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  Number 153 | Abril 1994
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Costa Rica

Interview with Figueres: We Want 'Costa Rican Development

"The state must guarantee equal opportunity for all in the areas of primary health, education excellence and development credits," declared Costa Rica's President-elect José María Figueres.

Seminary Team of the University of Costa Rica

The electoral triumph of National Liberation Party candidate Figueres opens new perspectives in the region. It is another setback for the neoliberal model in Central America, following that represented by the election of Carlos Roberto Reina in Honduras.

Two weeks before winning the hotly contested election, Figueres offered an extensive and interesting interview to our colleagues at Semanario Universidad, directed by Carlos Morales. Two days afterward, the new President gave the Universidad another long interview. We have selected and combined excerpts from both that contribute most to reflections in Nicaragua, where the last and most dogmatic neoliberal government in the area still holds office.

We Inherited Poverty From the Neoliberals
SU: What is your position on Social Democracy as a political and ideological force?
Figueres: The National Liberation Party has a Social Democratic orientation, but of the Costa Rican type. I make this distinction because today more than ever, given the changes and transformations we see in the world, we do not have the luxury of being dogmatic. We have to be practical and think how a small and poor country-which ours is, sad to say-can find the best combination of elements to continue a Costa Rican-style development.

We have always sought a Costa Rican path rather tan a Social Democratic or other ideological one. Ideals and principles do not change; what should very is the way they are applied and put into action. We Costa Ricans have changed, as have our needs; so the problems are now different. There can be a concrete policy in the fight against poverty, which is our main responsibility, since, in my view, it is the greatest problem that we inherited from the neoliberals.

Faithful to the principle that gave birth to Liberation, our responsibility is to search for new ways to combat that impoverishment process that hits the middle class hard, and those who have less even harder.

SU: You have made a strong accusation in calling your adversaries neoliberals. As an anti-neoliberal, what is your economic policy and your position regarding the International Monetary Fund? How do you explain that it was your party that began the structural adjustment program, and that the economists who promoted that policy during the administrations of Luis Alberto Monge and Oscar Arias are now your closest advisers?
Figueres: That is more like five questions in one. I maintain what I have stated before: our adversaries are neoliberals, and the dogmatic path that has concentrated wealth and increased poverty is not the path we want in Costa Rica. Our path is different and we have to advance along three fronts. First, a social program where the social and the economic are two sides of the same coin. Second, and industrial conversion plan than allows us to make us of the trade openings for a true world integration. And third, a state reform that is not a program of privatization or of labor mobility. This is all independent of whether the state should be larger or smaller. What is important is to make it efficient, agile and more conciliatory.

No Dogmatism

I think that, when comparing the adjustment programs proposed by National Liberation with what the current government negotiated with the international organizations, we see two profound differences. First, the country's situation is totally different. Let's remember that, when the Monge administration began the Program of Structural Adjustment I (PSA I), the country was ending the worst economic crisis that it had experienced in the second half of this century: no monetary reserves, elevated devaluations and a loss of buying power.

The program sought to stabilize the economy in order to promote growth. The Arias administration brought PASA II and sought to begin the opening-up process by promoting nontraditional exports to improve the macroeconomic balances and increase exports. That program had a high social content in that the housing program was strengthened and industrial conversion was initiated.

The situation we face today with PSA III is very different. In that earlier period we had no hard currency, while today we have almost US$900 million And since Costa Rica does not have an unlimited debt ceiling, it must be careful of its debts and how it will use the foreign currency it has.

We had managed to lower the foreign debt from $4 billion to $3 billion during the Arias administration, but with the loans signed by this government, we are almost back to $4 billion. This continue with PASA III.

The second great difference is that there were fewer imposed conditions in PSA I and II than in PSA III. Even more important, in the first two the clauses were approved before the conditions. This government did the opposite; it signed a virtual blank check. The program was approved first, then came 17 bills and other reforms that made up a long list of conditions.

National Liberation has not opposed PSA III because of dogmatism. In 1992 we offered an alternative proposal to the PSA which had a high social content, including a part for the country's productive transformation, industrial and agricultural conversion, and state reforms.

But the government decided to neither negotiate nor dialogue. It did not want to negotiate our liberationist proposals with us because of its own dogmatism. I reiterate my position that we in the National Liberation did not vote for PSA III in the form in which it was negotiated [with the IMF].

Last July, during a trip I made with Leonardo Garnier, Fernando Herrero and Fernando Naranjo to meet with the lending agencies, we told the IMF and the World Bank that we did not agree with what had been negotiated. I see no reason for that to make relationships with those organizations bitter. I hope that we will have a frank and open relationship with them, as with all the multilateral organizations, in which support will benefit Costa Rica and will have a "Costa Rican" orientation.

SU: The neoliberal tendency is a macroeconomic one being imposed throughout the world. How can your government change its path and at the same time work with that other tendency, which is integration? How can your reconcile these two positions?
Figueres: I see the neoliberal trend now going in reverse. The examples they give us of neoliberal policy successes are being uncovered as not so successful. The highly touted Chilean miracle is no such thing, when half of Chileans live in poverty and the social security and health systems have been dismantled. There is now one system for the rich, which is better, and another for the poor, where they even have to take their own sheets to the hospitals.

The other example is Mexico, which today has may problems that are not pure coincidence. We should be clear that the objective of neoliberals--to achieve economic development--has not been successful if this development is not accessible to the whole population.

Intelligent Integration

The averages are deceptive. I remember one image offered by don Pepe [Figueres, former Costa Rican President]; he said if you put a thermometer in the belly button of a man with his head in an oven heated to 350 degrees centigrade and his feet in a block of ice, you would probably find it is the average temperature for human beings. But this man is dying. That is what happens when the neoliberals talk to us of economic growth.

The neoliberals consider that prices will regulate themselves with the promotion of competition and the opening up of markets. But in small economies like ours, with imperfect markets, the oligopolies can control the market rules.

I am not in favor of a paternalistic state, which, in its day, played an important role in Costa Rican development. Today the state must be efficient and harmonize demands, because there will always be pressure groups that want a bigger piece of the pie. We have to evolve, take advantage of the trend of globalizing economies and cultures, as well as the irreversible technological and information-gathering processes. We should seek intelligent integration with the world, where Costa Rica chooses its integration strategy, but not based on low salaries, or on trade openings and devaluations. We will promote integration based on technology and efficiency and the transformation of the productive apparatus so we can export products with more value added, and thus improve the population's economic well-being.

Integration should also take up the cultural aspect, because this globalization process means that our country receives cultural trends from many other countries, many of which conflict with our characteristics and ways of being. We therefore must strengthen Costa Rican cultural values.

In our desire to compete in the world, we have forgotten about Central America in recent years. But the pendulum is now swinging back. I believe in working as brothers with the rest of the countries in the area. I've spoken with Carlos Roberto Reina from Honduras, and with political leaders in Nicaragua. I think that, with the changes in El Salvador and Panama, we could develop a regional team in the coming months. We need to strengthen trade and economic ties, taking care that they not be based on paying low salaries, because this puts us at a disadvantage. The final objective of an intelligent world integration has to be long-term sustainable development. In the past, Costa Rica was an example of social and economic development. In the future it should be another fine example of social development with sustainable economic growth, respecting natural resources--a new element we didn't take into account in the past-and Costa Rica's human beings.

To be sustainable in these two aspects, we should increase social investments in health and education, which will allow us to have an ever more educated citizenship, open to and able to make intelligent use of changes in the world in order to live better.

SU: Continuing with the neoliberal theme, could you specify what changes your government would make specifically in the area of investments and spending?
Figueres: We can't be satisfied just with good macroeconomic balances. As opposed to this neoliberal position, we should have defined micro-policies that help us advance in the area of industrial conversion, which requires a synergy of research in the universities and technology in the national productive sector. We need micro-policies that permit the modernization of the state without privatization. The institutions have to be given a development mentality. We need micro-policies offering incentives to national production and the export of our products.

Better Health and Education

We are taking office knowing the importance of small business in the political, social and economic system. We will defend these small owners at all cost. This means that the agricultural sector will be profitable again and that the small and medium producers will be able to guarantee their families the stability they deserve.

In addition, far from weakening the state through labor mobility, we conceive of it as promoting national development. We will seek state reforms that are very different from the neoliberal proposal. We have to look at each institution and each program to evaluate if their objectives are valid or not, if they have been fulfilled, and only then make any necessary changes of closing or expanding programs.

I think it's very important to strengthen social investment. We can't commit the sin of thinking that we will first develop economically and then catch up in the social or environmental area. We have to put greater emphasis on the future in the social sphere, because many are being left behind and we can't achieve our desired economic development without them.

SU: One of the IMF's prerequisites is the reduction of public spending. However, you propose a series of health and education reforms that require a personnel increase. Don't you think that this could be frustrated in the negotiation of PSA III?
Figures: Clearly every government pursues an austere fiscal policy. The household that spends more than is earned has no financial success. But under no condition can fiscal austerity be achieved at the cost of sacrificing health, because health influences the economy. Perhaps no one has quantified--or if someone has I don't have the data-what is lost to the country through accidents or disabilities due to lack of training. I am sure that it is much more than what we should invest in health.

I think that it is not an issue of more resources, but of reorienting the way they are used. Today, health posts have been closed in rural zones due to the labor mobility program. So once again we have malaria, measles and dengue. An investment of 35 million colons in vaccinations against measles, which would have prevented the epidemic, was not made. Now more than 200 million colons has had to be spent to combat it. We have two fundamental objectives in the health area: first, put the focus back on preventive health, following the saying that "It's good go get cured but it's much better not to get sick," and second, address the problem of long lines in outpatient services at the health clinics, which has to do with the system's administration. That's why we propose to vary the conception, to decentralize treatment. We propose to take it out of hospitals and clinics and put it in the communities and families. We want to divide the country into 800 small regions, from 3,000 to 5,000 people each, where a health post with one or two doctors, a nurse and administrative personnel can treat patients without them having to go to the clinic.

More must be invested in this area because there are gaps. In the 1970s, Costa Rica spent 30% on education and now it only spends 20%. Having ambitious programs to improve teaching quality requires gradual investment, because we don't have all the resources, and even if we did, we couldn’t assimilate them. Additional investments are required at the cost of other areas.

SU: The outgoing administration has given incentives to foreign investment. In your administration, under what conditions will this investment take place?
Figueres: The country needs foreign investment. We can't develop acting like an island, so we need investment, both foreign and national. Both should have the same incentives and clear rules of the game. The worst thing to do is to change the rules in mid-stream so the company doesn't know where to go.

We want to promote high-technology investment that brings productive processes and job opportunities not yet available in our country. It doesn't do much for us if foreigners come and buy up our coffee farms-we're the ones that teach the classes on coffee production. But we do need investment in productive processes that increase our knowledge and learning and open job possibilities for professionals. I believe in investment that offers good-paying jobs.

There also has to be better integration of national production to give what we produce more aggregate value. We've been producing coffee for 150 years and today we produce 2% of the world's coffee. We're efficient and offer a high-quality product. Now we should be packaging it, grinding it, putting it in small bags, as is already being done in Coocique, which brings together a group of cooperatives in Guanacaste. Than coffee gets better prices than the Central Plateau coffee.

What Kind of State Do We Want?

SU: You have spoken about the efficiency of the state and social justice. But how can this be accomplished without reducing the state, if we remember that 60 billion colons were lost through different forms of tax evasion?
Figueres: There will always be pressure groups that ask for more. That's why the state has to work hard to promote a society with equal opportunity without becoming paternalistic. Every Costa Rican has to have equal access to the minimum. This will allow economic reactivation and, with effort and work, everyone will advance as far as they can. We all have different goals in life and put different levels of effort into our work. That's why these state needs to guarantee equal opportunities for all in the areas of primary healthy, education excellence and credits for development. These three variables are the takeoff points.

Nor can the reform of the state be limited to privatization. We are not talking here only about privatizing. Some people wanted to privatize telecommunications, but this won't happed because ICE is a model institution and we should make it more efficient. They also wanted to privatize the insurance company, but no study has shown that private business would improve the quality, attention and coverage in the insurance area. Reforming the state also implies increasing state efficiency to allow even more national and foreign investment to create new jobs.

On the other hand, tax reform is the way all governments try to increase income. This administration designed a tax package and then eliminated the exonerations, which in reality was another package, disguised, since it took the exemptions away from construction materials and petroleum products.

More than a package, we need a reform that simplifies the tax structure. We have more than 100 taxes, many of which cost us more to collect than they actually bring in. It doesn't matter if there are 4 or 56 taxes, but they have to be easy to collect and control, and they have to be progressive, so we can return to the standard that whoever has more should pay more, and whoever has less should pay less. Tax evasion should be a criminal offense leading to a jail sentence, as in other countries.

SU: Your party has been one of the biggest proponents of sustainable development. Given the ecological damage caused by some large tourist projects, what are your plans to prevent environmental deterioration?
Figueres: I mentioned that the care and good use of natural resources is a new element of development education. All of us in the national productive process have the obligation to incorporate it as part of our daily life. This requires education and culture. Part of the environmental problem is found here.

In the area of tourism, we also have to find the "Costa Rican" way. Being small is a strategic advantage, because we don'ts need 15 million tourists yearly, like Spain, in order to have a positive impact on the national economy. We can have a big impact with fewer tourists. That's why we should be selective. Let's not compete with Mexico or the Caribbean for sun and sand. Rather, let's make our niche in the ecological market, which has greater value added and is more respectful of our cultural cuspoms and our way of life.

There's rom for European style investments, for small and medium family hotels with a centralized reservation network. This would offer opportunities to Costa Ricans to participate as workers and owners, and we can be stricter about all issues relating to the environment.

Time for the University

I have watched with pleasure over the last years how the state universities have left the campus and are much more interested in participating in other aspects of national life. This is constructive and should be strengthened.

Te centers of higher education should be present in all aspects of national life. Given the advances in information and technology that makes cultural patterns from other countries available to us, the universities should join together with other social sectors to rescue our culture.

We need to have an open mind to appreciate what comes from outside, but we also have to distinguish what is ours and in what aspects our culture is superior to what comes to us from outside. A society should have its own characteristics, and we are losing ours. Integration into the world should not mean the loss of our identity.

On the other hand, if we want to increase salaries of Costa Ricans, we have to be more efficient and this requires better technology. That's why research is key. In Costa Rica we spend less than 10% of what industrialized countries target for research. The bulk of the human talent that could help us in this process is concentrated in the state university research centers, but better links are needed between university research and national production.

I would say, with respect but also with concern, that some outside-financed research that takes place in the country tends more to satisfy the source of those funds than to have a direct link to our country's needs. It's necessary to design policies that allow the national productive sector and the private sector to contribute resources to correct this.

Businesses and producers should not continue thinking that university research is free. It has a cost that must be paid. We should find incentives so that the businesses will pay and should encourage the universities to seek out the business sector that will finance part of the research programs.

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