Costa Rica
The End of Passivity
Nitlápan-Envío team
"Calderón promised to eliminate the poor, and he's doing it; he's starving us all to death." This popular joke, repeated almost daily on the streets of Costa Rica, illustrates the key conflict facing President Rafael Calderón after almost two years in power: the application of the structural adjustment program in the face of a growing consensus among broad sectors of society that the neoliberal measures only mean greater social inequality and poverty for the majority. The true face of neoliberalism has been unmasked, revealing the structural inequities contained in its policies and the even greater dependency to which those policies inevitably lead.
For the first time, politicians from the opposition National Liberation Party (PLN) as well as the ruling Party of Social Christian Unity (PUSC) coincide with private business, union and peasant sectors in pointing out that, several years after being implemented, the structural adjustment program is a failure.
US aid and the imposition of neoliberalismCalderón had the bad luck of coming to power one month after Violeta Chamorro took office in Nicaragua, and at the onset of the sweeping international changes that brought an end to the Cold War. With the Sandinistas' electoral defeat, the end of the contra war and the FSLN's conversion into an opposition party, Costa Rica could no longer live off its image of "perpetual neutrality" that had been so opportunistically used by the Monge and Arias governments, under pressure from the United States. The model of a pacifist Costa Rica—"demilitarized," vulnerable and democratic—is no longer useful to US interests, which have now turned more towards the region's incipient democracies and the design of new inter-American relations.
During the peak moments of US military and diplomatic aggression against Sandinista-run Nicaragua, US aid had soared to $681.9 million in an effort to buy the Costa Rican government's support. Former President Oscar Arias once said, "As long as the Sandinistas are in power, Costa Rica is guaranteed at least $200 million annually in US aid." Practically overnight, then, Costa Rica's high levels of international assistance disappeared. Today, it has to compete on an equal level—or perhaps even from a less privileged position—for the small amount of aid the US has earmarked for all of Central America, as well as the Eastern European nations and the new countries of the former Soviet Union. In spite of promises from different quarters, everything indicates that foreign assistance to Central America as a whole and to each country individually will be severely limited in the future.
Another element useful for explaining the current crisis is that Calderón inherited from two previous Social Democratic administrations eight years of structural adjustment, which laid the foundations for implementing the neoliberal project. This plan was also intended to overcome the economic crisis of 1979-1982, the period in which President Carazo broke with the multilateral financial organizations because he was unwilling to heed their antisocial directives. Calderón has been given the task of dismantling the social welfare state created by the past two governments, as well as the "distributive-statist" model they had developed. All these factors have taken their toll on the Calderón presidency.
The past decade's macroeconomic indicators showed a sustained recovery of the Gross Domestic Product (GDP), a substantial increase in exports—principally in non-traditional crops—and did not predict a significant deterioration in living standards or a need to reduce the state apparatus. However, as the years passed, it became clear that the country was experiencing growing social inequality, increasing impoverishment of the middle class, a deterioration in public services and an increase in government corruption, delinquency, unemployment and violence.
Against this backdrop, Calderón's electoral promises had to be based on the conclusion already painfully obvious to the majority of the population: the popular sectors could not continue to pay the costs of the structural adjustment program. The majority of the country's poor thus voted for Calderón, only to feel almost immediately betrayed—instead of stabilizing prices and relieving the social crisis, he chose to implement an economic "shock" treatment.
Almost all of the country's 1990 economic indicators were negative, with the exception of a 3.5% growth in the GDP (the second highest posted in Latin America after Venezuela, but still far below Costa Rica's 1989 level). The statistics clearly announced an impending crisis. By 1991, regional and world changes and their consequences for foreign aid, social inequality and poverty caused by eight years of neoliberal adjustment and the 1990 economic crisis, all came together to finally shake up the Costa Rican population and force it to respond to Calderón's deceit and the bipartisan neoliberal plan. The Costa Rican population's conservative and conformist attitude during the 1980s has thus begun to wane, given the sad reality that Costa Rica is quickly coming to share a key element with the rest of Central America: poverty. The "Trojan Horse" for the region's poor—the Costa Rican model—has begun to crumble and the streets of San José have become virtual combat zones, from the January march supporting school cafeteria employees to the violent resistance of street vendors in June and the later protests of university students and faculty. These protests, along with those of the unions and other popular sectors, directly confronted the government's political unwillingness to respond to the social crisis. By the end of the year, Calderón had been forced into a political retreat, obliged to repeal the most harmful measures of the structural adjustment's second phase.
The political partiesThe president's popularity, which by September 1991 had slipped to a 26% approval rating—the same level of support given Venezuelan President Carlos Andrés Pérez after the coup attempt earlier this year—has led, for the first time, to a serious questioning of the bipartisan neoliberal project. This skepticism went so far that the divisions observed in the Cabinet since Calderón's May 1990 inauguration resulted in the resignations of several ministers—those most concerned about social issues—and sounded the alarm for a potential social explosion if the government were to continue down this road. All this led to concern among PUSC politicians about their 1996 election possibilities, while the PLN opportunistically opposed the measures, hoping to avoid having to share the political cost of the adjustment. It even encouraged the unions, popular organizations and small and medium producers to pressure the government for alternatives.
The PLN and the PUSC—imitating the US in a stellar example of cultural colonialism—make up a bipartisan system that controls the Costa Rican executive and legislative branches. Both are committed to the neoliberal project and are convinced that it is the best, if not the only, path to follow. While the Costa Ricans are neither the first nor the most energetic promoters of structural adjustment, they do want to seize the market advantages over the region's other countries, signing free trade accords with Mexico, Venezuela and other Latin American countries, and later with the US as part of the Bush Initiative for the Americas. According to Otón Solís, Minister of Planning under the Arias government, "Neoliberalism has become ideology for the PLN and PUSC. For them, it is an article of faith that competition will automatically increase business efficiency and productivity."
Strong criticisms made by PUSC and PLN politicians thus respond in large measure to electoral political interests. For some PUSC politicians, the criticism has party-based elements; they are looking to avoid greater divisions within the party before 1994, to keep alive its presidential possibilities. Nonetheless, some PUSC representatives have made very pointed observations. They include Roberto Tovar Faja, who said that the structural adjustment programs promoted since 1982 have done nothing for Costa Rica, as proven by continuing negative indicators and increased poverty. Others have pointed out that the structural adjustment programs will not stop at eliminating the state's social function but actually have a broader objective: to submit all social relations to the laws of the market.
The Social Christians have always had to deal with the difficult periods and this time around, the "lucky" one was Calderón. Although the PLN has made political hay out of the fact that the challenge to the neoliberal project emerged during a Social Christian administration, the PLN has already begun to show internal divisions in the 1980s. One group, to date the majority, sustains the neoliberal line. A minority is intent on a return to principles of social justice, if only in rhetoric, and pushes a social democratic line. For Rolando Araya Monge, leader of this current, structural adjustment is destroying Central American economies and "the people have been lied to about its real effects." This current accuses the party's neoliberal tendency of being rightist and opportunistic, of turning its back on the country's poor and of unconditionally supporting the government's economic policies.
Opposition from the leftLast year broad popular sectors finally began to question the neoliberal project. Even some businessmen who had supported the implementation of structural adjustment challenged the rhythm of tariff reduction and the scant financing from international lending organizations in exchange for meeting their conditions.
But neither the Left as a whole nor the union movement could head up this broad emerging discontent. In part, this is because both these groups were substantially weakened over the past decade. For them it was not simply a "lost" decade, but one that nearly resulted in their extinction. The Popular Vanguard Party, the Revolutionary Workers' Party, the United Peoples' Coalition—none of these groups were capable of getting even the 1.5% of votes required by the electoral law for participation in future elections. The Costa Rican system has effectively been reduced to a bipartisan system, like that of the United States, in which each party's position becomes more and more similar and corruption becomes increasingly common, including the involvement of drug trafficking money in electoral campaigns.
In the case of the unions, the Solidarismo movement (see envío, June 1991) is ahead of them in both numbers of members and ability to respond to those members' needs, thanks to financing from private and multinational corporations that benefit from the neoliberal project. The union movement is also very dispersed, with seven different federations representing less than 150,000 workers. In addition, 91% of union members are public sector employees. If Calderón achieves his goal of firing 30,000 state workers, the union movement in Costa Rica will have virtually disappeared.
The advance of revolutionary movements in Central America in the 1980s did not translate into greater political activity among Costa Ricans. To the contrary, it reinforced a conservative tendency, strengthened in part by the crisis of the left, both nationally and internationally. Neither the union movement nor the left reacted adequately to the neoliberal project, and the little reaction there was came late. They did not have either the strength or ability to empower popular discontent and build a coherent and cohesive response that could have altered the country's current path.
In 1991, however, in spite of their own weakness and the government's efforts to undermine their organizational capacity, the unions demanded changes in economic policy, including an end to massive public employee layoffs and to the privatization of state enterprises, and negotiation of the economic measures being promoted. This activism responded to growing poverty, unemployment and the burgeoning informal sector. According to the government's Office of Statistics, half the country's total income goes to 20% of the population, while the poorest 20% receive only 5% of total income. Hopes for a better future have evaporated for most Costa Ricans. Although last year's protests were not strong enough to force the government to change its current path, they did pressure Calderón to suspend the worst measures of the adjustment package at least temporarily.
Calderón had carried out secret negotiations with the World Bank and had entirely ignored the social costs of massive layoffs in the state sector, price liberalization policies and wage restrictions that forced middle class Costa Ricans to spend 94% of their incomes on food. For him, "retreating" on some of the economic measures was a way to gain time, at the same time recognizing that his government was not going to comply with the goals assigned by the IMF: inflation was to fall to 12% and instead was at 25%, and the GDP grew only 1%.
Even more important than the protesters' gains—reinstatement of the university budget and a decrease in the rate of layoffs, as well as of privatization—was the recently created National Front Against Privatization's presentation to the Legislature of a document called Costa Rican Economic Program I. This document's importance lies less in its content than in the fact that it seeks, if only symbolically, to recover the nation's sovereignty, surrendered to international financial organizations. The document was presented publicly in the November 20 demonstration against the adjustment measures. The 16 popular organizations that comprise the National Front Against Privatization, in addition to expressing their disappointment with the neoliberal plan, broke the three-month truce signed between the government and the Higher Labor Council, demonstrating their independent organizational capacity, outside union control.
The same day this plan was presented, the government and the National Agrarian Coordinator, which brings together small and medium producers, signed a 20-point accord that, according to the peasants, recovers national food sovereignty and constitutes a concrete response to structural adjustment. It demonstrated an attempt to move "from protest to proposals" and put a vision of developing the peasant sector back on the economic agenda by recognizing agriculture as the "motor force of the national economy." The signing of the accord was seen as a victory for the peasantry, whose organizations grew impressively, from 24 in 1980 to 193 in 1991, with an increase in total members from 7,600 to 50,432.
The political importance of this accord is that small and medium producers, faced with the threat of extermination by a structural adjustment that increased basic food prices and attempted to dismantle peasant production, would formulate and defend a national project taking in all sectors of society. They did not defend their specific demands, but rather the bigger issues of national food self-sufficiency, guaranteeing agrarian production and marketing in light of US AID-sponsored programs that had created a situation in which half the country's food was imported. The number of families benefited by this accord is greater than the country's total union membership. The agreement guarantees that the agrarian sector will have a say in defining compensatory and protective measures in the countryside, at least until 1993, as well as participation in negotiations toward regional integration and the reestablishment of the Central American Common Market. This proposal restructures the Costa Rican agricultural sector and responds to the peasantry's longstanding struggle against structural adjustment. It is an important signpost in the search for an intermediate alternative between a free market economy and the state's full social control that can slow Costa Rica's freewheeling race to become the paradigm for the region's emerging market economies.
This year began with a series of scandals and debates about democracy and neoliberalism. The second round of structural adjustment measures had aimed to reduce the public deficit, end inflation, consolidate the "labor mobility" program (public sector layoffs), complete the approval of tax reforms and maintain imports at their 1990 level. The third round, negotiated in 1991 for implementation in 1992, will further the neoliberal measures through the "voluntary retirement" of 30,000 state workers in order to "convert the state into a small and efficient apparatus." Second, it will promote the privatization of virtually all state enterprises in order to reduce the fiscal deficit in the short run, and, in the longer run, restructure the public sector, independent of its profitability. And third, tariffs will be reduced to a maximum of 20%, in accord with the other Central American countries.
These measures, accompanied by a lack of state intervention in pricing and the elimination of most tax exemptions, not only increase social discontent, but also raise questions about the meaning of democracy: is it simply a popular exercise every four years that benefits only a few, or does it mean the state must participate in guaranteeing the basic needs of the majority? The coup attempt in Venezuela forced Calderón and his Cabinet to seriously examine the economic situation for the first time and analyze a plan to slow inflation, considered part of the third round of structural adjustment measures, and include subsidies for the poorest 30% of the population. As in Venezuela, funds earmarked to "relieve" the social situation had been contemplated in negotiations with the IMF to avoid a social explosion, and the disbursal of those funds is now being accelerated to overcome any possible obstacle to the implementation of the neoliberal project. As President Calderón's recent visit to Colombia and Chile indicates, he is trying to put Costa Rica at the vanguard of access to fresh financing in markets outside Central America.
Indications of social decomposition in Costa Rica include the use of drug trafficking funds by the PLN and PUSC for their political activities. Suicide, alcoholism and teenage pregnancy rates in Costa Rica are among the highest in Latin America. And, as a backdrop, militarism is growing. It is no secret to the small and medium producers that a significant part of the "secret" army of 15,000 private security forces has been contracted by large landowners to intimidate and harass them in what to date has been a successful struggle. In addition, the security budget climbed 33% during 1990, despite the adjustment measures. Oscar Arias had prohibited the use of military ranks, hoping thus to center attention on Sandinista "militarism," but Calderón reinstituted a rank system among the 31,000 members of the armed forces disguised with the names Civil Guard and Rural Guard. Could it be that the training of 40% of the Civil Guard and Rural Guard by the special forces of Chile and Guatemala or the Israeli security forces means the Costa Rican government is preparing its response when the people dare to more aggressively challenge the adjustment measures?
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