Defending the State, Empowering the People

An interview with Ottón Solís, from Multinational Monitor, 9 January 1998

OTTóN SOLíS is a member of the Costa Rican National Assembly and chair of its Economic Committee, and an adviser to President José Figueres. Formerly minister of economic planning in the government of President Oscar Arias, he subsequently served as president of the Economic and Social Council of the Organization of American States.

Multinational Monitor: Why did Costa Rica, a relatively rich country, end up with a structural adjustment plan?

Ottón Solís: At the beginning of the 1980s, our country became heavily indebted. International factors, like rising oil prices, high interest rates and recession in the major industrial countries, created a trade deficit which induced the country to get money abroad. In 1982, after Mexico announced it could not pay back its loans, private banks stopped lending to other countries like Costa Rica. So we had to turn to international financial organizations and the American government.

At the time, Reagan was in power and Reaganomics was the order of the day. The condition that the international financial organizations placed on loans was that we adopt structural adjustment policies.

...

MM: What sort of results has free trade had on the country?

Solís: If you want to choose a single damaging policy, it has been the policy of reducing import tariffs. As a result of a massive ignorance, the neoliberals have felt that commercial policy is just tariff reduction. What has happened is the country has become an importer of things that previously we produced behind protectionist barriers. This has introduced a change in relative prices so that now there is a structural trade deficit problem.