Costa Ricans Unhappy : Arias Is No Hero to His Own People

A year after collecting the Nobel Peace Prize in Oslo, President Oscar Arias Sanchez stood here on a more modest stage. In an auditorium full of Costa Rican workers, he dispensed more than $1 million in loans to help them build the first homes they will ever own.

“Thanks to the peace I have worked for, Costa Rica can become the first Latin American country free of slums,” he declared. “Our neighbors buy tanks and cannons and warplanes, and they get poorer by the day. But our country is growing.”

As his attempt to pacify the rest of Central America falters, the 1987 Nobel Peace laureate is turning homeward to shore up his own country as a lasting model of prosperity. Even for a nation with no army, his vision is as utopian as peace itself--computers in every school, hotels jammed with tourists, a full-employment economy driven by innovative new exports.

Inflation Tops 20%

But while Arias’ domestic program has succeeded in many ways, it is a troubled and controversial effort.

Annual inflation has shot past 20% for the first time in five years. In an economy growing 4% a year, the working class has watched its income shrink. Subsistence farmers are being driven from the land by the sudden switch to a cash-crop economy. Many who were supposed to benefit from Arias’ policies say they are no better off now than when he took office in May, 1986.

“If you talk about housing, he is the first president truly interested in helping the less-privileged classes,” said Rigoberto Garita, a slum-dwelling father of five who was in the auditorium the other day. “But he has not controlled prices. We do not eat as well as before.”

Reflecting on the president’s speech, the 46-year-old factory worker dismissed its central argument--that by campaigning for peace in Nicaragua, Guatemala and El Salvador, Arias had steered his own country clear of their bloody conflicts and made it the focus of worldwide admiration, all for the benefit of 2.8 million Costa Ricans.

‘A Personal Trophy’

“If the Nobel Prize had kept up our standard of living for a year or two, it would have been a great thing for the people,” Garita said. “But it is just a personal trophy for him.”

A question spray-painted on a wall in a middle-class neighborhood here put the complaint more bluntly: “Arias, Why Peace With Hunger?”

This is a common refrain, one that nags the president and helps explain why his National Liberation Party trails in the polls as election year approaches. Although Arias cannot succeed himself, the voting in February, 1990, will be a referendum on his record.

If Arias’ candidate loses, his supporters say, Costa Rica might retreat from its neutrality and fall in step with Washington’s espousal of military force--or at least a military threat--against Nicaragua.

“That would undermine the peaceful environment Arias is trying to create here,” said Guido Fernandez, the president’s spokesman.

Went Along With U.S.

When Arias took office, Costa Rica was a compliant ally in the Reagan Administration’s war against leftist, Sandinista-ruled Nicaragua. The United States was building a clandestine network to supply Nicaraguan rebels--the Contras--in northern Costa Rica and spending heavily to revive and reorient Costa Rica’s stagnant welfare-state economy.

Arias defied Washington by shutting down the Contra network and launching a peace initiative. Signed by the region’s five presidents in August, 1987, it called for democratizing Central America and ending aid to rebel forces.

The agreement has failed to stop wars between Marxist guerrillas and U.S.-backed armies in El Salvador and Guatemala. Citing Sandinista efforts to comply with the accord, Congress stopped arming the Contras last February and thus greatly reduced the fighting in Nicaragua, but talks on a final armistice collapsed in June.

Since then, Arias has come to terms with the limits of his influence, according to foreign diplomats and his aides. They say he is biding his time, hoping to persuade the United States and the Soviet Union to agree on defusing Central America after President-elect George Bush takes office.

Cuts Back on Travels

Meanwhile, Arias has responded to domestic criticism of his travels by spending less time abroad--22 days in 1988, compared to 70 days last year--and focusing on the economy.

In an interview, Arias said he was “satisfied in part” with his peace campaign because of its effect at home.

“When I took office, Washington was trying to involve Costa Rica in the wars of Central America,” he said. “The consequences of this would have been the same here as in the other countries of the region--flight of capital, loss of production, more unemployment and poverty for everyone.

“I changed the destiny of Costa Rica by saying no to Washington,” he added. “Since then, we have begun a sustained growth of our production that I think is irreversible.”

Arias said his government has surpassed campaign promises to create 25,000 jobs and build 20,000 new houses each year. About 50,000 public school children have been introduced to computers.

Unemployment Down

Unemployment is down two percentage points to 5.5%, the third-lowest level in Latin America, and investment is up. Foreign tourists, a leading source of hard currency, are spending $40 million more this year than last.

Arias was in a good mood during the interview because the World Bank had voted the day before to lend Costa Rica $100 million--a credit that will be matched by the government of Japan.

“None of this would have been possible,” he said, “if we hadn’t tried to put out the fire in our neighbor’s house, to keep the fire from spreading to our house.”

Not all Costa Ricans agree. Arias’ approval rating, as measured three times a year by the local Gallup affiliate C.I.D., plummeted during 1987, the year of his peace bid, recovering slightly this year.

In this month’s survey of 1,202 people, 48% said they approved of the president’s performance. But 63% said he had done “little or nothing” to halt inflation. Asked in what condition Arias will leave Costa Rica, compared to how he found it, 27% said “better off,” 34% said “the same” and 32% said “worse.”

Party Would Lose Today

If the 1990 election were held today, the more conservative Social Christian Unity Party would defeat Arias’ Liberationists by a margin of 46% to 37%, according to the poll.

“The enemies of my peace efforts have succeeded in transmitting to a good many Costa Ricans the idea that I am interested only in other people’s problems,” Arias said. “That is absolutely false.”

Rafael Calderon, the Unity party’s 39-year-old presidential nominee, denied that he opposes the peace initiative. “But Arias hasn’t governed Costa Rica,” he added. “Of course, he can say we are better off than the rest of Central America. But still, there is great discontent, hunger and misery here.”

A Planning Ministry study, published in August and often quoted by the opposition, says that one-fourth of the working population is unemployed or underemployed and that two-thirds earn less than what it costs to feed a family of four.

Purchasing Power Falls

According to another official estimate, the purchasing power of most Costa Rican workers has declined by at least the equivalent of one month’s salary since 1986.

“Every month, I have to choose between paying the rent and the light bill or giving my children enough to eat,” said Celia Saenz, who earns $50 every two weeks sweeping floors at Juan Santamaria Airport outside the capital. She estimates that her raises this year were about half the inflation rate.

“Maybe it is better that my children are hungry instead of dying in a war,” she said. “But I wish somebody would explain why prices just keep going up and up.”

The burden on the poor was increased this month by a 10-day flurry of price increases for milk, sugar, beans, corn, butter, electric power and bus fares. The government-mandated increases were aimed at trimming the budget deficit--raising prices now to control inflation later.

‘Structural Adjustment’

Arias has been criticized within his own party for embracing such “structural adjustment” policies prescribed by the U.S. Agency for International Development (AID), which has spent more than $1 billion since 1982 to make Costa Rica the largest per capita recipient of U.S. aid after Israel.

In some ways, AID’s formula and largess have succeeded here. Costa Rica has eased its dependence on coffee earnings and developed an array of new exports--pineapples, macadamia nuts, cut flowers, packaging materials and textiles--that now account for nearly half its trade. It has slashed the fiscal deficit from 14% of the national product in 1981 to 4%.

Critics say the shift of state subsidies from traditional crops such as beans and rice, which are now imported, to the new exports was too abrupt, pushing thousands of small farmers into poverty. The government is also accused of undermining a social welfare and state banking system that many regard as the foundation of Costa Rica’s 40 years of political stability.

2 Close Aides Resign

Two close aides to the president, Agriculture Minister Alberto Esquivel and Planning Minister Otton Solis, have resigned in the past year after resisting the structural adjustment policies.

Solis had opposed a law to open the financial services market to private banks, but Arias argued that it was needed to get the $100-million World Bank loan. The law was passed in October in a Legislative Assembly vote that split the ruling party.

One former official said Arias has found it difficult to fight the Reagan Administration on two fronts--resisting Washington’s economic formulas and its war against the Contras.

“There is a lot of pressure from AID,” he said. “The wages of the poor are deteriorating, and this threatens our democracy. At AID, they don’t understand this.”

“There seems to be a consensus among Oscar and the political people that this year we have to give back the poor people their purchasing power,” a close associate of the president said. “If we do not, all his achievements may be forgotten.”