Costa Rica’s OECD membership may assist its recovery

Significance Admission to the group demonstrates international confidence in Costa Rica’s economic management, even as the government struggles with the prolonged negative impacts of the COVID-19 pandemic. OECD accession should provide an economic boost for Costa Rica, alongside domestic stimulus measures. Impacts The benefits of OECD membership will be felt well beyond the immediate post-pandemic period. OECD accession will help encourage more foreign investment into Costa Rica, potentially giving it advantages over neighbouring Panama. Costa Rican economic recovery may spur more migration from Nicaragua, especially if repression there worsens as November’s elections near.

Subject Costa Rica drugs. Significance Costa Rican police on February 15 seized more than five tonnes of cocaine in a single operation -- the country’s largest-ever drugs seizure. The haul underlines the extent to which transnational drug-trafficking organisations have infiltrated the country, compounding concerns about related impacts on crime. The government of President Carlos Alvarado is currently implementing a new security strategy, but it is unclear how effective this will be in combating drug gangs. Impacts Costa Rica will seek extra security funding from partners such as the United States. Violence in neighbouring Nicaragua will exacerbate the pressures facing security forces along the border. The Limon region will be a bellwether for security trends as new infrastructure opens up the region.


Significance Following the removal of sanctions last month, the government is looking to the return of foreign direct investment to kick-start an economic recovery. However, its ambitions to attract 50 billion dollars per year may be over-optimistic, owing to uncertainties regarding the sanctions regime and the economy's structural weaknesses. Impacts European and East Asian customers with existing trade links with Iran will be best positioned for investment opportunities. US investors may take advantage of Iran's reopening by one-off sales of capital goods via third parties. Further fiscal consolidation and prudent monetary policy could see the government achieve its goal of single-digit inflation. Living standards for ordinary Iranians will improve much more slowly than hoped.


Significance Several workers’ unions launched protests in July in anticipation of the reform’s approval, claiming it undermines labour rights. The protests are symptomatic of growing frustration with the government’s efforts to mitigate the economic damage caused by COVID-19 lockdown measures. Impacts Panama’s economic struggles will be exacerbated by an ongoing trade spat with neighbouring Costa Rica. Increased protests will present major infection risks, perpetuating the challenges facing the government. Any surge in COVID-19 cases requiring a return of lockdown measures would further weigh on attempts to spark an economic recovery.


Subject Costa Rican infrastructure. Significance After nearly three years of construction, Costa Rica inaugurated a new 1-billion-dollar cargo port at Moin, in the Caribbean province of Limon, in late February. The government hopes to turn Costa Rica into a major regional shipping centre and to use the project as a launchpad for an infrastructure investment push. Impacts Further delays in the Route 32 extension risk damaging the reputation of the new port, leading to long-term under-use. Employment from infrastructure investment should drive a continuing rebound in consumer confidence. There may be a growing focus on urban public transport over the next 3-5 years, particularly if this attracts investor interest.


Subject Costa Rica election build-up. Significance With presidential candidates now selected for all of Costa Rica’s main parties, the parties are gearing up for the February 2018 presidential and legislative elections. The country’s deteriorating fiscal situation is playing a key role in shaping electoral preferences and undermining the popularity of President Luis Guillermo Solis and his party. Impacts The new fiscal reform package is unlikely to pass before the polls, as the opposition will not allow the government a legislative victory. Economic concerns will force the incoming president to focus immediately on fiscal issues, risking a quick return to the current impasse. The suspension of state spending on some projects could undermine prospects for foreign investment into public-private projects.


Significance EU officials said this was another setback to reforms, after Georgian Dream withdrew from an electoral agreement that had ended months of confrontation with the opposition. Now the government has pre-emptively turned down a loan tranche before the EU can block it. Impacts The protracted domestic political crisis will hamper inflows of foreign investment. One solution will be to solicit Chinese investments despite US concerns. The pandemic will continue to limit the scope of economic recovery.


1996 ◽  
Vol 52 (4) ◽  
pp. 465-493 ◽  
Author(s):  
Marcia Olander

The years following World War Two produced a strong resurgence of U.S. intervention in Central America and the Caribbean couched in Cold War terms. Although the U.S. intervention in Guatemala to overthrow the government of Jacobo Arbenz in 1954 has generally been seen as the first case of Cold War covert anti-Communist intervention in Latin America, several scholars have raised questions about U.S. involvement in a 1948 Costa Rican civil war in which Communism played a critical role. In a 1993 article in The Americas, Kyle Longley argued that “the U.S. response to the Costa Rican Revolution of 1948, not the Guatemalan affair, marked the origins of the Cold War in Latin America.” The U.S. “actively interfered,” and achieved “comparable results in Costa Rica as in Guatemala: the removal of a perceived Communist threat.” Other authors have argued, even, that the U.S. had prepared an invasion force in the Panama Canal Zone to pacify the country. The fifty years of Cold War anti-Communism entitles one to be skeptical of U.S. non-intervention in a Central American conflict involving Communism. Costa Ricans, aware of a long tradition of U.S. intervention in the region, also assumed that the U.S. would intervene. Most, if not all, were expecting intervention and one key government figure described U.S. pressure as like “the air, which is felt, even if it cannot be seen.” Yet, historians must do more than just “feel” intervention. Subsequent Cold War intervention may make it difficult to appraise the 1948 events in Costa Rica objectively. Statements like Longley's that “it is hard to believe that in early 1948 … Washington would not favor policies that ensured the removal of the [Communist Party] Vanguard,” although logical, do not coincide with the facts of the U.S. role in the conflict.


Significance Although President Cyril Ramaphosa has publicly committed to increase funding to combat what he calls South Africa’s “second pandemic”, there is a lack of transparency in how the government disburses funds linked to its National Strategic Plan (NSP) on Gender-based Violence and Femicide. Impacts Civil society groups will increase pressure on the government to make expenditure on GBV programmes more transparent. A new private-sector fund to contribute to the NSP has received strong early support, but its management structure is opaque. High levels of GBV will not only have significant humanitarian and social costs but may deter much-needed foreign investment.


Significance Many areas of the Caribbean have trade, investment and family connections with communities in Florida. As the state now plays a pivotal role in US electoral politics, crises in the region can take on added political importance for parts of Florida’s electorate. Impacts Forecasts of short-term economic recovery for Florida remain highly uncertain given the continuing impact of the pandemic. Clashing interests across the Caribbean may demand greater coordination of US policy than the government can currently offer. Healthcare and disaster relief capabilities within the state are severely overstretched and could be overwhelmed by a new crisis.


Significance The closing of internal and external borders in response to COVID-19 has heightened a longstanding skills deficit in key industries, with implications for wage levels, prices and broader economic growth. However, a general increase in immigrant numbers may not provide the skills that are needed. Impacts Labour shortfalls may delay government infrastructure projects that were designed to lead the post-pandemic economic recovery. Foreign investment may be affected by skills shortages in key areas such as mining and metallurgy. Debate on immigration levels could influence voting in the general election that is now likely to be held in April.


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