COSTA RICA: REGIONAL AND DOMESTIC THREATS TO DEMOCRACY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP03T02547R000100190001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 20, 2016
• Document Release Date: April 30, 2007
• Sequence Number: 1
• Publication Date: February 1, 1981
• Content Type: REPORT

Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
National
Foreign
Assessment
Center
Secret
Costa Rica: Regional and
Domestic Threats to Democracy
Secret
PA 81-lOOS4
February /98/
~~?y 13 3
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
Approved Far Release 2007104!30:CIA-RDP03T02547R000100190001-1
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
National
Foreign
Assessment
Center
Costa Rica: Regional and
Domestic Threats to Democracy
Research.lor this report was completed
on 2 February 1981.
The author of this assessment isOLatin
America Division, Office of Political Analysis. It was
coordinated with the Office of Economic Research,
the Office of Geographic and Societal Research, the
Office of Central Reference, the Directorate of
Operations, and the National Intelligence Officer for
Latin America. Comments and questions are wel-
comeand should be directed to the Chief, Latin
America Division, OPA
Secret
PA 8/-!0054
Fehruan 1981
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
Central America
Cplo bla
Kil?nqurs I I
~ec~~e~` ii
-rEcuador
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
Costa Rica: Regional and
Domestic Threats to Democrac 25X1
Key Judgments Costa Rica's democratic system of government is facing its most serious
foreign and domestic strains since the late 1940s.
External factors that are unsettling to Costa Ricans and undermining
confidence in their own leadership include the Nicaraguan threat, arms
trafficking and other illicit support for Salvadoran guerrillas, the danger
that regional warfare will spill over into Costa Rica, and the growing
uncertainty in relations with Cuba.
On the domestic scene, the country will experience its worst economic crisis
in decades as a result of rising costs of oil imports, depressed prices for coffee
exports, and habitual government overspending and mismanagement. The
Carazo administration belatedly has introduced austerity measures and
sought renewal of assistance from the International Monetary Fund (IMF).
President Carazo is widely blamed for almost all of these problems, so much
so that even with one and a half years remaining on his term, his public
image is probably irretrievable. His likely successor, Luis Alberto Monge,
has apparent shortcomings that may diminish his ability to restore public
confidence.
Despite these problems, Costa Rica's constitutional process stands a good
chance of surviving the difficult two or three years ahead. Political stability
over this period is more a question of confidence in the political leadership
than one of institutional vitality. Potentially serious socioeconomic trends
are likely to have an impact only over the longer term.
The problems facing Costa Rica will make it increasingly unlikely that it
will actively collaborate with the United States on new initiatives in Central
America. Carazo will remain reluctant to challenge Cuba, Nicaragua, and
other supporters of regional guerrilla groups; meanwhile, domestic economic
and political problems will divert attention and preempt resources from
regional policies. Costa Rica will prefer to retain its traditional role of a
passive, democratic showcase for Central America, hoping that US assist-
anceand influence in international financial circles will help pave the way to
economic recovery.
 Approved For Release 2007/04130 :CIA-RDPO3TO2547ROOO1OO19OOO1-1
4ecret
Costa Rica: Regional and
Domestic Threats to Democracy
Costa Rica's stable, democratic political system has
long been unique in a region characterized by authori-
tarian military governments. This system is facing the
most serious external threats of this century and the
greatest domestic economic and political challenges
since the late 1940s. The internal issues, though dif-
ficult to separate from outside concerns, represent the
greater danger over the next two to three years. The
established strength of national democratic traditions
and institutions remains the best hope for weathering
this critical period-notwithstanding popular dis-
satisfaction with the way those institutions are now
functioning.
External Factors
Nicaragua. Turmoil in Central America has contrib-
uted to strains in Costa Rica in various interrelated
ways. The most serious threats stem from Nicaragua's
steady shift toward authoritarian Marxist rule, and
from arms trafficking and other illicit activity in Costa
Rica on behalf of guerrillas throughout the region.
It was not immediately clear in 1979 that most Costa
Ricans would in time come to view the Nicaraguan
revolution negatively. Although basically conservative
and anti-Communist, the majority bitterly opposed
Somoza and supported in principle the Sandinista ef-
fort to overthrow him. Thus, even participation by
Costa Rican officials in arms shipments to the
Sandinistas and government acquiescence in
Sandinista use of Costa Rican territory for training
and as sanctuary were publicly acceptable.
Costa Rica's sense of intimidation and vulnerability.'
Border shooting incidents last year and occasional
Sandinista activity inside Costa Rican territory have
heightened tensions and revived concerns about pos-
sible Nicaraguan Irredentist claims against Costa
Rica's northwestern Guanacaste Province. A steady
decline in bilateral relations hit bottom last fall when
Nicaragua aided the successful Cuban effort to block
Cost Rica's election to a seat on the UN Security
Council.
Costa Rican nervousness is reflected in public opinion
polls, which showed last year that a growing majority
of Costa Ricans believe that:
? Communists will gain complete control of the gov-
ernments of Nicaragua and El Salvador.
In the year and a half since Somoza's defeat, however,
Nicaragua's increasingly authoritarian and Marxist
tendencies, its growing ties to Cuba, and its assistance
to revolutionaries elsewhere in the region have stirred
Costa Rican fears of potential Nicaraguan aggression
and revolutionary spillover. Lack of military forces to
patrol the long border with Nicaragua compounds
' Costa Rica's constitution prohibits a standing army. National
Security functions are performed by the Civil Guard (about 4,000
men), the Rural Guard (about 4,000 men), and other smaller
constabulary forces. Because of inadequate training, Favor equip-
ment, and frequent turnover among officers as the reins of govern-
ment change hands, none of these forces are capable of effective
military action in the field. Consequently, Costa Rica relics on
members of the Organization of American States, collectively or
25
25
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
Panamanian-registered plane
carrying arms from Costa Rica,
Junel980
? Cuba has an important hand in this process and in
similar ones throughout Central America.
? Costa Rica will be substantially affected.
Many Costa Ricans now place the blame for their
precarious position on the Carazo administration's ear-
lier support for the Sandinista insurgency. Revelations
that the Costa Rican-abetted arms trafficking net-
work set up for the Sandinistas continues to operate in
support of other guerrillas in the region have fueled
ublic animosity toward the Carazo government.
The political pressure on President Carazo to deal
firmly with Nicaragua, therefore, is considerable, but
his options are extremely limited. He has ordered an
expansion and upgrading of the National Reserve, but
even a major effort on this score will not significantly
improve Costa Rica's weak security position. Carazo
has considered tightening border controls, delaying
Costa Rican-supported technical projects in Nica-
ragua, and taking other administrative steps to show
Managua his displeasure. Carazo recognizes, however,
that any provocative action risks retaliation from the
Sandinistas that Costa Rica could not withstand
Costa Rica needs good relations with Nicaragua not
only to ensure its political security but also for eco-
nomic reasons. The reconstruction effort in Nicaragua
over the past two years has been a boon to Costa Rica's
exports, more than offsetting its trade deficits with
other countries in Central America. Cross-border
commercial ties also are extensive. Nicaragua needs
Costa Rica's trade and aid as well as a secure southern
border, but Carazo clearly cannot depend on these to
constrain the sometimes paranoid Sandinista leader-
ship.
Support for Revolutionaries. Costa Rica's continuing
major role in unofficial activities that support Central
American insurgency places strains on the political
structure similar to those posed by the volatile relation-
ship with Nicaragua. These strains are manifested in
declining public respect for the national administration
and potentially for the political system as well, in a
tarnished international reputation, and in a greater
risk that Central American extremists of both left and
right will expand their conflict into Costa Rica.
Most of the support activities involve arms trafficking
to Salvadoran guerrillas. Costa Rica not only remains
a transit point for arms from Cuba and other suppliers,
but also has its own large black market for weapons.
25
25
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
The June 1980 crash in El Salvador of a Panama-
registered light plane bearing arms from Costa Rica-
and similar incidents h and
January-confirmed
arms
_
trafficking is continuing
Despite half-hearted interdiction efforts by the Carazo
government, this kind of activity will be drawn to
Costa Rica so long as revolutionary turmoil endures
anywhere in the region. The tolerant political at-
mosphere attracts exiles and extremists of all stripes
from throughout Latin America. Costa Rican security
forces are small, ineffective, open to corruption, and
divided among several ministries. The borders are long
and porous, and many areas such as Guanacaste Prov-
ince are sparsely populated. Costa Rica has hundreds
of small, remote airstrips and heavy private air traffic
that cannot be monitored. Only if the government of
Nicaragua decided no longer to try to conceal its
support of Central American revolutionaries might the
level of activity in Costa Rica significantly decline.
Perhaps the most important factor contributing to the
continuation of arms trafficking is the extensive in-
volvement of many Costa Rican officials and private
citizens. Former Minister of Public Security Juan Jose
"Johnny" Echeverria was and probably remains a
central figure. He has admitted publicly to congres-
sional investigators that he facilitated transportation of
arms from Panama and Venezuela to the Sandinistas
during the Nicaraguan revolution. It is also clear that
Echeverria, despite his denials:
? Permitted arms to arrive in Costa Rica directly from
Cuba.
? Siphoned off some of the materiel intended for
Sandinistas for sale later to various guerrilla groups.
Echeverria's motive is primarily profit, but regional
leftists and Cubans also have had some success in
cultivating him ideologically. Private citizens and
other high-ranking officials, such as the deputy direc-
tor of the Office of National Security and officers of
the Civil Guard, have been involved as well resum-
ably also for personal gain.
The Legislative Assembly's investigation of arms traf-
ficking during the Nicaraguan revolution probably has
run its course, and the scandal might ordinarily have
blown over. But new revelations about activities dur-
ing that period, as well as the continuing trafficking to
Salvadoran guerrillas, have kept the issue alive and
have continued to undermine public confidence in the
national leadership
Spillover of Violence. In addition to its effects on
public confidence in the government, regional warfare
can pose a direct threat by spilling over into Costa
Rica. Recent incidents have alarmed Costa Ricans
about this possibility.
' Scandals in Costa Rica usually are short lived. Polls indicate, for
example, that former President Oduber, who left office three years
ago under a cloud of corru Lion char es is now the most popular
politician in Costa Rica.
Secret 4
25X1
25X1
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
Secret
A notorious Costa Rican radio station that supports
leftist revolutionary movements throughout Latin
America was attacked by a light plane in November
1980 and again by right-wing terrorists in December.
In the latter incident the attackers were driven off
and later were captured.
Although the right-wing squad may have included
Guatemalans, a Costa Rican, and a Salvadoran, most
were Nicaraguans.)
This incident compounds public fears that the activ-
ities of former Nicaraguan National Guardsmen in
Costa Rica may provoke Sandinista reprisals. Al-
though the Guardsmen appear to be few in number and
disorganized, the appearance in San Jose recently of
handbills from the Movement for the Liberation of
Nicaragua could persuade Costa Ricans-and the
Sandinistas as well-that the Guardsmen are or-
ganized and potent
In the same vein, many persons associated with the
Salvadoran left are active in Costa Rica. As the strug-
gle in EI Savador escalates and foreign involvement
increases, the chances that Salvadoran or other re-
gional rightists will target their opponents in Costa
Rica will rise as well. This would aggravate friction
among various other exile groups, resident foreigners,
and transient extremists. It would also complicate
Carazo's efforts to back the Salvadoran Government;
these efforts are already constrained by his fear of
antagonizing the Nicaraguans.
Cuba. Regional headaches have been doubly galling
for Carazo, because he had anticipated that foreign
policy achievements would compensate for economic
and political setbacks at home last year. In particular,
he had counted on Costa Rica winning a seat last fall
on the UN Security Council. Cuba blocked that effort,
however, after its own candidacy became untenable.
Carazo's domestic standing suffered even more, as
some sectors of the Costa Rican media called the affair
the "tragic result for our democracy of a stupid inter-
national adventure" and opined that "such a post is not
worth all this humiliation." Although at times Costa
Rica has been very active internationally, this experi-
ence could rekindle the national withdrawal, aloofness,
the Security Council was motivated in part by Ha-
vana's conviction that San Jose was "Washington's
candidate." Carazo also had angered Castro by help-
ing the United States during the Cuban refugee af-
fair-Costa Rica sponsored hemispheric conferences
25
25
on the issue and offered to evacuate 10,000 Cubans 25
who had sought asylum at Peru's Embassy in Havana.
Costa Ricans hold Cuba partly to blame for most of
their other regional problems as well because of Ha-
vana's role in stirring revolutionary fires in Central
America. Nevertheless, Carazo's behavior toward
Cuba on issues closer to home than the United Nations
and the refugee affair is puzzling. Although he is
worried about Cuban encroachment in Central Amer- 25
ica, he continues to acquiesce in Cuban activities in
Costa Rica that support foreign revolutionaries.
25
25
Several possible reasons can be posited for Carazo's
behavior, none completely satisfying and all specu-
lative at present. He certainly recognizes that Cuba
could cause him problems at home. For example, Ha-
vana might capitalize on Communist influence among
banana workers to provoke a repetition of last year's 25
violent strike, which posed a serious challenge for the
government. Such a strike could be the final straw
persuading foreign fruit companies to close down oper-
ations. On the other hand, Carazo may believe that
permitting activities in support of regional insurgents
will increase Costa Rica's value to Havana and thereby
gain for San Jose some immunity from Cuban-inspired
subversion. Finally, Carazo could conceivably be a
victim of blackmail or bribery.
Domestic Factors
Economy. Although the causes of Costa Rica's malaise
and sense of impending crisis are multiple and inter-
related, domestic factors probably are the most likely
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
to place the political structure in jeopardy. Economic
questions are preeminent, with Costa Rica facing its
worst financial crisis in several decades. Although
since 1950 the trade balance has been unfavorable and
the population has tripled, the tradition of equitable
income distribution and government efforts to diver-
sify the economy helped generate the highest per cap-
ita income and gross domestic product in the region
and facilitated construction of a relatively advanced
welfare state.)
In recent years, the country has been living well be-
yond its means, spending about 12 percent more an-
nually than it has earned and financing~the difference
by borrowing. In 1981 the oil bill will jump to around
$260 million; it was $71 million in 1975. Nonoil im-
ports have continued to grow in recent years, since
Costa Rica's industrial sector is highly dependent on
imports and the government has been unwilling to
tighten its belt. Financing these deficits pushed Costa
Rica's foreign debt to an estimated $2.2 billion by the
end of 1980, compared with $51 1 million in 1975. The
international financial community is no longer willing
to support such consumerism, particularly since Costa
Rica failed to meet IMF targets set last March. Re-
gional turmoil compounds the nervousness of inter-
national lenders
Continued deficit spending in the public sector, despite
rising oil costs and depressed coffee prices, has
stemmed partly from the government's reluctance to
risk opposition by imposing the necessary austerity-a
reluctance reinforced by political upheaval in nearby
countries. By November 1980, however, Carazo finally
had acknowledged the severity of the problem and the
necessity of an agreement with the IMF.
? Balance-of-payments problems (68 percent of es-
timated export earnings in 1981 will go for debt
service and oil imports) will require import reduc-
tions of as much as 25 percent this year.
? These import shortages will contribute to con-
traction of the economy this year, compared with the
1-percent real increase last year.
? Such contraction will increase unemployment, al-
ready around 13 percent, and raise inflation from
last year's 20 to 25 percent to at least 30 to 40
percent.
The public, the media, the political opposition, and
even many erstwhile supporters of the administration
blame Carazo for the growing crisis. He indeed paid
too little attention to the burgeoning problems for too
long-but so did his predecessors. He countenanced
government overspending and sought to maintain so-
cial programs rather than press for unpopular auster-
ity. As a result, economic difficulties have been com-
pounded and public antagonism is directed at him
ersonall
Beginning in September 1980, Carazo finally began to
promote austerity measures. To date, these have
included:
? Controls on foreign exchange and a currency float.
? Movement toward an IMF program and external
debt renegotiation/rollover.
? Elimination of certain government capital projects.
? A public sector hiring freeze.
? Increases in the price of oil products and other meas-
ures to reduce consumption.
? Reduction of government subsidies to political party
campaigns.
After a long and politically costly battle in the Legisla-
tive Assembly, Carazo agreed in November to reduce
the planned deficit in the budget by about $138 mil-
lion, or 9 percent.
A new agreement with the IMF probably is essential.
A one-year standby agreement would help, but athree-
year program would have a better chance of correcting
some of the country's fundamental economic problems.
The IMF was encouraged by Carazo's announcement
of austerity measures, but in view of Costa Rica's
earlier failure to meet the Fund's targets and continu-
ing IMF concerns over the fiscal plan and controls on
autonomous agencies, negotiations are not assured of
success.
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
Secret
Even with assistance from the IMF and the increased
commercial lending such aid would generate, declining
imports and growth rates coupled with rising inflation
and unemployment will produce political and social
pressures on a scale that Costa Rica has not experi-
enced for decades. As a result, consumers will find
even more to complain about. Organized labor,
particularly the banana workers, will challenge the
austerity program by striking. A general strike, rare in
Costa Rica, is possible. Persons seeking entry into the
tightening job market, particularly university gradu-
ates, will add to the uproar. Public sector employees-
habitually among the most effective pressure groups in
the country-will vigorously defend their interests.
Industrialists will resist import restrictions. The mid-
dleclass, which is the backbone of Costa Rica's democ-
racy, will not sacrifice its standard of living quietly
0
Politics. The political impact of these developments
depends in part on the ability of the political structure
and the people to absorb the shocks and to adjust. In
the past, Costa Ricans have taken great pride in their
democratic traditions, which set them apart from other
Central Americans. Their geographical isolation
through the 19th century supposedly nourished such
traits as self-reliance, individualism, and conservatism.
It also helped produce a uniquely homogeneous popu-
lation with little class or race antagonism, good social
mobility, and a strong middle class.
At the same time, strong patron-client traditions led
Costa Ricans to defer to their elected representatives,
but to reserve the right to speak out and to complain.
Criticism of the government became a national pas-
time, and the popularity of political leaders was often
fleeting, falling victim to corruption scandals and the
like
The collapse of confidence in President Carazo is thus
unusual only in its scope, timing, and political effects.
Carazc's image with the public and the media is prob-
ably irretrievable. His relations with the Legislative
Assembly (which in the Costa Rican system has much
more power than is customary in Latin America) are
very poor; even most of the members from his own
coalition are at odds with him. Both the opposition's
instinct to take advantage of Carazo's growing weak-
Presidential contender
Luis Alberto Monge
ness and his own antagonistic posture have made the
natural gap between the President and his political
opponents almost unbridgeable
Carazo's premature lame duck status has focused
attention much earlier than normal on the February
1982 presidential election. The leading opposition par-
ty, the Party of National Liberation (PLN), selected
Luis Alberto Monge as its candidate in April 1980.
Other parties and candidates are jockeying for position
25
25
as well, but Monge is the solid leader in opinion polls. 25X1
The PLN has the strongest party organization in the
country and is likely to win handily in 1982.
Monge is not charismatic, however, nor has his leader-
ship been tested. He lost to Carazo in the last presiden-
tial election, and his rise in popularity since then can be
almost exclusively attributed to his success in gaining
control of party machinery and to the present admin-
istration's loss of standing. His ability to restore public
confidence in the national leadership remains an open
question.
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
If the PLN does win, it will not only face the challenge
of overcoming its usual factionalism, but also of chang-
ing from a party based on the personalities of its aging
founders and the anachronistic social democratic te-
nets of its early years into one that can deal with
contemporary issues and public confidence. Unfortu-
nately, Monge is most closely associated with the par-
ty's "old guard."
Threats to Stability
Costa Ricans are concerned that their long record of
political stability and democratic rule is in jeopardy,
perhaps more from internal decay than from external
threats. Coup rumors, which are not rare in Costa Rica
despite its peaceful history, began to circulate so
widely last fall that Carazo felt obli ed publicly to
dismiss them
In November former President Jose "Pepe" Figueres
acknowledged publicly that he was promoting a plan
whereby a provisional junta composed of Carazo, the
leading 1982 presidential candidates, and former
Presidents would replace the existing government.
Figueres employed a similar pattern when he came to
power following a coup in 1948 and has recommended
it periodically as a way to reorient and reinvigorate the
country. The junta would oversee structural reform of
the governmental system and eventually would hand
over control to constitutionally elected successors. The
irrepressible Figueres has been guilty of "coup plot-
ting" several times over the years, but in this case he
may have been trying simply to awaken Costa Ricans
to the serious implications of the Carazo government's
disrepute.)
Although most political leaders agree that Carazo is
politically bankrupt, none rallied to Figueres's pro-
posal. Even Carazo's most severe critics believe that
for the good of the country and constitutional order,
the President must finish his term
The possibility of a coup against Carazo thus appears
remote, even though economic conditions this year will
worsen, labor unrest increase. and the President's un-
popularity deepen.
Similarly, domestic subversion is not likely to have a
serious effect on Costa Rican political stability over the
next two or three years. Few local militants are in-
clined toward violence at home, and their capabilities
would be very limited. Moreover, international
supporters of Central American revolutionaries would
be more likely to discourage insurgency in Costa Rica
rather than imperil their international credibilit and
risk losing this important guerrilla support base
Until 1980 Costa Rica probably had the strongest
Communist labor union in Central America; Com-
munists were also making gains in university circles.
Regional turmoil has produced a national surge of
anti-Communism, however, and the PLN under 25X1
Monge has moved toward openly challenging the Mos-
cow-line People's Vanguard Party (PVP).
The PVP recently suffered a setback at the National
University and failed in its initial effort to organize a
united workers federation. It could not attract support
from democratic unions and ran afoul of strains within
the Communist labor movement. A militant
Communist group is resisting PVP domination of
Communist labor as well as the leftist political coali-
tion. The militants also are impatient with the PVP's
relatively moderate support for Salvadoran and other
guerrillas and with its more reserved domestic posture.
Despite these strains and setbacks, the Communists
remain determined and potent. They pose a potential
danger, however, only over the longer term.
Aside from the present crisis of confidence, most of the
potential threats to Costa Rica's stability indeed are
long-range socioeconomic trends. The country will be
faced with the need to develop new energy sources,
increase exports and reduce imports, slow the growth
of the public sector, and curtail external borrowing. In
the social sphere, a recent authoritative US study
found that the increasing concentration of land owner-
shipdue to livestock expansion, mechanized agricul-
ture, and speculation is depriving peasants of their
farms, reducing work opportunities, and contributing
to the spread of rural poverty. This in turn is increasing
disaffection among the rural poor with the historically
congenial patron-client relationships, producing a vol-
atility that could threaten the system
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
Secret
Crisis of Confidence
Costa Rica often is regarded as a small, insecure
country, not usually capable of keeping its crises and
scandals in perspective. Its present straits are genuine,
but the political system stands a good chance of surviv-
ing. National institutions, particularly the presidency,
have been strained and will continue to be tested. The
Costa Rican people, however, will be tested even more.
In this sense, political stability over this period is a
matter more of public confidence than of institutional
vitality. Central issues such as the economy, arms
trafficking, and the Nicaraguan threat are at least
partly beyond Costa Rica's control and are likely to
persist. Public confidence, therefore, will continue to
be battered for some time.
During this period, political affairs will remain the
overriding feature of the Costa Rican way of life, and
the institution of the presidency will remain the chief
focal point. The office does not wield, in relative terms,
the power of other Latin American executive branches,
because of the legislature's independent authority,
elaborate checks and balances, and reasonably strict
party discipline. Nevertheless, the presidency has ma-
jor powers and carries even greater symbolic weight.
When the people in this representative democracy lose
confidence in that office, the s stem itself will be in
jeopardy
To date, the crisis of confidence in Carazo's govern-
ment seems focused more on his personal leadership
than on the institution of the presidency. The damage
is not necessarily permanent, but Carazo's successor
must reverse the trend.
Implications for US Policy in Central America
Faced with such difficulties, Costa Ricans naturally
look to the United States. In the historically close
relationship, Washington is seen as an economic and
political benefactor, a booster, a role model, and a
major actor in Central America's affairs
Costa Rica also has special status with the United
States. Its democratic political system sets a positive
example for the other regimes of Central America.
Because it is the only country in the region that main-
tains communications with every other country, it has
served effectively as a bridge and a meeting ground for
governments with various differences. This accounts
for Washington's foremost policy objective in Costa
Rica: continued US~Costa Rican cooperation in
dealing with the Central American crisis, in an effort
to increase regional political stability and preclude the
emergence of Soviet satellites in Central America.
President Carazo has been helpful in this regard. From
the days immediately preceding Somoza's defeat to the
present, he has collaborated with US efforts to mod-
erate Nicaragua's Sandinista-controlled government.
He has helped enlist Venezuela and Panama in this
effort. Parallel with Washington's policy, he has sup-
ported the beleaguered junta in EI Salvador, most
recently promoting a regional political consensus in 25
favor of a negotiated solution there. His foreign min-
ister will visit West Germany soon to argue against
support by some German organizations for the Sal-
vadoran left. Carazo also took on Castro at the United
Nations and challen ed him over the Cuban refugee
exodus.
Carazo's hopes of becoming the key regional leader
have been dispelled, however, by bad experiences in
almost every case cited above. With the region becum-
ing increasingly polarized, Costa Rica will grow ever
less effective as a bridge among countries and a voice
of moderation. As a result, active collaboration with 25
the United States on new initiatives in Central Amer-
ica and toward Cuba are increasingly unlikely. Efforts
to promote pluralism in Nicaragua having failed so far,
Costa Rica has few levers of influence left, and would
hesitate to use them in any event for fear of Sandinista
retaliation. Carazo has scant economic resources with 25
which to aid democratic forces in Nicaragua indeed,
given the trade balance, the economic leverage works
the other way
Costa Rica will be reserved in other areas as well. The
shortage of economic as well as human and technical
resources-and the fear of antagonizing Nicaragua-- 25X
preclude concrete aid [o the Salvadoran Government.
Carazo has supported the junta politically, but the
recent guerrilla offensive shook his confidence in the
wisdom of such policy. Costa Rica does not have
extensive contacts or much influence with Guatemala
or Honduras.)
 Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1
If the squabbles with Cuba and other regional prob-
lems impel Costa Ricans to turn inward once again,
US interests throughout Central America could be set
back. On the other hand, even if Costa Rica does not
withdraw from regional activity, it may be able to
contribute little more to US policy in the region than
its prestige at international and regional forums. Even
in this regard, Carazo increasingly will prefer to act in
multilateral concert to avoid excessively close identi- '
fication with US initiatives. Costa Ricans undoubtedly
recognize that they failed to win the UN seat partly
because Cuba was able to convince many nonaligned '
countries that Costa Rica was "the US candidate."
Most Costa Ricans instinctively shy away from major
involvement in regional problems. They would prefer
instead to serve as a democratic showcase for Central
America, with US assistance and influence in interna-
tional financial circles helping foster their economic
and political refurbishment. Presidential candidate
Monge argues that Washington's Central American
policy must "interest itself more in the consolidation
and effective functioning of a democracy like that of
Costa Rica than in dedicating all of its energies in the
negative, and almost alwa s frustratin ,battle against
Communism." 2
The Carazo government probably does not expect the
new administration in Washington to alter the bi-
lateral relationship much, but will carefully gauge the
consistency of US policy toward other governments in
the region as it periodically reconsiders associating
itself with US initiatives on Central America. To the
extent that Costa Rica is unsure of this policy-as it
has been occasionally in the past two years-it will be
reluctant to risk confrontations on its own. Costa Ri-
cans put considerable stock in former President Car-
ter's support for human rights and democratic prin-
ciples. Nevertheless, many believe that President 1
Reagan will be better able to strengthen Washington's
international standing, a factor of overriding impor-
tance to Costa Ricans because of the extent to which
they see their future tied to the United States. 2
 Secret
Approved For Release 2007/04130 :CIA-RDP03T02547R000100190001-1