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Colombia risk: Political stability risk(RiskWire Via Thomson Dialog NewsEdge) COUNTRY BRIEFING FROM THE ECONOMIST INTELLIGENCE UNIT RISK RATINGSCurrentCurrentPreviousPreviousRatingScoreRatingScoreOverall assessmentC53C53Political stability riskC45C45Note: E=most risky; 100=most risky.SUMMARY Despite the high level of security risk, the political system functions adequately and the mechanism for transfers of power is well established. Mr Uribe enjoys high approval ratings, thanks to improvements in public security, economic recovery and strong leadership. His re-election by a comfortable margin in May 2006 gave a mandate for policy continuity. Victory for his political allies at the March 2006 congressional election supports governability. Human rights groups continue to express concerns over the potential for abuses in the government's democratic security strategy. Mr Uribe and other public figures will remain assassination targets for the guerrillas. Ideological differences between the Colombia and Venezuelan governments may impede efforts to coordinate measures to curb border incursions by Colombian rebels into Venezuela. SCENARIOS Public administration is disrupted by kidnappings and assassinations (Moderate Risk) Guerrilla violence and the intimidation of public officials, particularly at the municipal level in the south, remains a problem. The government's Democratic Security policy--which aims to drive back the insurgents through boosting the military--has allowed mayors to return to their municipalities. But despite a protection programme, their lives remain at risk. According to data from the defence ministry, four mayors and council members were assassinated in the first half of 2007, representing a sharp decline on year-earlier figures, when 17 were killed. Attempts on the life of the president and other high profile figures in the government are a possibility. Mr Uribes hard-line policies are highly personalised; his assassination might cause support from the public and political parties for a hard-line solution, as opposed to mediation, to waver. Firms should consider contingency scenarios, including exit strategies for personnel, in the event of a concerted guerrilla attack against the federal administration and/or the executive. The US scales back financial or political support (Moderate Risk) Maintaining constructive relations with the US has been crucially important to the Uribe government. For Colombia, financial aid from the US has helped support the administration's aggressive military stance towards left-wing guerrilla groups, while the main benefit for the US government has been the progress made in stemming the flow of drugs from Colombia. The vast majority of US support is channelled into supporting the Colombian armed forces and police. Although the US government has indicated that aid is expected to continue, a scaling back of financial or political support is possible in 2008 as the US presidential approaches. The Economist Intelligence Unit currently assesses this as a medium risk, but a number of issues could aggravate relations between the two countries. Local resistance to US-backed aerial chemical spraying, the US monitoring of the Colombian armys human rights record and the extradition to the US of Colombian nationals accused of drug-trafficking offences all have the potential to damage relations between the US and Colombia. In addition, a sharper-than-expected slowdown of the US economy could prompt the US Congress to reduce financial commitments overseas. A scaling back of aid from the US would harm the fiscal position in Colombia, as the Uribe government would be forced to shoulder a greater part of the financial cost of the internal conflict. This could hurt foreign businesses operating in the region, as the government would need to raise extra revenues to meet the shortfall. As the 2008 presidential elections approach in the US, firms should monitor the foreign policy platforms of the main candidates. Although a radical shift in policy is unlikely, businesses should remain aware of the potentially damaging effects of a scaling back of US support for Colombia. BACKGROUND (Updated: September 4th, 2006) Political Forces Parliamentary election results(no. of seats)Chamber of RepresentativesSenate2002200620022006Liberals(a)92365517Conservatives(a)38292618 Partido Social de Unidad Nacional(b)-29-20Cambio Radical(c)-206-15Polo Democratico Alternativo(d)-11-8Others(e)36162124Total166166102102(a) Includes members of dissident factions of the PL and PC. (b) New pro-Uribe party founded in 2005, known as Partido de la U. (c) New independent party established in 2005, led by former PL members but currently loyal to Mr Uribe. (d) New leftist party created in 2005 after the alliance of Polo Democratico Independiente and Alternativa Democratica M-19. (e) Includes leftist political forces, minorities entitled to have a seat (eg, indigenous people and Afro-Colombians) and new independent movements.Source: Registraduria Nacional del Estado Civil.The PL and the PC remain the two main political parties, but their dominance is being challenged by new forces. Traditional loyalties towards the main parties have been largely regional, although the PL, which was in power for 20 of the 24 years to 1998, has enjoyed broader support among low-income groups and has been associated with a more centre-left political and economic outlook than the PC. Collaboration in government over the last 40 years has reduced ideological differences, while urbanisation and social dislocation have served to weaken traditional loyalties. This loss of distinct identity, coupled with political corruption, has boosted support for independent candidates, especially in large cities. The last four elections for mayor of Bogota have been won by independent or non-PL or PC candidates, and the mayors of Cali and Medellin are also currently in the hands of independents. The traditional parties have had little success in improving their fortunes, despite the adoption of tighter conduct codes and further openness. New electoral rules from 2006 that increased the minimum number of votes needed to gain a seat in the legislature failed to strengthen the position of the PL and PC as expected. Although the number of smaller parties declined, from more than 70 in the 2002 legislative elections to only 16 in 2006, opportunistic alliances among Uribe supporters and divisions within the PL and PC have led to the emergence of a handful of new parties. These include the Partido Social de Unidad Nacional (Partido de la U), Cambio Radical and Alas Equipo Colombia. The PC lacks strong leadership and popular figures, while the PL, already affected by the loss of seats in the March 2006 regional and congressional elections, was further hit by its unprecedented third place in the May 2006 presidential race. The PL candidate, Horacio Serpa, lagged behind Carlos Gaviria of the leftist Polo Democratico Alternativo (PDA). The PDA now appears to be the leading opposition party, and the PL leader, Cesar Gaviria (no relation to Carlos Gaviria), is considering bringing the party into the governing alliance rather than remaining in opposition. Traditionally, governments lose congressional support in the second half of their terms. This has generally been attributed to the rule forbidding presidential re-election, which encouraged lawmakers to focus on positioning themselves for the next presidential campaign by abstaining from endorsing significant government initiatives. Now that re-election is allowed, this pattern is expected to change. However, with Mr Uribe serving his second and last term, he is likely to face waning support and more vociferous opposition as his term progresses. Presidential election results(m votes/% of valid vote)200220061st round1st roundAlvaro Uribe (independent, formerly PL)5.8/537.4/62Andres Pastrana (PC)3.6Carlos Gaviria (PDA)2.6/22Horacio Serpa (PL)3.5/321.4/12Luis E Garzon (Democratic left)0.7/6Noemi Sanin (independent)0.6/6Total incl others10.911.8Source: Registraduria Nacional del Estado Civil.Main political figures Alvaro Uribe: Mr Uribe won the presidency in 2002 and again in 2006. Trained as a lawyer, his political career began in the Partido Liberal (PL), with two consecutive periods as a senator (1986-90 and 1990-94), followed by the governorship of Antioquia (1995-97). In 2001 he resigned from the PL to form an independent movement to run for president. His popularity is explained by a hardline stance against the guerrillas, strong leadership, high work-rate and hands-on style. Improvements in public security and economic recovery during his first term helped to keep his approval rates high and win him re-election in 2006 with 62% of the vote. MrUribes personal safety is a concern; he has already survived several guerrilla assassination attempts. Francisco Santos: The vice-president is a journalist who developed his career in the influential newspaper, El Tiempo, which is owned by his family. He founded an anti-kidnapping, non-governmental organisation in the 1990s, but he had never played a significant political role until April 2002, when he became MrUribes vice-presidential candidate. His success in managing relations with human rights organisations and the foreign political establishment and media resulted in his selection for re-election with Mr Uribe in 2006. Juan Manuel Santos: An economist and former vice-president and minister of foreign trade, Mr Santos openly speaks about his presidential ambitions. He is cousin to the vice-president and also co-owns the El Tiempo newspaper, although the cousins do not have a close relationship. He has never been elected to public office, but has influence among some PL members. At the request of Mr Uribe, in 2005 he abandoned the PL to manage the newly founded Partido Social de Unidad Nacional (Partido de la U). This is the single most important pro-Uribe party, and is expected to be the cornerstone of the Uribe administrations coalition in Congress. German Vargas: Mr Vargas's political career began under the PL in the 1990s and has continued through his own independent political movement, Cambio Radical. Since the end of his term as Senate chairman in mid-2004, he has played an important role in bolstering support for Mr Uribe in the legislature. Mr Vargas posted the highest number of votes for senator in the March 2006 election, allowing the successful transition of Cambio Radical from a PL wing into a new independent party. Mr Uribes majority coalition in the legislature depends on full support from Mr Vargas. Carlos Gaviria: As a Constitutional Court justice in the 1990s, Mr Gaviria gained a reputation for his liberal stance on the most controversial issues in the national agenda. Having served as a senator in 2002-06, he decided to run for the presidency after winning the primary of the leftist party, Polo Democratico Alternativo (PDA). His strong opposition to Mr Uribe won him broad support among the left, to place him second in the May 2006 presidential election, with 22% of the vote. He is expected to continue to play a key role in co-ordinating the PDA opposition to the government. Cesar Gaviria: Leader of the PL and a former president (1990-94). Mr Gaviria enjoys a high public profile owing to his record in office and his role as secretary-general of the Organisation of American States (1994-2004). The re-election issue acted as a catalyst for his return to active politics in 2004. Identified as a neo-liberal, he espoused his social democratic credentials in order to win the leadership contest for the PL in June 2005. His popularity was damaged by his stiff opposition to MrUribe, but his personal prestige did not suffer from the PLs humiliating defeat in the May 2006 presidential election. His stance will determine whether the PL remains in opposition to the government. Political Developments On coming to office as president in 1998 Andres Pastrana (PC) improved relations with the US, and sought to begin peace negotiations with the guerrillas. The talks failed. In exchange for beginning a peace process, the FARC was granted control of a 51,000-sq km demilitarised zone (DMZ). The guerrillas used the DMZ as a gateway to the countrys southern jungles, where they transported equipment and provisions, increased production of illicit crops, and negotiated kidnappings and extortion to finance their military campaign. With the peace process discredited, in February 2002 Mr Pastrana called off negotiations and sent troops to reoccupy the DMZ. In May 2002, Alvaro Uribe won the presidency by pledging to use military force to defeat the rebels. On taking office, he declared emergency measures to strengthen the government's military capacity, including granting temporary judicial powers to the armed forces and imposing a one-off wealth tax to help finance a fortified military offensive. The military campaign against the guerrilla groups, in conjunction with controversial security measures, such as enlisting peasant soldiers, mass detentions and building a network of 1m informants, improved public security. Since 2004 the governments main offensive (with around 17,000 troops) has centred on the FARC's southern jungle hideouts in the departments of Caqueta and Putumayo, where the FARC guerrillas have been unchallenged for decades. Despite some high-level captures and a reduction in their ranks because of desertions, captures and casualties, the main guerrilla leaders have yet to be arrested or killed, and they retain considerable financial and military power. Peace talks with the much weaker ELN have come close on several occasions, but not yet materialised. Alongside a stronger military effort against the FARC, in mid-2003 the government began demobilisation talks with the largest paramilitary grouping, the AUC. More than 30,000 paramilitary combatants had demobilised by April 2006. The demobilisation process remains controversial. Doubts remain about their successful reincorporation into civilian life, and amnesty legislation for the paramilitaries has been criticised for its leniency given to the AUCs crimes, which include grave human rights abuses and drug-trafficking offences. The demobilisation risks losing credibility if the paramilitary leaders manage to retain their illegally amassed wealth and political influence in the territories under their control. Mr Uribe has exercised strong leadership but within the constitutional framework, respecting institutions and the separation of powers. However, his micro-management, hands-on style and continued popularity have resulted in an increase in the president's influence on policy formation and implementation. This increased personalisation of government, combined with the fact that MrUribe is a primary guerrilla target, serves to increase the risks associated with the possibility of his incapacitation or death. The constitution envisages that the vice-president, Francisco Santos, would take over, but if Mr Uribe were to suffer a demise, confidence would be badly shaken. Important recent events 2002: In May, AlvaroUribe is elected president with a strong mandate to adopt a hardline stance against the guerrillas. Following his inauguration in August he declares emergency measures to confront the guerrilla offensive, and in September the US administration offers military aid of around US$700m per year. 2003: After a car bomb planted by the largest guerrilla grouping, Fuerzas Armadas Revolucionarias de Colombia (FARC), at an exclusive club in the capital, Bogota, kills 35 people in February, a military offensive forces the FARC to retreat to rural bases. Public security improves. In July talks to demobilise paramilitary groups begin. 2004: The military steps up the offensive against the FARC by sending 17,000 troops into the southern departments of Caqueta and Putumayo, but there are no major breakthroughs. In July formal talks with paramilitary leaders begin. In December, Congress approves a constitutional amendment allowing presidential re-election. The bill passes to the Constitutional Court for ratification. 2005: The FARC launches a series of strikes against military outposts and rural villages, demonstrating its continued financial and military capacity. In June Congress approves a controversial peace and justice law that sets out the conditions for the amnesty for the demobilisation of paramilitary (and potentially other insurgent) groups. 2006: In March pro-Uribe parties win a majority in the legislature and in May Mr Uribe is re-elected by a landslide. In June the Ejercito de Liberacion Nacional (ELN) agrees to begin new exploratory peace talks. In July the Constitutional Court confirms the legality of the peace and justice law, although it imposes less lenient terms for the amnesty. International Relations and Defence Relations with the US are Colombias main foreign policy priority and have traditionally been positive. However, there have been periods of strain, such as in 1903, when the US encouraged the secession of the then Colombian province of Panama, and during the administration of Ernesto Samper (1994-98) because of allegations that his presidential campaign had been financed by the Cali drug cartel. In 1998 co-operation was restored under the Pastrana government, and it has strengthened under Mr Uribe. The US has dramatically increased aid to Colombia for the fight against drug-trafficking. Support totalled around US$3bn in 1999-2003, principally in terms of military equipment for the mobilisation of troops and for aerial spraying of illegal coca crops. In 2002 the US extended its aid to counter-insurgency operations. The US also renewed preferences to Colombian exports under the US Andean Trade Promotion and Drug Eradication Act (ATPDEA), which was originally due to expire at the end of 2006. After two years of negotiation, a free-trade agreement with the US was concluded in July 2006. The agreement is expected to be ratified by both countries' legislatures in 2006-07 and to be in force from 2008. US support has helped Colombia to receive more favourable treatment from the IMF and the World Bank. Signs are that the US government and Congress will approve a continuation of the current levels of aid from the US (around US$700m per year) to support anti-drug efforts. Initially, US support was contingent solely on progress in the fight against drug-trafficking, but under pressure from international non-governmental organisations it has also been conditioned on improvements in Colombias record on human rights, particularly regarding collusion between the security forces and paramilitary groups. Mr Uribe has sought to broaden international support for the offensive against the insurgents, with limited success. Aid from the EU and Japan is much lower than that from the US and is almost entirely restricted to social programmes. Colombias relations with other countries in Latin America are generally good. However, drug-trafficking and guerrilla activity in the border areas have caused concern among its neighbours. The Uribe government has sought their active co-operation but this has generally not been forthcoming. Territorial disputes persist with Nicaragua and Venezuela. The International Court of Justice at The Hague is handling Nicaraguas claim of sovereignty rights over the Colombian islands of San Andres y Providencia in the Caribbean. Bilateral committees are negotiating the dispute with Venezuela over waters in the Gulf of Venezuela. The ambivalent stance of the Venezuelan president, Hugo Chavez, towards the Colombian guerrillas and Mr Uribe's liberal policies and close relations with the US have caused bilateral tensions. However, the Colombian government is seeking to strengthen economic ties with Venezuela as well as with Central America and the Caribbean. Military balance, 2005Armed forces(a)251,718Army216,851Navy26,908Air force7,959Police(a)123,565Insurgent groupsguerrillas(b)Fuerzas Armadas Revolucionarias de Colombia (FARC)Active rural combatantsup to 16,000Urban militiaup to 4,000Ejercito de Liberacion Nacional (ELN)3,200Insurgent groupsparamilitaries(b)Autodefensas Unidas de Colombia (AUC)27,250(a) Ministry of Defence. (b) Number of demobilised paramilitaries as of end June 2006, according to the Ministry of Defence. Sources: Ministry of Defence; Fundacion Seguridad y Democracia. Copyright 2007 Economist Intelligence Unit |