The change of government in Costa Rica

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By GILBERTO LOPES*

Considerations on the development policies of the future president Rodrigo Chaves

Unknown to the public in Costa Rica until his appearance on President Carlos Alvarado's team, his brief foray into the Ministry of Finance, between October 2019 and May 2020, gave Rodrigo Chaves the impetus that led him to the presidency of the Republic.

As in the case of Alvarado, a series of circumstances – more than the candidate's own weight or the attractiveness of his proposals – made the election result in the second round on April 3 possible. The president-elect – who takes office on May 8 – had no known political background in the country, and this, in the current circumstances, ended up favoring him.

But its political history was not entirely unknown. For six years – between 2013 and 2019 – he was director of the World Bank's office in Indonesia, one of the Bank's largest offices outside of Washington. From there, he implemented policies that could also be promoted in Costa Rica. Not only that: these policies are part of a worldview, of a conception of development that was not discussed in the campaign.

The positive estimates of these policies can be found on the Bank's pages. On other pages there are critical assessments, contributions to a debate that we must not shy away from.

I tried to find antecedents when Chaves appeared in the Alvarado ministry. I wrote something when he was appointed to the Farm. During the recent election campaign, I didn't want to write anything. Former president José María Figueres (son of the most prominent political figure in the country in the last century, three times president, José Figueres), candidate of the social-democratic National Liberation Party (PLN), who won the first round with just over 27 % of votes, passed to the second round. The PLN will be the predominant force in the Legislative Assembly, with 19 of the 57 deputies. Rodrigo Chaves, candidate of Progresso Social-Democratic (PSD), a “rent” party with no tradition in the country, was ten points behind and, with its ten deputies, will be the second force in parliament.

In any case, Chaves circumvented the result and, in the second round, with 52,8% of the votes, secured the presidency of the Republic. A result that surprised many people. I did not feel represented by either candidate in the second round, and I set out my position in the article “In defense of abstentionism”.

I was impressed by the fact that the candidacy of José María Figueres made no allusion to the policies promoted by his opponent as head of the World Bank in Indonesia. There are some devastating aspects, as we'll see.

At first I thought it was the result of running a mediocre campaign. But then it seemed to me that one could not rule out proximity to privatization policies, the promotion of better “business environments”, things like that, in which the two candidates differed little and which made it impossible for me to incline towards one of them.

The truth is that the main campaign issues were harassment (for which Chaves was accused and penalized at the World Bank) or corruption (of which Figueres was accused when he was president, a position he held between 1994 and 1998, leaving the country for ten years not to be arrested). Naturally relevant themes, but insufficient to illustrate a debate between the candidates for the presidency of the country.

 

electoral scenario

The final result is known: Chaves won, but just over 43% of citizens preferred not to participate. If we add the blank and null votes, we have about 46% of the electorate.

I find it impossible to dissociate the growth of this percentage from a certain disillusionment with politics from the development of the neoliberal model that, since the early 80s, has been demolishing the foundations of a welfare state, whose cornerstone – in Costa Rica – has always seemed to me be a decree of nationalization of bank deposits in June 1948.

With a logic that seems impeccable to me, the Founding Board of the Second Republic, headed by old Figueres (who had triumphed in a short civil war in March of that year), decreed the nationalization of the banks, establishing that “only the State will be able to move, through their own banking institutions, the deposits of the public”. The decree considered that “the large profits of the banks, guaranteed by the State and by the social order, it is not fair that they belong to the shareholders who represent a small part of the mobilized capital, but should be converted into national savings, whose investment should be directed by the State ”. This is – in my opinion – the great secret of a development that distinguished Costa Rica not only in Central America, but also in the Latin American scene.

It is no coincidence that with the Structural Adjustment Programs (SAP), the first step in the neoliberal policies promoted in Costa Rica since the 80s was the privatization of the banking system, with money from the United States Agency for International Development (USAID). . The process then continued relentlessly: education, health, telecommunications, insurance, roads, airports, ports, etc… The public sector at the service of the private sector. The country has been transformed into a huge vault where Costa Ricans put their coins to fatten other people's pigs. These policies were diluting the country's traditional “bipartisanship”, composed of social democrats (PLN) and Christian socialists (PUSC). Both came and went in the same direction, with the well-known consequences for the country's form of development and the standard of living of the majority of the population.

It is not possible to go into the details of this process here. On April 3, voters had two options: vote for a candidate who had not only been part of this process of political decomposition, but who had left the country to avoid being arrested on bribery charges; and another, of which the general public knew nothing...

 

But not everything was unknown

With no political background in the country, let's turn our gaze to the political world of Rodrigo Chaves: that of the World Bank in Indonesia, the office under his responsibility, after a 30-year career at the institution.

To follow this up, we think a well-documented work – Indonesia: the World Bank failed East Asia miracle[I] –, prepared by an American foundation with a special focus on environmental issues: The Oakland Institute.

We are not going to refer to the policies promoted by the Bank in Indonesia during the 31 years of General Suharto's dictatorship (1967-1998). Although its consequences extend to the present day, we will refer to the most recent period, in which Rodrigo Chaves was at the head of the firm, or what, from previous years, was projected on this period.

What follows are references taken from the text of the Oakland institute. Mention is made there of "Doing Business 2018: Reforming to Create Jobs report” where the Bank highlights Indonesia's role as one of the ten most successful cases of economic reforms aimed at “improving the business climate” and attracting private investment. This is the optimistic view of the Bank, for whom the implementation of neoliberal policies made Indonesia an example of economic miracle in the Far East. But the study then analyzes the various consequences of these policies. In a hurry to reform and attract investment, millions of hectares of forests, until then managed by the local population, were handed over to foreign private companies, causing inevitable social conflicts, deforestation, inequality and poverty for the vast population affected. Indonesia adopted structural adjustment policies in the 90s. In 1998, it signed a memorandum with the IMF in which, in exchange for financial support, it would promote a policy of accelerated privatization, liberalization of foreign trade and foreign investment, and deregulation of local activities. In 2003, the results of these reforms provoked protests in the country. The images that illustrate the text are shocking. Between 2009 and 2017, the Bank lent or supported loans of 20,6 billion dollars to Indonesia, of which 22% were used to promote deregulation measures in the most diverse areas, such as tax cuts , facilitation of administrative procedures, reforms in land administration or commercial infrastructure projects, among others. As a result of these reforms, Indonesia rose rapidly in the World Bank's business index, from 106th in 2016 to 72nd in 2018, becoming the Southeast Asia's largest economy. I suppose that the result was considered a great success of the Bank's policies, precisely in the years that Chaves headed the office. A process in which President Joko Widodo, who has ruled Indonesia since 2014, is also very enthusiastic. Widodo created a task force coordinated by the minister of economy to promote reforms. In Costa Rica, a State reform project may be in the hands of a legislative commission that elected deputy Rodrigo Arias (brother of former president and Nobel Peace Prize winner Oscar Arias, of which he was minister of the presidency) has already announced his interest in chairing , in addition to promoting public-private cooperation projects, a new way of moving forward with privatizations. Oakland institute, that these “achievements” were achieved at the expense of Indonesian workers, indigenous communities and the environment. A destructive growth by attracting foreign investment, which neglected indigenous land rights.

In a document on the framework for cooperation with the country between 2016 and 2020, the Bank reaffirms its guiding role in Indonesia's economic policy. Through an accelerated transfer, culturally rich and food-producing lands are being taken over by companies seeking corporate profits, causing a “mass displacement of smallholders and indigenous peoples”. In many cases, this couldn't be done without the use of extreme violence (again, the photos are appalling). In 2011 alone, more than 600 land conflicts were recorded in Indonesia, with 22 dead and hundreds injured. This process was accelerated by the Bank-funded land reform program approved in July 2018, which, ignoring the role of indigenous communities, systematically undermined their rights in favor of corporations.

 

palm tree

As a result of this process, Indonesia has become the world's leading producer of palm oil. The 6,9 million tons of palm oil produced in 2000 became 32 million tons in 2016. More than 50% of the resources dedicated by the Bank to the production of palm oil went to Indonesia. “Between 1995 and 2015 alone (Chaves took over as head of the Indonesia office in 2013), an average of 117.000 hectares of forest – an area larger than Hong Kong – were cleared each year to make way for oil palm plantations. . According to data from the Indonesian Bureau of Statistics, the total area planted with this palm in the country was approximately 14 million hectares in 2017, an area larger than that of Greece.

“Private investments in palm oil are presented by companies and government authorities as a way to create jobs and build roads, schools and houses. But the expansion of large plantations also threatens the survival of an estimated 40 to 65 million people who depend directly on forest resources for their livelihood.” Those responsible for the plantations destroy small villages, rice fields and cemeteries located on the margins of their concessions, while hiring workers in remote areas, without contact with the local population, to work on the plantations.

 

Minas Gerais

But it's not just about the palm tree. The Bank also plays a key role in supporting mining activities in Indonesia, primarily through the operations of its International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency  (FRIEND). An activity that, according to the Bank, can have an impact on reducing poverty.

Huge reserves of gold and copper are operated by subsidiaries of the giant US mining company Freeport McMoRan Inc, according to the document of the Oakland institute. Explorations that discharge 200.000 tons of pollutants into rivers daily. The result is that, far from benefiting the local population, what was once a source of food for them has been turned into a mining wasteland. This happens everywhere and has provoked an intense debate in Costa Rica as well.

 

Tourism

In 2018, when preparing its annual meeting in Bali, the Bank approved US$300 million to improve infrastructure and services and attract private investment in the tourism sector. But building new airports and expanding luxury tourism to share prosperity with local communities is another "false promise", says the document we are analyzing.

Government policies included a tax amnesty and the removal of restrictions on new foreign investment projects, including expansion of the national road network, concession of 1.000 km of roads; 3.258 km of new railway lines; 15 new airports (improvements to 10 others) and 24 seaports (Indonesia is an archipelago with more than 10.000 islands, of which 922 are inhabited).

The coast was handed over to foreign investors. The Bank supported tourism development megaprojects, causing new problems. The construction of the Batang-Semarang highway in Central Java, for example, led to the expropriation of land from the local population and the displacement of communities in nine cities in April 2018. La Via Campesina, a local organization, denounced that the ambitious infrastructure project of President Widodo "brought misery to thousands of peasant families".

The document concludes that the Bank's advice to favor foreign investment in infrastructure and tourism is based on exploiting Indonesia's lush forests and beaches. But “the fanaticism of attracting investors to the new frontier of development neglects the serious impacts on the livelihoods of the local population and the environment”.

 

the political scene

This is precisely the debate, on the eve of Chaves taking office, not as head of a World Bank office, but as president of Costa Rica. It is reasonable to think that this will bring the same revenues to the country. If so (and knowing the results of its implementation in Indonesia and the world, where the years of neoliberalism brought tensions and inequalities to unprecedented levels), it is also reasonable that important sectors of society oppose its implementation. Chaves did not win the elections with this government project. As we know, the programs presented in elections are not only vague, but are, to a great extent, a formality to meet electoral requirements. But the incoming government has broad support in the Legislative Assembly for such policies. With the high chances that Rodrigo Arias assumes the presidency of the Assembly, he would have an important lever to advance in public institutions and companies that still resist privatization attempts. A persistent campaign about abuses in the public sector (which must be corrected), promoted by several conservative media, was oriented to undermine all support for this institutionality, without important sectors of the population being able to see the objective of this campaign. Those of us who oppose it have not been able to explain it clearly. This will be the scenario for the next four years and an adequate discussion of these policies is indispensable so that we can face the privatization efforts that the Arias-Chaves alliance (to which other factions will join) will promote in the next four years.

*Gilberto Lopes is a journalist, PhD in Society and Cultural Studies from the Universidad de Costa Rica (UCR). author of Political crisis of the modern world (Uruk).

Translation: Fernando Lima das Neves.

 

Note


[I] The original text, in English, can be seen here: https://www.oaklandinstitute.org/indonesia-world-bank-failed-east-asian-miracle.

See this link for all articles

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