National labour union strikes likely to be extended in Costa Rica; major operational disruption and property damage probable

On 13 September 2018, Costa Rica's government confirmed damage to commercial property in Limón province, sabotage at the government oil refinery RECOPE, and arson targeting a telecommunications tower of the state-owned Instituto Costarricense de Electricidad. This damage was a result of violent national trade and public-sector union strikes that began on 10 September against a government-led fiscal reform bill. The bill, dubbed Law to Strengthen Public Finances, proposes to expand the range of products and services to be taxed under a 13% value-added tax (see Costa Rica: 21 June 2018: Costa Rica's fiscal reforms likely to face opposition delays in next three months over public-sector labour strikes). Access to international airports was also disrupted following impromptu roadblocks by protesters on the main thoroughfares of the capital San José; fuel supplies, ports, and airport operations were nevertheless guaranteed by the government, which took control of strategic assets on 9 September ahead of the strikes. President Carlos Alvarado's administration has pre-empted the most serious disruption to commercial activity after diverting state resources to ensure continued delivery of essential services during protests. He also initiated proceedings to have the strikes declared illegal by the courts. However, in a clear indicator of escalating civil unrest risk, students from five state universities joined demonstrations on 12 September, after the police raided the University of Costa Rica campus – damaging installations and reportedly physically assaulting students suspected of setting up roadblocks in San José. Alvarado has announced plans to negotiate with trade unions if strikes are suspended.

Significance: If the government agrees to modify the fiscal reform bill and capitulates to trade union demands, Alvarado's new government will probably face a loss of credibility, and its ability to pass its legislative agenda would likely become significantly curtailed. The reported police action against students, the resultant and increasingly co-ordinated student support for the protests, together with Alvarado's apparent hard line against concessions to violent protesters, marks a significant escalation in risk. Protests and strikes will likely persist through the remainder of September and involve further damage to commercial property. Should Alvarado's government start informal negotiations with smaller protest groups, and ensure student safety during demonstrations, this would probably increase support for the fiscal reform bill in Congress, indicate diminished labour union cohesion, and reduce the risk of commercial disruption and damage from protests and strikes.