COLOMBIA´S FRAGILE STABILITY / GEOPOLITICAL FUTURES

Colombia’s Fragile Stability

It’s better off than other countries in the region, but that’s not enough to cope with the challenges coming down the road.

By Allison Fedirka  

Earlier this month, U.S. President Donald Trump canceled an official visit to Colombia that had been scheduled for early December. It’s the second time the president has canceled a planned trip to the country this year, which may give the appearance that relations between the two nations are less than cordial. But in reality, Colombia has been a key, reliable partner for the United States, particularly on security matters. For decades, both countries have worked together to monitor security of the Panama Canal, contain Venezuela and curb drug trafficking (93 percent of the cocaine in the U.S. is produced in Colombia, so Washington needs Bogota’s help on this front). In May, Colombia became the first South American country to join NATO as a “global partner,” a title reserved for some of the United States’ closest security allies. Bogota and Washington are also in early talks to expand the U.S. Customs and Border Protection's Preclearance program to El Dorado International Airport in the Colombian capital. Only 15 airports in six countries – Ireland, Aruba, the Bahamas, Bermuda, the United Arab Emirates and Canada – are currently part of the program. Colombia has become a reliable U.S. ally in part because of its economic and political stability, at least relative to other countries in the region. Brazil, for example, is embroiled in an ongoing political scandal that resulted in charges being laid against two former presidents. Argentina’s economy is still highly volatile, and Venezuela is mired in an economic crisis that has forced hundreds of thousands of people to flee the country. Colombia, meanwhile, has weathered the global financial crisis relatively well and, in 2016, was able to strike a peace deal with the largest rebel group in the country to end a decadeslong civil war. But despite being a relatively stable country on the continent, Colombia is facing a number of challenges that will put pressure on the government and could pose security risks down the road. The first, and perhaps most immediate, problem is the influx of Venezuelan migrants. In the past two years, Colombia has taken in more than 950,000 migrants from Venezuela. The government in Bogota has dedicated massive amounts of financial, administrative, health and security resources to help accommodate and settle the migrants. A World Bank report released earlier this month estimated that the issue could cost Colombia up to 0.41 percent of its gross domestic product. The influx has also had a social cost. A survey conducted by Cifras & Conceptos in April found that 68 percent of Colombians are concerned about increased job competition from migrants and 59 percent fear they will affect security in the country. Local protests have also broken out against camps and facilities set up to temporarily accommodate migrants, though the demonstrations remain small for now. On Nov. 11, for example, dozens of residents from the Engativa neighborhood in Bogota protested the city’s decision to relocate at least 300 Venezuelan migrants to a shelter in the area for at least three months.

 

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Colombia has also been grappling with economic challenges. Economic growth has been declining since 2013 and fell to 1.76 percent last year, only slightly above the rate immediately following the global financial crisis. Among the country’s top economic concerns are high public debt and disappointing levels of foreign investment. The government sees foreign direct investment as one of the main drivers of growth and development, but the country’s FDI dropped by 27 percent year over year in 2015, after peaking at $16.16 billion in 2014. It recovered somewhat by 2017, totaling $14.52 billion, but still has yet to reach the levels seen just a few years ago. The government had anticipated a spike in FDI following the peace deal with the Revolutionary Armed Forces of Colombia, or FARC, but it hasn’t materialized. Meanwhile, the three major credit rating agencies have warned that the country’s credit rating could be downgraded if the government doesn’t scale down the debt. According to Moody’s, the government debt-to-GDP ratio stood at 47 percent in 2017, up from 35 percent in 2012. The deficit is set to reach 3.1 percent of GDP this year, down from 3.6 percent last year, though Moody’s says reaching the 2.1 percent target for 2019 will be difficult given the government’s spending habits.

 

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To tackle these problems, the government has introduced a series of austerity measures. Over the next three years, it will slash spending by $2.2 billion by reducing executive and administrative expenditures. Congress, meanwhile, is debating a tax reform bill that would raise an additional $4.37 billion next year. The reforms will increase taxes for middle- and upper-income earners from 32 percent to 37 percent. Individuals with high levels of net equity may also see a tax hike. Corporate taxes, however, will be reduced by 5 percent to 30 percent in an effort to spur investment and employment. The most controversial part of the bill is a gradual introduction of a 17 percent value-added tax on consumer goods, though it includes a vague clause stating that the lowest income earners will get some type of rebate. Protests against this portion of the bill have already erupted in multiple cities, and as the government moves ahead with these changes, more social unrest is possible. On the security front, Colombia’s main challenges are related to expanding organized crime and a thriving cocaine industry. According to U.N. figures, the area under coca cultivation in Colombia reached a record 171,000 hectares in 2017, a 17 percent increase from 2016. The vacuum left by the FARC has opened the door to Mexican cartels to boost their presence in Colombia, particularly in the west, by building stronger ties with local criminal groups. There may even be plans to reestablish a wing of the FARC with dissident members to coordinate drug-related activity, according to a commanding officer in the Colombian military. This has resulted in increased competition and clashes among these groups, which in turn has led to rising violence against the local population. Homicides have increased this year, thousands of people have been displaced by the violence and protests have erupted against the deteriorating security situation. The government, for its part, is planning to crack down on coca cultivation by tightening control on input materials, cutting off power supplies to drug facilities and potentially using drone technology.

 

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In eastern Colombia, particularly in Norte de Santander department along the Venezuelan border, organized crime carries an extra security threat. Many groups in this area operate across the border, and some Colombian organizations, including FARC, have had strong ties with the Venezuelan government for years. (Venezuela benefited from having ties to organizations that could help destabilize a neighboring country.) Colombian rebel groups like the National Liberation Army even have camps and control territory in Venezuela’s Bolivar, Apure and Amazonas states. In addition to drug trafficking, they exploit mining resources to support their operations and funnel some of their profits to the Venezuelan government. While border incursions have happened in the past, they are now becoming more frequent and altercations with Venezuela’s military are rising. It’s a situation fraught with potential security risks because as both countries’ militaries get involved to try to control and push back these groups, the possibility of direct confrontation between the militaries themselves rises.

 

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None of these issues on their own will destabilize Colombia. Indeed, the country remains relatively secure and able to cope with the more immediate challenges posed by the Venezuelan migrant crisis. But that all these issues are arising at the same time gives the government less room to maneuver. Dropping the ball on any one problem could risk making the others worse. And the consequences of mismanaging the situation would be felt not only in Colombia but also in the United States, which has an interest in making sure Colombia can help suppress the drug trade. Washington, therefore, will become more inclined to increase its economic and security support for Bogota as these forces intensify.