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Notes on Costa Ricas strategic parameters

Dr. Kevin Casas-Zamora
Senior Fellow in Foreign Policy Brookings Institution

I.

Introduction

Strategic culture is an intriguing concept. It conveys the idea that strategic calculationsperformed by public decision makers in a given contextare determined by a set of entrenched national traits, assumptions and expectations. It refers to the attitudes that shape policy makers assessments of their countrys strengths, weaknesses, opportunities and threats, and to the objective conditions from which those perceptions may stem. To the extent that the notion of culture is thus articulated, it refers, on the one hand, to a shared outlook (say, between policy making elites or the nation writ large) and, on the other, to an evolving phenomenon. While the concept is clearly fertile and worthy of exploration, the goals contained within the following pages are not broad and theoretical, but decidedly more modest. Here I will try to cursorily identify a few key national traits that appear to inform strategic thinking in Costa Rica. As I will show, some of them are given while some others are the result of conscious decisions made by Costa Rican policy makers over time. Either given or chosen, these traits have helped to define the range of foreign policy and international trade options open to Costa Rican policy makers, and have thus decisively shaped the countrys interaction with its neighbors and the world at large. I will argue that Costa Ricas strategic options are constrained by pre-given factors such as size, resource endowment, and geographic location. They are also defined by specific acquired traits such as the lack of a standing army, the countrys long-term commitment to democracy, human development and (more recently) environmental stewardship. These political and social choices have set the country on a very distinct strategic path and have narrowed the options available to future decision makers. The analysis will first explore the non-chosen factors, move on to the self-selected traits, and, finally, make some closing considerations on the interaction between both factor sets and the evolving nature of the strategic parameters that they define. II. The given factors

As with any other country, some of the factors that have long determined Costa Ricas strategic options are not self-selected. Those factors are instead pre-given structural traits that change in exceptional circumstances only. As such, they provide the basic parameters of the countrys strategic thinking.

Size and resource endowment. With a territory of 51,100 Sq Kilometers and 4.6 million inhabitants, the single most obvious trait about Costa Rica is that it is a small country by any definition. While the implications of small geographic size have received relatively little mention in the International Relations or, more generally, the Social Sciences, some political and economic consequences are easily ascertained. First, small countries are vulnerable. The overarching interests that prevail over small countrieswhich are generally incapable of exercising power beyond their immediate vicinity or bordersare principally centered on remaining a viable sovereign entity in the international system. Small countries require a foreign policy that is both active and geared towards strengthening international lawas a simple matter of national security. Visibility is vital for small countries. A visible small country, such as Cuba, is less vulnerable than an invisible large one, such as the Democratic Republic of Congo. In the Costa Rican case, smallness is compounded by resource endowments and a geographical location that, while not bereft of strategic importance, are far from placing the country at the heart of geopolitical currents. This is not to say that the countrys extraordinarily rich biodiversity, closeness to the United States or access to both oceans are not important assets in Costa Ricas development prospects. It is simply to say that it does not sit atop vast reserves of natural resources of critical value to the world (e.g. Kuwait) or on a geographical location that bestows relevance well beyond sheer size (e.g. Israel, Panama, perhaps Singapore). It is, in other words, what Robert Keohanes classification of countries would define as a system-ineffectual country, with negligible impact on the international system. Theres no obvious reason why Costa Rica would matter to the world if the country chose not to make an effort to carve a niche for itself and to be heard. While the notion that dynamic foreign policy structures are essential to national security has yet to be widely internalized and understood in Costa Rica, the country has consistently made an effort to play an active and constructive role in the international arena, and, generally speaking, to punch above its weight in global affairs. Many examples could be harnessed to prove this point, but none is more eloquent than the fact that, rather remarkably for a country of its size, over the past four decades Costa Rica has held a non-permanent seat on the UN Security Council three times (1974-75, 1997-98, 2008-09). Costa Rican policy makers have somewhat vaguely understood that the country benefits from playing an active and visible international role. For the most part this has been construed as an opportunity to trade on the countrys good reputation (more on this below), rather than as something more fundamental, i.e. a national security imperative. The second, critical, implication that stems from Costa Ricas size is the openness of its economy. Nurturing intense commercial links to the world is almost a pre-requisite for economic prosperity for a country Costa Ricas size. This is hardly a new trait, but a feature of the countrys relationship with the world since the mid-Nineteenth Century, when coffee exports began in earnest. Much later, the large external and fiscal imbalances

generated by the import substitution industrialization model, which led to the 1980-82 economic crisis, sealed the realization that protectionism was a dead end for the small Costa Rican economy. As in most of Latin America, the economic collapse was followed by a major redefinition of the countrys accumulation model that put a premium on reducing tariffs, attracting foreign direct investment (FDI), promoting exports and, more broadly, opening up the economy. Whatever its visible shortcomings in other areas, which I will not address here, the success of this policy shift in transforming the Costa Rican economy and coupling it to global markets is beyond doubt. Today exports and imports comprise more than 70% of GDP, tourism accounts for close to 9% of the economy, and coffee and bananas the mainstay of the Costa Rican economy for most of the Twentieth Centuryaccount for less than 10% of exports. Moreover, FDI has significantly complemented domestic savings (to the tune of $2 billion or 6-7% of GDP per year, approximately, in the recent past), and in the process catalyzed the development of several new industries, from the manufacturing of microchips to a burgeoning cluster of services operated by multinational corporations. In the past two decades, Costa Rica has locked in the basic orientation or its economy by signing a string of free trade agreements with nearly all of its relevant commercial partners (United States, China, Mexico, Chile, Canada, the rest of Central America, CARICOM, etc.). Today, economic openness is more than a mere proclivity of the Costa Rican economy; it has, in more than one way, become compulsory public policy. All this entails very clear strategic implications. It is very difficult to explain Costa Ricas momentous decision to switch diplomatic recognition from Taipei to Beijing in 2007, or, more generally, the countrys current drive to step up its diplomatic presence in Asia, in a way that sidesteps the demand to find new markets and to court new investors. Moreover, given its structural economic conditions and the route traveled by its public policy over the past generation, Costa Rica has a stake in the outcome of global efforts to liberalize trade. Helping to disrupt those efforts a-la-Venezuela would be gravely selfdefeating for Costa Rica. Herein lies an example of a built-in bias that conditions Costa Ricas relations with the world, a bias that ultimately stems from the countrys size. Geographic location. For Costa Rica geography is destiny in at least two visible ways: the gravitational pull of the United States and the countrys relationship with the rest of Central America. As in the rest of Central America, the United States has played a major role in shaping Costa Ricas strategic options since the mid-Nineteenth Century. Unlike cases like Nicaragua, Guatemala or Panama, Costa Ricas political history is largely bereft of traumatic episodes of U.S. interventionism. This admits of one obvious exception, namely, William Walkers invasion of 1856-57, which nonetheless can only very loosely be construed as a result of Washingtons official policy toward the Central American isthmus. Since then, evidence of U.S. support for the overthrow of President Alfredo

Gonzlez Flores in 1914 and public tensions between Presidents Arias and Reagan regarding prescriptions to solve the Central American crisis in the 1980s, are probably all one can muster in the way of heavy-handed U.S. meddling in Costa Ricas political affairs. Relations between both countries have long been as amicable and constructive as one can find in Latin America. To this day, opinion polls continue to report on the Costa Rican populations strongly positive opinions about the United States. This closeness is anchored in the U.S. persistently decisive economic role in Central America. Long before the ratification of CAFTA-DR in 2007, Costa Ricas economic fate was strongly tied to the United States. Today, two decades into a remarkable export diversification process, approximately 40% of Costa Rican exports continue to travel to the United States, where 50% of FDI bound for Costa Rica also originates. The bilateral trade relationship with the United States remains the lifeblood of the Costa Rican economy. The irruption of new economic partners is unlikely to dramatically alter this fundamental fact. Unlike for most South American nations, for Central America China and Indias increased economic presence is, at best, a mixed blessing. While Cold War pressures are a thing of the past, the sheer strength of Costa Ricas economic ties to the United States will thus continue to influence and constrain Costa Ricas foreign policy and international autonomy in subtle ways, with allowances for occasional frictions with Washington on certain, very specific issues. Costa Ricas current efforts at diversifying its economic and political ties notwithstanding, the country will live under the U.S. shadow for the foreseeable future. Costa Ricas relationship with the rest of Central America (excluding Panama) is far more complex. It remains crucial to understanding the countrys self-perception and the image that it projects to the world. Shaped by a political history and by patterns of social interaction that sharply diverge from those of its neighbors (as was already evident to the eyes of travelers such as John Lloyd Stephens in the 1840s), Costa Ricas national identity has been largely forged in the contrast to the rest of Central America. The country has long seen itself as an oasis of democracy, stability and indeed civilization amid a tormented, chaotic and violent isthmus. This perception is not devoid of racist overtones insofar as Costa Ricas most widespread historical narrative places the countrys ethnic homogeneity and its presumed whiteness/Europeanness at the base of its relative success. Since at least the breakup of the short-lived Central American Federal Republic in 1840, Costa Rica has grown used to perceiving the rest of Central America as a source of problems and its own task as that of carving out a separate identity and international image. Objectively speaking, Costa Ricas political, social and economic evolution over the past century or so truly set it apart from the rest of the region. This fact has deeply contributed to the mistrust and jealousy that to this day pervades Costa Ricas relationship with the other Central American countries. Costa Ricas lack of enthusiasm for the isthmus integration process is well known and a consistent source of exasperation and resentment

for its immediate neighbors. The one partial exception to Costa Ricas traditional misgivings about engaging the rest of Central America concerns trade liberalization, an important source of economic dynamism for Costa Rica since the 1960s. Even some of Costa Ricas most active interactions with the rest of the isthmus do not deviate from this basic pattern. Thus, President Arias decisive role in crafting a negotiated settlement to the Central American civil wars in the 1980s was underpinned by the perception that the political violence in the rest of the region entailed dire risks for Costa Rica and that the country would reinforce its image as a beacon of peace if it led the negotiation process. In a way, Costa Rica engaged the rest of Central America in the 1980s in order to protect, reinforce, and underscore its own exceptionalism. It was a case of mixing in for the sake of standing out. To the extent thatas is mentioned abovea small country requires explicit efforts at visibility and distinctness in order to be safe, Costa Rica has been able to perform this trick largely by playing up its contrasts to its Central American neighbors. To put it another way: the traits that have long helped Costa Rica project an image of uniqueness commitment to democracy, peace, human development, environmental sustainability would be of limited use should Costa Rica be in, say, Western Europe. In such a case, Costa Rica would be just like any other country. The basic thrust of Costa Ricas foreign policy has been defined by its being in Central America and by the rest of the isthmus being what it is. The question is, of course, whether this strategic option will remain open in the face of the severe pressures towards regional homogeneity imposed by globalization. Some of these pressures come from forces aiming to turn Central America into a single economic entity (e.g. CAFTA-DR or the CA-EU association agreement), as much as from forces posing dramatic new challenges that call for regional action (e.g. organized crime). Globalization may well prove the centripetal force that binds Costa Rica to the rest of Central America, not as a matter of opportunity but as one of necessity. Even short of an externally imposed homogenization process, Costa Ricas basic strategic choices would be upended if other countries in Central America experience major, hoped-for improvements in human development and democratic stability. In this sense, Panamas recent journeyfrom an economic basket case governed by a narco-dictator 20 years ago to a respectable democracy as well as a booming economy todayprovides a cautionary tale for Costa Rica. Except to the deeply knowledgeable, perceiving Costa Ricas uniqueness in a paired comparison with Panama is becoming very difficult. Were the rest of Central America to travel down Panamas route an unlikely prospect, to be sure Costa Ricas claim to exceptionalism would be severely dented, thus demanding a new strategic approach.

 III. The chosen factors

While the previously discussed structural features, which bend Costa Ricas foreign and commercial policies in diverse directions, are not subject to willful transformations by policy makers, other traits are the result of political decisions and, thus, more malleable. That is not to say that they can be easily abandoned. On the contrary, some of them have become national identity traits every bit as central as Costa Ricas intricate relationship with the rest of Central America. Three of them stand out: the lack of a standing army, the countrys long-term commitment to democracy, human rights and human development, and, finally, its active protection of the environment. Costa Ricas lack of an army is, possibly, the national trait with the most far-reaching strategic implications. The lack of armed forces. Costa Rica abolished its army in 1948, in the wake of a short civil war. While it is true that Costa Ricas standing army was nearly obsolete in the early Twentieth Century, President Jos Figueres decision to formally immunize the country from the perils of militarism marked a decisive moment in Costa Ricas history. This trait would henceforth come to define Costa Ricas exceptionalism not just in Central America, but indeed in Latin America and even in the world as a whole, more than any other national characteristic. The lack of armed forces became Costa Ricas single best-known feature across the rest of the world. For Costa Ricans it became a badge of honor and an uncontroversial and essentially irreversible policy. Many consequences followed from Figueres momentous decision, some of which fundamentally affected the countrys strategic thinking. First, it made diplomacy and the active participation in the international system essentially the only instruments available to protect sovereignty. If the use of those instruments is, as seen above, a pre-requisite among small states, their deployment is nothing short of a matter of national survival in the case of an un-armed small nation. Second, it made the promotion of peace, disarmament and negotiated conflict settlements the only coherent indeed the only acceptablepath open to Costa Ricas foreign policy. Third, and most crucially, this decision tacitly wedded the country to the U.S. security umbrella. The latter implication deserves closer attention. It is true that the collective defense clause written into the Inter-American Reciprocal Assistance Treaty, signed in 1947, provided Costa Rica with a measure of protection against eventual external aggressions. However, the Treatys shortcomings, which would become all too apparent in the context of the 1982 Malvinas/Falklands War, implied that the real protection lied elsewhere. Until the end of the Cold War, and most notably during the tense days of Sandinista rule in neighboring Nicaragua in the 1980s, the unspoken assumption was that, if push came to shove, the U.S. marines would come ashore to rescue peaceful Costa Rica. An implicit cession of sovereignty was thus built into Costa Ricas foreign policy, one, moreover, that compounded the already strong links created by economic links between both countries. This implicit understanding had another far-reaching consequence: the protection of national sovereignty came to be perceived as someone elses task within Costa Rican

society. Whether good or bad, this security arrangement became symptomatic of and a reinforcing mechanism of the relatively limited value that Costa Rican society bestowed and continues to bestow upon the idea of sovereignty, a surprising attitude for a nation whose identity was first forged through the reality and myths of the military campaign to expel Walkers invaders in 1856-57. Whatever its specific implications, it is beyond a shadow of a doubt that Figueres decision to abolish the armed forces constrained the strategic paths open to Costa Rica in myriad ways. It is more than likely that those blocked paths would have been blocked anyway, had Costa Rica chosen to preserve a token military institution. In the meantime, the domestic benefits of abolishing the army were instantly apparent and large. It is in this realization, perhaps, where the genius of Figueres decision lies. Commitment to democracy, human rights, and human development. These are all choices that Costa Rica made long ago and which, once again, are central to its national identity. The country has been the most stable democracy in the developing world, with no breakdowns since 1948, and as such exhibits a long democratic tradition that in some ways goes back more than one century. Alongside Uruguay, Costa Rica routinely tops Latin Americas support for and satisfaction with democracy charts. The social roots of Costa Ricas democracy are extraordinarily deep and well-entrenched. The countrys democratic ethos goes well beyond the celebration of free and fair elections every four years and includes a genuine commitment to the protection of human rights. Neither the location of the Inter-American Court of Human Rights in Costa Rica, nor the fact that the Western Hemispheres main legal instrument of human rights protection bears the name of its capital (San Jose Covenant), where it was subscribed in 1969, are fortuitous in the least. They are a nod to the countrys robust liberal democratic tradition. The latter is reinforced by the countrys age-old commitment to social inclusion and the enhancement of human development. Although explaining the historical roots of this phenomenon goes well beyond the scope of these pages, it suffices to say that in Costa Rica public primary education was proclaimed to be universal, compulsory and free of charge as early as 1869. Large public health investments since the 1940s have resulted in Costa Rica exhibiting some of the best health indicators in the developing world, indeed on a par with those of industrialized nations. Costa Ricas top rankings among Latin American statesin terms of human development levelshave gradually eroded (62nd in the world, 7th in Latin America in 2010, according to UNDP figures), due both to the strides made by other Latin American countries and to the visible deterioration of its own public education system. All the same, the country remains one of social literatures prime examples of how policy choices rather than sheer wealth may determine a societys human development performance. What all this adds up to is a combination of features that until recently and for a long time was very exceptional in Latin America and, more generally, the developing world. Costa Rica became a symbol of a certain development style; it became the embodiment of

aspirations with broader international resonance. As was the case with peace and demilitarization, the promotion of democracy, human rights and human development at the international level became a necessity if Costa Rica was to sustain its claim to exceptionalism. Of course, it also fastened the country to a set of domestic policy options conducive to the preservation of those same values. Indeed, above all else, Costa Ricas credibility as a symbol of broader aspirations depends on its success in sustaining a humane development model at home. Costa Ricas credibility in this regardand the claim to exceptionalism that accompanies itare increasingly under threat due to a visible erosion of the countrys egalitarian ethos. It is also being threatened by other Latin American countries ability to put in place much the same combination of traits that once set Costa Rica apart. While the lack of armed forces continues to be a Costa Rican hallmark, the democracy-cum-human rights-cumhuman development model is no longer a badge of distinction. While the weight of its peculiar history will continue to slant Costa Ricas foreign policy in the direction of those values, the strategic pay-off of that bias seems doomed to diminish over time. In the future, the world may still recognize Costa Ricas consistency in preserving those values, but it wont necessarily reward the countrys exceptionalism. Environmental stewardship. Costa Ricas commitment to environmental protection is more recent than the other policy choices described above. It dates back to a 1970s decision to create the countrys National Parks System. Over the next 30 years the country would place nearly one third of its territory (as well as parts of its territorial sea) under different preservation regimes. This process unwittingly begot the foundations of a thriving eco-tourism industry that is the countrys single largest foreign income earner today. Perhaps more importantly, it nurtured as much as reflected cultural changes that made Costa Rican society aware of the countrys large biological wealth. Environmental awareness has become a crucial defining trait of national identity, particularly among the younger generation, one that manifests itself in a strong social demand for public policies geared toward environmental protection and the adoption of sustainable development as a key articulating concept of Costa Ricas foreign policy and international image. In the worlds eye, the country has indeed become synonymous with biodiversity and the efforts to preserve it. Once again, the adoption of innovative environmental policies and a dose of clever marketing, has allowed Costa Rica successfully to become a standard bearer of a global cause. In this case, as in the previous ones, the countrys coherence with the image that it wants to project narrows the range of strategic options available to its policy makers, on the international as well as the domestic front. What the previous paragraphs suggest is that Costa Rica has been very effective at bundling some key policy choices made in the past into a narrative predicated on exceptionalism and on good global citizenship. The Costa Rica name has become a kind of trademark that stands for something unique and valuable the world round. That this has happened in a rather haphazard fashion, without any kind of long-term plan or strategic design by its political elite, makes it all the more remarkable.

This has given Costa Rica the visibility and distinctiveness that most small countries only crave for, and has thus generated obvious benefits and opportunities. Yet it has also imposed burdens and constraints. Protecting the Costa Rican image entails precluding, in practice, certain policy options. Two recent examples illustrate this reality rather well. When an un-armed democracy that has staked its survival in a basic respect for international law inexplicably decides to support the U.S.-led invasion of Iraq in 2003, it is sure to pay a hefty price in terms of image. Similarly, when a country renowned for its environmental stewardship decides to make an open-pit gold mine a national interest priority in 2008, it will surely attract plenty of unwanted attention and deserved criticism. Playing the part of the exceptional country is hard work. Exceptionalism can be lost. One of Costa Ricas biggest strategic assetsthe trademark it has managed to register globallyis also a significant strategic constraint. IV. Some final comments

The previous pages have merely outlined some parameters that restrain Costa Ricas relationship with the world. Some are the result of pre-given factors, while some are the outcome of long-term policy choices and path dependence. Together, they bias Costa Rican policy makers strategic outlook in ways that are difficult but not impossible to change. As such they decisively shape the countrys strategic culture. Exploring the specific interactions and implications of these factors, in details, is more than what this short paper can do. However, two final reflections are in order, both of which relate to the inherent contingency of strategic choices. First, there is nothing clear-cut about the interaction between the factors outlined above. While it is generally true that pre-given factors trump chosen ones in the strategic decision-making process, it is at least conceivable that some acquired traits may become so central to a nations identity as to rule over its strategic calculations. It is thus very unlikely, for instance, that Costa Rica would forego its decision to live without an army for the sake of, say, more access to foreign markets or a more solid strategic relationship with the United States. The latter is not an entirely theoretical example. In the 1980s Costa Rican policy makers chose to stick to the countrys decision to abolish its armed forces in the face of pressures from Washington to reverse it. As this example suggests, structural factors may pull the country in different directions. Another illustration: engaging Beijing diplomatically is mostly a boon for the small Costa Rican economy, but is hardly coherent from the standpoint of the countrys long-term tradition of promoting democratic values. While the factors outlined above narrow the range of acceptable options for policy makers, they do not release the latter from the complex obligation of weighing the different factors when they pull the country in opposite directions. These factors increase the odds of certain strategic options, but do not for that create certainties.

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If this is a source of contingency, it is not the only one in this story. For the second and final reflection concerns the obvious fact that many of these factors do change, however difficult it may be. This includes even some of the pre-given factors. Costa Rica would not be the first country to wake up to a new strategic reality as a result of discovering large reserves of a valuable mineral commodity. Nor would it be, of course, the first country whose strategic culture is upended as a result of the change in its neighbors behavior. The latter is indeed the stuff most strategic evaluations are made of, particularly in the area of national defense. What the other Central American countries do matters decisively for Costa Ricas strategic outlook, whether they start rearming or building solid democratic institutions; whether they fall into a vortex of violence or succeed in nurturing more inclusive societies. The changing nature of these parameters is particularly true of those that stem from past policy choices. They are inherently evolving. This, once again, is not hypothetical. Currently, Costa Ricas nicely constructed claim to exceptionalism the very heart of its foreign policyis under severe pressure on many different fronts, from globalizationinduced homogeneity, to the strides made by some of the countrys neighbors, to the eroding commitment of its own elites to the values that long made it a peculiar society, worthy of attention and respect. The strategic parameters that define Costa Ricas relationship with the world today will almost certainly change in the future. Let us hope that they do so in a way that allows Costa Rica to assert a distinct and positive identity in the world, to protect its sovereignty, and to further the prosperity of its people. None of this is inevitable. It must be achieved through wise strategic choices, of the kind that the country has generally made in the past.