• Costa Rica Real Estate

How Costa Rica is affected by US aid

April 12, 2019

The State Department of the United States says it will cut aid to the Central American countries of El Salvador, Guatemala and Honduras, also known as the Northern Triangle.

According to the State Department, US President Donald Trump’s decision impacts approximately $450 million from Fiscal Year 2018. The State Department and the United States Agency for International Development (USAID) are currently evaluating the impact on Fiscal Year 2017 allocations to those countries.

“The State Department and US Agency for International Development intend to consult with and notify the Congress regarding the planned reprogramming of funds, and that will be consistent with all applicable requirements,” Deputy Spokesperson Robert Palladino said at a recent press conference.

Over the last two years, $1.3 billion was earmarked for Central America for US official development aid, most of it to these three countries, according to AFP.

Why does the US provide foreign aid?

The nonpartisan Council on Foreign Relations (CFR) says “national security concerns have continued to drive U.S. assistance policy.” Foreign aid aims “to provide stability in conflicted regions, bolster allies, promote democracy, or contribute to counterterrorism and law enforcement efforts abroad.”

The US has “pushed repeatedly” to reduce the amount of money sent abroad since President Donald Trump took office, according to Reuters.

How does US aid impact Costa Rica? 

Though it receives far less than many other Central American countries, Costa Rica alone has benefited from more than $1.6 billion in US assistance since the 1940s, as detailed in a 2012 publication from the State Department.

“I believe I speak for most of us who were responsible at one time or another for US assistance here when I say that aiding Costa Rica was good foreign policy,” former US Ambassador to Costa Rica Frank McNeil wrote.

That money, provided through programs such as the United States Agency for International Development (USAID), has been utilized across a number of infrastructure, health, education and economic development initiatives in Costa Rica.

In the 1940s, the United States helped finance the construction of the Inter-American Highway in Costa Rica. The following decade, the US assisted with upgrades to what is now Juan Santamaría International Airport in Alajuela.

Following a polio outbreak in the 1950s, the United States helped build the National Children’s Hospital in San José and provided a grant to establish a medical school at the University of Costa Rica.

By 1996, “Costa Rica graduated from US assistance programs and the USAID mission in Costa Rica was closed,” according to the State Department.

But Costa Rica still falls under the United States’ Strategy for Central America, which “aims to secure US borders and protect American citizens by addressing the security, governance, and economic drivers of illegal immigration and transnational crime, while increasing opportunities for US and other businesses,” according to the State Department.

In 2017, USAID’s Office of U.S. Foreign Disaster Assistance provided $150,000 to help humanitarian efforts in response to Tropical Storm Nate. And earlier this year, the Foreign Ministry announced it was accepting more than $40 million from the United States to combat narcotrafficking and organized crime.

The US and Costa Rica also “enjoy robust bilateral law enforcement and security cooperation, and have signed a maritime cooperation agreement that facilitates narcotics seizures, illegal migrant rescues, illegal fishing seizures, and search-and-rescue missions,” according to the State Department.

The Costa Rica USA Foundation (CRUSA), endowed by both country’s governments after USAID’s mission in Costa Rica closed in 1996, continues to operate in support of sustainable development in Costa Rica.

How does the US benefit from its ties to Costa Rica? 

The US benefits economically from ties to Costa Rica. Costa Rica is a member of Dominican Republic–Central America Free Trade Agreement (CAFTA-DR), which resulted in a $770 million trade surplus in 2016, the last year for which full data is available, according to the Office of the United States Trade Representative.

The US and Costa Rica exchanged an estimated $15.2 billion in goods and services in 2016. The United States’ top exports to Costa Rica are mineral fuels and electrical machinery, while Costa Rica’s top exports to the US include optical and medical instruments, edible fruit and nuts, and coffee.

“United States development assistance to Costa Rica […] is one of the most successful examples of how two countries have worked together to bring rapid development with social peace and shared prosperity,” wrote Anne Andrew, a former US Ambassador to Costa Rica, in 2012.

While CAFTA-DR has benefited Costa Rica, it has also raised concerns of economic reliance on the United States. In March, Costa Rica entered into a free-trade agreement with South Korea, reducing tariffs between the two countries.

What happens if foreign aid stops? 

When contacted by The Tico Times about cuts in funding, the US Embassy in Guatemala referred us to the State Department and declined additional comment.

In a recent press briefing, Deputy Spokesperson Robert Palladino said “the President has determined that these [aid] programs have not effectively prevented illegal immigration from coming to the United States, and they’ve not achieved the desired results.”

Palladino did not provide details of how the US distributes money allocated to foreign governments. He also did had “nothing further to announce” about US government actions and did not comment on how US Embassies or USAID are affected by funding changes.

The US Embassy in Guatemala, El Salvador and Honduras have not issued official statements on how US humanitarian efforts in those countries will be affected.

“[Trump] has made it clear that foreign assistance should be in support of America’s national interests,” Palladino said. “And our national interests here are quite prioritized, and that is the crisis that we are facing along our border is a national security issue, and that’s what we’re addressing.”


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