Wednesday, September 03, 2008

Purchase of bonds by China launches controversy in Costa Rica

Costa Rican President Oscar Arias. (AP Photo/Geert Vanden Wijngaert)San Jose (DPA) - The purchase by China of 300 million dollars in Costa Rican bonds and the involvement in the transaction of a Costa Rican bank with ties to the Central American country's current ambassador to China spurred a great controversy. The opposition were demanding the resignation of Ambassador Antonio Burgues on Wednesday.

Following several months of silence on the matter, Finance Minister Guillermo Zuniga told the legislature Tuesday that a local bank is holding half the funds - $150 million - sent by China. The other half is not yet in Costa Rican hands.

The bank, BCT, said it receives between $6,000 and $9,000 a month for its work on the matter.

Burgues is listed as a high executive and a partner of BCT at the Costa Rican trade registry, but bank officials have said he resigned from the post in July 2007, shortly before he became ambassador to China.

The diplomat told Costa Rican daily La Nacion that he had nothing to do with the transaction.

On Friday, Costa Rican President Oscar Arias said the loan is to be paid off in 12 years with an interest rate below 4 per cent.

Costa Rica established ties with Beijing on June 1, 2007, following 63 years of relations with Taiwan, which is recognized by only about two dozen nations, half of which are in Latin America or the Caribbean.

Following the formal establishment of ties, China offered to buy up to 300 million dollars in Costa Rican bonds, was preparing to build a modern $70 million national stadium and has offered important lines of cooperation with the Central American country.

Both countries are also evaluating a possible negotiation towards a free-trade agreement.

Arias visited China in October 2007. Costa Rica is the only Central American nation with ties to Beijing, while its neighbours continue to favour Taiwan, which Beijing considers to be part of the People's Republic of China.

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