Costa Rica Graduates From US Foreign Aid

After half a century and $2.7 billion in assistance, Costa Rica last month slipped quietly off the roster of nations receiving funds from the US Agency for International Development (AID).

Costa Rica's graduation from American support, based on economic and social progress, comes amid deep criticism of foreign aid in some quarters of the United States as wasteful use of tax money.

But to observers and residents here, the program is viewed as a major success.

Experts say AID's activities helped salvage the nation's economy, improved social conditions for thousands, and instigated much-needed agricultural reform. The assistance also helped Costa Rica reduce its dependence on exports of coffee and bananas.

"US taxpayers have got more than their money's worth," argues Mark Schneider, AID's assistant administrator for Latin America and the Caribbean. "Costa Rica now imports more US goods than Poland, Hungary, and Romania combined."

Costa Rica follows a handful of other AID graduates, including Argentina, Botswana, Thailand, Tunisia, and Uruguay, all of which saw AID depart in 1995. Estonia will soon follow suit. AID's budget for the year ending Sept. 30 is $5.8 billion.

In 1982, Costa Rican faced economic collapse as coffee prices fell and oil costs rose. The coln currency lost much of its value and inflation soared. San Jose was soon defaulting on foreign debt.

The recovery occurred during a decade of so-called "structural adjustment," with the government opening the economy in return for assistance from groups such as the International Monetary Fund and the Inter-American Development Bank. AID, though not the only influence, played a key role in Costa Rica's progress, advocates say.

By 1995, exports of nontraditional products reached $1.4 billion - 57 percent of total exports - up from just $90 million 12 years earlier.

Poverty and low wages persist for many people here. The purchasing power of the average yearly income is now about $5,800. But AID's impact on social-welfare programs here has been dramatic, supporters say. About 93 percent of Costa Ricans now have easy access to safe drinking water. Adult literacy is 94 percent. Infant mortality has dropped from 110 deaths per 1,000 births in 1950 to 12 in 1995. Family-planning efforts funded by AID have curbed population growth. In 1950, the average Costa Rican woman had seven children. Today, she has three.

During the 1980s, to keep AID funds rolling in, Costa Rica had to secretly give up its neutrality toward the civil war in neighboring Nicaragua. US-backed Contra rebels staged raids on Nicaragua from bases in northern Costa Rica. Critics say this reveals how AID became overly politicized during the 1980s.

Mr. Schneider says, "The end of the cold war has centered the focus on the more traditional forms of development," rather than on US political interests.