R40593
Costa Rica: Background and U.S. Relations
May 22, 2009
Download Locations
Summary
Costa Rica is a relatively politically stable and economically developed nation with a long tradition of civilian democracy. Former president (1986-1990) and Nobel-laureate Oscar Arias of the National Liberation Party was elected President in 2006. Throughout his term, Arias has focused on expanding the countrys social safety net and increasing free trade. He faced strong opposition to the countrys inclusion in the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), but eventually secured its ratification and implementation. Arias has also been active in foreign affairs, establishing diplomatic relations with China and Cuba after decades without formal ties. Once a predominantly agricultural nation, Costa Rica has established a diversified economy with a strong export sector. Under President Arias, the country has increased its social investment, experienced significant economic growth, and seen a reduction in poverty. The global financial crisis and economic downturn, however, threatens to erase these gains. President Arias has responded to the crisis with an ambitious fiscal stimulus and social protection plan. While the plan may do much to mitigate the social impacts of the crisis, analysts believe it will be unable to prevent Costa Ricas economy from slowing considerably in 2009. In recent years, many have begun to recognize Costa Rica as a world leader in environmental protection. Successive Costa Rican administrations have sought to address the extensive deforestation and environmental degradation that resulted from decades of logging and agricultural expansion. The countrys innovative policies, strong conservation system, and commitment to alternative energy have done much to restore Costa Ricas environment. Costa Rica is also party to a variety of international treaties and has committed to becoming carbon neutral by 2021. This commitment to environmental protection has been a major source of economic growth for the country as Costa Rica is now a top destination for ecotourism. The United States and Costa Rica have long enjoyed close relations as a result of the countries shared commitments to strengthening democracy, improving human rights, and advancing free trade. The countries have also maintained strong commercial ties, which are likely to become even more extensive as a result of the implementation of CAFTA-DR. Costa Rica and the United States have worked together on a number of other issues as well, such as conserving Costa Ricas tropical forests and combating narcotics trafficking. For additional information see CRS Report RL31870, The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), by J. F. Hornbeck, CRS Report RL34112, Gangs in Central America, by Clare Ribando Seelke, and CRS Report R40135, Mrida Initiative for Mexico and Central America: Funding and Policy Issues, by Clare Ribando Seelke and June S. Beittel.
