Out with the Chinchilla, in with the Solis

Christine Wade has a post on With Solis, Costa Ricans Signal Readiness for Change for the World Politics Review. Luis Guillermo Solis inherits a Costa Rica desperate for change following a mixed four-year term for Laura Chincilla and, more or less, long-term political and economic stagnation.

Here's a glimpse.

Solis, a former university professor, must now translate that mandate into concrete results, and soon. Above all, he must promote transparency and bolster public confidence in government. On his first day in office, Solis ordered the pruning of bushes in front of the Casa Presidencial. It was a symbolic gesture intended to signify the administration’s commitment to transparency. He also required his Cabinet members to sign a code of ethics prior to being sworn into office.

But these symbolic acts must be accompanied by efficacy in dealing with some of the country’s very serious challenges, including a crumbling infrastructure, high energy costs, a deteriorating public health system—referred to as the caja—high unemployment and a teacher’s strike. The most immediate problem, however, is the fiscal deficit. Solis must succeed where Chinchilla failed, which could be difficult given the composition of the legislature. Beyond keeping Costa Rica’s credit rating at a respectable level, Solis will need to attack the deficit in order to keep his campaign promises to address inequality and extreme poverty. 

Challenges confronting the next Costa Rican president

The Inter-American Dialogue's Latin American Advisor and American University's AULA Blog both take a look at what Luis Guillermo Solis has inherited in Costa Rica and what he has to do in order to leave the country in a better position that what he now inherits.

In the Advisor, José Antonio Muñoz, partner at Arias & Muñoz in San José, argues that

Solís' challenge to govern, if elected, is threefold: to maintain the vibrancy of Costa Rica's productive sector, to find the right political and government figures to lead the administration, and to either find a working arrangement with Congress or to neutralize it. he easier task for the new president will be to seek and obtain the support of the business community. This, in turn, would facilitate the other two. 

Kevin Casas-Zamora, secretary for political affairs at the Organization of American States and former vice president of Costa Rica, argues that

The challenges that await Luis Guillermo Solís are complex, and he's been given a weak hand to play. The first one is to build a viable majority in a legislature in which his party controls only one-fifth of the seats and has no obvious partners to forge a stable coalition. The second one is to appoint a credible economic team that can soothe the anxieties of domestic and foreign investors. The third one is to rein in a deteriorating fiscal situation, which calls for a tax reform that Solís has pledged not to pursue in the first 2 years of his administration. All this is a tall order for a leader that lacks any previous executive or legislative experience, a solid political base of his own and a team with deal-making and policy-making depth. 

Solis inherits a troubled country (though that is a bit relative) and it is really difficult to predict how well he is going to do. His party's has little legislative support and his government experience is limited. I'm not sure that he can satisfy the country's needs with symbolic victories even if they are just intended as a means to an end.

Fulton Armstrong takes a look at Solis in Will Costa Rica Seize the Opportunity?

His public persona – as a university history professor, former diplomat, a non-corrupt political neophyte, and an unglamorous campaigner – has engendered sympathy even if, as the head of a party with no record, people don’t really know what they’re getting in terms of policy.  Various business groups have signaled they can work with him and presented their wish lists – all touching on energy availability and prices – but that agenda also remains vague.

It's unclear whether those characteristics that allowed him to move to the forefront of Costa Rican politics will help him to govern. Armstrong, like the first two responses, is also concerned with what Solis will be able to accomplish with so little legislative support.

I'd say that these responses all work well with Something is wrong in the region’s “exceptional” democracy, Costa Ricans look to turn the page after a rough few years, No whammies! No whammy, no whammy…. STOP!, and Business Implications of El Salvador and Costa Rica Votes.

No whammies! No whammy, no whammy…. STOP!

Costa Rica got hit with a double dose of bad news yesterday when Intel and Bank of American announced significant layoffs in the country.

Bank of America Corp. and Intel Corp. stunned Costa Rica’s government by announcing they would fire about 3,000 workers in the Central American nation just two days after the opposition won a presidential runoff.

Intel, the world’s largest computer-chip maker, is cutting 1,500 out of 2,500 jobs in the country as part of an effort to consolidate some operations in Asia, spokesman Chuck Mulloy said yesterday. Hours later, BofA said it would be exiting operations in Costa Rica, Guadalajara, Mexico and Taguig, Philippines, without saying how many jobs would be lost. Costa Rica’s foreign investment agency said the BofA move would result in 1,500 layoffs.

This is horrible news for Costa Rica, of course, but it is also terrible for the rest of the Central America. Each country is trying to attract high quality, better paying jobs, and the fact that Costa Rica can't maintain 3,000 Intel and Bank of America jobs should make them rethink what potential they have to attract such jobs.

Instead, they'll just have to settle for deal such as Fruit of the Loom shifting its clothing operations to Honduras.

Costa Ricans look to turn the page after a rough few years

Getty Images

Luis Guillermo Solis of the Citizen Action Party walked away with a victory in yesterday's presidential runoff in Costa Rica. In what has been a rather strange campaign season, Solis picked up 78 percent of the vote, finishing well ahead of his rival Johnny Araya. While not as high a percentage as usual, 57 percent of the voters turned out yesterday. However, Solis did capture the highest absolute number of votes for a single candidate in Costa Rica's history (just like El Salvador's Salvador Sanchez Ceren).

Now it is on to governing with little money and little congressional support.

A published author well versed in international relations and global trade, Solis ran on a promise to fight Costa Rica's stubborn poverty rate and to stamp out corruption, an issue that has dogged incumbent President Laura Chinchilla's administration and which struck a chord with voters.

"It's been four years of daily suffering," said Mercedes Castillo, a 66-year-old housewife and mother-of-three, after voting for Solis at a high school in the capital, San Jose. "There's just too much corruption."

... 

He faces an uphill battle in a National Assembly where his party will have only 13 of 57 seats, although analysts tout his ability to reach across the aisle thanks to his ties to the PLN.

He must also square rising government debt with a campaign promise not to raise taxes for two years, despite pledges to boost spending on education.

"He's going to have a government without money, a fiscal deficit of 6 percent, and lots of social spending commitments," said Jose Carlos Chinchilla, a political analyst and a director at the University of Costa Rica.

Solis has also said he hopes to attract new businesses to Costa Rica's booming free-trade zones, which have enticed the likes of Hewlett-Packard Co.

Congrats and good luck president-elect.

Ticos will head to the polls once again today, or will they?

Luis Solis' first place finish in the first round of Costa Rica's February presidential vote surprised many, including myself. However, what was actually more surprising was what happened in the days and weeks following the vote. The Citizen Action Party and Solis' support increased to the point where he doubled, perhaps tripled, his second round opponent's support. His opponent, Johnny Araya of the incumbent party, subsequently dropped out of the race.

However, Costa Rican electoral law requires that Araya's name remains on the ballot but he's been done campaigning for a month. His party's still been out there but the only real question has been how much Solis going to win by and how many people are going to turn out in a one-way race.

In a sentiment I've read before, Javier Cordoba writes

Luis Solis' main challenger in Sunday's presidential election is voter abstention.

The center-leftist's only flesh-and-blood rival in the runoff dropped out of the race last month, leaving Solis one remaining challenge: getting enough Costa Ricans to the polls to give him a respectable vote total.

That's where it gets tricky. Costa Rica has compulsory voting where citizens are required to vote. However, compulsory voting isn't enforced. Therefore, there's some question as to how many people are going to turn out today and whether the results are going to give Solis some type of mandate. He's going to have minority support in the congress so he is going to have to rely to a certain extent on the public support to advance his preferred legislation.

It can't hurt but I'm just not entirely convinced that a surprisingly high turnout and/or a three- or even four-to-one margin of victory is going to make a difference.

You can read more in Something is wrong in the region’s “exceptional” democracy.

Business Implications of El Salvador and Costa Rica Votes

I spoke with Mark Keller last month about the potential political (and business) implications of the Costa Rican and Salvadoran elections. Some of my thoughts appear in this Latin Business Chronicle article entitled Business Implications of El Salvador and Costa Rica Votes

“The new administration should be somewhere between moderate left and radical left,” says Uccelli of JP Morgan. Current president Mauricio Funes, widely considered more moderate than the party’s old guard, focused on social investment, including providing meals in schools and aid to women which have proven popular.

Sánchez Cerén has promised to keep these programs, and may try to expand them, says Uccelli. He has also promised to create jobs, foment small business, and employ a “mano inteligente” approach to crime, favoring strengthening the police over the military in combating transnational drug crime. University of Scranton Professor Mike Allison, who spoke with LBC in February, also says the FMLN would be more sensitive to environmental concerns and opposed to opening mining in the country, a fact which could have economic implications for the country which has suffered sluggish economic growth in recent years.

I'm pretty sure that most would agree that there is not going to be a serious activation of the mining sector in the country under Sanchez Ceren and the FMLN. As I also said to Mark, the FMLN will probably be more concerned with the environmental implication of a variety of economic development strategies, not just in regards to mining.

The second Millennium Corporation Compact negotiated between the US and Salvadoran authorities calls for large investments in the coastal and maritime areas of the country in order to promote tourism and the agro-export industry. However, given the environmental vulnerability of those regions, many Salvadorans are against much of the planned development. It's not clear how committed Mauricio Funes was to striking the right balance between environmental and investor concerns, but I am pretty sure that Sanchez Ceren will be.

That might have implications for what happens to the second ~$300 million compact and is something to keep in mind.

Something is wrong in the region’s “exceptional” democracy

Arenal 2001

I'd like to welcome back Christine Wade of Washington College for a guest post on the significance of Costa Rica's recent elections. 

A myriad of articles about the recent the Costa Rican elections have proclaimed the country’s “turn to the left.” Perhaps some do this because it is simply too convenient to whip up an article or op-ed about leftist victories in El Salvador and Costa Rica. Or perhaps some are still trapped in the Cold War. But these headlines miss the more salient point of Costa Rica’s elections - Costa Ricans are fed up. And they’re fed up with the status quo.

Given the historically low approval ratings for President Chinchilla, it should be of little surprise that the PLN’s Johnny Araya has struggled in polls in recent months. But the general political malaise amongst Costa Ricans is much bigger than this election cycle.

In writing the most recent edition of our book, Understanding Central America, my co-authors and I report on the significant changes in participation and attitudes among Costa Ricans in recent years. Between the early 1990s and 2010, voter turnout in presidential elections declined 23%. Turnout in the February 2014 turnout was about 68%, meaning nearly one-third of voters simply stayed home. Declining political participation isn’t just limited to voting. Costa Ricans are also reporting lower levels of participation in political party activities and communal activism than in the recent past. In 2012, Costa Ricans were the least active in civil society in the region. Between 2008 and 2012, there was a 16-point decline in system support among Costa Ricans. They also demonstrated a significant increase in what we refer to as “triple dissatisfaction” (low commitment to democracy combined with below midpoint economic performance evaluations and institutional support), which rose from 2% in 2004 to 15% in 2012. Something is wrong in the region’s “exceptional” democracy- and the evidence suggests that it’s systemic, not ideological.

Costa Rica does have some serious issues that drive part of this dissatisfaction, but it’s a mistake to explain this away as shifting ideological preferences. The February 2 vote produced a surprise first-round victory for the PAC’s Luis Guillermo Solís, but I read this as a message about the level of overall dissatisfaction with the country’s “politics as usual” as opposed to shifting support for progressives. In a recent post-mortem on the elections sponsored by the Inter-American Dialogue, Kevin Casas-Zamora pointed out that the left-right vote split is about the same as in the CAFTA referendum. (He also highlighted the need for serious institutional reform, but more on that later.)

It’s time to move beyond the left-right discourse that all too frequently characterizes the analysis of Central American politics if we are to better understand the political dynamics of a region in flux. As the case of Costa Rica demonstrates (and this is true for El Salvador as well), such superficial explanations obscure more than they enlighten.

The sixth edition of Understanding Central America by John Booth, Christine Wade and Tom Walker will be available later this year.

Nuestro nombre es Costa Rica

Let's just say that Costa Rican youth are fed up with the PLN/PUSC two-party system. Libre and the Anti-Corruption Party seem to have broken Honduras's two-party system. GANA and Unidad continue to make waves in El Salvador's ARENA/FMLN two-party system.

Is Costa Rica's Frente Amplio the solution to the stale PLN/PUSC divide?

Shake-up in Costa Rican presidential campaign

According to Zach Dyer writing for Reuters, Rodolfo Hernandez of the center-right Social Christian Unity Party (PUSC) is leaving the race to be the next president of Costa Rica. He made the unexpected announcement on Thursday.

Hernandez blamed "backstabbing" by his own party and alleged that some dissatisfied PUSC members passed information to the centrist PLN's candidate, Johnny Araya. The PLN has held power since 2006.

Here's more from Zach this time with the Tico Times

The former-PUSC candidate said he never imaged that he would face so much “intrigue, envy, egoism, betrayal and disloyalty.”

“This is not the democracy I dreamed of, this is not the party I always defended. This is not what I wanted for Costa Rica,” Hernández wrote in his jeremiad.

Not much to say except those seem like weak excuses to back out of a presidential race. On the other hand, it just reinforces my impression that Costa Rican democracy has severely weakened over the last decade. It is still one of the shining stars in Central and South America with a very good quality of life, but it seems to have been heading in the wrong direction for some time now.

The ruling National Liberation Party's (PLN) and its candidate, Johnny Araya, are now in an even better position to hold on to the presidency. It looks like the PUSC has two weeks to name a replacement candidate for February 2nd's elections.

Update: Hernandez jumped back into the race Saturday afternoon, twenty-four hours after quitting it. Not quite the story of Brazil's Jânio Quadros but we'll have to see what happens.

Imagine a country where private sector campaign donations were prohibited

Imagine a country where private sector campaign donations were prohibited...

In Costa Rica, unlike in other political systems, the private sector is not allowed to provide campaign contributions. The democratically elected legislative representatives and the Executive Branch set the amount of GDP that will be used for campaign finance as well as for the administration of the elections. Monetary contributions by the private sector are not allowed in Costa Rica, although a legislative proposal to allow such donations was introduced by the ruling National Liberation political party (Spanish initials: PLN).

Recent surveys among voters in Costa Rica indicate that the citizenry is not ready to accept the concept of political campaign contributions being made by the private sector. The voters feel that such a system would bring a tinge of unfairness to some of the leftist political parties that are usually not very friendly to the private sector. They also feel that political donations by the private sector may also invite corruption in the electoral system.

In the coming elections to succeed President Laura Chinchilla, Costa Rica will spend $50 million dollars in election costs and campaign finance. Several new political parties will participate, and voter turnout is expected to improve. Although voting in Costa Rica is made compulsory by law, there is no enforcement thereof and no penalties for those who abstain. Voter turnout in Costa Rica used to be among the highest in the Americas, but it has sharply declined in the wake of two high-profile cases of corruption involving two former presidents who actually received prison sentences.

Campaign season in Costa Rica begins on Wednesday with elections scheduled for February 2, 2014.Clear your calendars. El Salvador's presidential elections are scheduled for February 2 as well.