SUSAN SEGAL [President and Chief Executive Officer, Americas Society / Council of the Americas]: Please, everybody. Hello? (Clinks glass.) Thank you. (Chuckles.) Good evening and welcome, everyone. And thank you for joining us this evening. We are so pleased and honored this evening to welcome back to the Americas Society and Council of the Americas the President of Costa Rica, Her Excellency Laura Chinchilla Miranda. President Chinchilla.
Before we begin, I would also like to give a very special welcome to Enrique Castillo, minister of foreign affairs; Anabel Gonzalez, minister of foreign trade—Anabel—(applause); Gloria Abraham, minister of agriculture—(applause)—not only my dear friend, but our dear friend Muni Figueres—(applause)—ambassador to the United States; Eduardo Ulibarri, permanent representative to the United Nations—(applause)—oh my gosh, we can—we'll never get through this list—(laughter)—Jose Rossi, president of the Costa Rican Investment Promotion Agency; Saul Weisleder, deputy permanent representative to the United Nations; and of course my dear friend Enrique Iglesias who has joined us this evening who we all know from—who is the secretary general of Iberoamericana and we all know for many, many years. (Applause.) I also want to thank our sponsors of this evening's event: The AES Corporation, Barrick Gold Corporation, CitiGroup, Corporacion America, Microsoft and NEC. Thank you all very much.
Since taking office a little over a year ago Costa Rica's first female president has worked to bolster the economy based upon the foundations of her environmentally conscious and sustainable nation. Under her leadership, Costa Rica has attracted new strategic foreign direct investment such as IBM's center, which I would like to point out was announced at our conference—(chuckles)—in Costa Rica last June. Tourism and ecotourism continue to grow steadily, and with President Chinchilla's support the new international airport planned for the Osa Peninsula promises its continued—continual growth of tourism. And on social issues, her Red de Cuido plan has taken an existing national child care plan and broadened it to include the elderly.
While she faces many challenges, her commitment to growth, competitiveness, innovation, entrepreneurship and a better life for all Costa Ricans remains steadfast. It is no wonder that Forbes recently named her one of the world's most—hundred-most powerful women. And I must admit too, there are so many women ministers, this is so fantastic. (Chuckles.) Again, it is just a great honor for us that—to welcome the president of Costa Rica, Laura Chinchilla. Thank you so much for being here. President Chinchilla. (Applause.)
PRESIDENT LAURA CHINCHILLA: Well, thank you. Thank you very much, Susan, for your very nice words about me and about my country. This is my second year here and I really appreciate the opportunity you give me again. And for those who are—were with us the last year, you will excuse me because I will need to repeat some of the contents, of course, because I am going to talk about my country. And probably there will be some new news, good news I hope, concerning the task we have been performing during this first year.
So dear friends, I would like first to express my gratitude for the invitation extended to me by the Council of the Americas to meet with a very selected group of people interested in my country. I also thank all of you for joining us today—tonight.
Costa Rica has an exceptional history. Our commitment to democracy, the rule of law and human development are not fruits of (fate ?). They are the consequence of explicit choices made throughout our life as a nation. No one forced us to declare and legislate that primary education should be free and universal in 1869, before all of Latin America, before England, before nearly every state in this very country. No one forced us to create in 1940 a public health care social security system underpinned by values of solidarity—a system that explains why Costa Rica now has the same life expectancy as the United States.
No one forced us to say in 1948 that we wanted to be the first country in the world without an army—that we refused to squander our resources on fighting imaginary wars, that we were unwilling to invest even one cent on military gear when we could invest these resources in building schools for our children. No one forced us to take on the task of protecting the biodiversity in a nearly 40-year-long effort that today places almost a third of our territory under some form of environmental protection regime.
No one forced us to devote well over a century to nurturing the institutions that currently make Costa Rica's democracy the most stable in the developing world. This is our legacy and we take pride in that heritage. But this is not enough. Historical inertia will not alone make Costa Rica a developed country. Costa Rica will take the developmental leap only if it proves capable of applying the blessings that it has inherited and the achievements that it has accrued along the way.
Development is not an unavoidable fate but an option to be chosen. I am convinced that the best way to multiply that which nature and history have given us involves a—our—involves our embracing globalization without reservations, hedging our bets for growth on an economy that is even more open, ever more integrated to the world and increasingly based on our ability to innovate and to create. That is the best way to honor our past and to ensure that Costa Rica remains a democratic, prosperous, just and secure society at peace with the environment.
There are lots that we are doing, and even more that we must do to give life to this vision. And in this first year my administration has been implementing a very ambitious plan to bring even more progress to our nation. Our first order of business involves expanding and improving our public education across all levels. Costa Rica currently invests more than 7 percent of its GDP in public education—one of the highest figures in the entire hemisphere. But this task goes beyond the issue of resources alone. And that is why we have taken other steps to consolidate our educational system such that—such that it matches the requirements of a society aspiring to succeed in the global economy.
We are running a comprehensive program aimed at proving our people with the necessary language skills to thrive in the world. We expect that in six years 100 percent of our high school students will be fully bilingual. We have afforded our schoolchildren access to technology. Currently over 80 percent of our public elementary schools have computer labs. As a result of liberalizing our telecommunications sector, we also have national telecommunications fund that will allow broadband connectivity in 100 percent of our public schools by 2015. Through the creation of close to 100 new technical high schools, we will be able to double the number of students that benefit from this kind of training and are thus ready to join the labor force with an enhanced skill level. This much and more—we pledge to make our young people as worldly and productive as they can be.
Our second priority involves core trademarks of our economic policy—research, development and innovation. Almost 40 percent of our exports are high-technology products, a number higher than China or Ireland's. This is the right path, but we want the technology that we export to reflect the ingenuity within Costa Rica too. We have not undertaken this task from a low level. Data from the World Economic Forum reveals that the quality of Costa Rica's research institutions and the availability of scientists and engineers are not far from Korea's and exceed Chile, Mexico and Brussels.
Our free trade zones now offer significant benefits for those manufacturing companies with local operation that allocate at least 0.5 percent of their sales on research and development. But we must strengthen the links between universities and firms, expand incentives for innovation and accelerate the formation of a professional class of individuals capable of performing and excelling in the most advanced technological fields.
Third, we are committed to improving our infrastructure. We need to dramatically improve our performance in utility, road, transportation and energy sectors. We have a structure—an investment plan budgeted at $5 billion to address the needs, which we intend to finance through a mixture of international credit, public investment and private-sector participation.
Fourth, we are taking strides to preserve Costa Rica as a safe country in a very challenging regional context. We are strengthening the law enforcement capabilities of our institutions and at the same time implementing drug abuse and crime prevention programs. Costa Rica continues to be one of the safest countries in Latin America, and we will do whatever it takes to keep it that way.
Last but not least, we have escalated our efforts to forge dense links between Costa Rica and the world economy. Costa Rica's agreements with its trading partners, including Europe, China and the United States of America, allow anyone who exports from Costa Rica tax exempt access to almost 70 percent of the global economy. In the last case—(in the last case ?), our exports have doubled and continue to grow rapidly not just in amount but in diversity and sophistication. Today I'm proud to say that we export over 4,000 different products to almost 150 countries around the world, that we are Latin America's first high-tech exporter and its top per capita exporter of non-natural resource products.
We rank number three as recipients affording direct investment per capita in Latin America. In the last 10 years, foreign direct investment flows to Costa Rica have increased more than threefold. On average during this decade such flows have represented over 6 percent of our country's GDP. More than 200 of the leading companies and services—advanced manufacturing and life sciences, among others—have made Costa Rica their home.
My dear friends, we are conscious of the challenges that lie ahead, but at the same time we are convinced that Costa Rica has the fundamental requirements for excelling in the region and in the world—clever and innovate people—innovative people, a stable political system based on respect for the rule of law, sound economic policies, an ideal geographical position, a strong social network and a deep respect towards our environment. We truly believe that by keeping our commitment to the values that supported the building of our nation, Costa Rica's on the right path to successful development.
I want to invite all of you to take part of our very exceptional and successful story. I want you to be partners of a country that pays tribute to its past by standing on the front line of progress, a country that views the world not as a threat but as an enormous opportunity better to protect the values that have made it so special. Thank you very much. (Applause.) Thank you. Thank you.
MS. SEGAL: Madam President, thank you very much for your inspiring comments about your country. And now we're going to—she has agreed to take some questions. So if you could—four questions. And so if you could—(off mic)—if you could raise your hand and identify yourself? Please identify yourself.
Q: Madam President, it's an honor to be here with you. Thanks for coming.
PRESIDENT CHINCHILLA: Thank you.
Q: My name is Roger Ullman; I'm the director of Linden Trust for Conservation. We are an environmental protection organization, and one of the sponsors of the—(inaudible).
PRESIDENT CHINCHILLA: OK.
Q: Thank you. My question relates to your marine control and surveillance strategy, implementing new technologies to better control your marine territory for your national security and protect the marine biodiversity. Can you share with us a little bit your vision for that? (Thank you ?).
PRESIDENT CHINCHILLA: Well, as I told you, we don't have an army. And that means that although we have—follow a quite different strategy to protect ourselves—that has to do with strengthening the rule of law, the independence of the judiciary, the professionalization of the police and the prevention of drug abuse and crime—we do believe in international cooperation. So what we have done in order to better patrol our seas is to establish some special instruments between Costa Rica and many other countries from Europe, United States and the Caribbean.
According to these instruments, we are—we have a kind of joint patrolling of the seas. And this has been very successful concerning at least this issue of the drug flows. However, we understand that we have to do a little bit more concerning, for example, the illegal fishing. In that sense last year I signed—decreed executive decree strengthening the protection of some part of our seas. So this is going to bring us new resources from international cooperation so we can be able to be more effective in terms of protecting our maritime fauna (or ?) our seas.
MS. SEGAL: Down here is a question.
Q: Hi—(inaudible). I would like to ask you about the trade you just mentioned.
MS. SEGAL: Could you identify yourself?
Q: Oh, sorry. (Inaudible)—from—(inaudible)—News. I would like to ask about trade. You just mentioned the three accords that you've signed with China. Will this increased trade with China somehow compensate the deceleration of the economies of Europe and the United States? Thank you very much.
MS. SEGAL: Of course.
PRESDIENT CHINCHILLA: If you don't mind, I would like my minister of trade to answer the question because she has been dealing, of course, with the approval of the China treaty in our congress. That was already approved, but I would like you to—I would like her to give you the answer. Anabel?
ANABEL GONZALEZ: Thank you. I should probably start by saying that Costa Rica has traditionally been oriented to the industrialized markets, in particular of course the U.S. with whom we have a very close trade investment relationship, but also to Europe. Nevertheless, I believe that—gracias—nevertheless we believe that it is very important for us to explore new opportunities with China. So we engage into the negotiation for a free trade agreement with China that was approved in our congress and came into effect—(off side conversation)—
MS. GONZALEZ: OK. That was approved—oh, I hope you understood me—(laughter)—you heard me before.
PRESIDENT CHINCHILLA: You will need to start—(chuckles).
MS. SEGAL: We did, we did.
MS. GONZALEZ: You did? OK. That was approved by our congress and that came into effect on August 1st. So we are exploring these new trade and investment opportunities and we believe that in the area of trade, there are two very important areas. One is for our agricultural products—you know, traditional products like coffee, bananas, our pineapples, pork, meats in general, orange juice, other juices, et cetera.
But the second one also very important, and it refers to global value chains because Costa Rica is a very strong participant in global value chains of high-tech products. Actually, 43 percent of our exports are directly related to participation in one of five global value chains in the area of electronics, medical devices, automotive, aeronautics and broadcasting devices. So with China, a lot of them—our center is the U.S. but China is an increasingly important partner in these global value chains as well. So that's one area.
The second one is in the area of investment. We are beginning to work very closely with China, and we are looking at a number of investments in areas to improve our competitiveness. We are talking about an oil refinery, we are talking about basic infrastructure; we are talking about telecommunications as well. But most importantly, from my perspective, also is to work with China to use Costa Rica as an export platform to export to different parts of the Western hemisphere in particular. And we are beginning to see a lot of interest in China, particularly in the area of clean technologies. But this is work in progress and—so to answer, you know, in a summary: Yes, we are looking at opportunities in China as well.
Q: Thank you.
MS. SEGAL: Yes? Back here, please.
Q: Good night—(inaudible). My name is—(inaudible)—from CitiGroup. It's an honor to be here today. My question is about the fiscal reforms. During the past few days there have been very, very encouraging news about having a fiscal reform. Your government has been negotiating with—(inaudible)—partners—to move forward in fiscal reform. Will you share with us your views about the importance of this fiscal reform?
MS. SEGAL: OK.
PRESIDENT CHINCHILLA: Yes. We have probably the most—the most concerning problem we have in terms of our macroeconomic stability has to do with the fiscal deficit. Our public finances were affected in 2009 when the economy slowed down. And also the government at that time tried to compensate the economic cycle with more public resources. This situation created a problem in terms of fiscal deficit. Now we have just presented the new budget to congress. It is being discussed at this time. And the fiscal deficit for next year is estimated in 5.5 percent of GDP. This is—this is a problem.
And so that is why we have been trying to get the approval from congress of a fiscal reform. The fiscal reform is supposed to give us about 2.5 percent of GDP. And it has to do basically with including some services and goods that were accepted before. We are also transforming the tax we now have, which is the sales tax, into an add-value tax. And I would say that probably that is the most important issues that are included. And also we are taxing some revenues coming from capital gains. That is, in general terms, the most important characteristics of the fiscal reform we have proposed.
This is not easy. It is not easy in any country to get political consensus around new taxes. And the same is happening in Costa Rica. But at least last week we were able to move one very important step ahead. We got the support of one of the most important political parties represented in congress. And I hope we can overcome this very important problem to us. Of course, at the same time, my administration is trying to be more—much more moderate in its spending, and also we have been implementing a very aggressive campaign in terms of prosecuting those who are evading the payment of taxes.
MS. SEGAL: Are there any questions—right here, thank you.
Q: Good evening. (In Spanish.)
PRESIDENT CHINCHILLA: Gracias.
Q: (Inaudible)—regarding education. I want to know, what do you attribute the success of your educational system? And if it could be replicated in other countries, what would other countries need to be successful as Costa Rica has been with this system?
PRESIDENT CHINCHILLA: Well, education has been always very important for our country. And we have been working with this priority probably, I would say, since the beginning of our nation as an independent republic. Just to give you a very significant data, my nation was founded by educators. The first president we had was a professor, while in other Latin American countries you find that the nations were founded by soldiers—by generals. So that mark a very important difference.
But, of course, I think that also we started earlier than most of the Latin American countries. Most of the countries now have the opportunity to improve the education systems. Latin America has to recognize that we have to do much more in terms of giving our young people more opportunities. Probably the most important resource—the most important asset that we Latin Americans have is young people. And we are not taking advantage of this very important asset.
One of the most dramatic problems we have in Latin America is—(in Spanish).
MS. SEGAL: Is school drop-out rates.
PRESIDENT CHINCHILLA: The school drop outs. And that is why, also, we have such amount of crimes and juvenile violence in Latin America. But I think that now that Latin America is going through a very—in general terms, a very positive situation in terms of having more resources to invest in development. The priorities should be education, education and education for our young people.
Q: Would you—is this success based on—(inaudible)—schools, is it the teachers? What, to you—is it the curriculum? What do you—that it has been so….
PRESIDENT CHINCHILLA: Well, first, I would say that we gave education a priority. And that was always the same thing. And secondly—we were more prepared than other nations when we went out to the world to invite investors to come to our country. And secondly, we have been also adding some new—some new programs to give our students newer skills, like, for example, computing; a second language. And now we are moving very fast to introduce what we call the technical education. So what you have to do is to continuously be improving the education they are receiving.
MS. SEGAL: I understand you are willing to take one more, Madam President?
PRESIDENT CHINCHILLA: Sure, sure.
MS. SEGAL: OK. We can take one more. Yeah? Ed?
Q: Madam President, my name is Ed Cloonan. I'm with Greenwich Point Group and a member of the board of directors of the council. Quick question: You're here for the United Nations. I was wondering if you could characterize the relationship with the United States right now and what—maybe one, two or the three top issues that you have with the United States that need to be addressed or give rise to some concerns for you and your country?
PRESIDENT CHINCHILLA: I think the United States is quite concentrated in its own domestic problems and also in problems that other parts of the world are facing. In a certain way Latin America is doing relatively well and that means that we do not call for the attention of other nations—not in the same way that in the past. I would say that now there are two—probably two major issues defining our relationship.
One is trade, which is always important, and at least in the case of Costa Rica we cannot complain because we already have a free trade agreement with the United States but there are still two of them pending, very important to (other ?) Latin American countries like the treaty with Colombia and Panama. And I don't know if the United States is going to—Congress is going to be able to pass these laws because you are already in the middle of the—of the political presidential election. And this is very political.
And the second issue, and probably the most important one for the United States not necessarily for us, is—defining our relationship—is security and mostly concerning the organized crime and the drug issue. We have been talking to them. We have a long-time agenda. I think this agenda has to be—has to be evaluated. And we should be able to introduce, probably, new alternatives because what is true is that we have been working with these instruments during the last 10 years, and at least the situation of Central America and Mexico today is worse than it was in the past.
But those are the most important issues. I have to recognize that the Obama administration has accepted that the drug issue has to be deal with as a problem that concerns both the producer nations and the consumer nations. They have accepted a concept which is very important to us, which is the core responsibility in dealing with these very important problems. Thank you. (Applause.) Thank you, thank you.
MS. SEGAL: With that, I want to thank the president for her open and frank remarks and I want to wish her a lot of luck. And before that I want to—can I have my glass of wine, please, because I think we should all raise a glass—(off-side conversation).
MS. SEGAL: I don't need my glasses for this. (Laughter.) (Inaudible.)
I would like to propose a toast to Costa Rica, to President Chinchilla and to the relationship between the United States and Costa Rica and the hemisphere. Good luck, Madam President. (In Spanish.) To Costa Rica!
Now comes the dinner part. And I hope you will all enjoy your dinner. And, again, thank you for joining us. And particularly thank you to President Chinchilla and to her entire delegation for joining us this evening. Thank you very much. (Applause.)