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Colombia: From failed state to rising star, part 1

Colombian economy | Colombia: from failed state to rising star, part 1 Anthony Harrington

When President Clinton went to Colombia in 2000, the country was a failed state, with the government in charge of less than one third of the country. Drug lords and rebels, including the notoriously violent FARC, controlled the rest of the land. In just over a decade the country has gone from bust to boom and has even managed to turn around a hugely bad-tempered relationship with its neighbour, Venezuela, which was having a severe dampening effect on trade between the two countries, and even teetered from time to time on the brink of descending into outright military conflict.

During a speech to The Americas Society, Colombian President Juan Manuel Santos praised the decisiveness of his predecessor, President Uribe, who on taking up his office eight years ago “applied a very simple, but very important concept that the Romans invented - namely, security. Security must be the first law of the republic; otherwise the other laws will not operate effectively.”

Security means every citizen should be able to go about their business secure in their possession of their property and their rights. It also means taking back Colombia from the rebels and the drug lords. The job is not completely done by a long stretch, but the steps made have been enormous. Recently Colombian security forces killed the FARC commander and destroyed his headquarters, capturing invaluable computer-based information at the same time, which President Santos said should help them end FARC’s reign of terror for good.

In his speech, the Colombian President said that Uribe’s stance on security paved the way for the present Government’s successes against terrorism: “Today, the state controls every single centimetre of the Colombian territory, and that has made a tremendous change [to our society]”.  Normal economic life is almost impossible to maintain and economic growth, together with the alleviation of poverty, becomes a dream when a society has to cope with violence and terror on the scale that existed in Colombia just a decade ago. Now, as Santos said, when he sits down with presidents and prime ministers from other countries, the first item on the agenda is no longer drug trafficking, violence and kidnapping. “Now we’re [...] talking about social development, human rights, the environment and how to grow at a high rate”, he said.

Santos gave a lot of the credit for Colombia’s success with security issues to the US, which has had a ten year programme, initiated at the Clinton visit, of training the Colombian special forces, now acknowledged to be among the best in the world. The next big thing that Colombia wants from the US is a free trade agreement, something that has been stalled in Congress for the last four years – another testament to the predilection of US politicians for protectionism.

The IMF, in a report on a new “contingency” reserve loan for Colombia, to help guard it against exterior price and demand shocks, pointed out that the country has grown at an average of 4.6% from 2004 to 2009 (ahead of the regional average in Latin America) and inflation is now in the low single digits. Moreover, despite a large number of public projects, Colombia’s public debt to GDP ratio fell by 10 percentage points while debt in the industrialized nations has soared. Colombia needs the IMF contingency loan simply as a backstop, since as a commodity-exporting nation – around 50% of its exports are commodities – any sharp fall off in global growth can adversely affect the economy.

However, the country has tremendous resources. As President Santos told The Americas Society, with the world food stocks under pressure as never before, Latin America in general, and Colombia in particular, has massive potential for food production. As far as climate change is concerned, Colombia is the lungs of the world, he told his audience, both in terms of tropical forests and biodiversity.

Santos also pointed out that where terrorism has its roots in injustice, it has the power to sap the life out of the economy. Armed with this insight, Colombia is addressing a long string of criminal acts against its peasant population through a programme of land restoration. The plan is then to have the local population get together with agri-businesses to provide the raw materials for a thriving food-based sector to the Colombian economy. When people have a stake in the land, they have a stake in ensuring an ordered society, he told his audience. The twin track approach of ensuring security and remedying long-standing grievances, while cracking down on drug trafficking, has paved the way for Colombia to transform itself.

Further information on Latin America and the Colombian economy:




Tags: agriculture , Colombia , FARC , food prices , food shortages , land restitution , President Clinton , President Juan Manuel Santos , security forces
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