Costa Rica’s recent referendum was supposed to decide once and for all whether that country should enter into the Central American Free Trade Agreement (CAFTA). Instead, the Oct. 7 vote polarized and politicized this small country of four and a half million people more than anything since neighboring Nicaragua’s war between the Sandinistas and the Contras two decades ago. And even though supporters of the treaty prevailed by a slim margin, CAFTA opponents still have a few cards to play and may yet block its implementation.

Leaders from the five Central American countries signed CAFTA in May 2004, with the Dominican Republican coming on board a few months later. Whereas the other countries were quick to ratify the accord, in Costa Rica, the trade deal was controversial from the start. It was the main issue of the 2006 presidential elections, where former President Oscar Arias emerged victorious by a mere 1.1% margin ahead of Otton Solis, leader of the newly created and progressive Citizens Action Party (PAC).

Costa Rica has not been completely immune from Washington Consensus policies, which since the mid-1980s have included the promotion of non-traditional exports, the privatization of sectors such as banking and a slow decrease in public spending on social services. Although perhaps not as marked as other Latin American countries (Costa Rica has been able to maintain the highest development indicators in Central America), such policies did have an impact, with inequality rising as well as the real minimum wage and the poverty rate, at around 20%, remaining stagnant since the early 1980s. These factors contributed to the movement against CAFTA.

Yes v. No

To settle matters, the Electoral Tribunal declared that the CAFTA issue would be resolved via referendum. Banners appeared around the country, as did bumper stickers, pins and t-shirts. In a country where Pura Vida (the pure life) is the national slogan, reflecting its laid-back, peaceful nature, the debate generated around this issue caused a tense polemic.

Having arrived in Costa Rica at the end of July, I was quickly brought up to speed on the debate and assured by many Ticos (the name Costa Ricans use to refer to themselves) that I was witnessing “a period of history like no other” ever before seen in the country. Through my work at the Inter-American Human Rights Institute, located in San Jose, I had the opportunity to serve as a volunteer international observer, where I was able to visit a variety of different voting centers and witness the referendum process first hand.

Throughout the six-month campaign, the Yes side maintained a constant yet narrow lead in the polls. As referendum day grew closer, however, polls began to show the gap closing between the Yes and No sides, indicating a technical tie. The Thursday before the vote, the final poll revealed a surprising result: the No side appeared to be leading by an 8-12% margin. Three days later, on referendum day, all bets seemed to be on a victory – albeit a tight one – for the No voters.

At the end of the day though, the final tally showed the Yes side having won with 51.61% of the vote, just three percentage points ahead of the No camp. Two days after the referendum, a Wall Street Journal editorial referred to the outcome as a “triumph of Costa Rican hope and confidence over the fear peddled by opponents.” The Yes camp in Costa Rica also tried to connect the No camp with fear, using slogans such as “No to Fear, Yes to the FTA.” A closer look at the events that transpired throughout the campaign, however, reveals a different story.

Strategy Based on Fear

From the onset of the campaign, the Yes side, led primarily by President Arias and business leaders, appeared confident in their ability to use their influence and resources to sway voters to approve the trade deal. During my first few days in Costa Rica, I was struck by a full-page ad from the Yes camp in San Jose’s major newspaper, La Nacion. The ad states: “What interest do Hugo Chavez, Fidel Castro and Daniel Ortega have in us not approving the FTA? They are the ones behind those who want to destabilize our democracy. Let’s wake up: Cuba, Venezuela and Nicaragua – hands off. We Ticos will be the ones who decide: Yes to the FTA.”

Weeks later, an engineer for a major multinational fruit company confided that the company is pressuring employees to vote in favor of CAFTA and threatening to relocate to Nicaragua in the case that it doesn’t pass. Another worker for a major microchip manufacturer told me that all employees have been receiving long emails detailing why they must vote Yes and also hinting at relocation if CAFTA doesn’t pass. A security guard explained that he will be voting in favor of the accord, because he is convinced that those who are against the trade deal are communists and no good for the country.

The Albania of Central America

Then, in early September, the leaking of a memo from the top Yes strategists made explicit what had been obvious to observers of the campaign from its onset: that they were in fact the ones peddling fear. Among the suggestions promoted in the memo sent by a congressman and then second vice-president, Kevin Casas (who was forced to resign over the incident), to Arias and his brother, included threatening to cut off mayors from federal funds if they didn’t deliver votes in favor of the trade accord. The Memo also included a neatly laid out four-pronged fear-mongering campaign: 1) Create fear of losing jobs. 2) Create fear of attack on democratic institutions. 3) Create fear of foreign meddling (i.e. from Fidel Castro, Hugo Chavez and Daniel Ortega). 4) Create fear of the impact of a No vote on the government. Finally, the Memo also suggested organizing visits to the largest businesses in the country, as this is described as the easiest and best way to spread pro-trade propaganda.

Demonstrating that he got the memo, Arias’s message throughout the campaign was that if Costa Ricans were to reject the FTA, the country would become isolated, would lose current trade preferences under the Caribbean Basin Initiative and would lose all possibilities of negotiating future trade agreements, not only with the United States but with Europe as well. His rhetoric included stating that Costa Rica would be transformed, from the Switzerland of Central America to the Albania of Central America. In an interview a few days before the vote, Arias declared that rejecting the deal would be equivalent to “collective suicide” for the country.

As if the national fear campaign were not enough, the United States felt the need to weigh in on the debate at the last minute. On the Friday before the vote, U.S. Trade Representative Susan Schwab sent a message to Costa Ricans in order to “set the record straight,” and left open to speculation the chance that the Caribbean Basin Initiative trade preferences would not be renewed. Then, on Saturday, just one day before the vote, Bush himself sent a message to Costa Ricans via the White House spokesperson, reiterating that the United States would not renegotiate a trade deal if Costa Ricans were to reject CAFTA.

Referendum Day

Overall, the day transpired smoothly and peacefully. Having said that, the fear propagated throughout the campaign was also visible in subtle and not-so-subtle ways on the day of the Referendum. Here’s a summary of what I saw first hand:

  • As we drive to visit different voting centers, we listen to Radio Columbia, one of the most popular national radio channels, where they are providing an all day live broadcast on the referendum. Not surprisingly, great coverage is given to the last-minute U.S. messages that the trade deal would not be renegotiated. The additional reports are almost exclusively from the Yes side, which begin to send a message of victory early on in the day.
  • The driver accompanying us shows me a text message he has received from his employer that states: “I hope you’ve all gone out to vote Yes. Today the only No will be against the unionists and Chavista deputies.”
  • Despite any form of electoral propaganda being strictly prohibited inside or near any voting centers, in one school we visit, I am directed to a locked classroom in which two large ads for the Yes side have been posted to the inside windows. The ads show the picture of both a Yes and a No leader, the Yes supporter portrayed as a high-level government representative whereas the No leader is portrayed as an unknown union leader. The heading reads: “Who do you trust?”
  • During briefings, along with other observers, I hear many reports of citizens simply stating they had come out to support the government and that they had “voted for the President.”
  • The Yes side has buses shuttling people to their voting centers. Businesses also provide transportation for their employees to vote. There are reports that businesses are keeping track of who is going out to vote. In one voting center, the Yes tent set up outside the voting center, is keeping a list of who enters the voting center.

Patriotic Committees

Two days after the vote, the PAC party announced that they would not block the “implementing agenda,” which refers to a set of 12 laws that must be passed in order to adapt national law to CAFTA. Congress now has until March 1 2008, before the agreement expires, to pass these laws. Instead, PAC leader Solis has said they will look to implement a “mitigation” agenda that would include agricultural subsides and an increase in education spending.

The citizens’ “patriotic committees” set up to oppose the trade agreement have re-grouped in full force, with newspaper reports stating that the number of people attending some recent meetings is higher than at similar meetings prior to the vote. CAFTA opponents’ energy will now be channeled towards presenting official complaints in regards to the irregularities observed throughout the process, as well as towards resisting the implementation agenda. Arias and the CAFTA supporters in Congress appear nervous and are reviewing proposals for combining several laws together under a larger umbrella law in order to speed up passage. Whether this can be done – given the close vote results and the continued pressure of citizens groups and anti-CAFTA congressmen – remains to be seen.

In the end, the vote was about more than just the accord. It posed a crucial question regarding the country’s development paradigm: Should Costa Rica maintain its model of heavy government intervention? Or should it join the rest of Central America in the race to open markets and globalize?

For the moment, fear appears to have won. But whereas the Yes campaign was top-down and dominated by government and business interests, the No movement was diverse, horizontal and innovative it its strategies, using grassroots organizing, door to door campaigning, and the Internet as forms of getting their message out. It was able to unite a broad spectrum of groups – including students, academics, environmentalists, feminists, and unions – as one movement.

The “Patriotic committees,” which have sprouted up around the country, are an indication that this process of social transformation that was awakened will not easily disappear. Even if CAFTA does ultimately get implemented in Costa Rica, all is far from lost.

Elsa Arismendi, a former Institute for Policy Studies intern, is a contributor to Foreign Policy In Focus ( and a program officer at the Inter-American Institute for Human Rights (IIHR) in Costa Rica. She was an international observer during the Costa Rican referendum on CAFTA.

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