76. Memorandum of conversation, April 24, between Foreign Minister-designate Oduber and Edwin M. Martin 1
SUBJECT
- Economic Policies of Incoming Orlich Administration
PARTICIPANTS
- Daniel Oduber Quirós, Foreign Minister-Designate of Costa Rica
- Mr. Edwin M. Martin, Assistant Secretary of State
- Mr. Arturo Morales-Carrión, Deputy Assistant Secretary
- Mr. V.P. Randolph III, Officer in Charge, Costa Rican Affairs
- Mr. Sacha Volman, U.S. member of Directorate of Institute of Political Education, San José, Costa Rica
SUMMARY
In an informal, get-acquainted meeting with Department officials, Oduber discussed (1) the budgetary crisis (2) his government’s intention to institute reforms and (3) its policies toward education and Central American integration.
Mr. Oduber stated that Costa Rica’s primary problem was its current budgetary crisis. Using a figure of 420 million colones for the 1961 budget, Oduber said that of this sum 180 million colones due in taxes had not been collected, and blamed the vested coffee and sugar-producing interests behind the outgoing Echandi Government for contributing to the budgetary shortfall by failing to pay their higher taxes imposed by the 1961 tax reform law. He noted also that import (and duties) had fallen as a result of the 1961 tariff increase enacted with the advice of the IMF.
Oduber declared that first priority in the new Orlich government is going to be tax reform; that the new government has already a reform program worked out (he did not elaborate on this program); and that it will be submitted at an early date to the Legislative Assembly in which the Orlich government has an “overwhelming” majority. Oduber declared that his government felt the United States should not loan or give any Latin American government a penny until needed internal reforms were carried out and mentioned that Costa Rica had already made a start in self-help measures. Oduber repeatedly pledged that his government would implement such reforms before it sought assistance from the United States. He mentioned that President-elect Orlich [Typeset Page 198] wished to visit the United States after his reform program was underway.
Mr. Martin observed that it was difficult, if not impossible, for the Department of State to ask Congress for funds for budgetary support if the country in question had not collected the taxes due it, and emphasized internal fiscal reform [Facsimile Page 2] as a requisite for financial assistance. Mr. Martin also stressed the U.S. reluctance to supply local currency costs in development projects, adding that local currency needs in special cases might be furnished during the transition period of local reform.
Oduber gave as his opinion that this transition period in Costa Rica might last as long as 10 years, but that the Orlich government would push immediately for internal reform, especially revision of the tax structure, despite the considerable internal opposition which is bound to develop.
Turning to economic matters of wider scope, Oduber said his government was fully committed to all forms of Central American integration, especially in the economic and educational fields. He noted that El Salvador was cooperating fully in Central American integration and Honduras to a lesser extent. Oduber said his “group” favors having price increases accruing from a World Coffee Agreement turned back to the government for it to help establish producers’ cooperatives to break the big growers’ control over the coffee industry. Oduber also referred to Costa Rica’s shortage of properly-utilized land and stated that the Orlich Government’s policy of “land reform” will be to encourage farmers to stay on the land by providing adequate rural education.
Oduber concluded by promising the full cooperation of the Orlich Government in working for the goals of the Alliance for Progress.
COMMENT
Not once during his 50 minutes with Mr. Martin did Oduber mention the name of José Figueres, leader of Oduber’s (and Orlich’s) Popular Liberation Party.
- Economic policies of incoming Orlich administration. Confidential. 2 pp. DOS, CF, 818.13/4–2462.↩