Lack of Leadership and Ungovernability

Faced with increasing chaos in Costa Rica due to demonstrations and blockades, a part of the business sector decided, unilaterally, to negotiate with representatives of the movement that incites to protest, and to reject the official call by the President of the Republic.

Friday, October 16, 2020

The protests and blockades that are taking place in Costa Rica arose after it was reported that in order to access the $1.75 billion credit that it intends to request from the International Monetary Fund (IMF), the Costa Rican government proposed to tax financial transactions, raise the tax on the profits of companies and individuals, and increase the tax on real estate.

After the country was semi-paralyzed by the violent blockades made by the demonstrators on different highways, the Alvarado administration decided to withdraw the initial proposal and called for a national and multi-sector dialogue.

The government's proposal was not welcomed by several of the business chambers, as of the 29 seats available, only four were directed at the business sector. For the productive sector this dialogue scheme was unbalanced.

You may be interested in "Blocks and Costs to the Region"

On October 15, the Costa Rican Union of Chambers and Associations of the Private Business Sector (UCCAEP) issued a statement informing the decision not to attend the Table organized by the President of the Republic, through the State of the Nation Program, but to continue in the dialogue forum called by the Assembly of Workers of the Banco Popular.

Jose Alvaro Jenkins, President of UCCAEP, said that they reiterate their "... concern regarding the unbalanced proportion of the table promoted by the government, which does not guarantee the representation of all sectors of society in the search for a consensual solution for the country. We are in favor of dialogue and we urge the government to join the National Forum for Multisectorial Dialogue that was promoted by the National Assembly of Workers of the Popular and Community Development Bank."

On the night of October 15, it was reported that UCCAEP and leaders of the National Rescue Movement, which promotes violent demonstrations and closures of highways in the country, held a meeting in which they negotiated the lifting of blockades on national roads.

After the news was spread, the Costa Rican Chamber of Construction (CCC) reacted through a statement published on October 16.

The CCC document details that "... given the information that circulated about a meeting between UCCAEP and the so-called National Rescue Movement, we wish to state that the Costa Rican Chamber of Construction did not receive for its information, did not approve, nor does it endorse, any agreement of the Costa Rican business sector, meeting in UCCAEP, with this group."

"... From our organization we support dialogue and make the necessary efforts to build bridges in search of agreements, but in no way, with groups that use force, disorder and the breaking of constitutional rights of Costa Ricans. We reiterate our support to the institutionality of the country and we call for dialogue to solve the problems, in a fair, representative and balanced environment," the statement concludes.



More on this topic

Fiscal Crisis: Less Spending and More Information

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Given the agreement reached by the Alvarado administration and the IMF for Costa Rica to access a $1.75 billion loan, the business sector is calling for a reduction in public spending and for detailed information on the scope of the agreement signed by both parties.

In an attempt to ease the fiscal and economic crisis the country is going through, last year the Alvarado administration began negotiations to access a loan for $1.75 billion to be requested from the International Monetary Fund (IMF).

Blockages and Ungovernability: Diverging Positions

October 2020

After the UCCAEP in Costa Rica began to negotiate the lifting of the blockades with the self-proclaimed group Rescate Nacional, promoter of the protests, several business chambers distanced themselves from that decision and others have expressed their support.

Given the wave of protests and blockades that have been reported in the country, which arose after it was reported that to access a loan from the International Monetary Fund for $1.75 billion, the government planned to tax financial transactions, raise the tax on the profits of companies and persons, and increase the tax on real estate. The Costa Rican Union of Chambers and Associations of the Private Business Sector (UCCAEP) decided to negotiate the lifting of the blockades.

Effects of the Lack of Leadership

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Although the Alvarado administration reversed the initial proposal to ask the IMF for $1.75 billion in financing and called for an inter-sectoral dialogue, Costa Rica is semi-paralyzed by the blockades that are taking place on various roads in the country.

On the afternoon of September 17, and in the context of a severe economic crisis that had already begun before the pandemic started, the Alvarado administration presented the plan with which it intends to mitigate the fiscal impact of the Covid-19 crisis, a proposal to negotiate an agreement with the International Monetary Fund (IMF) to obtain a credit of $1.75 billion.

Million-Dollar Losses by Protests and Blockades

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In the context of the protests and blockades that have been affecting Costa Rica for several days, the businessmen denounce that there are millions of losses, mainly in tourism, exports, and agricultural, industrial and commercial activities.

The protests that began last week and intensified on June 28, when students and teachers from at least 232 schools blocked several routes in the country, are caused, according to their participants, by young people objecting to issues such as dual education, neutral bathrooms, FARO tests or purchase of drones for agricultural schools.