Like other Central American countries, Costa Rica’s history remains a loose sketch during the reign of its pre-Columbian tribes, and European ‘discovery’ of the New World was followed by the subjugation and evangelization of Costa Rica’s indigenous peoples. But in the mid-20th century, Costa Rica radically departed from the standard Central American playbook by abolishing its army, diversifying its economy and brokering peace in the region, paving the way for today’s stable and environmentally friendly nation.

Lost Worlds of Ancient Rica

The coastlines and rainforests of Central America have been inhabited by humans for at least 10,000 years, but ancient civilizations in Costa Rica are largely the subject of speculation. It is thought that the area was something of a backwater straddling the two great civilizations of the Andes and Mesoamerica, with the exception of the Diquís Valley along the Pacific coast, where archaeological finds suggest that a great deal of trading took place between early inhabitants of Costa Rica and their more powerful neighbors. On the eve of European discovery some 500 years ago, an estimated 400,000 people were living in today’s Costa Rica.

Unlike the massive pyramid complexes found throughout other parts of Latin America, the ancient towns and cities of Costa Rica (with the exception of Guayabo) were loosely organized and had no centralized government or ceremonial centers. The settlements fought among each other, but for the purpose of getting slaves rather than to extend their territory. Not known for building edifices that would stand the test of time, Costa Rica’s early inhabitants did, however, leave behind mysterious relics: enormous stone spheres, liberally scattered around the Diquís Valley.

Heirs of Columbus

On his fourth and final voyage to the New World in 1502, Christopher Columbus was forced to drop anchor near present-day Puerto Limón after a hurricane damaged his ship. While waiting for repairs, Columbus ventured into the verdant terrain and exchanged gifts with hospitable and welcoming chieftains. He returned from this encounter claiming to have seen ‘more gold in two days than in four years in Española.’ Columbus dubbed the stretch of shoreline from Honduras to Panama ‘Veraguas,’ but it was his excited descriptions of costa rica (the ‘rich coast’) that gave the region its lasting name. At least that’s how the popular story goes.

Anxious to claim the country's bounty, Columbus petitioned the Spanish Crown to have himself appointed governor. But by the time he returned to Seville, his royal patron Queen Isabella was on her deathbed, which prompted King Ferdinand to award the prize to Columbus’ rival, Diego de Nicuesa. Although Columbus became a very wealthy man, he never returned to the New World. He died in 1506 after being worn down by ill health and court politics.

To the disappointment of his conquistador heirs, Columbus’ tales of gold were mostly lies and the locals were considerably less than affable. Nicuesa’s first colony in present-day Panama was abruptly abandoned when tropical disease and warring tribes decimated its ranks. Successive expeditions launched from the Caribbean coast also failed as pestilent swamps, oppressive jungles and volcanoes made Columbus’ paradise seem more like a tropical hell.

A bright moment in Spanish exploration came in 1513 when Vasco Núñez de Balboa heard rumors about a large sea and a wealthy, gold-producing civilization across the mountains of the isthmus – these almost certainly referred to the Inca empire of present-day Peru. Driven by equal parts ambition and greed, Balboa scaled the continental divide, and on September 26, 1513, he became the first European to set eyes upon the Pacific Ocean. Keeping up with the European fashion of the day, Balboa immediately proceeded to claim the ocean and all the lands it touched for the king of Spain.

The thrill of discovery aside, the conquistadors now controlled a strategic western beachhead from which to launch their conquest of Costa Rica. In the name of God and king, aristocratic adventurers plundered indigenous villages, executed resisters and enslaved survivors throughout the Península de Nicoya. However, none of these bloodstained campaigns led to a permanent presence, as intercontinental germ warfare caused outbreaks of feverish death on both sides. The indigenous people mounted a fierce resistance to the invaders, which included guerrilla warfare, destroying their own villages and killing their own children rather than letting them fall into Spanish hands.

New World Order

It was not until the 1560s that a Spanish colony was firmly established in Costa Rica. Hoping to cultivate the rich volcanic soil of the Central Valley, the Spanish founded the village of Cartago on the banks of the Río Reventazón. Although the fledgling colony was extremely isolated, it miraculously survived under the leadership of its first governor, Juan Vásquez de Coronado. Some of Costa Rica’s demilitarized present was presaged in its early colonial government: preferring diplomacy over firearms to counter the indigenous threat, Coronado used Cartago as a base to survey the lands south to Panama and west to the Pacific, and secured deed and title over the colony.

Though Coronado was later lost in a shipwreck, his legacy endured. Costa Rica was an officially recognized province of the Virreinato de Nueva España (Viceroyalty of New Spain), which was the name given to the viceroy-ruled territories of the Spanish empire in North America, Central America, the Caribbean and Asia.

For roughly three centuries, the Captaincy General of Guatemala (also known as the Kingdom of Guatemala), which included Costa Rica, Nicaragua, Honduras, El Salvador, Guatemala and the Mexican state of Chiapas, was a loosely administered colony in the vast Spanish empire. Since the political and military headquarters of the kingdom were in Guatemala, Costa Rica became a minor provincial outpost that had little if any strategic significance or exploitable riches.

As a result of its status as a swampy, largely useless backwater, Costa Rica’s colonial path diverged from the typical pattern in that a powerful landholding elite and slave-based economy never gained prominence. Instead of large estates, mining operations and coastal cities, modest-sized villages of smallholders developed in the interior Central Valley. According to national lore, the stoic, self-sufficient farmer provided the backbone for ‘rural democracy’ as Costa Rica emerged as one of the only egalitarian corners of the Spanish empire.

Equal rights and opportunities were not extended to the indigenous groups, and as Spanish settlement expanded, the local population decreased dramatically. From 400,000 at the time Columbus first sailed, the population was reduced to 20,000 a century later, and to 8000 a century after that. While disease was the main cause of death, the Spanish were relentless in their effort to exploit the natives as an economic resource by establishing the encomienda system that applied to indigenous males and gave the Spaniards the right to demand free labor, with many worked to death. Central Valley groups were the first to fall, though outside the valley several tribes managed to survive a bit longer under forest cover, staging occasional raids. However, as in the rest of Latin America, repeated military campaigns eventually forced them into submission and slavery, though throughout that period many clergymen protested the brutal treatment of indigenous subjects and implored the Spanish Crown to protect them.

Fall of an Empire

Spain’s costly Peninsular War with France from 1808 to 1814 – and the political turmoil, unrest and power vacuums that it caused – led Spain to lose all its colonial possessions in the first third of the 19th century.

In 1821 the Americas wriggled free of Spain’s imperial grip following Mexico’s declaration of independence for itself as well as the whole of Central America. Of course, the Central American provinces weren’t too keen on having another foreign power reign over them and subsequently declared independence from Mexico. However, all of these events hardly disturbed Costa Rica, which learned of its liberation a month after the fact.

The newly liberated colonies pondered their fate: stay together in a United States of Central America or go their separate national ways. At first they came up with something in between, namely the Central American Federation (CAF), though it could neither field an army nor collect taxes. Accustomed to being at the center of things, Guatemala also attempted to dominate the CAF, alienating smaller colonies and hastening the CAF's demise. Future attempts to unite the region would likewise fail.

Meanwhile, an independent Costa Rica was taking shape under Juan Mora Fernández, the first head of state (1824–33). He tended toward nation building, and organized new towns, built roads, published a newspaper and coined a currency. His wife even partook in the effort by designing the country’s flag.

Life returned to normal, unlike in the rest of the region, where post-independence civil wars raged on. In 1824 the Nicoya-Guanacaste region seceded from Nicaragua and joined its more easygoing southern neighbor, defining the territorial borders. In 1852 Costa Rica received its first diplomatic emissaries from the US and Great Britain.

Coffee Rica

In the 19th century, the riches that Costa Rica had long promised were uncovered when farmers realized that the soil and climate of the Central Valley highlands were ideal for coffee cultivation. Costa Rica led Central America in introducing the caffeinated bean, which transformed the impoverished country into the wealthiest in the region.

When an export market was discovered, the government actively promoted coffee to farmers by providing free saplings. At first Costa Rican producers exported their crop to nearby South Americans, who processed the beans and re-exported the product to Europe. By the 1840s, however, local merchants had already built up domestic capacity and learned to scope out their own overseas markets. Their big break came when they persuaded the captain of HMS Monarch to transport several hundred sacks of Costa Rican coffee to London, percolating the beginning of a beautiful friendship.

The Costa Rican coffee boom was on. The drink’s quick fix made it popular among working-class consumers in the industrializing north. The aroma of riches lured a wave of enterprising German immigrants, enhancing technical and financial skills in the business sector. By century’s end, more than one-third of the Central Valley was dedicated to coffee cultivation, and coffee accounted for more than 90% of all exports and 80% of foreign-currency earnings.

The coffee industry in Costa Rica developed differently from those in the rest of Central America. As elsewhere, there arose a group of coffee barons – elites who reaped the rewards of the export bonanza – but Costa Rican coffee barons lacked the land and labor to cultivate the crop. Coffee production is labor intensive, with a long and painstaking harvest season. Costa Rica's small farmers became the principal planters, and the coffee barons monopolized processing, marketing and financing. The coffee economy in Costa Rica created a wide network of high-end traders and small-scale growers, whereas in the rest of Central America a narrow elite controlled large estates worked by tenant laborers.

Coffee wealth became a power resource in politics. Costa Rica’s traditional aristocratic families were at the forefront of the enterprise. At mid-century, three-quarters of the coffee barons were descended from just two colonial families. The country’s leading coffee exporter at this time was President Juan Rafael Mora Porras (1849–59), whose lineage went back to the colony’s founder, Juan Vásquez de Coronado. Mora was overthrown by his brother-in-law after the president proposed to form a national bank independent of the coffee barons. The economic interests of the coffee elite would thereafter become a priority in Costa Rican politics.

Banana Empire

The coffee trade unintentionally gave rise to Costa Rica’s next export boom: bananas. Getting coffee out to world markets necessitated a rail link from the central highlands to the coast, and Limón’s deep harbor made an ideal port. Inland was dense jungle and insect-infested swamps, which prompted the government to contract the task to Minor Keith, the nephew of an American railroad tycoon.

The project was a disaster. Malaria and accidents churned through workers as Tico recruits gave way to US convicts and Chinese indentured servants, who were in turn replaced by freed Jamaican slaves. To entice Keith to continue, the government turned over 3200 sq km of land along the route and provided a 99-year lease to run the railroad. In 1890 the line was finally completed and running at a loss.

Keith had begun to grow banana plants along the tracks as a cheap food source for the workers. Desperate to recoup his investment, he shipped some bananas to New Orleans in the hope of starting a side venture. He struck gold, or rather yellow. Consumers went crazy for the elongated finger fruit. By the early 20th century, bananas surpassed coffee as Costa Rica’s most lucrative export and the country became the world’s leading banana exporter. Unlike in the coffee industry, the profits were exported along with the bananas.

Costa Rica was transformed by the rise of Keith’s banana empire. He joined another American importer to found the infamous United Fruit Company, known locally as Yunai, which was soon the largest employer in Central America. To locals it was known as el pulpo (the octopus) – its tentacles stretched across the region, becoming entangled with the local economy and politics. United Fruit owned huge swaths of lush lowlands, much of the transportation and communication infrastructure, and bunches of bureaucrats. The company drew a wave of migrant laborers from Jamaica, changing the country’s ethnic complexion and provoking racial tensions. In its various incarnations as the United Brands Company and, later, Chiquita, Yunai was virulently anti-union and maintained control over its workforces by paying them in redeemable scrip rather than cash for many years. Amazingly, the marks that el pulpo left on Costa Rica are still present, including the rusting train tracks and a locomotive engine in Palmares.

Birth of a Nation

The inequality of the early 20th century led to the rise of José Figueres Ferrer, a self-described farmer-philosopher. The son of Catalan immigrant coffee planters, Figueres excelled in school and went to Boston’s MIT to study engineering. Upon returning to Costa Rica to set up his own coffee plantation, he organized the hundreds of laborers on his farm into a utopian socialist community and appropriately named the property La Luz Sin Fin (The Struggle Without End).

In the 1940s Figueres became involved in national politics as an outspoken critic of President Calderón. In the midst of a radio interview in which he bad-mouthed the president, police broke into the studio and arrested Figueres. He was accused of having fascist sympathies and was banished to Mexico. While in exile he formed the Caribbean League, a collection of students and democratic agitators from all over Central America who pledged to bring down the region’s military dictators. When he returned to Costa Rica, the Caribbean League, now 700 men strong, went with him and helped protest against those in power.

When government troops descended on the farm with the intention of arresting Figueres and disarming the Caribbean League, it sparked a civil war. The moment had arrived: the diminutive farmer-philosopher now played the man on horseback. Figueres emerged victorious from the brief conflict and seized the opportunity to put into place his vision of Costa Rican social democracy. After dissolving the country’s military, Figueres quoted HG Wells: ‘The future of mankind cannot include the armed forces.’

As head of a temporary junta government, Figueres enacted nearly a thousand decrees. He taxed the wealthy, nationalized the banks and built a modern welfare state. His 1949 constitution granted full citizenship and voting rights to women, African Americans, indigenous groups and Chinese minorities. Today Figueres’ revolutionary regime is regarded as the foundation of Costa Rica’s unarmed democracy.

The American Empire

Throughout the 1970s and ’80s, the sovereignty of the small nations of Central America was limited by their northern neighbor, the US. Big sticks, gunboats and dollar diplomacy were instruments of a Yankee policy to curtail socialist politics, especially the military oligarchies of Guatemala, El Salvador and Nicaragua.

In 1979 the rebellious Sandinistas toppled the American-backed Somoza dictatorship in Nicaragua. Alarmed by the Sandinistas’ Soviet and Cuban ties, fervently anticommunist president Ronald Reagan decided it was time to intervene. Just like that, the Cold War arrived in the hot tropics.

The organizational details of the counterrevolution were delegated to Oliver North, an eager-to-please junior officer working out of the White House basement. North’s can-do creativity helped to prop up the famed Contra rebels to incite civil war in Nicaragua. While both sides invoked the rhetoric of freedom and democracy, the war was really a turf battle between left-wing and right-wing forces.

Under intense US pressure, Costa Rica was dragged in. The Contras set up camp in northern Costa Rica, from where they staged guerrilla raids. Not-so-clandestine CIA operatives and US military advisors were dispatched to assist the effort. A secret jungle airstrip was built near the border to fly in weapons and supplies. To raise cash for the rebels, North allegedly used this covert supply network to traffic illegal narcotics through the region.

The war polarized Costa Rica. From conservative quarters came a loud call to re-establish the military and join the anticommunist crusade, which was largely underwritten by the US Pentagon. In May 1984 more than 20,000 demonstrators marched through San José to give peace a chance, though the debate didn’t climax until the 1986 presidential election. The victor was 44-year-old Óscar Arias Sánchez, who, despite being born into coffee wealth, was an intellectual reformer in the mold of José Figueres Ferrer, his political patron.

Once in office, Arias affirmed his commitment to a negotiated resolution and reasserted Costa Rican national independence. He vowed to uphold his country’s pledge of neutrality and to vanquish the Contras from the territory. The sudden resignation of the US ambassador around this time was suspected to be a result of Arias’ strong stance. In a public ceremony, Costa Rican schoolchildren planted trees on top of the CIA’s secret airfield. Most notably, Arias became the driving force in uniting Central America around a peace plan, which ended the Nicaraguan war and earned him the Nobel Peace Prize in 1987.

In 2006 Arias once again returned to the presidential office, winning the popular election by a 1.2% margin and subsequently ratifying the controversial Central American Free Trade Agreement (Cafta), which Costa Rica entered in 2009.

When Laura Chinchilla became the first female president of Costa Rica in 2010, she promised to continue with Arias’ free-market policies, in spite of the divisive Cafta agreement (the referendum in 2007 barely resulted in a ‘yes’ vote at 51%). She also pledged to tackle the rise of violent crime and drug trafficking, on the increase due to Costa Rica's being used as a halfway house by Colombian and Mexican cartels. Ironically, a month after discussing the drug-cartel problem with then-US president Barack Obama during his visit to Costa Rica, Chinchilla herself became embroiled in a drug-related scandal over the use of a private jet belonging to a man under investigation by Costa Rican intelligence for possible links to international drug cartels.