Costa Rica Coffee Guide

Milking the Chinese Dragon

August 6, 2010

Chinese Foreign Minister Yang Jiechi touched down in Costa Rica amidst the country’s largest annual event. Nearly half of Costa Rica’s population was on its way to Cartago to pay homage to the Virgin Mary.

Stores were shuttered, workers stayed home, and a long stream of pilgrims walked from the country’s capital to the basilica, 13 miles west of the capital city of San José.

But President Laura Chinchilla’s cabinet members cleared their schedules and postponed other plans to receive the high-level official. He dined with Chinchilla for lunch, met with the foreign, finance, transportation and foreign trade ministers in the afternoon, and in the evening, he was received by former President Oscar Arias for a private dinner at the Costa Rican Museum of Art.

And the Costa Ricans were well prepared to greet Jiechi with a laundry list of requests, including funding for a 108- kilometer highway from the northern zone to the Caribbean port town of Limón (at an estimated cost of $221 million), money for clean energy initiatives, and financial backing for other infrastructure projects.

Already the Chinese have bought their Central American friend an immense, $83 million stadium, purchased over $300 million in government bonds, contributed $20 million to flood victims, increased a line of credit to the cash-strapped Banco Nacional, and pledged to pay half of a $1 billion effort to expand the national oil refinery in the Caribbean port of Moín.

“What I wonder when I see this shopping list presented to the Chinese is what ‘leverage’ the Costa Rican government might think it has with the Chinese,” said Carlos Denton, co-founder of the market research firm CIDGallup.

“Is Costa Rica going to threaten them with going back to recognizing Taiwan? I doubt it. I thought it was a bit embarrassing to see Costa Rica asking for all of this.”

In a move called “intelligent” by some and “an act of betrayal” by others, in 2007 Costa Rica ended its 63-year relationship with Taiwan to join the mainland People’s Republic of China’s “One China” campaign.

Since then, China has made an example of Costa Rica, said Willy Soto, international relations professor at the NationalUniversity in Heredia, with a gift of a “very visible and very palpable” soccer stadium, and pumping the country with other economic benefits.

“China is using Costa Rica as an example of all the foreign aid and commercial gains that other countries can have if they take the same path as Costa Rica,” he said. “China is holding on to the hope that others will follow.”


Imperial Designs?


But with the move to align itself with China nearly three years in the past, some question the motivation for China’s continuing presence in the country.

“What interest does China have in a country as small as Costa Rica?” Soto asked. “Costa Rica is not a big market. There is not much to be gained economically here.”

The question many are asking is whether Costa Rica is selling itself to Asian imperialists.

Michael Shifter, president of the Washington, D.C.-based Inter-American Dialogue, a non-profit policy analysis center, doubts that China’s presence in Costa Rica is an effort to make the Latin American country its lap dog.

“China is interested in two things in Latin America,” he said. “One is to buy commodities and, the second, the question of Taiwan.

“There is not much to gain economically in Costa Rica,” he continued. “But Costa Rica is politically and symbolically significant. They want to reward Costa Rica for its decision in the hope it will influence others.”

Shifter stresses the importance of maintaining the country’s ideals, because questions of the environment and human rights aren’t as high on the Asian country’s list of priorities.

“Knowing Costa Rica, I think they will make their priorities clear,” Shifter said of the Central American country, which is well-versed in pitching itself as a world leader in promoting peace and the environment. “If Costa Rica can benefit economically from these gifts, I don’t see a real problem in accepting them, as long as it doesn’t end up distorting its own path of where it wants to go as a country.”

Soto said there is little difference between Costa Rica’s new relationship with China and the one it has had with the United States. “As long as Costa Rica is an intelligent player, it should only benefit,” he concluded

Where Costa Rica should be more cautious is in accepting future gifts that don’t involve its workforce, said former U.S. Ambassador to Costa Rica Frank McNeil, who also served in diplomatic posts in East Asia. That the National Stadium is being constructed without employing a single Tico worker is a mistake, McNeil said. “This is not a project that lends itself to development. It doesn’t help Costa Rica become a developed country.”

And while McNeil agreed China probably does not have imperialistic motives, it does struggle with transparency.

“Chinese like to keep things secret,” he said. “Therefore, Costa Ricans need to insist on transparency.”

Despite a growth of conspiracy theories, McNeil agrees that China is not out to conquer Latin America.

“What this is though, is an effort to increase their trade and nail down resources,” he said. “They want to make a lot of money.”


Seeking Mutual Benefit


Earlier this year, Costa Rica demonstrated it would not become a Chinese puppet when it refused to rubber stamp a request for worker’s visas on behalf of a Chinese construction firm. René Castro, Costa Rican foreign minister, indicated that the situation “was not discussed in depth” during Jiechi’s visit, but that “both countries have expressed agreement in attracting businesses and investors who understand the processes.”

And, rather than continue eating out of China’s hand, Costa Rican officials have stated a need to move from a benefactor-beneficiary relationship to one in which projects are more mutually beneficial.

“It’s important to have a relationship that matures day-by-day,” said Castro, adding that he wants more of “a relationship between equals.”


Facts on China-

Costa Rica Relations

– Costa Rica established relations with China in 2007

– China boasts the world’s third largest economy

– China is Costa Rica’s second biggest trading partner

– In 1999, Costa Rica exported $91 million to China. In 2009, they exported $1.4 billion.

– Under the proposed free trade agreement, currently before Costa Rica’s Legislative Assembly, orange juice, rum, flowers, shrimp and paint coming from Costa Rica will not pay tariffs in China. Fifty-seven percent of Chinese products coming to Costa Rica – including apples, figs, musical instruments and athletic shoes – will not pay tariffs.



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