Costa Rica - Into the Eye of the Storm
The calm facade of Costa Rica is rapidly wearing thin. This year's February 7th elections, which swept Luis Alberto Monge to a landslide victory on a 77% turnout, appeared to confirm ticos'...
...A special new anti-terrorist squad of the Civil Guard is also expected to receive assistance from Israel...
...From the earliest days after 19th century independence from Spain, the Costa Rican bourgeoisie outstripped its neighbors in introducing social reforms...
...Costa Rica's dilemma is tailormade for the Reagan Administration...
...Already the new mentality is taking shape within Costa Rica...
...Leftist sectors of the party's base are discontented with its program for economic recovery, and a new radical leadership looks likely to emerge, even though the PLN's power of patronage is considerable...
...The social consequences of this economic collapse are dramatic...
...Much of the reason lies in the determination of successive administrations to attract foreign investment...
...dollar, now sells for 47...
...The equation is a simple one: in exchange for economic recovery assistance, Costa Rica must bend unquestioningly to the dictates of Washington's Central American geopolitics...
...In the rural areas, the gap between the big agro-exporting companies and smaller private producers is growing...
...Nor is the conflict limited to clashes between the government and the working class...
...What alternatives exist...
...The Reagan Administration has chosen both countries as showcases-not only as launching pads for counter-revolutionary activity (Sandinista defector Eden Pastora made his base first in Costa Rica, then in Honduras), but also as societies which can still be "saved" for Western-style democracy, and where popular movements are still too weak to present an alternative...
...The success of the Costa Rican state since 1948 has been its capacity to rule by consensus...
...Small producers have little or no capital to invest, and their profit margins have become non-existent as the domestic market contracts...
...Monge's early foreign policy statements -harsh attacks on Cuba, Nicara38 gua and El Salvador's FDRFMLN-confirmed the rightward shift...
...Is Costa Rica slipping into new Crumbling Alliances militarism...
...Wages are low, U.S...
...An increase in domestic production, the expansion of domestic markets and the redistribution of wealth through such measures as tax reform, agrarian reform and the nationalization of foreign trade, is unacceptable to the United States and outside Costa Rica's current political spectrum...
...Inflation stands at almost 100%, and there is an acute currency crisis...
...It is hard to foresee any result but more intense suffering for the majority of Costa Ricans, and a cycle of discontent, protest and repression which will strike at the survival of the Costa Rican system...
...0 z Costa Rica's leaders have also always prided themselves on their ability to co-opt and defuse dissent from the Left...
...Agriculture has tended to remain in the JulylAug1982 hands of a large number of small and medium-sized family farms, without an entrenched oligarchy of the sort common in El Salvador, Nicaragua or Guatemala...
...And broadening the definition of Costa Rica's re-militarization to cover external defense as well as domestic counterinsurgency, a State Department spokesman pledged the United States to invoke the Inter-American Treaty of Reciprocal Assistance (TIAR) to "repel any aggressor against Costa Rica...
...Purchasing power declined by a quarter last year...
...In August 1981, U.N...
...aid for 1982 to $121 million...
...Costa Rica's traditional agro-exporting model is incapable of generating funds to finance the kinds of infrastructural improvements which foreign investors demand...
...Costa Rica is now eleven months in arrears oi...
...So the money for modernization has come instead from foreign loans...
...Ambassador Jeane Kirkpatrick offered security assistance to the Carazo Administration...
...The police will begin to mount surveillance on people moving around [San Jose] late at night or early in the morning, and anyone engaged in sporting pursuits, especially gymnastics...
...With the devaluation of the colon, average industrial NACLA Reportupdate update update update 0: z Ex-president Jose "Pepe" Figueres, leader of the 1948 revolution, symbolizes an era of Costa Rican stability, earnings are now equivalent to $0.19 an hour, the same as wages in Singapore and Haiti...
...The PLN's international credibility is relatively high, and its anti-Sandinista stance will foster the current polemic within the SI over its support for the Nicaraguan revolution...
...Garden Of Eden In Decay So why has Costa Rica's apparent idyll turned so sour...
...And already, semi-spontaneous community groups are mushrooming in protest against high rents, increased bus fares and the shortage of urban services...
...Costa Rica's traditions may yet recover, but clearly not without considerable trauma...
...As the economic crisis bites, a process of division is underway within the traditionally harmonious private sector...
...The President hailed Monge's "courageous program" to cut back on rent subsidies and other domestic social services...
...Yet the problem runs much deeper...
...Agents In Jogging Shorts Costa Rica's ruling PLN offers Washington an additional advantage through its membership in the Socialist International (SI), the worldwide grouping of Social Democratic parties...
...In common with its neighbors, the Costa Rican economy relies heavily on its agricultural exports...
...The gravity of Costa Rica's economic ills, and the severity of the medicine likely to be administered by the new PLN government, seem sure to threaten the roots of Central America's only long-standing parliamentary democracy...
...But beyond whimsical visions of undercover agents in jogging shorts, this characteristically authoritarian military response from the Reagan Administration would be a special tragedy for Costa Rica, which disbanded its standing army after the 1948 revolution...
...The colon-which used to change hands at 8.6 to the U.S...
...Monge, whose National Liberation Party (PLN) is the epitome of the 34-year-long stability ushered in by Costa Rica's 1948 liberal-democratic revolution, took a handsome 55% of the votes cast...
...The CDCA, designed as a means of encircling and isolating Nicaragua, brings together Costa Rica, Honduras, El Salvador and (now) Guatemala...
...There is a rapid concentration of capital, with large growers taking full advantage of lowered wages in order to expand their business empires and swallow up smaller firms...
...Costa Rica has prided itself on a European-style welfare state since 1948...
...As in Mexico, the election of new government means a clean sweep of everyone from 37update * update update update deputies to dog-catchers...
...And multinationals may find the appeal of tariff reductions offset by their fear of regional political instability and cumbersome Costa Rican government bureaucracy...
...Should the country create a new army under U.S...
...Worst of all, the country is now bankrupt...
...investment is considerable, the work force (so far) is docile...
...Denouncing to Reagan "a massive offensive by Marxist-Leninist totalitarianism, embodied in Nicaragua," Monge has accepted U.S...
...Shoring Up The Economy Costa Rica has always been a central focus of the Administration's much-vaunted Caribbean Basin Initiative (CBI...
...For the first time in living memory, their demonstrations in the capital, San Jose, were broken up by tear gas and police violence...
...In Honduras and Costa Rica, the United States is seeking bulwarks against the region's revolutionary movements...
...and/or Israeli supervision, as the Costa Rican ambassador to Mexico informed Unomasuno June 29, it would be virgin territory for the introduction of the latest techniques of counterinsurgency...
...But the strain is showing today within the PLN...
...As this cycle of indebtedness speeded up, Costa Rica found itself taking in new loans which were inadequate even to meet current repayment obligations and import bills...
...The main beneficiaries of these improvements-above all the U.S.-based multinational corporations which have brought in $210 million worth of investment-are not of course the ones called on to foot the bill...
...Costa Rica, even under Carazo, was a key selling-point for the Central American Democratic Community (CDCA), constituted in San Jose in January under U.S...
...President Carazo announced to bankers last year that Costa Rica could no longer meet repayments on either the principal or the interest on outstanding loans-the first Latin American country ever to declare itself in default...
...offers of police and counterinsurgency training-sweet words in Reagan's ears...
...The extent to which the system is already in crisis is hinted at by the Monge regime's emphasis on national security, U.S.-mandated solutions and-since the February elections-the crudest form of redbaiting...
...The slump in salaries means ever-mounting exploitation of cheap labor...
...Unemployment has reached 20% and shows no signs of falling...
...The International Monetary Fund too has come up with its Costa Rican prescription, and Monge took advantage of his Washington trip to meet with IMF Managing Director Jacques de Larosiere...
...its debt repayments...
...Quite the opposite: the government's generous opendoor policy to investors allows them tax exemptions and the free repatriation of profits...
...Continued inflation will serve the purpose of depressing domestic demand and purchasing power, especially the demand for manufactured consumer goods, which in Costa Rica are heavily dependent on imported components...
...Guerrilla groups frequently take part in this kind of activity, in order to keep in shape...
...Seventy million dollars of the emergency assistance component of the CBI is slated to go to Costa Rica, bringing total U.S...
...tutelage...
...Leftwing parties and trade unions alike are apt to be galvanized into more radical positions by the depth of the crisis...
...And like the rest of Central 36 America, it has fallen victim to slumping prices for its main crops, particularly coffee...
...The biggest casualty however was the outgoing administration of President Rodrigo Carazo Odio, blamed by most for the runaway economic crisis of the last three years...
...The Mexican newspaper El Dia reported on June 23rd an announcement from Costa Rican Public Security Minister Angel Edmundo Solano...
...These projects in turn were financed by simply printing money, unleashing a fierce surge of inflation and further undermining Costa Rica's credibility in the eyes of the international financial community...
...The key agrarian sector of the economy has shown consistently negative growth since 1979...
...The new relationship was typified by a June visit to Washington by newly elected President Monge, the first Latin American premier to meet Reagan since the Malvinas/ Falkland debacle...
...This year's February 7th elections, which swept Luis Alberto Monge to a landslide victory on a 77% turnout, appeared to confirm ticos' faith in the resilience of their political institutions...
...Monge certainly seems to offer no alternatives for capitalist recovery beyond the continued mortgaging of the economy to foreign interests and increased exploitation of the work force...
...The foreign debt has soared to over $4 billion, and is further compounded by the high lending rates of recent years and the enforced trend toward a higher proportion of loans from private banks...
...A new challenge from the far Right failed to shake traditional two-party dominance, while the feeble Left--represented this time by the new Pueblo Unido coalition-fared even worse...
...But things are not so straightforward: $70 million is a trifling amount, equivalent to only half of last year's lost revenues from coffee exports...
...Seemingly secure Latin American democracies can break down with bewildering speed: Uruguay's collapse into dictatorship in 1973, in a country long dubbed the "Switzerland of Latin America" (until Costa Rica inherited the title), is the most obvious example...
...The Carazo Administration instead began to meet its balance of payments deficit by dipping into the country's depleted reserves, and by diverting loans intended for infrastructural projects...
...Offering 10% tariff reductions, the CBI might also help to attract multinational investors...
...With a sharp decline in private investment, small industries have been especially hard hit, with many small and mediumsized enterprises going bankrupt...
...That faith may be short-lived...
...The lack of serious divisions within the bourgeoisie has always given government a great deal of flexibility in its dealings with the mass movement...
...Any radical attempt to challenge the existing logic of the Costa Rican economy is out of the question...
...The emphasis on military matNACLA Reportupdate * update * update . update ters should not suggest that economic issues took a back seat during the Reagan-Monge talks...
...Export earnings trailed off from $1.6 billion in 1979 to a mere $1.2 billion last year...
...Their proposal is to further encourage the development of the export-oriented agrarian and industrial sectors at the expense of growth in the internal market...
...On the face of things, it seems like an ideal place to test the "magic of the marketplace...
...As a result, domestic austerity will be essential, with the corresponding social cost of high inflation and low wages...
...After last year's failure to secure an agreement with the Carazo government for a $300 million loan, the IMF will soon send a fresh mission to San Jose...
...Reagan made a personal commitment to Costa Rica's economic recovery...
...The offer was angrily rejected, but Monge has no such qualms...
...Wage hikes granted by the government in March this year went nowhere toward keeping pace with the escalating cost of living, and workers took to the streets in protest...
...The problem, voters concluded, was not the system itself so much as the way it was being managed...
Vol. 16 • July 1982 • No. 4
