Costa Rica’s Continued Fall from Grace
• Costa Rica is no "Switzerland of Latin America," but merely one more banana republic.
• The recently-initiated investigation of current Costa Rican president Abel Pacheco is the latest in a string of
presidential corruption scandals in the country.
• Three former presidents have also been implicated in fraudulent transactions, causing ignominious resignations from
the leadership positions from important bodies like the Organization of American States (OAS) and the World Economic
Forum.
• The overseas' interests behind the corrupt dealings include government agencies and private corporations in Taiwan,
France and Finland.
• The recent investigations have severely damaged Costa Rica’s reputation as a bastion of democracy and public
rectitude.
• In order to salvage the nation’s ravaged international image, the current investigations must be carried out in a
scrupulously professional manner and any responsibility for dishonest transactions must be determined.
On June 1, Costa Rican President Abel Pacheco agreed to a parliamentary inquiry into the funding of his 2002
presidential campaign, his travel records and his business contacts. Now the fourth president in a row to be implicated
in a string of government corruption scandals, Pacheco hitherto has been a strong advocate for the official
investigation of dishonest practices by state officials, calling corruption “a cancer” that was eating away at the
Central American country. Pacheco’s predecessors, former Presidents Rafael Ángel Calderón, José Maria Figueres and
Miguel Ángel Rodríguez have all been accused of corruption and the abuse of their offices and are currently facing
investigation by Costa Rican authorities. Calderón and Rodríguez are under house arrest after serving short prison
sentences, while Figueres remains in Switzerland, issuing letters to the Costa Rican government insisting on his
innocence and claiming that his political enemies are behind the charges against him.
Past Presidents
Calderón (president from 1990-1994) is charged with receiving nearly $500,000 from a Finnish government loan to Costa
Rica intended for the purchase of medical supplies. Figueres (1994-1998) allegedly confessed to receiving about $900,000
in various commissions from Alcatel, the French cellular telephone company, during his presidency. Finally, Rodríguez
(1998-2002) is under investigation for allegedly demanding approximately $1.2 million of a $2 million commission that
Alcatel paid to the former president’s close associate, Jose Lobo in exchange for helping to finalize a deal between the
corporation and the state-run Telecommunications and Power Institute. Last October, the growing revelations of his being
implicated in mushrooming scandals forced Rodríguez to step down from his post as Organization of American States (OAS)
secretary general, which he had just assumed, and Figueres to give up his position as the head of the World Economic
Forum. These withdrawals under the worst of circumstances should serve to remind the outside world that it has been a
long time since Costa Rica has deserved to be called the "Switzerland of Latin America;" rather its broad-band
corruption and steamy politics far more accurately should see it as merely one more smarmy Central American banana
republic, as the recent CAFTA debates once again affirmed. In those debates, all of the Central American presidents
covered up the fact that the regional free trade area produced much more of a "win" for the U.S. than it did for their
countries.
Not Over Yet
The current president, Pacheco, is accused of a string of indiscretions, including irregularities in his 2002 campaign
financing. According to Costa Rican law, donations to political campaigns cannot exceed $28,000, and there can be no
foreign donations. Pacheco’s campaign received and acknowledged contributions of $100,000 from Alcatel and $500,000 from
various Taiwanese businessmen. In addition, the Costa Rican government partially paid for two trips Pacheco took to
Seville last year, where he met with Spanish businessman Bernardo Martin Moreno. Moreno, who arranged to publish a book
by Pacheco, later just happened to win the state-controlled right to develop the Papagayo area of Costa Rica as a
tourism destination. Pacheco also appointed Moreno the honorary consul for Costa Rica. In another twist, former chief
protocol officer Jorge Arce, who accompanied Pacheco to Spain, resigned on May 30 after it was revealed that he had
previously worked for Moreno. The legislative investigation of Pacheco’s activities is ongoing, even though the
president himself continues to maintain his innocence.
International Actors
Characteristically, Costa Rica’s corrupters are foreign governments or overseas corporations. For example, there is a
longstanding relationship between Taiwan and Costa Rica, the latter being one of a dwindling number of countries that
still recognizes Taiwan’s independence from China. There is little question that such diplomatic recognition is the
motive behind the Costa Rican government’s skewed dealings with the Asian nation, though in a statement to the Taiwanese
press last October, a spokesperson for Taiwan’s Ministry of Foreign Affairs insisted that any government money given to
Costa Rica is intended to foster the Central American country’s “national development,” not to buy diplomatic support
for Taipei.
In addition, in 2001, Finland loaned the Costa Rican social security system $39.5 million with which to purchase
advanced medical technology on the condition that San José purchase at least half the equipment it needed in this sector
from Finnish corporations. The president of Costa Rica at the time, Rafael Calderón, allegedly received a kickback from
the Finnish director of the state-sponsored program. Last April, the Finnish ambassador to Central America pledged to
reform the nation’s foreign aid format, acknowledging that the terms of the 2001 loan invited corrupt transactions.
Outside Reactions
The international response to these scandals has been surprise, consternation and perhaps even some pleasure due to
Costa Rica’s somewhat ill-deserved reputation of being the “Switzerland of Latin America.” But the myth goes on, as was
seen last year when the Latin American Caribbean and Central America Report described corruption in the country as
“minimal.” Since the corruption scandals broke last October, however, several international organizations have
criticized Costa Rica’s lack of transparency. According to an article in the San José daily La Nación, a March report
co-sponsored by the OAS and the Swedish-based International Institute for Democracy and Electoral Assistance found Costa
Rica’s system of contributions to political campaigns as "linked to practices that go against public interest."
According to the report, individuals and corporations are known to have bribed legislative and executive officials to
"'ease' appointments, bids, loans, bills, decrees and regulations for the benefit of the donors."
Declining National Morale
All of these scandals have had a debilitating impact on Costa Rican public opinion. According to international watchdog
organization Transparency International, Costa Rica is the second most pessimistic country when it comes to corruption;
in December 2004, 61 percent of Costa Ricans expected government corruption to get worse within three years, which is a
dramatic increase from 32 percent in 2003.
The Costa Rican daily La Nación conducted a survey of the country’s registered voters in May, finding that 32 percent
would abstain from voting in national elections if they were held at that time. Also, the survey found that 12 percent
of Costa Ricans are unsure of whether to vote in the upcoming November 2006 elections. The newspaper blames this
alarmingly high percentage on “a weakening of democracy, particularly because of misuse of powers and the inefficiency
of politicians.”
Grave Implications
Costa Rica’s fall from grace has significantly affected the country’s international image. Long a “model of Latin
American stability and prosperity,” according to Mark Kaufman in the Washington Post, Costa Rica has been best known for
its high literacy rate and democratic strengths as well as its low level of violence and domestic discord. But the
seemingly endless corruption scandals plaguing the nation have gone a long way to disable the very spirit of democracy
thought to be entrenched in the Costa Rican mentality. The country’s fate and bona fides now rest on the government’s
investigative machinery; judicial probes being carried out must be honest and exacting in order to save the
once-respected nation from the complete destruction of its already fast-fading reputation.
This analysis was prepared by COHA Research Associate Sara Evans.