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Real Progress: Fifty Years of USAID in Costa Rica
The Reagan administration sought additional aid for Central America and in
1983 established a bipartisan commission chaired by former Secretary of State
Henry Kissinger to recommend a longer-term programme. The Kissinger Commission
proposed a five-year programme of USD1.2 billion in annual economic
aid to the region, along with substantial military aid. Congress appropriated
about USD1 billion annually for the rest of the decade.
In the early years of the Kissinger programme, USAID, the administration, and
Congress generally agreed on allocation of aid to the Central American countries.
By the late 1980s, however, discrepancies appeared. By 1987, USAID proposed
lower funding levels to Costa Rica, for two reasons: the progress being made, and
the concern that continued high levels would create permanent dependence. Congress
feared such cuts would signal dissatisfaction with the Central American peace
efforts of the then-president Oscar Arias, and it specified continued high levels of
funding for Costa Rica. By 1991, however, the Sandinistas had been voted out of
power in Nicaragua, economic recovery was well under way in the rest of the region,
and US aid to Central America began to decline sharply. In 1994, USAID declared
Costa Rica an aid “graduate” and established a timetable for phase-out of programmes
there by 1996. USAID offices closed in September 1996, though some
modest activity has since continued through USAID’s Central American regional
programmes.
How much aid was provided?
The US Government provided slightly more than USD1.7 billion in direct bilateral
aid to Costa Rica during 1946-95. Measured in constant 1994 dollars, the total
amounts to USD2.9 billion. Additional US aid flowed to Costa Rica through other
channels. Perhaps USD150 million came from USAID’s Regional Office for Central
America and Panama, and another USD100 million or so came from activities
funded by USAID/Washington. Finally, US government contributions to multilateral
organisations that carried out programmes in Costa Rica included USD903 million
in loans from the World Bank, USD1.72 billion in loans from the Inter-American
Development Bank (IDB), and USD27 million in grants from United Nations programmes.
All these multilateral agencies depend on US government support, ranging
from 20-25% for World Bank and UN programmes to half for IDB loans through its
Fund for Special Operations. Nevertheless, most of the funding from the multilateral
banks is not foreign aid in the usual sense. The banks obtain most of their
resources by using guarantees from member countries to raise funds in capital markets
to be re-lent at commercial interest rates.
Altogether, then, bilateral US aid to Costa Rica aggregates to about USD2 billion
in congressionally appropriated dollars, or about USD3 billion in constant 1994
dollars – nearly USD1 000 for each Costa Rican citizen alive in 1994. US economic
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