Tags: costa | rica | economy | hard. | times

Costa Rica Learns From Economic Crisis

Tuesday, 29 December 2009 09:37 AM

SAN JOSE, Costa Rica — Marta Gomez has served plenty of meals over the decades. When she was in her 20s, the single mother looked after her own daughter and son and the more than a dozen foreign exchange students who lived with them.

When the crisis of the 1980s hit Costa Rica, feeding her full house wasn't so easy.

"I had to do everything to keep up appearances so that the food was the same. That was very hard. I worked magic," said Gomez, now a doting grandmother at 58.

The passing in early December of Rodrigo Carazo Odio, Costa Rica's president from 1978 to 1982, jogged the Ticos' memory of those days — times that seemed far from the psyche of a nation recently voted the happiest people on the planet.

Today Costa Ricans boast education and health care levels that are the envy of the region. And, though the social gap may be growing, this country enjoys slimmer class disparities than many of its neighbors.

But during the Carazo administration, the inflation rate soared from 6 percent to nearly 100, Costa Rica's currency crashed, debt skyrocketed, credit froze, basic food became scarce and unemployment reached at least 9.4 percent, while underemployment was probably much higher. These were not the happiest of times for Costa Rica.

Offices and cantinas have been abuzz about Carazo, who died Dec. 9 at age 82 of complications from open-heart surgery. But Ticos seem to struggle for words to characterize the president posthumously, sometimes staying barely within the characteristic Costa Rican politeness to remember a man who bore some of the blame for the country's worst economic crisis in memory.

Gomez did not mince words.

"I used to talk really badly about our president; I had very bad words for him and I used to curse him," she said, allowing a glimpse of her youthful disaffection. But Gomez noted that with time, and faced with the current crisis, she has tempered her opinion.

"I was young. Now, in my maturity, I understand that [the economic crisis] wasn't his fault."

Many Ticos would not be so generous. Luis Mesalles, president of the Academia de Centroamerica, a San Jose economic think tank, this week described the Carazo years as a troubling combination of "bad circumstances and bad management."

The external circumstances were clear: coffee, which had been flying high at an international price of $350 per 100 pounds, plummeted; oil prices, which had been relatively low, began to soar.

Domestically, the Costa Rican currency, the colon, fell from 8.60 to the dollar to nearly 45.

In a controversial move, Carazo announced Costa Rica would not pay its international debt. The International Monetary Fund pressed Carazo to slim down the government and rein in spending. He declared the IMF persona non grata, claiming he was fighting for "the respect of our national sovereignty."

"At that time, uncertainty rose and people's distrust in the colon grew stronger. There was a serious lack of income, and all this provoked a sharp devaluation of the colon, coupled with very high inflation," Mesalles recalled.

For Juan Jose Echeverria Bealey, who served as Carazo's security minister, the crisis was not the president's fault. Echeverria said there were signs of the coming crisis at the end of the previous administration.

Now a prominent lawyer, Echeverria said the administration got off to a weak start as it emerged from a coalition of parties, each with its own political agenda. By the end of his term, Carazo had the support of just one congressman, according to Echeverria. This lack of census led the Legislative Assembly to strike down Carazo's attempts at fiscal reform, Echeverria said. He believes the reforms would have cushioned some of the crisis' impact.

After ousting the IMF, Costa Rica faced a serious PR problem.

"The last 18 months of the Carazo administration, not one dollar came into Costa Rica for international aid or loans," Echeverria said. "Our image was 'Costa Rica is not paying international debt so we're not going to give it any more.'"

However, some op-eds celebrated Carazo's defense of a tiny nation's sovereignty, and not just for standing up to the IMF. In some circles, the Carazo government is credited with helping overthrow Nicaragua's Gen. Anastasio Somoza by supporting the Sandinista Revolution that toppled Somoza in July 1979.

"Humberto Ortega (brother of Nicaraguan President Daniel Ortega) has told me that the Sandinista Revolution couldn't have happened if it hadn't been for Carazo," said Rodrigo Carreras, a career Costa Rican diplomat.

But later in his administration, it was the war with finances that temporarily defeated Costa Rica.

Mesalles said today the country is better placed to weather economic storms. Its exports are diverse and plentiful — no longer just coffee and bananas, but pineapples, computer chips and medical equipment too — and its markets are far more open than before to foreign trade. If the crisis of the 1980s brought anything, according to Mesalles, it was an end to Costa Rica's oversized, highly regulated government of the 1970s.

But for many Costa Ricans, the hour-long lines at the food offices are what stands out the most. Gomez' 37-year-old daughter Laura Borge remembered that she would accompany her mother on the long shopping spree, sometimes helping her buy meat from the supermarket as well for the foreign exchange students. "I wasn't jealous, but kind of curious. We went two years without eating chicken or meat, but I never went hungry. (The food we had) was enough."

Gomez has changed her tune since those days, saying, "We used to blame the president. Now we know what a crisis is and it’s not (Oscar) Arias fault or Barack Obama’s fault."

© Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

1Like our page
Tuesday, 29 December 2009 09:37 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved