The 1980s began with Costa Rica facing one of the worst financial crises in its history. The oil shocks of the late 1970s combined with prolific borrowing from international banks to place Costa Rica in a deep financial hole.
The presence of the Sandinistas in Nicaragua and the election of Ronald Reagan as President of the United States prompted an unprecedented interest by Washington in the affairs of Central American countries, as the Cold War headed for its final days.
As a consequence, the United States poured more than $1 billion into Costa Rica over the course of the decade, which, combined with “structural adjustment” loans from the Inter-American Development Bank tied to a series of free-market reforms, placed the country back on the economic development track. Later in the decade, after Costa Rican President Oscar Arias won the Nobel Peace Prize, tourism exploded, providing what would eventually be the country’s number-one source of foreign-exchange earnings.
But the biggest story in Costa Rica in the 1980s was the struggle for peace in Central America.
On the Rim of the Cauldron
As the decade began, Central America was a seething cauldron of conflict and intrigue. Costa Rica, which tried to remain on the sidelines of the violence, found itself inevitably in the middle of conflicts from around the region. San José became home to numerous exile groups from both sides, and several episodes of Cold War violence were played out on Tico soil.
Salvadoran guerrillas kidnapped a Japanese businessman in Costa Rica and also Kaveh Yazdani, the son of a wealthy Iranian exile living in Costa Rica, and authorities found an underground dungeon built by Salvadoran leftists to be used in future kidnappings.
Sandinista operatives kidnapped, in broad daylight in San José, Argentine military officer and Contra rebel trainer Hector Francés, spiriting him off to Nicaragua, where he was later reportedly executed. In 1982, authorities uncovered an arms-smuggling ring that took weapons to Farabundo Martí National Liberation Party guerrillas in El Salvador.
In 1983, a former Sandinista government official blew himself up with his own bomb in downtown San José while on his way to a meeting with guerrilla leader Edén Pastora.
Homegrown terrorism struck Costa Rica in March 1981, when two bombs exploded: one aimed at the Honduran Embassy and one that injured two U.S. Marines riding in a van. A group calling itself the Comando Carlos Aguero Echeverría, after a young Costa Rican who died fighting with the Sandinistas against Somoza, claimed responsibility.
Then the evening of June 12, when Civil Guardsmen approached two people changing the license plate of a Datsun in the San José suburb of Guadalupe, the two men opened fire on the guardsmen, killing three.
Another guardsman gave chase in a taxi, which the assailants fired on, killing the taxi driver.
Patrolmen found the Datsun parked by the Torres River and caught Viviana Gallardo, a 19-year-old University of Costa Rica student, daughter of a middle-class Costa Rican family, trying to dump the body of her wounded comrade, Carlos Enrique Enríquez, into a ditch. Enríquez died of his wounds.
Gallardo was arrested and subsequently killed in her jail cell by one of her prison guards, José Manuel Bolaños, 23, who sought revenge for the murder of his fellow guardsmen.
Police then broke Gallardo’s ring of more than a dozen guerrillas in the making, which the press dubbed “La Familia.” They later were given lengthy prison sentences on conspiracy charges.
At the beginning of the decade, relations between the Costa Rican and Sandinista governments began to sour as the Sandinistas started pressuring moderates in the country to toe an increasingly radical line, something that developed along with the creation in Honduras of a U.S.-backed Contra rebel army from a core of former members of the National Guard of deposed dictator Anastasio Somoza.
Meanwhile, a number of former moderate Sandinistas sought exile in Costa Rica, eventually taking up arms. Principal among them was Eden “Comandante Cero” Pastora, the hero of the seizure of Somoza’s National Assembly in 1978, widely seen as the beginning of the end of the Somoza dynasty.
Pastora began operating from camps inside Costa Rica, briefly taking San Juan del Sur in 1984. Eventually the Sandinistas abandoned the entire southern part of Nicaragua, allowing Contras to control the densely jungled and strategically unimportant area rather than engage in a two-front war.
A President in a Bind
Pastora’s presence in Costa Rica put President Luis Alberto Monge in an embarrassing predicament.
On the one hand, Monge denounced Marxist Leninism as the main threat to Central America, music to the ears of the Reagan administration. On the other hand, in an effort to keep Costa Rica on the sidelines of the war, Monge declared perpetual and disarmed neutrality, a policy that obliged him to pressure Pastora and other groups to restrict their activities to Nicaragua.
But Monge’s tightrope act did not go over well with Contra opponents in the U.S. and Europe, who denounced the presence of Contras in Costa Rica or with members of Monge’s own National Liberation Party, deeply divided over the Contra issue.
To keep the internal forces in balance, Monge placed the Ministry of Public Security in the hands of party members opposing the Contras, and the Ministry of Interior in the hands of those supporting the Contras. Reports were rampant of Ministry of Public Security personnel breaking up Contra camps and seizing weapons, and Ministry of Interior personnel assisting the Contras to transport arms supplies.
In 1984, amid strange unsubstantiated rumors of a possible coup attempt in Costa Rica, Monge reshuffled his cabinet, placing pro-Contra businessman Benjamín Piza as Minister of Public Security and lawyer Enrique Obregón, more faithful to Monge’s neutrality policy, as Minister of the Interior.
Piza proved to be a strong defender of the Reagan policy in Central America, overseeing military training for Costa Rican police officers by U.S. Green Berets at a Civil Guard camp in the northern province of Guanacaste and eventually helping U.S. National Security Council advisor Oliver North establish a secret airstrip on the Santa Elena Peninsula to illegally run arms to the Contras in Nicaragua. Also instrumental in this effort was U.S. Ambassador Lewis Tambs, who eventually told congressional Iran-Contra investigators that he understood his main mission in Costa Rica was to help establish a so-called “Southern Front” for the Contras under U.S. leadership, aiming to unseat the Sandinistas.
The effort was a difficult one, mainly because of the resistance of Pastora to accepting CIA direction. Such was the enmity between the CIA and Pastora, who said he would not be a party to installing another Somoza regime in Nicaragua, that when a terrorist posing as a Danish journalist exploded a bomb at a Pastora press conference on May 30, 1984 at the guerrilla encampment of La Penca, the CIA came under immediate suspicion (see separate story).
Contras and Drugs
Contra supporters also came under suspicion for drug trafficking in order to pay for the Contra effort at a time when U.S. aid to the contras had been cut off by Congress.
Much of the information on drug-trafficking came to light in the investigation by Massachusetts Senator John Kerry and the Congressional investigation into the Iran-Contra controversy. The record shows that U.S. officials, including CIA director William Casey and Oliver North, set up a private network to assist the Contras that was used by drug traffickers as cover to ferry drugs into the United States.
North himself met with Panamanian dictator Manuel Noriega to recruit the known drug trafficker into the Contra effort. Among a group of pilots eventually arrested in Costa Rica for drug trafficking, who also ran guns for the Contras, was eventually Noriega’s personal pilot, Floyd Carlton Cáceres.
Several other drug-running operations tied to the Contras were also uncovered, including the fishing operations Frigoríficos de Puntarenas and a ring headed by Nicaraguan exile Horacio Pereira, who was sentenced to 12 years in a Costa Rican prison but fled the country before he could serve his term, and was eventually murdered in Guatemala. In the late 1990s, the CIA’s own Inspector General found that Contra-related drug trafficking occurred in at least 51 cases.
Ticos and Drugs
Independent of the Contras, Costa Rica had a serious drug-trafficking problem of its own, made manifest in March of 1985 when notorious Mexican drug lord Rafael Caro Quintero, wanted for the murder of U.S. Drug Enforcement Agent Enrique Camarena, found refuge in Costa Rica, entering the country in a small plane without having to pass through Immigration or Customs.
Caro Quintero was discovered and arrested by Tico and U.S. authorities in a mansion near the airport in Alajuela and returned to Mexico for prosecution. But the incident prompted the Legislative Assembly to investigate the penetration of the drug mafia into Costa Rica.
A special investigative commission led by Congressman Alberto Fait found that a “superior political authority” had been responsible for Caro’s brief stay in Costa Rica, without naming any individual.
The commission also recommended that Ambassador Tambs, Oliver North, former U.S.,Maj. Gen. Richard Secord, U.S. National Security Advisor John Poindexter and former CIA station chief Joe Fernández be banned from Costa Rica for creating circumstances in their support for the Contras for drug trafficking in Costa Rican territory. The recommendation was acted on by President Oscar Arias.
The congressional commission also investigated the connection between U.S. drug trafficker James Lionel Casey, arrested in Costa Rica in the possession of an Irish passport, and former Costa Rican President Daniel Oduber, to whom Casey had made a $2,000 campaign contribution. Oduber denied any knowledge of Casey’s drug-running past.
The commission also cast suspicion on National Liberation Party congressman Leonel Villalobos, who was eventually arrested in possession of a large quantity of cocaine. Another celebrated case of politics mixing with drug trafficking was that of Ricardo Alem, a National Liberation Party member, convicted of cocaine smuggling.
Arias Gets Tough
Costa Ricans were deeply divided over the activities of the Contras in their national territory. Polls showed, however, that a clear majority of Ticos were concerned about the possibility of being dragged into Nicaragua’s Contra war. Amid this uncertainty, National Liberation Party presidential candidate Oscar Arias won the 1986 election on a peace platform, promising to keep Costa Rica out of the war. Arias let it be known immediately that he would seek disarmament of all guerrilla groups, including the Contras, as the backbone of his peace efforts.
Before his inauguration, Arias told U.S. journalist John McLaughlin that he would advise the Reagan Administration to give economic aid to Central American countries rather than aid to the Contras. In his inauguration address, Arias announced his intention to promote agreement on the so-called Contadora peace process led by Mexico, Panama, Colombia and Venezuela.
The Reagan Administration had drawn a line in the sand against communism in Central America in El Salvador, and had put the full weight of U.S. might and prestige on the side of the Salvadorean government, despite the horrible human-rights record of the Salvadorean military and associated death squads.
The formation of the Contras in Honduras was intitally justified as a necessary (covert) operation to interdict arms from the Sandinista government to the Farabundo Martí Front for National Liberation guerrillas in El Salvador.
But opposition to the Contras in the U.S. and suspicion over the conduct of the war led the U.S. Congress to impose restrictions on Contra aid, first granting the assistance, then cutting it off, then renewing only humanitarian aid, all in knock-down, dragout budget battles.
Arias’s steadfast opposition to Contra aid in a face-to-face-meeting with Reagan was used in the halls of Congress to defeat the aid, earning Arias the enmity of the Reagan Administration and U.S. hawks in general. But the restriction of aid to the Contras did not deter the Reagan Administration, which the Iran-Contra record shows helped mount an effort by “private benefactors” to arm and supply the Contras.
It was in this context that North, along with Secord, built the secret airstrip on the Santa Elena Peninsula, from which “private benefactor” airplanes flew arms and supplies to the contras inside Nicaragua.
The Secret Airstrip
The airstrip, which The Tico Times and several international correspondents uncovered, had been built in a remote valley called Portero Grande. Residents in the area had reported seeing large aircraft coming and going, and Iran-Contra investigations eventually determined that on one occasion one of the aircraft had gotten stuck in the mud.
The airstrip’s ownership was traced to a company called the Santa Elena Development Corporation, which in turn was traced to a phantom company in Panama called Udall Resources. The principal of Udall was one Robert Olmstead, the pseudonym for a Vietnam buddy of Oliver North named William Haskell.
Udall Resources turned out to be just one of a bewildering number of shadow companies set up to cover the network providing assistance illegally to the Contras. The land the airstrip was on had been expropriated by the administration of Daniel Oduber, but the government could not take possession because the owners had not been paid.
Following revelations of the use of the airstrip to rearm the Contras, Arias made the expropriation final.
The expropriation became an irritant to U.S.-Costa Rican relations, and one occasion the U.S. used its influence to block an international to Costa Rica because of lack of progress in settling. Costa Rica eventually agreed to take the issue to World Bank arbitration, which resulted in Costa Rica paying the owners of the land $13 million.
Later, President Monge was to tell The Tico Times that “men with maps” whom he believed to be from the U.S. government had gained his permission to build the airstrip, against the possibility of a possible Sandinista invasion of Costa Rica.
Upon taking office, Arias told Ambassador Tambs to close the airstrip. Meanwhile, the Costa Rican President worked to bring together Central American presidents in a peace plan that called for disarmament of all regional guerrilla groups as a prelude to free elections.
Two weeks after the discovery of the airstrip, the Sandinistas shot down a cargo plane operated by the “private benefactors” in southern Nicaragua, capturing one of the occupants, Eugene Hasenfus. Recovered from the plane was a telephone book containing some numbers from Costa Rica.
Reporters determined that the Costa Rican phone numbers belonged to the Special Operations Office of the U.S. Embassy and the home of Tomás Castillo, which turned out to be the pseudonym of C.I.A. station chief Joe Fernández, linking the U.S. government to the “private benefactors.”
The Reagan Administration,with Reagan himself steadfastly vowing to support the Contras to the end, vehemently opposed the Arias plan. But in November 1986, when U.S. Attorney General Edwin Meese announced that U.S. officials had traded arms for hostages in Iran and used proceeds from the arms deal to arm contras in violation of a congressional ban, the lid was blown on the Iran-Contra scandal.
As a result, the Reagan Administration’s Central American policy, which had relied heavily on an obsession with the contra effort against the Sandinistas, fell apart. The fitting epitaph for the shenanigans that went on in Costa Rica during the contra era was provided by local farmer and self-described CIA operative John Hull, who told the UPI, “We never knew when things were going from overt to covert to pervert.”
In the resulting policy disarray in Washington, the Central American presidents were able to come to agreement on the historic Esquipulas peace accords signed on Aug. 7, 1987. The effort earned Arias the Nobel Peace Prize in October, 1987.
For the rest of the decade, tough negotiations to disarm guerrilla groups in both Nicaragua and El Salvador led to elections in both countries, won by La Prensa publisher Violeta Chamorro in Nicaragua in 1990 and businessman Armando Calderón, of the rightwing National Republican Alliance in El Salvador, in 1994.