On Sunday Luis Guillermo Solis, candidate of the Citizens Action Party (PAC) was elected president with 1.3 million votes (almost 78% of the vote). This was a great result (300,000 more votes that Solis was hoping to get and the highest relative support in recent decades) even if he was running against himself since the other candidate (from the governing PLN) abandoned the campaign trail in early March.
The election of Solis is an exciting change: he is not a career politician and this is the first time left-center PAC wins the election. What should be his priorities? And how likely is he to deliver fundamental change? We had an interesting panel yesterday at Canning House were it was clear that Costa Rica faces many challenges and that change in policies may be less substantial than initially expected.
Solis has five different challenges that can be written as questions:
1. How can the country reverse the unequal pattern of income distribution? How can the government tackle the crisis of social security, both in health care and pensions?
2. How can it increase tax revenues and deal with the country’s difficult fiscal position?
3. How can Costa Rica build an economy with two motors which depends less on non-traditional exports from the export processing zones?
4. How can the new government stop the erosion of state institutions and increase state capacity?
5. How should it promote transparency and get politicians closer to the people?
In confronting these questions, it is clear that Solís will try to slow down the past neoliberal agenda, continue some of the good policies (e.g. education) from the last administration, try to pass a tax reform and strengthen social insurance. In practical terms, this means that the accent on free trade agreements will diminish (Costa Rica is unlikely to become a full member of the Pacific Alliance) while an accent on state subsidies for agriculture and a push for a reform of social insurance is likely. These are all welcome changes, but they are more footnotes to the current model than a radical transformation.
Solis will have to confront significant political challenges: he is an outsider to his own party, has a very small minority in the Legislative Assembly (the PAC has 12 deputies out of 57 plus another one that was surprisingly spelled from the party but will likely support its agenda) and will have to deal with a PLN (the most important political party in Costa Rica which has 18 deputies) which is very divided. To success, he will have to promote social dialogue and build a direct relation to the electorate, which helps to pressure political parties in the Assembly to build coalitions and implement reforms. Easier said than done!