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Costa Rica’s protest movement
Anger at proposed tax increases and IMF negotiations has driven two weeks of protests
Protests have occurred over the past two weeks in Costa Rica after President Carlos Alvarado proposed an increase in taxes as part of negotiating with the IMF for a $1.75 billion loan. The tax increases, combined with some government budget cuts, were seen as necessary to prevent long term fiscal problems in the country. However, the proposals generated a lot of anger given the economic challenges of the pandemic including unemployment levels over 20%.
Protests have taken place since 30 September across the country. After only four days of protests, the Alvarado administration backed down from its proposal for tax increases. That did not stop the protests from continuing, including one in the capital yesterday (12 October).
Who is protesting and what do they want?
The protests are a diverse movement, but the media and political system have generally portrayed them as led by the Movimiento Rescate Nacional and Jose Miguel Corrales, a former presidential candidate and legislator. They have been joined by a number of unions including the public sector employees union (ANEP) and the telecommunications union (SITET).
Above: Images of protests from Recate Nacional’s Facebook page.
The protests have a strong rural component. This has given the protests less visibility in the capital, but greater ability to block roads around the country including the major highways and at the borders. Individual communities have protested over their own local concerns and the government has negotiated with local leaders region by region. For the protest on 12 October, people from rural areas bussed to the capital to add to the numbers.
Costa Rican police allege that drug traffickers have infiltrated the protest movement and are using it to disrupt security around the country. Oddly enough, protest leaders including Corrales agree that drug traffickers are hiding inside the protest movement and have agreed to cooperate with authorities to halt their influence.
The protest movement has been driven by outrage over the negotiations with the IMF and potential tax increases, but their demands have been more nuanced and at times contradictory. They don’t want tax increases, but some of the protest leaders have stressed the importance of multinational companies paying more in taxes. Protesters say they want to avoid austerity measures while some local communities have called for cuts in excessive government spending including pensions for top politicians.
The government has a plan to calm things down
The Alvarado government has proposed a multi-stakeholder negotiating process that will begin on 17 October and will last for four weeks. This is a similar tactic to the one used successfully by Ecuador President Moreno last year to halt the protests. It calms the situation because it:
Brings moderates to the table and leaves only the extreme actors on the streets.
Demonstrates that the government is listening to the concerns of the protesters.
Buys time and creates a timeline for negotiations that slows the protesters’ momentum.
Forces the protesters to offer detailed proposals rather than just opposition to government plans.
The existence of the process does not mean it will lead to a successful outcome where everyone is happy. These negotiations are about calming the situation down, but there will be too many actors with positions that will be difficult to reconcile.
The president’s challenges go beyond the protesters in the streets. Alvarado does not have significant support in the Congress and needs a supermajority in some cases to obtain approval for issuing new debt. Eduardo Cruickshank, president of the Congress, opposed the tax measures proposed by the president, even as he has been cooperative in terms of moving beyond the protests and towards negotiations. The political incentives definitely lean in favor of politicians opposing the president’s unpopular proposals. Nobody is going to win the next election in Costa Rica by supporting austerity and tax increases.
If Costa Rica has these challenges….
Costa Rica is in a better situation in terms of political stability, economics and citizen security than many other countries in the Western Hemisphere. Even after two weeks of protests, the political instability and economic challenges Costa Rica currently faces are not so bad relative to most of its neighbors in Latin America. While individual violent incidents have been reported, contrasted with recent protests in other countries, the protests have been relatively peaceful and the police repression of the protests has not been particularly harsh.
The protest movement will likely fizzle with the upcoming negotiations and then renew when those negotiations break down without an agreement that passes the Congress. But it’s all still relative to Costa Rica. The disruptions and road blockages are an annoyance but there is little probability of major violence. The fiscal situation is bad, but not likely to lead to a major economic crisis.
Costa Rica’s protests should be a warning light to other countries in the hemisphere, particularly in Central America. Guatemala, El Salvador, Honduras and Nicaragua all face bigger fiscal challenges, worse democratic conditions, and a more dangerous security situation than Costa Rica. If protests are hitting Costa Rica over this tax issue, it’s a sign other countries should expect worse in the coming months.
Thanks for reading
If you need more regular updates on Costa Rica in English, the Tico Times has been providing daily updates including which roads around the country are blocked.
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