Costa Rica and its friendship with Israel

Costa Rica is one of the most stable countries in all Latin America. Since its independence from Spain in 1821, it only had two brief periods of violence, being the last one in 1948. After the civil war, in 1949, President José Figueres Ferrer decided to abolish the army [1]. Since then, the country enjoys a strong democracy, despite the situation of its neighbors. During the ’80s, El Salvador, Guatemala, Honduras, and Nicaragua were all immersed in civil wars. At the same time, Costa Rica remained peaceful and even declared its neutrally under the government of Luis Alberto Monge. The peace at the region arrived in 1987 with the signature of the Esquipulas agreement. For his role in the negotiations, the then-president Oscar Arias Sanchez was awarded the Nobel Peace Prize later that year [2].

Since the beginning of the new millennium, Costa Rica had lived an “erosion” of its political system, with narrow elections that required second rounds in 2002, 2014, and 2018 [3]. In 2006, former President Oscar Arias Sánchez won the polls by only 1% with a significant percentage of abstention[4]. Another example occurred in 2007 when a referendum was held regarding the inclusion of Costa Rica on an FTA with the USA. The “yes” won with 51.7% against 48.3% of the “no” [5] Despite this fraction, the Costa Rican democracy is stable, and it is expected to remain as such

Israel- Costa Rica relationship

The excellent relationship between Costa Rica and Israel is even older than the state. In 1947, Costa Rica was a great supporter of the Partition Plan that established the creation of a Jewish State, next to an Arab one, at the Mandate of Palestine. The support was not only expressed by their affirmative vote, but the country also sent an Ambassador to the capitals of Latin America to achieve their support too [6].

In 1954, Costa Rica and Israel established diplomatic relations, when Israel presented his first diplomatic delegate to the country [7]. In 1962, the President of Costa Rica, Francisco Jose Orlich, visited the country and met with PM David Ben Gurion. Both leaders signed a treaty to open mutual embassies both in Jerusalem and San Jose [8]. In 1966, Israel opened its embassy in Costa Rica.

PM David Ben Gurion (L) welcoming the President of Costa Rica, Francisco Jose Orlich (R), at the PM Office in Jerusalem in 1962. Credit: GPO (Israel)

In 1980, after the annexation of East Jerusalem by the Knesset, the UN recommended to all 16 Embassies in the city (most of them from Latin American countries) to leave Jerusalem, and so the Costa Rican government did. However, only two years later, in 1982, the country moved back its Embassy to Jerusalem, as decided by President Luis Alberto Monge [9].

Costa Rica and El Salvador, remained the only countries with Embassies at the Holy City, until 2006. During that year, the President Oscar Arias Sanchez (on his second term), decided to move the embassy to Tel Aviv, to improve the diplomatic relations with the Arab countries. Since that year, the diplomatic representation is located in Ramat Gan, a city located next to Tel Aviv [10].

Since that year, despite the relationship between the countries, Costa Rica changed its pro-Israel policy. In 2008, the country recognized Palestine as a State. Under the presidency of Laura Chinchilla Miranda, the country voted for the access of the Palestinian to UNESCO (2011) and to the UN as an observant member (2012) [11]. In 2014, the Costa Rican government criticized both Israel and Hamas for the killing of innocent civilians in Operation Protection Edge. It even considered calling his Ambassador to Israel to consultations as a protest. [12].

In the last years, two Costa Ricans Foreign Ministers visited Israel, showing the importance of this small country to the Central American country. First, was FM Enrique Castillo in 2012, who met with President Peres and other multiple officials, including Vice PM, Moshe Ya’alon. The visit also included meetings with the PA officials in Ramallah [13]. In 2016, during the visit of Costa Rica’s Minister of Foreign Commerce, Alexander Mora, the country opened a commercial office in Israel, becoming the first Latin American country to do it. [14]

One year late, in 2017, FM Gonzales Sanz visited the country, having meetings with President Rivlin, PM Netanyahu, and with members of the local business community [15]. Rivlin expressed the great friendship between the nations and the fact that Israel will not forget that Costa Rica was among the first countries to open an Embassy in Jerusalem [16]. With PM Netanyahu, they discussed multiple areas of cooperation available [17].

President Rivlin (R) with FM of Costa Rica, Manuel Gonzalez Sanz at the President Residency in Jerusalem.
Credit: Mark Neyman / Government Press Office (Israel) / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)

Doing Business in Costa Rica

The Doing Business Report for 2020 positions Costa Rica in the 79th position of its ranking. Despite the multiple procedures needed to open a business, the time to open it is lower than the regional average. Regarding other aspects of the report, Costa Rica does exceptionally well in registering property and getting electricity (almost half of the time than OECD countries in both cases). The country also has a good credit system that respects the legal rights of the sides [18].

The country offers multiple advantages in the economic field. Its GDP has been growing during the last ten years, and it is expected to continue until 2024, with an annual rate of over 2% per year. That’s mean that the annual GDP of 62 billion USD, is expected to increase to over 80 billion USD in 2024. The inflation is likely to remain on the 3% per year scale during this period [19].

All this progress is due to the strong foundations of Costa Rican society. The absence of a military budget allows the government to relocate multiple resources to other areas. In this regard, I want to highlight the significant investment in education (7.63% of the GDP per year) and health ( 9.9% of the GDP per year), providing to its citizens some of the best systems in the world [20].

Buenaventura Corrales School, one of the oldest education institutions in Costa Rica.
Credit: Rodtico21 / CC BY-SA (https://creativecommons.org/licenses/by-sa/4.0)

This high-skilled labor force has transformed the Costa Rican economy (who use to be based on agriculture) to the second most innovative in the region (after Chile), and the forth hi-tech exporter in Latin America after Mexico, Brazil and Chile. In this regard, many international companies, including Microsoft, Intel, and Google, have established offices in the country. The investment in the health sector has also attracted many multinationals to the country, including P&G, Baxter, Abbott, Pzieser and more[21].

Intel’s factory in Costa Rica
Credit:Mariordo Mario Roberto Duran Ortiz / CC BY (https://creativecommons.org/licenses/by/3.0)

One of the most important sectors in the country is tourism. Costa Rica, despite its small size (0.03% of the world’s landmass), it has about 5% of the world’s biodiversity. The country has positioned itself as a center of ecotourism, with 25% of its land territory are national parks or protected territories. [22]During 2019, the country received over 3.1 million tourists (1.3 million from the US) and about 15 thousand Israelis[23].

Tortuga Island, Costa Rica
Photo by Atanas Malamov 
Cataratas del Toro, Costa Rica
Steve Jurvetson / CC BY (https://creativecommons.org/licenses/by/2.0)
A colorful macaw in Costa Rica,
Photo by Shannon Kunkle

Regarding the exports of the country, its main exports are electronic components (18 percent of total exports), medical equipment (7.3 percent), pineapples (7 percent), and bananas (6 percent). Costa Rica’s main export partner is the United States (37 percent of total exports). Almost half of their total exports go to North America (46%), while the percentage of the Middle East as a trade partner is virtually 0%. In 2019, the country exported goods for over 10 million USD to Israel and imported around 35 million USD [24].

Costa Rica is willing to increase its exports to Israel, focusing mainly on Pineapple , Bananas, coffee, and mangos. However, the importation of these products to Israel is very hard due to strict regulations by the Minister of Agriculture and the Minister of Health.

Organic Coffee plantation in Costa Rica.
Credit: Everjean / CC BY (https://creativecommons.org/licenses/by/2.0)

Opportunities for Business and Cooperation

There are multiple opportunities for cooperation between Costa Rica and Israel. Regarding the international relations, both countries are observer members at the Pacific Alliance, a regional group conformed by Chile, Colombia, Mexico, and Peru. A great proof of the country’s success is the fact that Costa Rica is about to enter the OECD, allowing better cooperation in the Economic and Development areas with Israel (a member of the group since 2010).

If we are speaking about development cooperation, it is important to highlight the role of MASHAV, Israel’s Agency for International Development Cooperation. Since 1958, the agency has trained hundreds of thousands of people from around the world, including over five thousand Costa Ricans in areas such as agriculture, sustainable development, entrepreneurship, education, and others. To learn more about MASHAV role, please watch this video: https://www.youtube.com/watch?v=yQHnezxknSw

Despite the economic success of the country, the country still has around 20% of poverty, and a high degree of social inequality, measured by the Gini coefficient. From 2006 to 2018, the coefficient increased from 0,496 to 0,514 . This inequality is also expressed in the business world. According to an IDB report, around 2% of the companies are responsible for more than 70% of the total exports of the country, while 73% are responsible for just 1%[25]. This situation is unsustainable, and its expressed already in the highest deficit that the government had in the last years.

To help improving this situation, the government impulsed a plan, that includes increasing the investment in R&D from 0,53% of the GDP to at least 1% (for comparison, the OECD countries invest 2,4% of their GDP and Israel over 4%), improving its infrastructure (roads, airports, ports), and more.[26] This plan presents an excellent opportunity for cooperation between governments, but also between businesses.

In the Business sector, there is an increased interest of Israeli companies in this country. In 2017, as a part of the visit of the Costa Rican FM, a meeting with business leaders was organized by Procomer, The Export Promotion Agency of Costa Rica. The event counted with the participation of executives from diverse companies of multiple areas such as medicine, banks, cosmetics, hi-tech, real estate, and more [27].

As seen, there are many opportunities for cooperation between Israel and Cota Rica. If you want to hear more about them, you can write to me in the contact section of this webpage.

References

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