How Costa Rica's economic crisis could become a political millstone
San Jose, Costa Rica
While most of Central America measures its history by military coups, stable Costa Rica's major milestone - and millstone - is a severe economic downturn. Costa Ricans call their predicament la crisis. Real salaries for most Costa Ricans dropped 45 percent over the past three years. The value of the colone against the dollar is less than one-fifth of what it was in September 1980 (from 8 colones to the dollar to 43 colones today). Last year's inflation was 100 percent, and national production in 1982 was down 6 percent. The country is struggling to pay the interest on its $4.2 billion foreign debt, the highest per capita in the world.Skip to next paragraph
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Unemployment, once virtually unheard of here, has more than doubled in five years to a record 9.4 percent. Underemployment has jumped twofold to 22.4 percent.
Assessing these conditions, political observers are wondering if the economic chaos of la crisism will turn political.
Some economists say it could. In a recent study, Juan Manuel Villasusos, an economist at the University of Costa Rica's economic science research center, concludes from statistics on land ownership and income distribution la crisis has created of ''income concentration'' or economic polarization.
If something doesn't change soon, he says, ''the model of Costa Rican society could be put into question.''
Not all analysts would agree with him, but people on all sides of the political spectrum say Costa Rica's ample middle class has been largely responsible for the country's 33 years of social and political stability.
Vladimir de la Cruz, a history professor and Marxist at the University of Costa Rica, says the middle classes have been ''a dampener to the revolutionary process.''
Second Vice-President Armando Arauz states it differently. He considers the 30 to 35 percent of the population that is middle class as the country's ''great political stabilizer.''
If United States aid to Costa Rica is any indication, one might think ''stabilizer'' in danger. Aid from the US has risen dramatically - to $162 million in l983, up 126 percent over last year.
Some $70 million of that comes from a large increase in US aid for most Caribbean-region nations under President Reagan's Caribbean Basin Initiative. But some analysts wonder if the increased aid to Costa Rica shows the US is worried about political stability in Central America's only democracy.
''That's exactly why we've increased aid,'' said one US economist here. He indicated the US was genuinely concerned that economic turmoil could turn into political turmoil.
Leftists point to other events to illustrate political polarization. Foremost is the creation last November of OPEN (the Organization for National Emergencies), a volunteer ''anti-terrorism corps'' of about 10,000 Costa Rican men and women. Professor de la Cruz contends its OPEN threatens Costa Rica's neutral status as a nation without an army.
Leftists also cite the $2.2 million in US military aid in 1982, which they contend Costa Rica is using to militarize its police forces.
They point to government action against Aportes, a leftist magazine that was temporarily seized by the mail service because it contained allegedly subversive material.
Political polarization is most obvious in attitudes toward the recent agreements between Costa Rica and the International Monetary Fund. President Luis Alberto Monge and his Partido de Liberacion Nacional (PLN) hail the agreement as the first step in regaining Costa Rica's economic credibility. But critics see economic measures related to IMF aid - high interest rates and social welfare austerity - as unfairly taxing the middle and lower classes.
''Monge's economic policy is coherent, but the social results are very negative,'' says Jose Luis Vega, a social scientist and author of a book on Costa Rican politics and democracy.
''It [Monge's policy] ruins the middle class, threatens the working class with high unemployment, and ends formerly protected industry,'' he says. The IMF's austerity measures are especially severe in Costa Rica, where an estimated one-third of the population is on the government payroll, and most people depend on goverment subsidies for purchases of gas, electricity, water, medicines, beans, and rice, says Mr. Vega.
Labor leaders forecast strikes in l983 if the government doesn't ''make adjustments.'' The streets of San Jose, the capital city, have already been clogged several times this year with demonstrations in favor of subsidies on housing and agriculture.
Mr. Monge and his party, which are in the social democratic mold, are responding to such calls with a ''social compensation plan.'' They are also pushing a bill in the nation's legislative assembly that would turn severence pay for workers into a national fund for social development. Response from the business community so far is mixed.
''The privileged groups have to realize with la crisism they can't maintain the same margin of profit that they have in the past,'' says Ricardo Thompson, secretary of PLN's own Confederation of Costa Rican Democratic Workers. ''The government has to make the necessary adjustments.''