A decade of civil war in neighboring Nicaragua did nothing to help Costa Rica’s financial crisis. Initially sympathetic to the Sandinista Liberation Front (FSLN), and their attempt to topple the right-wing dictatorship of ‘Tacho’ Somoza, President Rodrigo Carazo (1978-82), permitted the Sandinista forces to set up camps inside the Costa Rican border. However, when Somoza sent air forces to strike these camps Carazo withdrew his support, closed the camps and severed diplomatic relations with Nicaragua. In 1983 the new president, Luís Alberto Monge (1982-86), declared Costa Rica’s neutrality.
However, by this time, Nicaraguan exiles opposed to the Sandinistas had begun operating in San Jose. Backed by the U.S Reagan administration who wanted the socialist Sandinista threat eradicated, these exiles coalesced to form the Nicaraguan Democratic Front (FDN), otherwise known as the ‘Contras’, and Monge was put under immense U.S. pressure to commit to and support these ‘Contras’.
Fortunately neutrality was restored after the 1986 presidential elections, when a young, liberal, economic lawyer, Oscar Arias Sánchez, won a very close race by declaring himself the candidate for peace. Once in power he expulsed the ‘Contras’ and worked ceaselessly to develop the ‘Arias Peace Plan’ that would end civil war throughout the Central American region. On August 7th, 1987, the five Central American presidents signed the accord, and at the end of that year Arias was duly awarded the Nobel Peace Prize. In 1990 Nicaragua held its first ever democratic elections, largely the result of Arias’s efforts.
However, the war had further destabilized Costa Rica’s economy. Up to 250,000 Nicaraguan refugees and exiles flooded into the country, draining scarce resources, and international confidence suffered as a result of the unrest, causing a ‘flight’ of foreign capital and a 60% drop in trade.
Fortunately neutrality was restored after the 1986 presidential elections, when a young, liberal, economic lawyer, Oscar Arias Sánchez, won a very close race by declaring himself the candidate for peace. Once in power he expulsed the ‘Contras’ and worked ceaselessly to develop the ‘Arias Peace Plan’ that would end civil war throughout the Central American region. On August 7th, 1987, the five Central American presidents signed the accord, and at the end of that year Arias was duly awarded the Nobel Peace Prize. In 1990 Nicaragua held its first ever democratic elections, largely the result of Arias’s efforts.
However, the war had further destabilized Costa Rica’s economy. Up to 250,000 Nicaraguan refugees and exiles flooded into the country, draining scarce resources, and international confidence suffered as a result of the unrest, causing a ‘flight’ of foreign capital and a 60% drop in trade.
