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FROM THE APRIL 2, 2014 ISSUE

What lies ahead for Costa Rica's next president?


Costa Ricans go to the polls on April 6 to select the country's next president. Ruling party candidate Johnny Araya abandoned his campaign on March 5, paving the way for leftist anti-establishment candidate Luis Guillermo Solís to be elected. What are the biggest challenges facing Costa Rica's next leader? What types of policy changes can be expected from a Solís administration? To what extent will Solís succeed in working with Costa Rica's business community?

José Antonio Muñoz, partner at Arias & Muñoz in San José: "Getting his party to rally behind him and establishing a working relationship with Costa Rica's productive sector are Luis Guillermo Solís' big challenges after confirming his electoral win on April 6. Of these, the largest challenge is for Mr. Solís to get confirmation of party loyalty and unswerving support. For establishing a framework of work and understanding with the country's business sector, Mr. Solís has no choice. He is certainly left of center, but he does not campaign against existing institutions. He campaigns for better governance and accountability, and he absolutely needs the working support of Costa Rica's productive sector. Solís' challenge to govern, if elected, is threefold: to maintain the vibrancy of Costa Rica's productive sector, to find the right political and government figures to lead the administration, and to either find a working arrangement with Congress or to neutralize it. The easier task for the new president will be to seek and obtain the support of the business community. This, in turn, would facilitate the other two. Costa Rica's public-sector entities would profit from more professional management and systems than drafting from the private sector would afford. The Congressional minority of Mr. Solís' party in the future Congress can only become a working majority by the endorsement of pro-business representatives in the PUSC and PLN contingents. Only from the private sector can Mr. Solís generate safe and sound income to manage the fiscal deficit and fund his distributive social programs. And should the factional future Congress prove to be unmanageable for the new president, Mr. Solís would need the financial security and stability that only private economic expansion can create. The big premise, though, will remain unanswered until after the run-off election: can he garner overwhelming support from within his own party?"

Kevin Casas-Zamora, secretary for political affairs at the Organization of American States and former vice president of Costa Rica: "The challenges that await Luis Guillermo Solís are complex, and he's been given a weak hand to play. The first one is to build a viable majority in a legislature in which his party controls only one-fifth of the seats and has no obvious partners to forge a stable coalition. The second one is to appoint a credible economic team that can soothe the anxieties of domestic and foreign investors. The third one is to rein in a deteriorating fiscal situation, which calls for a tax reform that Solís has pledged not to pursue in the first 2 years of his administration. All this is a tall order for a leader that lacks any previous executive or legislative experience, a solid political base of his own and a team with deal-making and policy-making depth. Solís will also have to deal with an institutional set-up riddled with veto points and able to frustrate the best intentions. It is likely that a Solís administration will try to compensate for these difficulties and its lack of a strong popular mandate by quickly adopting many symbolic measures to signal its commitment to austerity and probity. This may soon increase its popularity among a citizenry that appears eager for a change. Alas, such gestures alone cannot durably protect Solís from headwinds if economic growth, which has been good and steady in the past four years, decelerates, legislative gridlock worsens and the expectations of the more radical sectors of his party's base (notably public sector trade unions) go unmet. As of today, all these outcomes appear probable. There are few doubts that Solís is a smart, moderate, decent, well-intentioned leader. Yet, his glaring political vulnerability may soon start to exact a toll. Costa Rica may be in for a rough ride." MORE


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Diego Arria
Director,
Columbus Group

Genaro Arriagada
Nonresident Senior Fellow,
Inter-American
Dialogue

Joyce Chang
Global Head of
Emerging Markets Research, JP Morgan
& Chase Co.

W. Bowman Cutter
Former Partner,
E.M. Warburg Pincus

Dirk Donath
Senior Partner,
Aimara Capital

Jane Eddy
Managing Director,
Corporate & Government
Ratings Group,
Standard & Poor's

Marlene Fernández
Corporate Vice
President for
Gov't Relations,
Arcos Dorados

Peter Hakim
President Emeritus,
Inter-American
Dialogue

Donna Hrinak
President,
Boeing Brazil

Jon Huenemann
Vice President,
US & Int'l Affairs,
Philip Morris

James R. Jones
Co-Chair,
Manatt Jones
Global Strategies

Craig A. Kelly
Director, Americas
Int'l Gov't Relations,
Exxon Mobil

John Maisto
Director,
US Education Finance Group

Nicolás Mariscal
Chairman,
Grupo Marhnos

Thomas F. McLarty III
President,
McLarty Associates

Carlos Paz-Soldan
Partner,
DTB Associates

Beatrice Rangel
Director,
AMLA Consulting

José Antonio Ríos
Chief Executive Officer, Vadium Technology, Inc.

Gustavo Roosen
Chairman of
the Board,
Envases Venezolanos

Andrés Rozental
President,
Rozental & Asociados and Senior Fellow,
Brookings Institution

Everett Santos
President
DALEC LLC

Shelly Shetty
Head, Latin America Sovereign Ratings
Fitch, Inc.

 

 

Erik Brand
Publisher and Director,
Corporate Program
TEL: 952.892.0177952.892.0177
EMAIL: ebrand@thedialogue.org

Gene Kuleta
Editor
TEL: 202.463.2920202.463.2920
EMAIL: gkuleta@thedialogue.org

Megan Cook
Reporter and Assistant Editor
TEL: 202.463.2562202.463.2562
EMAIL: mcook@thedialogue.org