(Corrects Guatemala local-currency rating in 20th paragraph, Rousseff’s presidency in 23rd.)
March 1 (Bloomberg) -- Drug legalization in Central America merits a “serious” debate as a solution to the crime and violence coursing through the region even if it runs up against U.S. opposition, said Costa Rican President Laura Chinchilla.
“If we keep doing what we have been when the results today are worse than 10 years ago, we’ll never get anywhere and could wind up like Mexico or Colombia,” Chinchilla said yesterday in an interview in San Jose.
While U.S. opposition to legalization is well-known, Central Americans “have the right to discuss it” because “we are paying a very high price,” said Chinchilla, 52.
She isn’t the only leader to part company with the U.S. by calling for consideration of alternatives to military action to counter Mexican drug cartels. These traffickers have unleashed a fresh bout of violence in the region as they establish new routes to smuggle cocaine to the U.S., the world’s largest consumer of narcotics, according to a United Nations report.
Guatemala’s President Otto Perez, a former army general, said Feb. 13 that “if drug consumption isn’t reduced, the problem will continue,” and suggested legalizing the use and transport of drugs even while proposing a military crackdown. Seeking to win over other nations to give the legalization proposal more heft, he was turned down by Panama and El Salvador.
Blaming the U.S.
In his Jan. 10 inauguration speech, Nicaraguan President Daniel Ortega said that while the U.S. “continues to fail to control the consumption of drugs, it continues to contaminate and poison this region.” Ortega has not taken a public position on legalization.
Trafficking in Central America has reached “alarming and unprecedented” levels as cocaine passing through the region may equal about 5 percent of the countries’ gross domestic product, the UN International Narcotics Control Board said in a Feb. 27 report.
“Despite efforts to counter drug trafficking in Costa Rica, Honduras and Nicaragua, in 2010, those countries were, for the first time, identified as major transit countries,” according to the UN board.
In Costa Rica, murders jumped to 11 per 100,000 inhabitants in 2010 from 7 in 2006, according to the UN Office on Drugs and Crime. That rate compares with 13 per 100,000 in Nicaragua, 41 in Guatemala and 82 in Honduras.
Having dismantled its army in 1948, Costa Rica has had to tackle drug-related violence differently from its neighbors, Chinchilla said. For example, last year the country ratified a law to decriminalize drug possession in recreational quantities.
In response a surge in crime, Chinchilla has added 1,500 police officers since taking office in May 2010. This year her government plans to add at least 400 more patrol cars to reduce response time for reported crimes, Security Minister Mario Zamora said in December.
When she won the 2010 elections, Costa Rica’s first female president became leader of a country with Central America’s lowest murder rate and whose 4.3 million citizens are on average the region’s wealthiest. Still, crime was on the rise and the previous administration’s spending saddled her with a 2010 budget deficit of 5.2 percent, highest in the region.
With two years remaining in power, the former security minister is struggling to preserve Costa Rica’s self-image, enshrined in a popular song entitled “The Switzerland of Central America.” Her approval rating slumped to a record low of 23 percent in January, according to a quarterly poll published by San Jose-based research firm Unimer, which had a margin of error of 2.8 percent. Chinchilla is barred by the constitution from seeking a second, successive term.
“Costa Rica is far from the Central American oasis that it used to be,” said Michael Shifter, president of Washington-based research group Inter-American Dialogue, in an e-mailed message. “Its vulnerability is real and it has little experience in dealing with the drug problem.”
The U.S. would be “smart” to engage with Costa Rica “right now before more violence and intense drug trafficking gets there,” said Vanda Felbab-Brown, a fellow at the Brookings Institution in Washington and author of “Shooting Up: Counterinsurgency and the War on Drugs.” For its part, Costa Rica needs “to try to make law enforcement more efficient.”
Chinchilla met with U.S. Homeland Security Secretary Janet Napolitano two days ago and Guatemala’s deputy president, Roxanna Baldetti de Paz, yesterday. Napolitano, who this week has been meeting with the region’s leaders, reiterated on Feb. 28 the U.S. position that legalization “is not the way” to stop drug traffic.
In Washington, the spokesman for White House Drug Policy Director Gil Kerlikowske, Rafael Lemaitre, said President Barack Obama’s goal is to reduce the demand for drugs in the U.S. Even so, Lemaitre said, “Neither a law-enforcement only ‘war on drugs’ approach or outright drug legalization are policies that are realistic, humane, or grounded in research.”
Despite the rising drug violence, Costa Rica’s economy is proving resilient. Foreign direct investment rose 52 percent to a record $1.56 billion in the first nine months of 2011. Gross domestic product expanded 4.2 percent last year, compared with 4.7 percent in 2010, reaching $7,691, the highest in Central America.
Still, fiscal woes have cast a shadow on the country’s growth outlook. With the economy weighed down by a deficit of more than $2 billion, central bank President Rodrigo Bolanos predicted in January that growth will slow to 3.8 percent this year.
Increased government spending and stalled tax legislation prompted Standard & Poor to cut Costa Rica’s local-currency credit rating on Feb. 13 by one level to BB, two levels below investment grade and one level below Guatemala.
The yield on Costa Rica 6.548 percent bonds due in 2014 fell 25 basis points, or 0.25 percentage point, to 2.908 percent this year, according to data compiled by Bloomberg. The yield on Guatemala 2013 bonds dropped 38 basis points to 3.117 percent in the same period.
The colon weakened 0.3 percent to 513 per U.S. dollar today and has depreciated 0.2 percent this year as of 11:25 a.m. New York time. That compares with a 9.2 percent appreciation of Mexico’s peso in the same period. In Panama, the balboa is pegged to the dollar.
Married and mother of a 15-year-old son, Chinchilla studied public policy at Georgetown University in Washington and is among a recent crop of first-time Latin American female leaders. Dilma Rousseff became president of Brazil in 2011, Cristina Fernandez de Kirchner was re-elected president of Argentina last year and Michelle Bachelet governed Chile for four years between 2006 and 2010.
Nobel Prize Winner
Chinchilla is a member of the National Liberation Party, which demilitarized the country and has produced some of the nation’s most influential politicians, including her predecessor and mentor, Nobel Peace Prize winner Oscar Arias.
Costa Rica and its northern neighbor, Nicaragua, have engaged in frequent border disputes. Chinchilla said that even though her country has “suffered many aggressive incursions” from Nicaragua, she is willing to overlook those hostilities and has the “utmost confidence” both countries can work together on the drug problem.
“No Central American leader is more knowledgeable about the security issue than President Chinchilla: her expertise in this area is unquestioned,” said Shifter. Still, “her country’s politics are complicated and have put her leadership skills to a severe test.”
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