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Bellwether state

"Bellwether state" Continued...

Issue: "Crossing borders," June 23, 2007

Other Costa Ricans resent the foreign invasion because it upsets the way life used to be and sends land prices skyrocketing. The Arias administration cuts deals with foreigners instead of fixing the disheveled capital, they say. The government says public works projects are limited because it has to pay high interests on the large national debt.

Alleyway graffiti-"Costa Rica is not for sale!"-oppose the government's courting of foreigners. "We are auctioning off our resources to the highest bidder, almost always Americans or Japanese," says Jorge Mora, who works for the Yiski Conservationist Association, a group opposing the sale of public land to foreigners for resort development. "Foreigners are buying up lots of land, mostly to put up gated communities on the beaches and deforesting National Park territories for development. It's profitable, but it's an insult to the nation."

Costa Rica's modern political era began in 1949 following a civil war, when President Arias' National Liberation Party, or PLN, abolished the armed forces to fund state-run education and health programs.

Riding a wave of economic growth in the 1950s, successive PLN governments expanded on this welfare state. A more pro-business conservative party that offered tax breaks and subsidies rose to wrest power from the PLN, and the presidency spent 30 years seesawing between the left and right, alternately growing the economy and the welfare state with a whiplash of disparate policies.

By 1981, the welfare state was serving nine out of 10 Costa Ricans and absorbing nearly half of the budget. When export prices nosedived the over-extended government was helpless. International loans Costa Rica had taken out came due, flinging the country neck deep into the world's worst per capita debt. The United States and several other nations came to Costa Rica's aid, but the government still runs a perpetual deficit to finance its welfare state and devotes roughly a third of the budget to servicing its debt.

The wealth gap, meanwhile, is widening, even though the poverty rate has shrunk. Proponents of the country's myriad state-run industries have taken to the streets and found the strike, or even the threat of one, an effective tool of negotiation. Tensions frequently boil over onto the immigrant community, which includes 500,000 Nicaraguans (a ninth of the country's population). Legal and illegal, they provide a cheap labor source but burden the welfare system.

The debate over ratifying CAFTA-DR, which every Central American nation but Costa Rica has approved, is intense. Its ratification was one of Arias' campaign pledges, but his countrymen's tepid, if oftentimes hostile, reaction to it has ratcheted down his own support publicly. Polls now suggest only 40 percent of Costa Ricans favor CAFTA-DR.

Last October, teachers and public workers unions-an intimidating array of 30,000 professionals, farmers, and laborers-responded to the call for a ratification vote in the National Assembly with promises of a national strike. They threatened to stop teaching, freeze hospital services, and upend traffic. They argued that privatization of state-run industries and budget cuts would chip away at Costa Rica's literacy rate or introduce instability into the newly privatized industries.

To survive, CAFTA-DR must now pass two tests: a Sept. 23 nationwide referendum and a ruling on its constitutionality by the high court in June. Arias received the Nobel Peace Prize in 1987 for his efforts to end civil wars in several Central American countries. Twenty years later, he has the hard task of bringing political peace to his own country.

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