343. Memorandum of Conversation1

SUBJECT

  • The President’s meeting with President Rodrigo Carazo Odio of Costa Rica

PARTICIPANTS

  • The President
  • Zbigniew Brzezinski, Assistant to the President for National Security Affairs
  • Henry Owen, Ambassador-at-Large
  • Guy Erb, Deputy Director of International Development and Cooperation Administration
  • John Bushnell, Deputy Assistant Secretary for Interamerican Affairs
  • Ambassador Francis J. McNeil
  • Robert Pastor, NSC staff member
  • President Rodrigo Carazo Odio
  • Mario Carazo Zeledon (son)
  • Ambassador Jose Rafael Echeverria
  • Foreign Minister Bernd Niehous
  • Neil Seidenman (interpreter)

The President welcomed President Carazo, expressing his pleasure in having the opportunity to meet with him. (U)

President Carazo thanked the President, recalling the warmth and responsiveness that he and his Administration have shown in dealings with Costa Rica. He considered it to be an historic imperative to meet with the President within his final weeks in office, and to convey to him his appreciation and recognition for the close relationships which the President has developed with Latin America, after so many years and so many problems. He was gratified to be able to speak with the President and share with him some of his country’s current problems. (C)

The President thanked President Carazo for his remarks, adding that the U.S. and Costa Rica had indeed worked together on some common problems. He expressed gratitude to President Carazo for his country’s cooperation in regard to the Cuban refugees, and its contribution to the maintenance of stability in Central America, despite severe tests and trials of patience. (C)

President Carazo assured the President that their common position regarding the Cuban refugees was not simply a product of the occasion, [Page 845] but rather a reflection of the values the U.S. and Costa Rica attach to humanitarian considerations. He considered the attitude of the Castro regime towards the U.S. and the world as an expression of contempt for human dignity, an insult, and a serious situation in our time. Accordingly, when the situation at the Peruvian Embassy deteriorated, the Costa Rican government decided to act for the common cause.2 President Carazo added that for him it was a source of shame to see a country of our hemisphere, having common geographic, ethnic, and historical roots, committing these acts. Therefore, he felt that in taking the position he did he was above all commanded by conscience.

The President asked what Costa Rica could do to prevent Cuba from transporting arms to other countries of Central America in support of subversive activities.

President Carazo stated that the problem of Cuba’s intervention in the region was a serious matter. His government, the U.S. government, and all of Central America were aware of it. He stressed that the situation in Central America was being exploited not only by Cuba but by all outside groups that wanted to destabilize those countries, and the struggle was at its worst in El Salvador, in a battle of the extremes. Unfortunately, it was a situation that had its effects on Costa Rica as well, if only in the political aspect. In response to the President’s query, he stated that Costa Rica would need assistance from the U.S., inasmuch as Costa Rica alone lacked the military and technical wherewithal to monitor this type of activity. The Costa Rican authorities have been aware of and have discussed with the U.S. Ambassador certain activities centered in the Cuban Consulate in San Jose, and the government has undertaken to act accordingly. But Costa Rica was not equipped to maintain effective control of its air space, and the Cubans were aware of this. He said that up to the present, they have not used Costa Rican territory, but they have used Nicaraguan territory. This was a serious development. And just the week before, the Cubans moved arms through Nicaragua to El Salvador, using aircraft bought in Costa Rica. This was the first time a move of this kind by the Cubans had been detected. Up until then, we had not been aware of such movements.

President Carter responded that the most helpful step we might take at this point would be to provide assistance from our intelligence, to be combined with information developed by the Costa Rican government, to prevent Costa Rican territory from being utilized.

[Page 846]

The President mentioned Costa Rica’s negotiations with the IMF and asked whether President Carazo is expecting a visit in January from the IMF.

President Carazo confirmed this, indicating that there would be an IMF mission to Costa Rica in January. The Costa Rican Minister of Finance was at the moment engaged in discussions at the IMF. Costa Rica was determined to define and resolve its short-term obligations, which at the moment constituted their heaviest burden, in view of payments due in the coming months on non-governmental trade operations accounts. And in regard to the special arrangement being sought with the IMF, which President Carazo thought Costa Rica would be granted—given the importance of solving the financial problem, the Fund has also shown consideration of the political implications. In Costa Rica, the President of course could not give orders to the legislature, which pretty much did what it pleases! A bill has been pending for some months now, designed to address fiscal matters, still awaiting legislative disposition, which is not a very satisfactory situation. Of course, a democracy had to operate in this fashion. This explained a part of the problem vis-à-vis the IMF, which wants immediate action. In addition, Costa Rica has adopted a few non-traditional measures. The IMF traditionally required curbing imports. In the interest of its relationship with the IMF, Costa Rica has taken a number of unorthodox steps, but as temporary measures to tide it over the 90–100 days pending the special arrangement. Costa Rica also desires, with the IMF’s agreement, to seek means of handling its balance-of-payments deficit, under pressure of short-term trade obligations in an environment of rising costs of goods purchased abroad against weakening prices for Costa Rica’s exports, primarily coffee. The arrangement would require reform and reinforcement in areas mentioned. Besides IMF, Costa Rica was also seeking cooperation from various private and commercial banks in the U.S. and other countries. (C)

President Carazo went on to say that Nicaragua obtained a special arrangement with the IMF. But then Nicaragua suspended payments abroad. Costa Rica did not wish to follow Nicaragua’s path and risk jeopardizing its good name and credit standing. In dealing with the various credit institutions, Costa Rica has sought to bring about an awareness of the political sensitivity of coffee exports for the country. And operating in a context of fixed quotas and fixed prices could jeopardize the country’s ability to sustain the terms of payment, which would pose a serious problem. (C)

President Carter pointed out that he had seen many instances in which executive authorities had been able to benefit by the IMF’s requirements for restraint by countries in such circumstances. A case in point was Prime Minister Callaghan of Great Britain, facing a Parlia[Page 847]ment that did not want to go along with certain measures, which were finally obtained thanks to the IMF’s position. Much the same happened with Mexico, Egypt, Turkey. So that, if Costa Rica could negotiate well with the IMF regarding steps President Carazo basically approved of, this might provide the necessary elements of discipline for the legislature to resolve the problems. The President said he had observed how the IMF could play a constructive role in the assessment of the political consequences involved in situations of this kind. (C)

President Carter went on to state that the U.S. Government was pursuing opportunities, within our budgetary limitations, to meet Costa Rica’s needs under PL 480. We were also reviewing Costa Rica’s concern regarding the airline contracts, and were aware that the Costa Rican government preferred Pan American. The President explained that our government just wanted to try to accommodate our carriers by providing the opportunity to compete in the market, and at the same time, bring about more access to Costa Rica from Miami, Houston, Los Angeles. The President said he did not know what could be done on this issue, but he wanted President Carazo’s views. (C)

President Carazo expressed his appreciation for the President’s attention to these matters, which were of great interest to Costa Rica. Of particular importance were the arrangements under CCC and Title II, as Ambassador McNeil was aware from their many discussions. He said that Costa Rica looked with great optimism on a prospective solution to the problem. Their concern regarding the airline contracts was centered primarily on Pan American’s (PAA) established personnel structure. President Carazo remarked that he regarded PAA with personal affection, since he himself had been a PAA employee at one time! Employment is an important factor. He would not wish to see undue harm to many Costa Ricans who had been on the company’s payroll for so many years.3 (C)

President Carazo made brief mention of two other items. The first was a regional meat import quota. He expressed the hope that a complementary formula might be adopted in the application of the Central American quotas, so that if, for example, Guatemala fell short of using its full quota, the unused portion would not be allocated to Australia or New Zealand, but rather to the Central American region. Secondly, the President applauded the Carter Administration’s approach to AID policy, emphasizing the private sector. This had been valuable in devel[Page 848]opmental efforts, since aside from public agencies, various private institutions were essential factors in economic development. Therefore, the shift of emphasis in the flow of credits was a positive development, and he wanted to encourage that. (C)

President Carter thanked President Carazo, and asked if Costa Rica had meat to export. President Carazo said “yes,” and the President responded that he had just eliminated the meat quota system and so the U.S. market was open for all Costa Rica could export.4 (C)

President Carazo said, “Magnifico!” He concluded by extending to President and Mrs. Carter a standing invitation to visit Costa Rica as a great friend of that country. (U)

  1. Source: Carter Library, National Security Affairs, Staff Material, North/South, Pastor Files, Country Files, Box 10, Costa Rica: 5/80–1/81. Confidential. The meeting took place in the Oval Office. Carazo was on a private visit to the United States November 29–December 1.
  2. See Document 334.
  3. Following a December 30 order by the United States Civil Aviation Board, Air Florida inaugurated its Miami to San José service on January 1, 1981, replacing Pan American airlines. (Telegram 341865 to San José, December 30, and telegram 82 from San José, January 7; National Archives, RG 59, Central Foreign Policy File, D810001–0017 and D810009–0764 respectively)
  4. In telegram 319896 to multiple posts, December 3, the Department transmitted a November 28 press release from the Department of Agriculture “announcing the President’s intention to suspend meat import quotas in 1981.” (National Archives, RG 59, Central Foreign Policy File, D800577–0077)