Former Costa Rican president tells CNN, ‘We should be ashamed of this poverty’

July 27, 2013

Former Costa Rican President and Nobel Peace Prize winner Oscar Arias offered a harsh assessment of Latin America’s fight against poverty since the consolidation of democracy in the region three decades ago.

“Democracy has not yielded fruit, not only in Central America but across all of Latin America,” Arias, who won a Nobel Peace Prize in 1987 for his role in negotiating an end to regional civil wars, said in a Thursday interview on CNN México’s “Aristegui.”

The Noble Prize winner said Latin America has fallen behind other developing countries when it comes to addressing poverty, especially China.

Arias, who twice served as president from 1986-1990 and 2006-2010, noted that the region’s tax structure was one of its biggest challenges. The former president said that the tax system in Costa Rica was regressive, with the brunt of the burden falling on lower-income citizens, and has gone unreformed for 12 years.

“There is great inequality in Latin America because the wealthy don’t pay their taxes,” Arias said.

According to World Bank data, inequality has been rising in Costa Rica since 2005. Costa Rica’s Gini coefficient, an income distribution index, trails behind Nicaragua, El Salvador and the Dominican Republic.

Guatemala and Honduras remain the most unequal countries in Latin America.

Despite Arias’ dire assessment, many have celebrated the drop in extreme poverty in Latin America during the last decade and the expansion of the region’s middle class.

A June report from the World Bank lauded Latin America and the Caribbean for reducing extreme poverty by 50 percent and growing its middle class between 1995 to 2011.

Central America and Mexico, however, remain at the rear of these gains. This region has the largest number of people living in extreme poverty in Latin America. According to the World Bank, 16.4 percent of people in Mexico and Central America are extremely poor, compared to 10.6 percent in the Southern Cone, the Latin America’s leader. 

The former president suggested that Latin America was unable to move beyond the idea of spending its way out of poverty, namely through social programs and the expansion of the welfare state.

This kind of social spending however, epitomized by conditional cash transfer programs like Brazil’s Bolsa Familia and Mexico’s Oportunidades that pay poor families small amounts of money provided they spend it on education or health care, has been credited with lifting millions out of poverty in Latin America.

The World Bank reported that 60 million people were lifted out of poverty in Latin America between 2003 and 2008. 

This progress, however, did not satisfy Arias.

“We should be ashamed of this poverty and Costa Rica is no exception,” he lamented. 

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