In 1502, on his fourth and last voyage to the New World, Christopher Columbus made the first European landfall in the area. Settlement of Costa Rica began in 1522. For nearly three centuries, Spain administered the region as part of the Captaincy General of Guatemala under a military governor. The Spanish optimistically called the country "Rich Coast." Finding little gold or other valuable minerals in Costa Rica, however, the Spanish turned to agriculture.
The small landowners' relative poverty, the lack of a large indigenous labor force, the population's ethnic and linguistic homogeneity, and Costa Rica's isolation from the Spanish colonial centers in Mexico and the Andes all contributed to the development of an autonomous and individualistic agrarian society. An egalitarian tradition also arose. This tradition survived the widened class distinctions brought on by the 19th-century introduction of banana and coffee cultivation and consequent accumulations of local wealth.
Costa Rica joined other Central American provinces in 1821 in a joint declaration of independence from Spain. Although the newly independent provinces formed a Federation, border disputes broke out among them, adding to the region's turbulent history and conditions. Costa Rica's northern Guanacaste Province was annexed from Nicaragua in one such regional dispute. In 1838, long after the Central American Federation ceased to function in practice, Costa Rica formally withdrew and proclaimed itself sovereign.
An era of peaceful democracy in Costa Rica began in 1899 with elections considered the first truly free and honest ones in the country's history. This began a trend continued until today with only two lapses: in 1917-19, Federico Tinoco ruled as a dictator, and, in 1948, Jose Figueres led an armed uprising in the wake of a disputed presidential election.
With more than 2,000 dead, the 44-day civil war resulting from this uprising was the bloodiest event in 20th-century Costa Rican history, but the victorious junta drafted a constitution guaranteeing free elections with universal suffrage and the abolition of the military. Figueres became a national hero, winning the first election under the new constitution in 1953. Since then, Costa Rica has held 13 presidential elections, the latest in 2002.
Costa Rica long has emphasized the development of democracy and respect for human rights. Until recently, the country's political system has contrasted sharply with many of its Central American neighbors; it has steadily developed and maintained democratic institutions and an orderly, constitutional scheme for government succession. Several factors have contributed to this tendency, including enlightened government leaders, comparative prosperity, flexible class lines, educational opportunities that have created a stable middle class, and high social indicators. Also, because Costa Rica has no armed forces, it has avoided the possibility of political intrusiveness by the military that other countries in the region have experienced.
During the tumultuous 1980s, then President Oscar Arias authored a regional peace plan in 1987 that served as the basis for the Esquipulas Peace Agreement. Arias' efforts earned him the 1987 Nobel Peace Prize. Subsequent agreements, supported by the United States, led to the Nicaraguan election of 1990 and the end of civil war in Nicaragua. Costa Rica also hosted several rounds of negotiations between the Salvadoran Government and the Farabundo Marti National Liberation Front (FMLN), aiding El Salvador's efforts to emerge from civil war and culminating in that country's 1994 free and fair elections. Costa Rica has been a strong proponent of regional arms limitation agreements.
With the establishment of democratically elected governments in all Central American nations by the 1990s, Costa Rica turned its focus from regional conflicts to the pursuit of democratic and economic development on the isthmus. It was instrumental in drawing Panama into the Central American development process and participated in the multinational Partnership for Democracy and Development in Central America.
Regional political integration has not proven attractive to Costa Rica. The country debated its role in the Central American integration process under former President Calderon. Costa Rica has sought concrete economic ties with its Central American neighbors rather than the establishment of regional political institutions, and it chose not to join the Central American Parliament. Former President Figueres promoted a higher profile for Costa Rica in regional and international fora. Costa Rica gained election as president of the Group of 77 in the United Nations in 1995.
In May 2002, President Abel Pacheco of the Social Christian Union Party (PUSC) assumed office after defeating National Liberation Party (PLN) candidate Rolando Araya in the first-ever second-round runoff election. The April 2002 runoff election was necessitated by the failure of any one candidate to obtain the constitutionally required 40% of the popular vote in the February first-round election. Pacheco has been criticized as having achieved little during the first half of his four-year term, and his declining approval ratings reflect public frustration with his government. In his defense, Pacheco cites achievements in fighting corruption and reducing poverty. He continues to seek a fiscal reform package and can count the successful negotiation of a U.S.-Central America Free Trade Agreement (U.S.-CAFTA) and an improved economy among his significant accomplishments. The 57-member unicameral Legislative Assembly has five principal party factions, with the governing party, PUSC, having only a 19-seat plurality. As a result, legislative action has been slow.
After four years of slow economic growth, the Costa Rican economy grew at a healthy 5.6% in 2003, with growth estimates exceeding 4% for 2004. Compared with its Central American neighbors, Costa Rica has achieved a high standard of living, with a per capita income of about U.S. $4,100, and an unemployment rate of 6.3%. The annual inflation rate hovers around 9% as the Costa Rican Government seeks to reduce a large fiscal deficit.
Controlling the budget deficit remains the single-biggest challenge for the country's economic policymakers, as interest costs on the accumulated central government consumes the equivalent of 32.1% in 2003 of the government's total revenues. About 18.9% of the national budget was financed by public borrowing. This limits the resources available for investments in the country's deteriorated public infrastructure.
There is an ongoing dispute between Nicaragua and Costa Rica regarding navigational rights on the San Juan River separating the two countries. Nicaragua and Costa Rica signed an agreement in September of 2002 to defer until 2005 presenting the dispute to the International Court of Justice (ICJ) for resolution. Meanwhile, the governments of Nicaragua and Costa Rica agreed to work towards an
amicable solution and to jointly-fund community development projects in the border area.
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