Residente 2006-01

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Editorial Note: Happy New Year! Always a good time for new beginnings, new thoughts, new ideas....

In that light, we are looking for people who would like to contribute, write articles, send ideas, or whatever else you may think you would like to see.

And speaking of beginnings, in this issue we take you back to another beginning, the start of the Spanish in the new world.

We hope you ďŹ nd it interesting and enjoyable.

And don’t miss the update on another new beginning, the new Immigration Law has been passed, and will come into effect this year.... (see page 5) Welcome to 2006.

- Ryan Piercy

Its time to renew your INS medical, contact us to find out your new options!

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This magazine has been published every two months for 10 years as the ofďŹ cial communications media of the Association of Residents of Costa Rica. Our organization provides service to thousands of foreigners who have chosen Costa Rica to reside for short periods or for permanent residence.

Since 1984 the Association of Residents of Costa Rica has been offering reliable SERVICES, INFORMATION and ADVOCACY to Costa Rica’s foreign residents. We have the experience and ability to help you with your residency application, immigration, business and ďŹ nancial management, real estate purchases and rentals, property management, insurance, pet importation and much more.

If you wish to place an ad in El Residente, please contact the ARCR main ofďŹ ce.

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Presidents Repor t

by Bob Miller Wow, wow, wow! How fantastic!

This year we were able to collect well over 200 Christmas presents, as well as a few hundred dollars in cash, for the unfortunate children at the San Gabriel Hospice. What a wonderful feeling and way to top off the year.

Many many thanks to all of you who gave gifts. It definitely made the Christmas a lot brighter for the children, and I know it made you feel good too! Also a special thank you goes to Atillio Gilberti who put the pieces together in order that this would be a success.

Another great success was the Christmas Dinner/Dance held in conjunction with the Canadian Club (ACCR).

More people showed up than expected, with about 180 attendees, and everyone had a ball.

Especially enjoyable was the show put on by Mrs. Delcore’s Tango Group. The young couple burned up the dance floor and inspired us all (even me) to dance the rest of the night away.

Also present this year were the Canadian Ambassador, as well as the new Consul from the US Embassy. I didn’t see the consul Dance at all, but he commented that he really enjoyed the event, so maybe we will se them again at the next one.

In this magazine we will include some of the photos taken

by Ryan (another of his many hats) from when the staff of the Hospice came to pick up all the gifts. They were also very happy to see so many presents donated.

The food was also very enjoyable, and for this we must give thanks to Alan Weeks and company, who put it all together in spite of personal matters. His wife was again undergoing surgery in December, and we hope that Gida’s operation goes very well. Thank you Alan for all your hard work!

This project is one we will definitely have to do again next year, and we hope that most of the same children will still be around to enjoy it then as well, god bless them.

Well, back to work for me, but I hope you all have a very wonderful Holiday Season with your friends and family, and that your New Year brings all sorts of good things.

Continued on page 4...

Cover Photo Torch of Independence: Brand new as an official symbol of Costa Rica, the Torch of Independence was just declared as such on September 14th, 2005 by President Abel Pacheco. The project of law 15360 explains how, in 1964, the Costa Rican Minister of Education, Lic. Ismael A. Vargas, took advantage of a meeting of Education Ministers in Managua, to propose a Central American celebration with all those countries who gained Independence from Spain (1821).

It was a historic run, now an annual tradition, emulating the carrying of the torch from Guatemala and terminating in Costa Rica, as was done almost 2 centuries ago. Now the internationally recognized Carrera de la Antorcha de la Independencia is an important symbol of freedom to all those who live in the region.

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ARCR CHRISTMAS GIFT DRIVE FOR TERMINALLY ILL CHILDREN-

SUCCESS! On December 16, 2005 Attilio Gilberti of the ARCR Charity Committee presented 200 Christmas gifts and 50,000 colones to the staff of the Fundacion ProUnidad Cuidado Paliativo.

This Foundation runs The San Gabriel Hospice where 600 critically and terminally ill children are served medically.

The Hospice, located in La Sabana, has Benefited from ARCR help during the year and was featured in the last issue of La Residente.

The staff members who came to pick up the generous donation were overwhelmed when Their ageency van was filled totally with the gifts, that for some of these children, will be for their last Christmas.

Liliana Rojas, Andreas Monterok, and Marco Tulio Monestel were photographed in the ARCR offices next to the mountain of toys dwarfing the office Christmas tree.

Attilio Gilbberti received help from a variety of individuals and organizations including: Silvana Craig, Eric Garrita of Banco Popular, Xenia Morales of Joyeria BerjioPineda, Marta Borbon, Maritza del Core, Josette Altman Figueres, and Alessandra Gonzales the owner of a MultiPlaza boutique Morgan de Trois.

El Residente

The Director of San Gabriel’s Hospice, Laura Romero Fernandez, said, “you have brought so much joy to these ill children who have so little to look forward tothank you from the bottom of our hearts.”

Note: Unfortunately not everyone was able to enjoy Christmas this year, as my cousin’s son, Kevin Michael Seeburger, passed away on November 9th after a courageous battle with Luekemia. He was 12 years old.

Next year we intend to once again collect gifts, in his name, for the children at the Hospice San Gabriel, each of whom face each day with the same sort of courage possessed by Kevin.

Anyone wishing to make a donation to the Hospice should contact Attilio Gilberti at the ARCR office. Call 257-6646 or email arcr@casacanada.net.

-Ryan Piercy

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Immigration Update

by Ryan Piercy

01-2006 Re: New Law Passed Over the past few months we have received constant requests about the changes in the immigration law, and finally it is possible to comment. On December 12th the newly approved law 14269 was finally published, and will actually go into effect 8 months after this date. So what can be expected now?

Unfortunately it is still too early to determine too much, as two vital aspects of the law don’t exist. The first is the sub-text (rules), which will explain how the actual procedures will be. This has yet to be written by immigration, who are responsible to do so now that the law has passed. Finally, even once written on paper, the more important aspect will be HOW the immigration department actually processes applications. It is necessary to remember that the main reason for the new law is supposedly public security for Costa Rica, and criminalizes aspects such as smuggling illegals in or providing them with lodging.

In any event, the law does show us that our lobbying efforts have paid off, as the amount for Pensionados remains the same.

We also managed to convince the government to keep the Rentista category. At first the amount was also the same, but it appears they have changed this at the last minute. An individual would still require $1,000 per month, but a couple may require double, plus $500 more for each child. Still we feel there will be nothing to worry about for the majority of those interested, as for several months ARCR has been investigating options to ensure there will be a minimum impact for those interested. Contact us to find out what your options may be.

For all those who already have residency (or apply before the new law comes into effect) remember that new details, such as required amounts will not affect you. However one point that may be of benefit is that the new law specifically allows for those with 3 years to be able to change to Permanent Residency Status. Again, the details will be up to immigration, but for many this status proves to be more beneficial and less complicated to maintain.

January-February, 2006

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Wild Side XXIX X

by Ryan Piercy

Bee Careful!

One of our most recent encounters with nature was not something I would enjoy experiencing again, as Killer Bees do seem to live up to their names quite seriously. In November we discovered our neighbours house was (once again) infested. Before there was time to have them removed, some maintenance workers at his house set them off, and our large dogs became the victims of their aggravation.

Mellifera scutellata, the Africanized Honey Bee, has been present in the Americas since 1956, when they were imported to Brazil in an attempt to crossbreed with the European Honey Bees to increase production.

Unfortunately in 1957 swarms of bees along with 26 Queens escaped, and started to breed with feral and commercial bees. After spreading at a rate of 100200 miles per year, they reached the United States in 1990, and of course Costa Rica several years before.

Locally known as Abejas Asesinos, I first encountered these animals 5 years ago and discovered then that it is likely all Honey Bees in Costa Rica are probably Africanized. It seems that the drones (males) will infiltrate the nests of other Honey Bees to breed with the queens, creating a more vicious hybrid.

Africanized Bees are more dangerous as they will attack in greater numbers, and will chase humans up to a quarter mile. Loud noises are often the cause (such as machinery or vehicle vibrations) though just passers-by have been known to set them off.

El Residente

Of course we don’t here of attacks every day here, and it seems that these bees are often fine as they go about their normal business. Like all Honey Bees they will die after they sting. So how can you tell them apart? Unfortunately only in a laboratory it seems, as an expert would need to measure some 20 different parts, or actually do a test of the DNA. It is recommended you be alert for any bees’ nests to avoid disturbing them. These bees are willing to nest anywhere (another cause for their great expansion) including in hollow trees or even man-made structures (such as our neighbours house). If disturbed they can remain agitated for 24 hours.

If you are attacked, try to remain clear headed. The bees will try to attack your head, which is the most critical area. Try to cover it with something (hat, towel, shirt) as stings to other areas are less dangerous. Get to cover, then brush off stingers (do not pull them out as this causes the poising to be pushed out). If stung more than 15 times get medical attention! If possible try to take an antihistamine to help reduce the effect of the stings.

Fortunately thanks to the vet’s immediate attention, our dogs (barely) survived this time, though it took two weeks before they could even move normally. Twelve years ago my wife lost her dogs in an attack. These bees kill, humans as well, so do not approach a nest. If you detect a Honey Bee nest don’t try and deal with it yourself, call the Bomberos (Fire Department) in Costa Rica. They have special equipment and training to deal with this potential menace.

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New At AR RCR 2006 Discount Directory: Coming later this month, the new Discount Directory will be available at the ARCR office. So what’s new?

In order to start using your discount now, contact Continental (Diego Sanchez) for more information at 296-4313 or 296-5554.

You must mention that you are a member of ARCR (they will request to see your member card at time of payment) and are participating in program CR250. This should give you one more reason to ‘enjoy your flight’!

How about Discount Air Tickets?

Another new member to the program is Laurin B&B in Escazu, owned by ARCR member Ginette Laurin. This wonderful lady will take excellent care of you or your friends and family, and will give members a discount off the price (but not the quality of service). You can reach Ginette at 289-4198 or email lauring@racsa.co.cr

Thats right, we have entered into a new agreement with CONTINENTAL AIRLINES in order to receive 10%, 5% or 2% discounts off of the posted airfares. This can add up to big savings for those that fly frequently.

This year you can expect to continue receiving discounts at many other fine locations, such as Farmacia Fischel, Opticas Vision, Hospital Clinica Biblica, among other services and businesses.

The amount of the discount will depend on the pricing of the ticket and must originate in San Jose. Bookings must be made through the San Jose office, and if used widely we will be able to negotiate better deals from more points of origin.

If you wish to find out more about the program, to offer a discount on your services, or to recomend a location, please contact the ARCR office at 257-6646 or email us at arcr@casacanada.net. Your input is important to the success of this program.

Well, unfortunately Cemaco cancelled on us with no notification, seemingly because they iliminated the ACE Hardware section, however we also have some good news...

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Association of Residents of Costa Rica Watch for the Annual ARCR Picnic, coming up in March/ April, including the meeting of the General Assembly.

Call the office for details at 257-6646.

Volunteers welcome. website www.arcr.net

Send us your club news or activities for free publication in this column

Canadian Club Are you ready for a competitive game of Pool, or Darts? Or, perhaps the celebral challenge of a game of Backgammon or Chess! Maybe you just want to visit with old friends or watch a Big Screen TV! You could also spend the evening at the bar, with Laurie, catching up on all the news. It’s a great place to network too! Whatever the reason… it’s a fun place to be! Come and taste some of the delicious entrees!

Plan to attend the monthly “ACCR Pub Night” Now, the first Thursday of the month.

‘Laurie’s Bar & Grill’ in front of the ‘Ceviche Del Rey’ on the Old Road to Santa Ana. website www.canadianclubcr.com

PC Club of Costa Rica This computer Club meets on the third Saturday of each month at Pan American school, in Belen, 9 am to Noon 2 months Free Trial for newcomers For information call Chuck Jennings. Phone 266-0123 www.pcclub.net Republican’s Abroad The Republicans Abroad of Costa Rica meets the second Tuesday of each month Contact Francis 286-6060, or 386-1420 Radio control Sailing Club

Bird Watching Club The Birding Club of Costa Rica sponsors monthly trips to observe local and migrant birds in various areas of the country. For more information contact us at 282-5365 or at costaricabirding@hotmail.com Women’s International League for Peace and Freedom (open to men too) Bi lingual group meets in Heredia on the first Wednesday of the month at 10 a.m. in the clinic of Mireya Gonzalez. We work on peace and human rights issues. Call Mitzi 433-7078 or write peacewomen@gmail.com Democrats Abroad The Democrats Abroad of Costa Rica meets the last Saturday of each month at the Aurola Holiday Inn, 9:30 a.m. to noon, coffee break menu. Visit cr.democratsabroad.org or call David Sagel 248-0719 for information and reservations.

Meets at Sabana Park Lake For information contact Walter Bibb.

Wwbbsurf40@yahoo.com Wine Club of Costa Rica Please mark your calendars The wine club usually meets at 1 P.M. on the last Sunday of each month. Join us to tantalize your taste buds and expand your education on one of the finer things in life.

For more information on upcoming events please contact us Phone 279-8927, 257-2223, 285-1276 Women’s Club of Costa Rica Founded in 1940. The Women’s Club of Costa Rica is one of the oldest, continuously operating service clubs in the country. The name has changed in 63 years, but our motto “friendship and service” has remained the same,. An English-speaking organization, our club has approximately 350 members, originating from over 30 countries. Please join and help us to continue to grow. Remember that you can contact us or keep in touch through our website www.wccr.org

Newcomer’s Club White Artist colony (for David & Julia) A women’s social organization that meets the 1st Tuesday of each month. We welcome English speaking women who reside in Costa Rica. New and long term residentscontact Carol phone 232-3999

El Residente

The colony has currently suspended their concert series, but continues to operate in bringing artists to Costa Rica.

For information and details, please E-mail bwhite@forjuliaanddavid.org

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January-February, 2006

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Living in Co osta a Rica and US Tax xatiion

by Randall J. Linder E.A. For U.S. citizens living in foreign countries, there is little or no relief in income-tax filing requirements. Often we are faced with new requirements and situations, and given wrong advice from fellow citizens.

As a professional U.S. income tax preparer specializing in U.S. citizens living in foreign countries, I have provided in this column answers to some frequently asked questions.

Now that I am living in Costa Rica, do I need to file a U.S. income tax return?

Most U.S. citizens must file an annual income tax return on their worldwide income. As a general rule, Think as you are living in the United States and if you think need to file a return, you are probably correct. It is better to file than not.

Where you live has no bearing on your filing requirements.

My only income is from a Costa Rican company, and I pay taxes to Costa Rica. Do I have to include this income on my U.S. tax return?

U.S. citizens must include all worldwide income on their tax returns. This income could qualify for the $80,000 foreign earned income exclusion, but the exclusion is not automatic. You must include the income on your tax return and then exclude it by using IRS form 2555. If you do not meet the requirements for the exclusion, then the tax you paid to Costa Rica could possibly be taken as a foreign tax credit.

I live in Costa Rica and work for a U.S. company. Does this income qualify for the $80,000 foreign earned income exclusion?

If you meet the other requirements for the foreign earned income exclusion, the wages you receive from your U.S. employer can also be excluded. Your employer is still required to withhold Social Security and Medicare on your wages.

I have my own small business in Costa Rica and work as a self-employed person. My business is not incorporated. Does this income qualify for the foreign earned income exclusion?

Yes. This income can qualify for the exclusion just as if you were working for a U.S. employer. Caution: The exclusion is for federal income tax only. You will still be required to pay self-employment tax (Social Security and Medicare taxes) on your profits.

El Residente

I receive dividends from a Costa Rican company. Are the dividends “foreign earned income,” and do they qualify for the exclusion?

No. The foreign earned exclusion does not apply to income such as interest, dividends, capital gains, pensions, annuities and gambling.

The exclusion applies strictly to earned income – in other words, your wages, salaries, bonuses, commissions, fees and other compensation for services rendered.

Note: If you own 10% or more of a foreign corporation, you are required to file with your individual income tax return IRS form 5471 (Information Return of U.S. Persons with Respect to Certain Foreign Corporations).

I receive interest from my Costa Rican bank account.

Do I have to report this interest on my U.S. income tax return?

Yes. U.S. citizens must include in their income monies received worldwide. This includes interest and dividend income. In addition, if the aggregate value for your foreign accounts is greater that $10,000 at any time during the year, a Report of Foreign Bank and Financial Accounts must be submitted to the U.S. Treasury Department.

I transferred money from the United States to Costa Rica.

Is there anything special that I need to do?

If a U.S. citizen has a financial interest in or signature authority over any financial accounts, including bank, securities or other types of financial accounts in a foreign country, and if the aggregate value of these accounts exceeds $10,000 at any time during the year, the accounts must be reported to the U.S. Treasury Department.

Last year I got married to a Costa Rican citizen. Can I file a joint return with my spouse, who is not a U.S. citizen?

Yes, but in doing so, you make the election to report your income and your spouse’s income worldwide. If your spouse does not work, or has very little or no income, it could be to your advantage to file a joint return. If your spouse does not have a taxpayer identification number, one must obtained.

My Costa Rican wife has a child from a previous marriage. The child is living with us. Can I claim the child as a dependent on my tax return?

Continued on page 11...

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To be claimed as a dependent, the dependent must be a U.S. citizen or a resident of the United States, or, in certain cases, a legally adopted child of a U.S. citizen.

I have been living in Costa Rica for years and have not filed a tax return. What should I do?

It is to your advantage to seek professional help to determine whether or not you need to file.

My business is incorporated as a Costa Rican S.A. (sociedad anónima, incorporated company). Currently it is not making a profit, and I am not receiving a paycheck.

Does this have to be included on my tax return?

Yes. If you own 10% or more of a foreign corporation, you are required to file with your individual income tax return IRS form 5471 (Information Return of U.S. Persons with Respect to Certain Foreign Corporations). This includes inactive S.A.s and corporations not making a profit.

For more information on U.S. taxation, call U.S. Tax & Accounting Service at 288-2201 or 839-9970, or e-mail ustax@lawyer.com.

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Business Brie efs Baxter opens a financial centre The medical company, Baxter, inaugurated a financial centre in Heredia where they will centralize financial services for their U.S. operations. The general manager of Baxter, Fernando Luján, minister of the economy Gilberto Barrantes and president of Costa Rica Abel Pacheco participated in the ceremony. The centre will start with 100 employees.

Costa Rica high in development The Trade and Development Index (TDI) of the United Nations Conference for Trade and Development (UNCTAD) places Costa Rica 35th among 110 nations assessed in relation to trade and development. The Index measures the degree of integration of trade policies and commerce in the nations studied. Spain, 19th, and Uruguay, 33rd, also place among the top nations, while Costa Rica surpasses Panama, 37th, Chile, 40th, Argentina, 43rd, and Mexico, 49th. Singapore, 19th, is the only developing country among the top 20, followed by South Korea, 25th, and Malaysia, 28th. While Denmark, the United States, and the United Kingdom top the list, the 10 countries at the bottom are all African nations.

Inflation stationary at 14 percent The cumulate inflation for the last 12 months remains near 14 percent, as it has done since September 2004.

The National Statistics and Census Bureau published the data for October, which show that the trend remains.

The cumulate inflation between October last year and last month was 13.94 percent, after it increased 1.24 percent up this October. Economist Felix Delgado believes that by the end of the year the overall inflation will be between 13.5 and 14 percent. The Central Bank had forecast an overall 12.7 percent inflation for the year 2005, but its president, Francisco Gutierrez (above), admitted that it is more likely to be 13 percent.

Less satisfaction with the political system Even though they support democracy, only 39 percent Costa Ricans are satisfied with the performance of the political system, according to a survey. This contrasts with the figures for the year 2002, when 75 percent of the respondents stated satisfaction. However, 73 percent assert that they prefer democracy to any other form of government.

According to analysts, the degree of dissatisfaction coincides with strong disapproval for the Pacheco Administration.

El Residente

Central American Free Trade Agreement in legislature In Costa Rica, the fate of the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA), signed in August 2004, depends now of the decision of the 57 congressmen in the Legislative Assembly. Upon submitting the document to Congress, President Abel Pacheco asserted that the decision is now the responsibility of the legislative body. The US, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic have all ratified the agreement, which goes into effect with or without Costa Rica on January 1, 2006. President Pacheco had refused to submit the agreement to Congress until his controversial tax package, which has been in Congress for over 3 years, was passed, but pressure from Congress, business and workers groups who fear the loss of their jobs finally convinced him to submit the agreement.

Several government unions announced their decision to go on strike and to take other steps to force Costa Rica to turn down CAFTA membership. According to President Pacheco, polls show that 80 percent of the Costa Ricans say that they are informed about CAFTA and that 64 percent of them are in favour of it. The agreement would require that the government open its insurance and telecommunications monopolies to competition by 2008.

223,000 surfers visited Costa Rica According to the Costa Rican Board of Tourism (ICT in Spanish), 20.5 percent -223,000- of the tourists who arrived by air in 2004 were attracted by the excellent surfing conditions that many a Costa Rica beach has to offer, both on the Pacific and the Caribbean. The chairman of the Costa Rican Surf Association, Antonio Pilurzu, said that the current trend is a marked increase from the numbers for 2001, where 101,014 surfers accounted for 12.4 percent of the tourists visiting Costa Rica.

53 textile firms faded away The dire straits of the textile sector is reflected in the fact that, in the last four years, 53 exporting firms have disappeared and sales abroad have dropped by $182 million. Also, over 15,000 jobs have been lost. These facts have prompted private and public institutions to seek ways of cushioning the negative impact of the trend. According to the Foreign Trade Promoter (PROCOMER in Spanish), in the year 2000, 152 firms exported $729 million in textiles; last year, 99 companies sold $547 million abroad. It is feared that should CAFTA not be ratified by the government that few textile firms could survive.

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January-February, 2006

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The Coloniz zatiion of Costa Rica

coast were made in the 100 years following Columbus’ discovery. The Spanish conquest here as in other parts of the New World were usually violent and showed disrespect for the native peoples. As a result, the natives resisted the Spaniards’ efforts to subjugate them by either direct confrontation or by fleeing inland to more remote areas, often burning their own villages and crops behind them so that the foreign forces would not be able to make use of them.

Competition, deceit, and jealousy among the Spanish, along with the difficult climate of the Atlantic region, were other factors that stalled their success in establishing permanent settlements there during the first three centuries of the colonial period.

Veragua When Christopher Columbus made his fourth and final voyage to the New World in 1502, he was forced to take refuge at Isla Uvita on September 18th, a tiny island just off the coast from what is now the major port city of Limón. His ships had suffered damage from storms, and morale was low.

During their 17 days of rest Columbus and crew explored the surrounding villages and to their delight the natives treated them amicably.

They also were wearing such impressive gold and jade jewelry that this region eventually came to be known as Costa Rica, literally “rich coast,” because of the mineral wealth that the Spanish imagined must exist within the territory.

They returned to Spain with the impression that Veragua (Columbus’ name for the area from Panama to Honduras) could be conquered with ease.

Pacific Coast The Pacific Ocean was discovered in 1513 by Vásco Nuñez de Balboa. With a new entry point to the region, Spaniards began exploring the Westy Coast of

First Attempts When the first colonizers returned however, they did not get the friendly reception they had been expecting. In spite of their insatiable lust for gold and precious stones, the Spanish conquistadors were never able to bring eastern Costa Rica under their control. A dozen expeditions to the east Continued on page 15...

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Veragua, and finally colonization began from the Pacific side of Costa Rica.

The earliest record of exploration along the Pacific coast is that of Hernán Ponce de León and Juan de Castañeda who set sail from Panama in 1519 and reached as far north as the Gulf of Nicoya. New expeditions soon brought the native population of this region under Spanish control.

Besides confiscating any valuables and gold they could find, the Spaniards also began a slave trade to other parts of the Americas, principally Panama and Peru, with the indigenous people of the Nicoya Peninsula. The extent to which this trade was practiced greatly reduced the local population.

January-February, 2006

Also the introduction of small pox and other diseases devastated the indigenous population further.

Despite weather conditions more like the Mediterranean climate of Spain and a clear dominion over the native people, for many years only small numbers of Spanish settlers inhabited the area. Nevertheless, it maintained its importance as a protected port area and as a starting point for exploration and settlement further inland.

Colony in Cartago It was not until 1561, however, that the first Spanish expedition ventured into the intermontane valley that would become the country’s economic and population center in the centuries to come. Organized in Nicaragua and led by Juan de Cavallón, this expedition entered the Central Valley from the western end (nearest the Gulf of Nicoya) and established the small settlement of Garcimuñoz, which some say was near the present day town of Santa Ana.

Continued on page 16...

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introduced by the Spanish), and wheat flour, along with mules, were among the principal products exported to the neighboring countries. Textiles, metal implements, and various other luxury items were among the most desirable imports.

The agricultural production in the Central Valley came from 3 sources: 1) Large land holdings that had been given to a favored few by authority of representatives of the Spanish crown and that were worked primarily by indigenous laborers,

In 1562, Juan Vásquez de Coronado brought more men and supplies from Nicaragua to bolster the struggling settlement. He also brought an attitude very different from that of other conquistadors -- he believed in treating the natives with more respect and using violence only as a last resort. The result was a successful beginning to the colonization of Costa Rica. By gaining cooperation from many of the local chieftainships in the eastern end of the valley, he transferred the main colonial settlement to a site near what would become the town of Cartago, finding the land very fertile.

Despite Vásquez de Coronado’s humanitarian approach to colonization, the increasing number of white settlers in the region signaled the irreversible demise of indiginous populations. During the first century of Spanish conquest, many natives succumbed to diseases that they had no natural immunity against, others died while attempting to resist the foreign invaders, still less fortunate ones were imprisoned and tortured, and some fled into remote mountain regions. Those that fell under the domination of the Spaniards were forced to lead lives far different from what they had known before, and many became domestic servants of their new conquerors.

The Spanish divided the best agricultural lands among themselves, leaving the remaining native inhabitants to marginal terrains, while at the same time demanding payment heavy tributes in the form of crops. In fact, it is doubtful that the early colonists would have survived for long without the food they obtained from the natives in this fashion.

2) The plots that the natives had for their own use but from which they were required to yield a substantial portion of the production, and 3) Small farms owned or leased by Spaniards, or Spanish descendants, that had not been privileged enough to have been granted large holdings.

Due to the difficulties inherent in long distance transportation of goods, the dwindling supply of indigenous labor, and other economic crises that affected the new colony, a change began to take place in Costa Rican society by the end of the 1600’s. Many of the large farms went into debt and were forced to sell off pieces of the property to families seeking their own small farms. Other large farms became divided into smaller farms simply through the process of partitioning among heirs over several generations. And with a shortage of native labor and a growing population of white settlers and their descendants, the Spanish settlers and their descendants soon found it necessary to toil in their own fields in order to make a living. While the Spanish never did find the gold and riches they had dreamed would be in Costa Rica, they did encounter lush, fertile fields, and a rich flora and fauna, helping it live up to its illustrious name, the ‘Rich Coast’.

Into The Centuries During the 17th Century the country began to produce enough agricultural surplus in order to maintain an export trade to Panama and Nicaragua. Corn, wheat (a crop

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January-February, 2006

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CALL TODAY! (506)

672-1181

www.FirstRealtyCR.com

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Dollars & $ens se

by Alan Weeks

The Rising Eastern Stars The Asia-Pacific region is fast becoming the engine of world economic growth. Within 10 years it is forecast that the Asian economies will account for almost half the world GDP (1). This is significantly more than the United States (US) and Europe combined. The Asian economies are also home to over 60% of the world’s population and their peoples are growing strongly in affluence.

THE VIEW FROM DOWN UNDER Australia is a highly competitive, stable, and business friendly nation. It is ideally positioned and well equipped to take advantage of this Asian growth with its strong trade and investment links within the region. Of Australia’s two way merchandise trade with major partners last year, 35% of it was with Japan & China, and another 38% with other Asian countries. And Australia is continuing to build on its position in the region with a network of Free Trade Agreements.

While its abundant natural resources have been helping to drive the economic development of many Asian economies, Australia is in fact, a sophisticated knowledge economy with services accounting for almost 80% of GDP. THE LAND OF THE RISING SUN Japan is back. It is being reformed. It is reviving. Now Japan’s chances of prosperity and influence look surprisingly bright.

This revival has taken an extraordinarily long time, but Japan is finally recovering from its debt- and deflationridden stagnation of the last 15 years. Forecasts of economic growth are being raised, particularly after recent figures showed Japan’s GDP grew at an annual 3.3% rate in the 2nd quarter of 2005. Even urban real estate prices have finally started to increase at a steady pace. And, foreign investors have started to rush to Tokyo.

The helpful “wind” from China’s booming economy, has stayed strong enough for long enough, that the resulting demand on Japanese corporations has increased profits, strengthened balance sheets, pay their debts, and boost investment spending.

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Companies are also hiring again, taking on more full-time staff. Unemployment has fallen significantly. And, with proper jobs finally being created and wages rising, there are signs that more confident workers will spur consumer spending. Growing domestic demand will allow Japan’s economy at last to begin rising of its own accord, with much less reliance on exports and the global economy.

Japan has been going through a long period of incremental reforms, which together have changed politics, the economy, and financial markets far more than most people realize, promising the country a bright, long-term future.

CHINA: STICKING TO THE FAST LANE China surely is the real star of Asia, destined to out-sprint the sluggish, overrigid Japanese and eventually dominate the region’s politics and economies.

With China’s very recent announcement that its economy was considerably bigger than previously estimated, and with another year of sizzling growth to report, its economy may already rank No.4 in the world. Thus, China would be trailing only the US, Japan, and Germany.

Economists say the new figures just provided by China are very good news, suggesting that the economy is healthier, more diversified, and more sustainable than previously thought. And, it appears that the Chinese government is achieving a key policy goal: to wean the economy from heavy government spending and rely more on trade and domestic consumption for growth. The latter is being fueled by the fact that incomes are rising all over China.

Another indication that the “internal vitality of the Chinese economy is strong”, is in the change in investment allocation.

Investment was up in agriculture, service sectors, energy, and transportation – the last three in an effort to overcome power shortages, and road and port bottlenecks that plagued China before.

China is now the world’s third-largest trading nation.

Whatever the international concerns may be about the rapid growth in exports, up 35% in 2004, China isn’t likely to do anything to slow the “beating heart” of its economy. This is because the export of goods is providing many tens of thousand of jobs for workers being let go from moribund state-run enterprises. And, it has also “sucked up” surplus agricultural labor into factories by the tens of millions. Thus, China is seeking stability through a high level of growth.

Chinese economic growth created a boom in commodity Continued on page 20...

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markets, “swallowing” raw materials as fast as they can be dug up. However, the popular perception that China will continue to be an insatiable commodity-guzzler is now too simplistic. As Chinese authorities have worked to cool overheated parts of the economy, consumption of some commodities has slowed sharply or even fallen.

For example, Chinese demand for oil has been just 2% higher this year; demand for cement is flat; and that for aluminum has declined by 5%. As for steel, China has been a huge consumer of world output, and its demand is rising. However, this year China is likely to export as much steel as its imports and may have a trade surplus in 2006. China is also a growing exporter of aluminum and cement.

The extent and duration of China’s weakening demand for commodities, however, is quite selective. Demand for certain other commodities, such as coal, copper, and uranium are still strong.

However optimistic the outlook is for the Chinese economy, it’s important to recognize the risks. They include the state of the nation’s banking system with huge bad loans, political stability, over-investment, and a continuing misallocation of export earnings and foreign capital.

THE LARGEST DEMOCRACY India has also enjoyed high growth again this year and its investors enjoyed a solid stock market performance. In city after city, India is booming.

India’s IT companies are world-beaters. And, out of the IT infrastructure has grown a huge business of “outsourcing” almost any business process that can be performed remotely.

These service businesses have thrived because they capitalize on India’s strengths – computer skills, and fluency in English. However, the entire IT and office-service industry employs only about one million people.

The consensus forecast is for sustained growth but India may face daunting risks in 2006. This is because India has lousy infrastructure, burdensome regulation, and restrictive, inflexible, labor laws. The government is also burdened with very high fixed costs, huge public debt, and chronic fiscal deficits. And, making important economic reforms now appears to have been stalled by a lack of political consensus.

It may seem odd, if reform is so important, that India’s economy is doing so well without it. The biggest reason is that India’s economy is so strong, structurally and

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cyclically. Its young population gives it a fast-growing workforce and a declining proportion of dependents. Industry meanwhile, has recovered from a splurge of over-investment, has improved efficiency, and is now both reaping the benefits and re-investing in new capacity. However, exports are nowhere close to their potential.

The fact is, none of the Asian Tigers, nor Communist China, managed to climb rapidly in employment for huge numbers of their peoples without a boom in export-oriented manufacturing. India is unlikely to be different. Unfortunately, the free market that helped the Tigers so much, often works better in China than in India.

India’s ballooning trade deficit is also becoming a source of concern for overseas investors. The flaw is too little investment in regard to rapidly increasing consumption. It thus depends on capital inflow to fund its consumption-led growth. Just like a poorer version of the US, India wants to spend its future income today.

THE ASIAN SQUIRRELS There has been an enormous build-up of foreign-exchange reserves in Asia. As a group, Asian countries now have a “stash” of more than $2.5 trillion, about two-thirds of the world’s total. And, most of this is in dollar securities. Since US treasuries and bonds are basically IOUs, this means that every US adult is already liable to the Asian central banks for at least $8,500 per person.

Some American economists and politicians assert that the huge build-up in reserves in Asia proves that the region’s governments are intervening on a grand scale to keep their currencies undervalued as part of an export-led growth strategy. However, the motive for accumulating reserves differs widely by country.

The fact is that trade surpluses have not been the main cause of the increase in Asian reserves. The inflow of foreign direct investment and speculative capital has, in fact, contributed more than twice as much to the growth in reserves. Thus, the argument that if only the Chinese and other Asian countries let their currencies rise in value, the US external deficit would shrink painlessly, is pure bunk! Respected economic groups are certain that a revaluation of Asian currencies would have little impact on America’s current-account deficit.

THE GLOBAL IMBALANCE AND RISKS The world economy is still growing rapidly, but it is badly out of kilter and ultimately unsustainable. This is because American consumers cannot forever spend more than their incomes, Continued on page 21...

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nor can US foreign borrowing rise indefinitely. Eventually, a global fiscal balance must be restored.

There is no question that US consumer spending must slow.

It is, in fact, now at a record 160% of US wages. This is not a “pretty picture”, and consumers need to change their “shopaholic” ways. However, slower US consumer spending suggests that world economic growth will slow. The risk is that any adjustment, when it comes, will go too far.

The present US current-account deficit is excessive, unprecedented, and dangerous. It could end in a global recession, rampant protectionism, and even a disastrous financial crash. Therefore, investors and their advisors will need to stay well informed of changing conditions and be nimble enough to change investment strategies as warranted.

(1) On a Purchasing Power Parity (PPP) basis.

(2) Basis References include THE ECONOMIST’s Country Survey articles, and various WALL STREET JOURNAL, BARRONS’, and NY TIMES articles.

For more information please contact Alan Weeks at 256-5848

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Learning The Langua age

by Christopher Howard

Family Ties If you are a serious Spanish student then sooner or later you will have to learn the names of the different members of the family in Spanish. This is no easy task, as Spanish families tend to be quite large… Study all of the words on this list until you know them by heart.

Father Mother Sister Brother Son Daughter Grandfather Grandmother Grandson Granddaughter Aunt Uncle Cousin (boy) Cousin (girl) Husband Wife family members

el padre, papa Great grandfather la madre, mamá Great grandmother la hermana Great grandson el hermano Great granddaughter el hijo Father-in-law la hija Mother-in-law el abuelo Son-in-law la abuela Daughter-in-law el nieto Brother-in-law la nieta Sister-in-law la tía Godparents el tío Godfather el primo Godmother la prima First cousin el esposo, marido Political cousin la esposa distant cousin los miembros de la familia

el bisabuelo la bisabuela el bisnieto la bisnieta el suegro la suegra el yerno la nuera el cuñado la cuñada los padrinos el padrino la madrina primo hermano/a prima político primo lejano

Here is your Costa Rican expression or tiquismo for this week: “Pepearse” means to fall in love, however the correct word in Spanish is enamorarse.

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January-February, 2006

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“ The Cause for Paws 2005” First Annual Silent/Live Auction Fund Raiser

THE REFUGIO DE ANIMALES – AHPPA COSTA RICA gratefully acknowledges the support of the following businesses and more than 50 private individuals who made our first event a HUGE SUCCESS. With the proceeds, the Refugio has purchased a badly needed x-ray machine, PLUS… almost 1,000 local schoolchildren will be able to attend our animal education program in 2006.

“We couldn’t have done it without you!”

Thank you from the Auction Committee and all the Animals of CR. And a special acknowledgment to our major sponsors:

Angie Theologos Jewlery, San Pedro

Chef Jacques Restaurant, Heredia

Aquas Bravas Rafting

Ceramic Tiles, handpainted by artists Juliette Betancur and Patricia Munoz

Art Depot, Escazu Arte 2000 Framing, Heredia Auto Centro, Heredia Aviarios del Caribe, Puerto Limon Bagelmen's, Isabel and Malcom Matheson Barva Cheese Beauty Club, Escazu Beisanz Woodworks

Club Scorpio Fitness Center, Heredia Coca-Cola FEMSA David Carli, Artist Dentista Sandra Meza, Heredia DiBartolo's Italian Restaurant, Escazu Doggi Divino Pet Grooming, Escazu Dole/Standard Fruit Company

Bill's Prestige Printing, Eustis, FL

Dra. Gabriela Guzman Stein, Cosmetic Surgeon, Clinica Santa Rita, San Jose

Blue Monkey/Mono Azul Hotel, Manual Antonio

Dreamy Contentment B&B, Playa Matapalo

Café Britt Canopy Tour, San Jose de la Montana Casa Punta Blanco Casa Laurin B&B, Escazu, Ginette Laurin

Earth University Hotel/Nature Preserve, Limon El Residente Magazine Elena Austermuhle, Artist Emerald Forest Properties Real Estate Fiesta Casino, Alajuela

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Hotel Cocal & Casino, Playa Jaco Hotel Parador, Manual Antonio IHI International Health Travel Insurance Il Panino Restaurant, Escazu Importadora Quigo S.A. Auto Products, San Antonio de Belen Instituto de Musica, Zapote

Rios Tropicales Rafting

Jim Theologos, Artist

Rich Coast Furnishings, Manual Lobo Miranda, Birri, Heredia

Jose Vargas, Artist Jude Maceren, Artist

Roger Peterson, Attorney and Author, The Legal Guide to Costa Rica

Kiana Resort, Playa Dominical

Selva Banjanito Lodge and Reserve Sunburst Coffee, Escazu and Guanacaste The Garden Spa at the White House Hotel, Escazu The Tico Times

Kimberly Clark

King's Garden Restaurant, San Jose Kole Kab Honey

Tin Jo Restaurant, San Jose Tre Fratelli Restaurant, Escazu Villa Belen B&B, Belen

Konfort Muebles, Escazu

White House Hotel, Restaurant, Casino & Spa, San Antonio Escazu

La Chocolateria, Escazu

Whitetail Leather Works, Toni Norman

La Condessa Hotel, Heredia

William Castro, Sculptor

LaMariposa Hotel, Manual Antonio

Wilson Arce Mendez, Woodworks

Laz Divaz Casitas B&B, Playa Samara

Xandari Hotel and Spa, Alajuela

Mangiamo Restaurant, Santa Ana Marriott Costa Rica, San Antonio de Belen Mawamba Lodge, Tortuguero

SPECIAL RECOGNITION For the design and production of the Refugio 2006 Calendars by artists and professionals who generously donated their time and work.

Alianza Ad Honorem All proceeds benefit the AHPPA.

McDonald's, Costa Rica Octagon Gallery, Heredia, Sylvia Tandlich Outback Steak House, Escazu

Pfizer Animal Health Products Pico Blanco B&B, Escazu

ASSOCIACION HUMANITARIA PARA LA PROTECCION ANIMAL DE COSTA RICA Cedula Juridica: 3-002-131253 Apartado 73, Heredia, Costa Rica. 267.7158 e-mail: refugio@infoweb.co.cr

Rainforest Aerial Tram Rancho Valeron Landscape Design, Cameron Teeter Restaurant Lluna de Valencia, Barva, Heredia

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Exchange rate of the Costa Rican ¢ to the US Dollar June 476.91 July

479.97

August

482.76

September

486.40

October

489.16

November

492.32

Basic Interest Rate June 15.75 % July

15.75 %

August

15.50 %

September

15.25 %

October

15.25 %

November

15.25 %

Exchange rate of other currencies to the US Dollar Japanese Yen 119.63 Swiss Franc

1.3151

Canadian $

1.1663

Giro (DEG)

1.4241

ÂŁ Sterling

1.7263

Euro

1.1779

Mexican Peso

10.596

Korean Won

1,035.0

Danish Krone

6.3287

Norwegian Krone 6.7637 Argentine Peso

2.9787

Colombian Peso 2282.0 Brasilian Real

2.2153

Libor Rate 1 month 4.2938 % 3 month

4.4200 %

6 month

4.6006 %

12 month

4.7900 %

Prime Rate

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7.00 %

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Holidays Of Costa Rica January 1st ‘New Year’s Day’ April 11th ‘Battle of Rivas’ April 13th ‘Holy Thursday’ April 14th ‘Good Friday’ ******************** A Touch of Wisdom “An ounce of prevention is worth a pound of cure.” unknown “Avarice and happiness never saw each other; how then should they become acquainted.”

Ben Franklin (1706-1790) “Even monkeys fall out of trees.”

Japanese proverb ******************** English Translations That Went Wrong COCKTAIL LOUNGE, NORWAY: Ladies are requested not to have children in the bar.

AT A BUDAPEST ZOO: Please do not feed the animals. If you have any suitable food, give it to the guard on duty.

DOCTORS OFFICE, ROME: Specialist in women and other diseases.

HOTEL, ACAPULCO: The manager has personally passed all the water served here.

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