Caribbean & Central America - December 2014 (ISSN 1741-4458)

With the constitutionally determined deadline of 30 November looming, Costa Rica’s lawmakers were obliged to participate in a rare, Saturday session of the 57-member unicameral legislature to vote on the government’s budget. It passed, with 27 votes in favour and 22 against, much to the relief of the leftist Partido Acción Ciudadana (PAC) administration of President Luis Guillermo Solís. However, a ruling is still pending on the constitutionality of the budget’s passage following a complaint by an opposition legislator.

The final text set out a budget of C$7.9tr (US$14.5bn), with just over half (C$4.2tr) financed by government revenues and C$3.7tr requiring financing. The budget is almost 20% higher than the spending plan approved last year, in the final budget of the Partido Liberación Nacional (PLN) administration of President Laura Chinchilla. The deal was passed thanks to the votes of the PAC, the left-wing Frente Amplio, the Partido Renovación, the Partido Accesibildad sin Exclusión and, crucially, four votes from the Partido Unidad Social Cristiana (PUSC).

Solís won over those four votes after promising to adhere to a series of rules set out by PUSC legislators to ensure fiscal responsibility and spending efficiency. It has taken over three months to negotiate the budget and it is possible that there may be further wrangling down the road. On 26 November, 14 legislators, led by Otto Guevara, from the libertarian Movimento Liberal party, filed a complaint questioning the approval of the draft budget bill in a first round vote on 25 November.

After lawmakers voted down all three budget proposals, the assembly president, Henry Mora, from the PAC, passed the government’s original proposal. Citing Article 178 of Costa Rica’s Constitution, he argued that given the rejection of all of the spending plans, only the government’s proposal had validity. The constitutional court now has a month to decide whether Mora’s actions were justified.

Gloom descends

Shortly before the budget’s approval, a survey conducted by the private sector umbrella group, Unión de Costarricense de Cámaras y Asociaciones del Sector Empresarial Privado (UCCAEP), found Costa Rican businesses were gloomy about their prospects for next year. Increases in the costs of production and the apparent lack of a clear strategy from the government to improve the business environment in the country were cited as the principle reasons for a loss of confidence in the private sector.

Published on 26 November, the survey found that six out of ten companies reported significant increases in production costs over the past year, mainly due to rises in the cost of electricity and fuel. Over 60% of those surveyed ruled out taking on new staff or increasing investment in the short-term. “The loss of confidence in the sector is worrying,” Ronald Jimenez, the president of UCCAEP, said. “Without confidence there is no investment, without investment it is impossible to create the jobs that the country needs.”

The “Business Pulse” survey interviewed 460 directors of small, medium and large companies between the middle of October and the middle of November. It found that 28% had been obliged to lay off staff during the course of 2014; 61% ruled out new hires in 2015. The survey showed a 5% fall in confidence from the same period of last year.

National Development Plan

Tackling social inequality was one of the president’s campaign promises. On 17 November Planning Minister Olga Marta Sánchez unveiled a national development plan (PND) to reduce poverty and tackle Costa Rica’s rising levels of inequality. Health, education and infrastructure projects form the backbone of the 164 programmes Sánchez announced. The government has also promised to prioritise domestic food security over cultivating crops for export as a way of reducing the number of households in extreme poverty.

Drug trafficking making in-roads into Costa Rica

At the end of November, Costa Rica’s judiciary created a new court system designed to tackle drug trafficking in the country. The move is arguably the most glaring admission that over recent years, drug trafficking has become a serious issue in the Central American country. In May this year a judge in the Caribbean port city of Limón, Rosa Elena Gamboa, was accused of charging C$20m (US$40,000) to free a drug trafficker.

According to Carlos Chinchilla, a supreme justice court (CSJ) magistrate, the thinking behind the new system is to concentrate all investigations, search warrants and wiretaps in a specialized part of the judiciary in order to prevent leaks. “[Currently] Much of the information is leaking and investigations are ruined. Today, judges are vulnerable in the communities in which they live. The idea now is to have determined judges, who want to do their job properly and without fear of losing their lives,” he said.

On 13 November Costa Rica’s attorney general, Jorge Chavarria, said that Mexican drug cartels are supplying the country’s criminal groups with machine guns and grenades. A week earlier, the public security minister, Celso Gamboa, said that police had seized nearly 23 tonnes of cocaine in 2014, more than any other country in Central America.

Guatemala, El Salvador and Honduras have long been the preferred transit countries for Mexican traffickers but as some governments have cracked down on the problem with hardline security policies, Costa Rica, which has no standing army, has become an increasingly attractive stopover.

On 25 November, new data released by the Office of Judicial Investigations showed San José remained the most violent part of the country, with 58 reported homicides so far this year. In second place, Limón had been overtaken by Desamparados, a suburb of the capital. So far this year 38 murders have been recorded in the area, the vast majority of which appear to have links to drug trafficking.

• San Juan River tensions

On 18 November Costa Rica’s foreign minister, Manuel González, and Public Security Minister Celso Gamboa presented video and photo footage supporting claims that Nicaraguans have been removing trees and widening the bank on the Costa Rican side of the San Juan River that divides the two countries. Earlier, Nicaragua had denied the charge, arguing any activity in the area was part of essential maintenance of the area. The area is the subject of a dispute brought by Costa Rica before the International Court of Justice (ICJ) in 2010.