Caribbean & Central America - May 2015 (ISSN 1741-4458)

To mark President Luis Guillermo Solís’ first year in office, the University of Costa Rica (UCR) carried out a survey on his approval ratings in late April. After his first 100 days in office, the President enjoyed the approval of 68% of Costa Ricans; that figure has now fallen to 42%. Asked whether the government was well-run, only 20% responded in the affirmative while 60% of respondents thought that the economy was “bad” or “very bad”.

It may not have helped the President the fact that the survey was carried out while he was reshuffling his cabinet, in the midst of accusations of ministerial incompetence. On 16 April, Melvin Jiménez, President Solís’s chief of staff, was finally forced out following a long-running opposition campaign against him. As a Lutheran bishop, opponents had questioned whether his appointment violated the constitution’s requirement to keep Church and State separate. Interestingly, the UCR’s survey showed that the dismissal of Jiménez ranked among Solís’s best decisions. Jiménez has been replaced by Sergio Iván Alfaro, a longtime member of Solís’s centre-left Partido Acción Ciudadana (PAC).

A string of other departures preceded and followed that of Jiménez. The deputy chief of staff had resigned in January while ministers of health (María Elena López) and security (Celso Gamboa) both stepped down in February. On 10 April the science, telecommunications and technology minister, Gisela Kopper, also quit over a bungled attempt to reform Costa Rica’s media law. Wilhem von Breymann, the tourism minister, quit on 21 April, ostensibly for “personal reasons”. Local press reports were quick to point out the criticism he had received from tourism lobbies like the Costa Rican Tourism Institute and the national chamber of tourism (Canatur) which accused him of failing to act in their interests.

In the wake of these resignations, Solís opted appoint a communications’ minister, a position which he had previously thought he could do without. Mauricio Herrara Ulloa, a well-regarded commentator, academic and investigative journalist, took up the post on 21 April. At the end of the month, Solís announced the ministerial replacements.

Marcelo Jenkins, an academic from UCR and winner of the national science and technology prize in 1997, takes over at the science and technology portfolio. Mauricio Ventura Aragón, a former president of Canatur, takes over from Von Breymann, in a clear attempt to mollify the important tourism lobby. Fernando Llorca is the new health minister.

However while designed to send a message of stability to the electorate and investors, these appointments were undermined by yet another ministerial resignation on 12 May. Elizabeth Fonseca, the culture minister, was forced out over the debacle that marked Costa Rica’s annual international arts festival (FIA). According to local press reports, the ministry’s Centro de Producción Artística y Cultural (CPAC), which was charged with organising the festival blew almost the entire budget for the year, which was meant to include three arts’ festivals, on the event at the end of April/beginning of May that saw most of its attractions cancelled. Sylvie Durán Salvatierra, a new deputy minister, will also take over Fonseca’s responsibilities for the time being.

Congressional headache

While the president’s authority has been undermined this year by the string of cabinet resignations, Solís’ position in congress has also been weakened as his opponents start to organize. Already in a precarious position in the 57-member unicameral legislature, given that his party, the PAC, has just 13 seats, Solís must now contend with an alliance struck between six of the eight opposition parties to control the legislative leadership. Historic rivals, the Partido Unidad Social Cristiana (PUSC) and the Partido Liberación Nacional (PLN), with a combined total of 26 seats, have put aside their differences to this end, joining forces with a number of small parties to ensure a comfortable majority.

Rafael Ortiz, a PUSC congressman, has now been elected as the new president of the assembly and the rest of the leadership committee is made up of representatives of the other parties, leaving the PAC all but isolated. The new opposition alliance also controls the most important legislative commissions: finance and public spending, and juridical issues. This all ensures that the opposition will call the tune with the government struggling even to get its priority initiatives introduced to the legislature.

State of the union

In his state of the union address on 1 May, Solís was defiant, setting out job creation and infrastructure upgrades as his second-year goals, along with a number of more controversial measures opposed by the opposition alliance. The President wants to introduce equal rights for same-sex couples, permit in vitro fertilization and introduce new taxes to tackle Costa Rica’s fiscal deficit. But the opposition alliance is highly conservative on social issues and therefore likely to block Solís’s progressive plans. It is also demanding a reduction in public spending before any discussion of tax reforms.

One of Solís’s key campaign pledges in the run-up to the 2014 election was the promise of tax reform and a commitment to reducing the fiscal deficit. Long-term, he wants to introduce a capital gains tax; in the short-term, he wants to replace the current 13% sales tax with a value added tax (VAT) of 13% in 2016 and 15% in 2017, netting, along with other changes to income tax, an expected ₡600bn (US$1.12bn), or 2% of GDP. The fiscal deficit reached 5.7% of GDP in 2014. Solís said that servicing Costa Rica’s debt currently costs US$1.6bn a year, twice that of 10 years ago, and that unless this is addressed swiftly, it will become unsustainable.

Solís also defended his record on public spending. He boasted that he had reduced non-essential spending by ₡700bn (US$1.3bn) in the ₡8.4trn budget. He said that spending was only up by 9.3% in the budget, its slowest annual increase for six years and that he would move to revise pensions and promote bills to limit State indebtedness, while improving transparency and efficiency in the use of public funds. Noting that the country’s growth of 3.5% in 2014 was “insufficient…but satisfactory considering…the international environment,” Solís also warned that “a difficult year awaits us”.

Those difficulties will not be purely economic. The president’s failure to push forward with his plans on the fiscal deficit during the honeymoon period following his election looks like a serious mistake. Solís and the PAC, a restive party even at the best of times, look likely to have their plans stymied by an increasingly assertive opposition.

Solís in the US

In mid-May, Solís embarked on a 13-day visit to the US to promote trade and investment. Accompanied by his foreign trade minister, Alexander Mora, and Jorge Sequeira, the president of CINDE, the country’s investment promotion agency, Solís started his trip in Charlotte, North Carolina, where he signed various cooperation agreements to allow Costa Rican scientists to study at the North Carolina Research Campus, which specializes in agriculture, human health and nutrition.

Over the next few days, the Costa Rican delegation will continue its tour through the US, visiting the cities of Austin, Texas; Atlanta, Georgia and Chicago, Illinois, where they will meet with representatives from other universities in order to ink further cooperation agreements (see sidebar).

• Videogames

On 12 May the videogame “Color Guardians” went on sale for the Sony Playstation. It is the first videogame developed in Costa Rica to come out for a console and only the second Playstation game developed in Latin America. The game took two years to develop and involved more than 50 programmers. “We are very proud that Sony has given us the opportunity to lead a new wave of super innovative games made in development studios in Latin America,” said Claudio Pinto, the general manager of Fair Play Labs, Color Guardian’s developer.

• US interest

President Solís received the first fruits of his diplomatic mission to the US on 15 May when Precision Concepts, a medical device assembly company, and Dole, the fruit and vegetable company, announced they would expand operations in Costa Rica. Earlier this week, UST Global, a California-based IT service company, said that it intends to hire 100 professionals in information technology and telecommunications by the end of the year. Bridgestone, the tyre-makers, have also signed an agreement to expand operations. Altogether, at least 450 new jobs will come to Costa Rica.