#269 – The Expat Files: China’s Influence in Costa Rica and Cultural Dynamics

Automatically transcribed from the original recording; names and wording may contain errors.

[00:14] Hello there all you expat wannabes, I'm Johnny Mueller and you're listening to the Expat Files, living in Latin America. The show that tells you just what it's like to live, work, play and or retire down here in Latin America. It's a mix of the good, the bad, the ugly and the great, and it's all right here so let's get started. I'd like to read you a little news article now, forwarded to me by a friend and seminar attendee, Andreas. And it comes from a well known, down here anyway, expat gringo newsletter called the Costa Rican Times, which you may or may not have heard of, but it's the rag that every expat reads in Costa Rica, since 98% of expats down there don't know enough Spanish to get through the local newspaper. Anyway, the ominous title for this article says, China buys Costa Rica for $1.5 billion

[01:04] and this article is very recent, June 3rd. And here is how it starts, let's all be honest, Costa Rica and Laura Chinchilla, the current president of the country, just sold the soul of Costa Rica. The price tag was 1.5 billion, but I guess we can add to the running total, which includes the new national stadium too. And don't forget that this also includes a $900 million line of credit for an oil refinery on the Caribbean coast, showing once again that the Costa Rica government is not really going green or carbon neutral either. And it also shows that once again, the government just doesn't care about the Caribbean coast of Costa Rica. During an official visit by Chinese President Xi Jinping, the two countries signed nine

[01:54] cooperation agreements, totaling 1.5 billion, that will provide resources for improving Costa Rican roads and public transit fleets, purchasing solar panels and building a new police school. Now here's the kicker, Costa Rica is the only Latin American country that has diplomatic relations with China, the world's second largest economy, and has been rewarded with this by having projects and visits by two sitting Chinese presidents since it first recognized the Asian giant over Taiwan in 2007. The old refinery in Porto Limón is small and old and refines about 18,000 barrels of crude a day. The new Chinese-built refinery, however, will boost production to 65,000 barrels a day,

[02:40] more than triple that of the old refinery, with the Chinese sharing in all the profits and the take. Now, let me paraphrase a bit so as not to bore you with the details. It goes on to say Renee Castro, Costa Rican Minister of Environment and Energy, said that the agreement only means that China is giving them a line of credit of close to a billion dollars and that Costa Rica's government will have some sort of say to determine whether this big refinery project is feasible, or should the line of credit be used for other energy projects. The article also says that the Chinese ratified Costa Rica's sanitary protocol to allow the export of pork and pork products to China. I mean, I've heard about government and pork barrel deals, but this is ridiculous.

[03:30] Anyway, then it goes on to say, while the largest dairy business in the country, Dos Pinos, announced new exports of fresh and flavored milk to China, too. Hmm, flavored milk? Well, that sounds like it's got Monsanto written all over it. Anyway, here's the payoff. Listen closely. It says here Costa Rican President Laura Chinchilla said her country will now make the visa process more flexible and easy to increase the number of Chinese tourist and business visitors. I hope you guys are getting this. It looks like a straight bribe to me. You offer a huge line of credit to a third world country and they kick the doors wide open for you so you can come in and buy the rest of the place, lock, stock, and barrel. And then it adds foreign minister Enrique Castillo says Costa Rica will now be speeding

[04:18] up the process for Chinese who already have visas from other countries, such as the US and the European Union. And he said that the Costa Rican government will be hiring additional people in the Costa Rican, Beijing, and Shanghai Consulates to process the impending extra paperwork. Then it goes on to say China has more than 100 million tourists traveling worldwide. And Costa Rican Foreign Minister Castillo said that with this fast-track visa and residency process, Costa Rica could get half a million of those new Chinese tourists a year. It would boost tourism visits by 25% currently. But you know, what they don't tell you is that if that really was to happen, and Chinese tourists came in droves, that would mean if you were strolling on the beach in Guanacaste

[05:04] or hanging around in the Central Park in San Jose, 1 out of 4 people you meet on the street would be Chinese. So what that would mean is that in a few years you should be able to look forward to a Latin American vacation, Asian style. And if you don't think that'll change the complexion of Costa Rica drastically, well I guess you don't travel much. And you know, I wonder if the Costa Rican government is thinking about those long-term consequences on tourism. Probably not, they're just looking at that billion dollar carat that's dangling. After all, Chinchilla and the people in power now will be long gone when the throngs of Chinese tourists and investors start piling in. And the article adds by saying, Chinese tourism to Costa Rica is very small because of the current visa problems. But the Costa Rican government is making sure these tourists are pushed to the Pacific coast

[05:55] of Costa Rica. Obviously, since that's where the money is going to build the refinery. Now the author of the article goes on to say, if there is an oil spill, the Costa Rican government is not worried since it will only hurt the Atlantic coast of Costa Rica, which has never been an important tourist destination. Tourism, of course, being their number one industry. Then the author adds that the Atlantic coast is filled with people right now that the leaders of Costa Rica, with their traditional racism, have deemed unimportant. And then the author adds, I'm sure that the president, as well as some of the former presidents, will have a nice retirement villas waiting for them after their terms in office. Bought and financed by China, of course.

[06:42] So anyway, that's the article and you might be wondering what he's talking about, especially when he refers to the Atlantic versus the Pacific coast, the government's inherent racism, the effect of an oil spill on tourism, and how he talks about the government pushing the Chinese to the Atlantic side of Costa Rica. What's that stuff all about? Well let me clue you in, unless you've actually lived in Costa Rica a while. Much of that would go in one ear and out the other. You wouldn't think twice about it either way. Now I know in one of my past shows, maybe two years ago, I mentioned that almost no one except for backpackers, end up going to the Atlantic coast of Costa Rica. Because over there it's kind of run down, dirty and beat. And the big tourism companies have avoided it like the plague. And specifically on that side of the country, all the action, if you can call it that, is

[07:30] located in a little port town called Limón. Now that's a place that's been completely neglected by the Costa Rican government, as well as the big tour companies. And you think with all the tourism dough pouring into the place, that town would get an equal shake, but it doesn't. Compared to the rest of Costa Rica, the infrastructure stinks. And not just metaphorically either. In fact, the whole province of Limón, which would be more or less like a big county, is not like the rest of Costa Rica at all. It's totally run down, filthy, dirty, crime ridden and basically unsafe for tourists. Sure, like everywhere, they've got their local small time corrupt politicians, but they get almost no assistance from San Jose, the federal seat of Costa Rican government. Why? Because that's where the black population of Costa Rica lives.

[08:18] In fact, its indigenous population is 80-90% African, mostly Jamaican descent. And I don't know if you've visited Costa Rica, but when you first land at Juan Santamaria Airport and you go to the city of San Jose, that's usually the first stop, a half an hour to 45 minute drive away, then after a couple days in the capital, you head out to one of those big, famous beach destinations, all of them on the Pacific coast by the way. I don't know if you've noticed, but there are almost no black Costa Ricans in sight. Though you do see the occasional black tourists from the first world. But even that's pretty infrequent. However, as soon as you cross over to the Atlantic side in the province of Limón, it's like you're in a completely different country. The mood and the atmosphere shifts dramatically too.

[09:07] And the city of Limón is basically like a shanty town of 50,000 or 60,000 people. A very stark contrast in wealth compared to all of the western towns and cities in the country. And if you think I'm exaggerating this and the racism, all you have to do is look at the makeup of the Costa Rican government. Turns out all of the mid and upper level government jobs are filled by light skinned Latins of Spanish descent. There are practically no dark skinned Costa Ricans at all in the upper levels of government. However, there's an over-representation of blacks and dark skinned Latins in the national soccer leagues. It's apparently just fine to be black and dark skinned when talent comes into play. But when it comes to government jobs and patronage, uh-uh, it's all about who you know and your

[09:53] skin color. But you won't hear light skinned Costa Ricans ever bring that subject up. It's better left unsaid. And it turns out the only people that seem to notice are expats and dark skinned Costa Ricans who rarely get the opportunity to advance. And the same is true in the business sector. The only time you see dark skinned and black Costa Ricans at high level positions is when they own or are principals in the company. And like I said, if you think I'm exaggerating, all you have to do is go to Limón and ask any of the black Costa Ricans there why they just don't get out of their poverty by moving to the city, San Jose, the capital, or moving westward to the Pacific coast. They'll all tell you that they're just not accepted as equals in the rest of Costa Rica. They'll tell you it's very, very hard to get ahead, and almost impossible to get any

[10:41] kind of job above the poverty level, even with a decent education. And though as you might expect, the Costa Rican constitution puts everyone equal under the law, it's really just so much babble and no one enforces it. Even though black Costa Ricans of African descent have been in the country for three or four hundred years, they were not even given official Costa Rican citizenship by the government until 1948. And like one black Costa Rican friend of mine named Tony, a very good musician, he told me that the only reason he and his cousin, another great black musician, believe it or not, also named Tony, the two Tonys, how they ended up in San Jose at all, a dozen years or so ago, was because they were in a popular music group in Limón, and they caught on

[11:28] And get this, it took a gringo music promoter, not a local Costa Rican, to arrange for them to relocate and get housing in San Jose. And still, Tony said, when the gringo manager went back to Canada to live, leaving the two Tonys and their group on their own, in San Jose, the big city, suddenly things changed. Because they weren't being protected by the gringo manager any longer, the two Tonys weren't under his wing anymore and he wasn't making arrangements and getting gigs for them, the landlord wouldn't rent them their apartment anymore, unless they got a white Costa Rican or gringo to co-sign for them. And that was only 10 or 12 years ago and Tony says, things like that are still going on. And get this, Tony said, along with his band making some money, it wasn't quite enough

[12:14] to make ends meet. So the guys in the band had to try to get day jobs, and the other guys, the light-skinned Costa Ricans in the band, got work right away. But the black guys, the two Tonys, no such luck. So they decided to start their own small business, a very small business. He and his cousin started a little fast food business out of their apartment and they'd load up their bicycle baskets with these Caribbean tortillas, a popular favorite ethnic food with people in Limon, and they figured people in the city would like them too. And they did. Anyway, around 11 at night, they'd pull their bikes up in front of popular discos in San Jose and sell these things to the local Latins and the tourists going in and out of the bars and discos. And he said at night, a lot of small vendors were out selling things.

[13:00] But all was not well with their midnight fast food business. Turns out Tony and his cousin Tony, because they were the only two black food vendors on the streets back then, and they insist that was the reason they were picked on. Anyway, they continuously got the shakedown from the cops, asking them to produce their food-selling license and papers, yet the other people out there selling things, the lighter Latinos and the white Costa Ricans, never once got hassled for any of that paperwork. And he said no one had paperwork anyway, though the two Tonys were the only ones ever asked to produce a document. Oh, and this I forgot to tell you. Tony said that his band would get repeatedly ripped off by Costa Rican bar and nightclub owners. They'd skip out on you, make it come back day after day waiting for your check. Checks would bounce.

[13:46] Owners would give you free food or free drinks as part of the deal, then accuse you of abusing it and dock you for it later. They'd give you the door or a cut of the door, then they'd lie about the numbers that came through. And even worse, owners would make them, the group, hand out promotional pamphlets and flyers on the street the morning before the concert, then when your check was short, you'd find out they subtracted the cost of the printing and the pamphlets from your cut of the dough. Tony said they'd tried all kinds of tricks, the Costa Rican bar and club owners, that is. Or they'd simply say business was down and they'd dock you accordingly, even though you had a signed contract. And Tony said if you put up a stink or complained too much, they'd talk to the other bar owners and blackball you.

[14:32] Which is why, like he said, by rights they should have made a good living with the band but they never could. Though he did admit, when they played the big beach town tourist spots, owned by gringos and expats, it was a completely different situation. With the expats, or ex-sanhedos as they're called, a deal was a deal and most of the time with them everything turned out fine. However, like he said, you really couldn't make a living on the beach circuit. The bars and restaurants were too far in between, so you could play a good two or three weeks in a beach spot, then they'd want some fresh blood and you'd have to move on. The only place you could get constant steady work was in San Jose. Anyway, Tony had a few more things to say about Lamone. His run down hometown on the Caribbean coast. As far as the rumor that the Costa Rican health care system is so fantastic, he said

[15:21] that Lamone, with about 60,000 people, only has one public hospital. You know, part of that so called great Costa Rican national health care for all the residents. Whereas Tony said, other Costa Rican cities inland, towns with more or less the same population as Lamone, have around four public hospitals or clinics for every 50 to 60,000 people. So like he said, those kind of numbers tell it all. And you know, recently one of my buddies from Costa Rica, a light-skinned Latin businessman, he told me, as if I didn't know it already, that the Costa Ricans are not only extremely color-conscious, but they're also extremely racist towards Asians in general. And like this guy said, Asians own a lot of businesses. Import-export stuff, restaurants, textiles, manufacturing, yet like my friend says, and

[16:10] he belongs to the Costa Rican Chamber of Commerce, and so do a lot of Asians by the way. The fact is, even though there are a lot of Chinese businessmen, he knows of no one, no regular Costa Rican that is, who actually hangs around with, or even has a passing acquaintance with an Asian person, unless strictly for business purposes. And get this, and I expect it no less. He said he doesn't care how many billions they give to the government. He thinks it's a very bad idea to have a lot of Chinese tourists in his country. And I said, you mean, even though rich Chinese tourists will spend a lot of money in your country? And he made a wrinkly face and he said, we don't want them here, we want the gringo and European tourists. Then he said, I think the government's selling us out. So I want you to think about what this Costa Rican guy said.

[16:55] He doesn't want the Chinese in his country. And at first glance, it's not for the reasons that you and I might think. That you know, the Chinese are just coming into undeveloped countries like bulldozers and spreading money around everywhere, buying up land and farms and properties and mineral rights and stuff, buying up or putting in a claim on the world's natural resources. Now that doesn't seem to worry Costa Ricans one bit. What worries the Costa Rican businessman and the man on the street is that there will be too many smiling Asian faces taking tours in book and hotels. Instead of their favorites, the gringos and the Europeans. Apparently, they like the gringo dollar much better than the Yuan. And they love McDonald's and Wendy's much more than they'll ever love kelp, seaweed and sushi. Now, again, let me remind you that one of the reasons the Costa Rican government is

[17:42] cozying up to the Chinese so much is that, like I mentioned before, Costa Rica is on the verge of bankruptcy. Its national health care system and their social security pension system are completely broke just like ours. Sound familiar? Only, you see, they've found Big Daddy China to come in and save him, whereas no one can save Uncle Sam, being that the US is the lender of last resort. But consider this, what if China came in and bought up Detroit or Cleveland? I mean, they're in the crapper, we know it, but they could be put back on life support via Big Daddy like China. So I ask you guys in the Rust Belt, Detroit, Cleveland, Chicago, would you want the Chinese coming in and buying up everything? What if it was that or RIP? I think most Americans deep down would rather see their cities rot and die than to see the

[18:30] Chinese come in and buy them a lock, stock and barrel. And there is precedent for that. I know this is dating me and I don't know if you're old enough, but do you remember back in the late 70s and 80s, when it was the Japanese who were buying up big swaths of Los Angeles and all the big media companies in LA too, like Universal, Fox and Paramount? Remember that? And do you remember back then, when the Japanese real estate market was in such a hyper bubble that just the Imperial Palace in Tokyo and the land around it was at that time estimated to be worth more than all the land and property in the state of California? And I know that didn't last long and the Japanese bubble blew, but do you remember the resentment about that back then? The real fear and loathing in the hearts of Americans thinking that the Japanese were

[19:18] going to buy up the whole countryside? In fact, I remember there was such resentment in Chicago where they had a Chrysler and an American Motors plant that if you were a worker at one of those plants, you were not allowed to park a Japanese car in the parking lot. And back then in those big rust belt cities, if you did have a Japanese car, vandalism perpetrated by laid off factory workers was not uncommon. And then when Japan's stock market blew out and the real estate bubble burst, for gringos it was out of sight out of mind again, right? And though the Japanese retreated on the US real estate front, we were the ones that slowly let them devour the US auto market. You know I could be wrong, but maybe we're not much different than the Costa Ricans now are we? And to put an even more politically incorrect slant on this business, I've heard from

[20:06] a number of Costa Rican males and females that when you're by chance in a shopping mall, when you see a Costa Rican girl pushing a baby carriage with her husband alongside, and she's a typical Latina and he's an Asian. When you see that, I've been told by Costa Rican men and women, they believe strongly that there's two things going on there. He has to be extremely loaded and she's got to be extremely desperate. And that's not just in Costa Rica, I've heard that very same thing from Latins throughout all of Latin America. A marriage like that, which would barely raise an eyebrow in the States or Europe, becomes a point of great gossip and extended family problems down here in Latin America. Which means in the social justice and equality department, Latin America has a long way to go. You could chalk that up to the lag time effect.

[20:53] So eventually, society will soften up on those issues. But for now, well, that's the way it is. Not changing gears too much now, since I mentioned real estate bubbles past and present and I'll never quit reminding you that in Latin America, there's a nice one going on right now. Anyway, as usual, even in bubbles, there are great deals to be had. If you keep your eyes open, you're patient and you look around for desperate sellers and landlords. Now, I always advise you come down to Latin America and you rent for at least six months. Because that's how long it's going to take you to suss out the market and maybe longer if you don't speak Spanish. So in that vein, let me read you an email from some new good friends, a couple that came down to my seminar a year ago and never left. Now, these two used to be in the real estate business when it was very active and on the

[21:40] run up to that big bubble. And they were right in the epicenter of it in Florida. So when they first came down here a year ago, they rented one place for a while, then another, always looking for that golden deal that you can find even in the midst of a bubble. So let me read the email that I just got from them yesterday. It says, and I'll paraphrase here, Johnny, we're glad we found your podcast and changed course. And let me stop and point out, they were going to do this in Costa Rica. But instead, they went down and settled in Antigua, Guatemala, on my advice and more than a few other expats who have absolutely fallen in love with the place. And that's where they are right now. Anyway, they say, glad we found your podcast and changed course. Coming up on our one year anniversary of our new life and we're quite happy we made the jump into Latin America.

[22:26] We just found a three bedroom, three and a half bath, 1800 square foot house, located in so and so subdivision. I won't tell you that. Don't want to give any secrets away here. Anyway, they got all of that for $540 a month. And they go on to say, we have views of all three volcanoes from a large terrace. Now other people might be able to get a better deal, but this is no chicken coop. And I have to say, we are living in style. Just one click from Antigua Central Park and all the nice restaurants, et cetera. So that's an email from some new expats that have been down here exactly one year. And it took them that long to find the exact deal that they wanted. Now just to fill you in, Antigua Guatemala is a UNESCO world heritage site of only about

[23:14] 20, maybe 30,000 people. It's a throwback to an old Spanish colonial town where everything is kept rustic, old fashioned and spectacular. In fact, there are over a hundred ruins of cathedrals and churches all over the city dating back over 300 years. Now of course, like in any Latin American city, the Central Park is where the action is. Or at least the first stopping off point for any newbie who comes into town. And because every structure within about five blocks of the Central Park is a restored or somewhat restored 17th or 18th century colonial structure. That means everything within that five or six block radius of the Central Park, that's where the real estate bubble is. And you figure that's where rents are double. But the secret is, as soon as you get out from the Central Park a few more blocks, the

[24:00] rents and purchase prices start dropping like a rock. And you see, the thing is, like every other nice colonial city in Latin America, everybody wants to be where the action is, close to the Central Park. But once you've been living in a city like that for a couple of months, you soon realize, and I've been told this by so many expats, it's great at first. But in time, it's so hectic that it starts wearing on you. There are always people around. It's noisy and not very private. But then again, you want to be within walking distance of it to take advantage of that mystical colonial atmosphere that pervades the place. And you really have to be there a couple of days to know what I'm talking about. The majority of expats that come down to a city like this, whether it's Antigua or Copan Honduras or Granada Nicaragua or Chela and other old colonial city in Guatemala or any

[24:48] of the preserved colonial towns in South America like Cuenca. You find that if you live about a mile away or so from the Central Park, you've got a near perfect quiet lifestyle with all the mystical colonial trappings at 1980s Cleveland prices, as my friends were able to pull off who've been down here just a year. And sure, you could have that in the center of the city, close to the Central Park, too. But you'll pay double or triple. Remember, if you're within a mile or so of where the action is, the nexus of a town, the Central Park, that's only like a 10 or 15 minute walk. And now some more scary news about Big Brother up in the States. Now, I just found this out and it didn't surprise me much, but it did scare me. Now, I got the following information from a very good source, from a high-end first-world programmer who knows all about this kind of stuff.

[25:35] He told me that every time you log on Facebook or Twitter or any of those social sites and you post a photo or two, which is what everybody does, right? The GPS coordinates of each and every photo is embedded into that Facebook or Twitter post. And you know who developed that technology? Raytheon, the fifth largest defense contractor in the world. And by the way, being that in a past life I was a real engineer, not the train driving or garbage control kind either. Because of that past life connection, I happen to know some very smart geeks. And this particular computer geek told me that whenever you post a photo on Gmail, Twitter, Facebook, Yahoo or any of them, that embedded GPS data that I told you about is immediately linked to the Google map and the Google Earth system.

[26:21] And of course, the reasoning for that is that it's said to be an invaluable addition to a defense department and law enforcement data capture systems. In other words, face and place recognition. I don't know about you, but about a year or so ago, I disassociated myself from Facebook and all the social media. That's when I heard stories from insiders that this ubiquitous embedding of GPS material was nothing but a big US citizen tracking device. So for all you guys and gals out there who continue to send me Facebook and LinkedIn requests and stuff like that, don't think I'm sliding or avoiding you. I just avoid those information gathering services and you should too. Oh, and just one more thing about the Chinese buying up Costa Rica. As one US expat in Costa Rica points out, there is an upside to that, you know.

[27:07] That'll pave the way for Costa Rica to be the only country in Latin America with decent Chinese restaurants. And before I sign off today, I want to remind all of you who've sent me emails asking me about having a personal phone consult. Well, the first thing you do is you send me an email with a list of five or 10 points you want to hit on and then go to expatwisdom.com and click on the consultation link. Then we can discuss the details and plans of your own future expat move. You've been listening to The Expat Files, living in Latin America, coming to you each week from somewhere south of the border. And don't forget you can email me on anything at all about Latin America, The Expat Files, at gmail.com. See you next time.