Colombia: from Magic to Realism (part 2)

As the US presidential campaign is slowly turning into a self-parody of debates focusing on glass and ceilings, pits and bulls or lips and sticks, all too often do we get distracted by the fact that regardless of whether the next inhabitant of the White House will be more or less church-going, more or less gun-totting, and more or less procreating, this nation will also have to elect part of its legislative.

And the Congress has a long shelf of unfinished businesses. Among the homework postponed until after the skiing season, US Congressmen and Congresswomen have been extraordinarily successful dithering over the ratification of Free Trade Agreement (FTA) with Colombia. Protectionism is economically questionable. But when applied to allied nations in the immediate neighborhood, it is a folly.

AN EMBARASSING CASE OF REGIONAL MYOPIA
Colombia is a large open economy. 22% of its GDP is generated by exports. 40% of exports and 32% of imports are exchanged in trade with the United States, with some 51% of the total covered by the Andean Trade Preference and Drug Eradication Act (ATPDEA), a temporary free trade arrangement, introduced in August 2002. Under ATPDEA, over 1’200 products entered the US market duty free, creating 90’000 new jobs in Colombia. Colombia is also among the main importers of US agricultural products.

Colombia has created a successful coffee brand and privatized its coal industry but an unprecedented economic contraction gripped the country early this decade. It only began to recover slowly around 2003, following a competitive depreciation of the currency, good performance of non-traditional exports (textiles, clothing, flowers) and the revival of the construction industry. President Alvaro Uribe hopes that enhanced access to US markets will attract foreign direct investment in labor-intensive industries.



All trade agreements are viewed in terms of domestic political costs, weighed against the benefits preached by economic orthodoxy. And it is the potential for job creation in Colombia that is at the core of the lengthy ratification process in the US. The costs of FTA’s failure seem to be seriously underestimated.

THE PROMISES OF THE LAND
In Colombia, a measure of resigned defeatism always elicits a chuckle. I often heard the locals joke about thir favorite sports – the so-called Colombian triathlon – “aguardiente, rumba y muchacha” (alcohol, dance and girls). But such fatalistic outlook on life is responsible for the lackadaisical attitude not only towards rural poverty and addictions but also AIDS, with little in the way of visible prevention campaigns in the countryside.

The country’s commendable macroeconomic performance has long been contrasted with the entrenched poverty and the social woes, deeply rooted in Colombia’s economic history. The reasons for the recurrent violence in the countryside should be sought in the spontaneous, sometimes chaotic colonization of the new lands. As a Spanish colony, Colombia quickly ran out of precious metals and shifted to agricultural commodities. Sugar and tobacco plantations benefited from costless African and Zambo slave labor. Contraband soon developed to facilitate direct trade between neighboring colonies (intercolony trade was forbidden by the Spanish Crown). And although Criollo-run councils were at the forefront of Colombia’s growing national self-determination, vested interests of the landholding class led to lopsided asset distribution - 2% of the population owning 70% of the land. Poverty and violence in overpopulated centers further pushed colons to the periphery, where they were attracted by the illusion of prosperity. The resulting debt trap further solidified the skewed ownership structure.

The modern structure of land ownership in Colombia is a tangible proof of the uneven land distribution that durably underpinned the convexity of the Lorenz curve. Beyond the land used for successful, modern agricultural production, much of Colombia is divided between traditional latifundia with big haciendas (often a playground of right-wing paramilitaries), areas of historical colonization (the original hotbed of left-wing guerrilleros), regions colonized since the 1970s (later turned into a frequent battleground between the paramilitaries and the guerrillas) and “minifundios” – poor peasant parcels, plagued by a variety of potential claims and counter-claims. In addition, there are indigenous “minifundios” whose landowners are easily manipulated by various political forces in Bogota. Finally, poor outer barrios are predominantly composed of squatters displaced by the civil war.



Much of the original, post-colonial ownership structure persisted largely intact into the 1970’s. By that time, radicalization of peasant movements led to the emergence of massive rural guerrilla activity, fuelled by extensive underground economy.

THE SOCIAL ECONOMY OF COCAINE SECTOR
For many years, the economy of (urban) Colombian was one of the strongest performers in Latin America, somehow seemed insulated from the surrounding atmosphere of violence, crime and corruption. Rapid economic growth lasted for most of the second half of the 20th century. During Latin America’s debt crisis the 1980s, Colombia was the only country that avoided defaulting on its external debt commitments, and recorded average growth rates of 3.5%, despite having to adjust to swings in the prices of its main commodity exports. However, early this century, the recession reversed that situation with both investor and consumer confidence suffering from the effects of continuing disruption and uncertainty. In 1998, the tight monetary policy designed to maintain the peso peg weakened the economy and exposed it to falling commodity prices. Public deficit reached 6%, financed mostly by the sale of treasuries in the international markets.

Between 1980 and 1997, Colombia’s parallel economy spawned vertically integrated international enterprises specializing in planting, harvesting, processing, trading and marketing illicit drugs, predominantly cocaine, where Colombia accounted for 60% of the world’s cultivation. The trade generated revenue equivalent to 7% of the country’s GDP. Coca was cultivated in areas in the south-eastern part of the country, but also smuggled in from Peru and Bolivia for industrial processing. By the end of the 20th century, Colombia supplied 75% of the world’s cocaine and successfully competed for heroin markets with Burmese and Afghan exports. Its main export target was the US where Colombian exports enjoyed the market share of 90% for cocaine and 65% for heroin products.

Narco-terrorists assassinated three presidential candidates in 1980’s. The death of Pablo Escobar in December 1993 put an end to Medellin Cartel’s dominance. In place, Cali Cartel rose to prominence, bringing down President Samper, accused of receiving electoral funds from the narco-barons. In 1994, Colombia ratified the 1988 UN convention on narcotics, but it was the last Andean country to do so. Between 1993 and 1997 lenient sentences were offered to narco-criminals in exchange for cooperation. However, in response to verbal and economic pressure from Washington, tougher line has been followed since 1997.



The breaking of the Cali cartel in 1997, responsible for the supply of 80% of cocaine to the US, drove industrial production into the hands of smaller operators, often collaborating with the communist insurgents and the paramilitaries. Although ideologically supported by naïve, left-wing NGOs in Western Europe, the guerrillas have, for a number of years, been providing drug cartels with crop protection, production laboratories and airstrips, while some members of the guerrilla groups were believed to be more directly involved in drug-trafficking. Not surprisingly, many paramilitary groups also sought access to the lucrative business, some with considerable success.

In 1999, the government estimated that some $5bn was smuggled into the country for money-laundering operations. By then, the main coca-growing areas were concentrated in the South-West region of Putamayo. The products were exported either through Brazil or over the inhospitable northern corridor between the Caribbean and the Pacific Ocean. It is in this area that large-scale battles opposed the communist guerrillas and right-wing paramilitaries, each vying for the control of this vital region. However, according to a UN study, the coca crop fell 30% in 2002 and another 21% in 2003, pushing the primary crop production across the border to Peru. High-earning crop substitution programs were lacking, making these gains unsustainable.

As recently as 2003, an estimated 35000 people were involved in various armed groupings. If the horizontal social mobility was statistically high in Colombia, then it owed it less to existing attractive opportunities in the urban centers and more to push factors – a spiral of violence and fear. The armed conflict displaced some 2m people, most of whom congregated in outer barrios. The process of demobilization posed a dilemma of durable employment for the former combatants. To this day job creation is the single most acute social issue for the country facing 60% poverty rate and 16% unemployment, an easy prey to the self-regenerating hydra of drug industry and parasitic criminal middlemen.



This is not an issue that the US Congress can easily turn its back on. But it did, again, last spring. The ratification procedure of the trade agreement originally signed in 2006 was delayed on allegedly procedural grounds, as a way to avoid the first defeat of an FTA since fast-track rules had been established three decades earlier. House Democrats’ opposition was misguided. Hiding protectionist agendas beyond the veil of concern for human rights betrays either poor understanding of socio-economic conditions in Colombia, or simply reveals pre-electoral hypocrisy. But relations between Washington and Bogota should be viewed in a broader, strategic sense. Especially now when a deranged caudillo in a neighboring country yelps from the podium: “qué se vayan al diablo, los Yanquis de mierda!”

COLOMBIA – FROM MAGIC TO REALISM (part 1)

Bueno. Ingrid Betancourt is free. The American contractors are free. The war with communist terrorists is almost over. For all of you who have not been fortunate enough to discover the boundless charms of Colombia, it is time to chart your flights. Or just about.

Most of you do not realize that I am writing about the 4th largest nation in the Western Hemisphere. The only South American country with access to both oceans. A nation tri-sected not by one Andean range, but three. One of very few places on earth where from a tropical beach you can contemplate snow-capped peaks. What will separate you from them is a jungle with hidden pre-Colombian cities. And until recently, teeming with leftist thugs.

But even those who have not had a chance to explore the extraordinary greenery of Colombia’s landscape have at least once in their lives come across the country’s most prominent exports – Garcìa Màrquez’s realismo màgico, Botero’s jocular voluptuosity or the nation’s “three Co’s” – some coal, more coffee and even more cocaine.

There are two Colombias. There is Colombia Colombians are proud of – a nation historically unscathed by autocratic regimes, blessed with a modern economy, vibrant urban middle class, parks, pedestrian zones and a metropolitan transportation system that serves as a model for developing countries. This is a country of a US-educated elite, unparalleled feminine beauty (probably rivaled only by neighboring Venezuela), rich mineral reserves and a GDP per capita of some $6800 – twice the level of China’s.

And then, there is the fragmented, lamentably poor rural Colombia. Home to the world’s largest organized crime networks, ravaged by decades-long struggle between neo-stalinist guerrillas and right-wing militias, underscored by the failure of the state to protect its citizens, four million of whom have fled the country.

This amazing contrast has been at the very root of Colombia’s problems and the rebel groups’ violent activity, which outlived the relevance of their professed ideological background. Fuelled by highly profitable underground economy and capable management, the guerrillas survived the collapse of leftist ideologies and have continued the armed struggle as a way to protect their economic empires. And for decades, the government failed to respond to this challenge accordingly – through well-funded and capably managed operations.

The reason lies in the fact that for many years the affluent urban Colombia lived in a relative safety and isolation of the dramatic, bloody events that played out in the countryside. This unsustainable balance was eventually broken at the end of the 1990’s, when the combined forces of the economic crisis, insurgents’ cheeky intransigence and government failure put the very survival of the Republic at stake.



WHO ARE COLOMBIANS?
Because of their history, unusual ethnic mix and insulating environment, Colombians are quite unique among Andean Latinos.

The Amerindian traditions were pulverized by early settlers, but few immigrants reached the hinterland until the coffee boom in the 1930s. Consequently, whereas other immigration nations fixed the loyalty of primary groups to protect their interests against newcomers, no such fossilizing tradition was necessary Colombia. Just like in other Latin American societies, the family has always played an important role, but the circle of acquaintances has always been wider and flexible enough for Colombians to fill in the organizational vacuum between the elitist State structures and the local communities. Given the inaccessibility of many areas of the country and the fabulous riches that unfolded outside the government control, the incentive to build parallel networks of authority was high, whenever supported by economic rationale.

As a result, Colombians tend to reward individual talent and initiative to much larger extent than other Latinos. Even at times of global ideological schisms, Colombians’ circumstancial pragmatism and a very “un-Latin” propensity for entrepreneurial risk-taking prevented total economic stagnation. Not surprisingly, Colombians make better businessmen (and even businesswomen) than many other South Americans. Their management capabilities are objects of neighbors’ tacit envy.

This does not mean that initial capital accumulation leads to creation of globally competitive companies. The structures Colombians tend to build are strongly hierarchical and impatience to obtain immediate satisfaction stunts growth of their enterprises. Seldom do they build a scale that would position them competitively in the rivalry for political or economic influence. Rather, the multiplication of interests, opportunistic flexibility and the importance of the local context have led to the fragmentation of the society in which communities took issues into their hands. Without falling into naturalistic determinism, it is worth underlying the inaccessible character of the various fiefs – nestled in insulated valleys and still speaking the same language only because 300 years is not long enough to replicate the linguistic variety of the Swiss Alps, the Balkans or PNG Highlands.

Well above these divisions, and unlike in other Latin nations, Colombia has maintained a civilian government with regular free elections, only interspersed by two short-lived attempts to introduce military rule. Polls conducted by Latinobarometro in 17 Latin American countries routinely confirm that Colombians have the strongest attachment to democratic values among various nations inhabiting the varied ecosystems that separate Rio Grande from Ushuaia.

This is more than a passing comment. The tradition of dictatorship, whatever its form - latifundia-based caudillism or a military junta - indelibly shaped the political cultures of Latin America. It spawned an entire literary genre – novela del dictador – and its Nobel-prized epiphenomena: Asturias’ “El señor Presidente”, Roa Bastos’ “Yo el supreme”, Carpentier’s “El recurso del método”, Valle Inclàn’s “Tirano Banderas”. Even if Colombian literature joined the bandwagon (notably in Garcìa Màrquez’s unreadable “Otoño de patriarca”), the Satanist narrative of an inaccessible Supreme Leader – the Lucifer tucked in his sprawling palacio and projecting his ruthless, infernal tentacles of power has never captured the political imagination of Colombians.

But it did capture the nation’s economic reality. By the 1980s, the extraordinary flourishing of drug cartels generated the most powerful underground big shots since the times of Al Capone. The brash, ebullient personality of Pablo Escobar perfectly fit in with the Latin myth of a tragically isolated, brutal, boundlessly wealthy, elusive, eloquent populist with friends in high places (from Norriega to Ortega). Several years after Escobar’s death I went to visit the presumptive headquarters of the cartel in Medellin. The high-rise ruin still stood there, a monument to the hierarchy of terror, untouched because untouchable. Smelling with horror.



CIVIL WARS LIKE THE CORDILLERA – NOT ONE BUT THREE
Despite the commitment to democratic institutions, periods of widespread conflict have plagued Colombia, leading to civil wars at the turn of the 20th c, in 1950’s and again recently. The foundations for such recurrent social convulsions have been laid by the social and economic fragmentation of the population, and the relative isolation of the privileged elite. In fact, the elite networks may have favored relatively consensual politics, in which opposition parties should be regularly included in the government. However, emerging political forces were not co-opted into the system, but suppressed, leading to the emergence, since the 1960’s, of three armed groups:
• neo-stalinist Fuerzas Armadas Revolucionarias de Colombia (FARC, 1964)
• pro-Cuban Ejército de Liberacion Nacional (ELN, 1965)
• maoist Ejército Popular de Liberacion (EPL, 1966)

The world today may be unrecognizable for those who have stuck to their jungle-based guerrilla anachronism and the very durability of the conflict has astonished distant observers. There are several reasons for it.

By 1970’s, massive urban migration and accelerated modernization had seen the emergence of new social classes which the State’s administrative structure failed to accommodate. In fact, the failure was threefold: economic (lack of perspective for economic welfare, tax evasion and free riding on public costs), political (non-incorporation of large parts of the population into mainstream public life, degradation of regional authority, division between the center and the periphery abandoned to the guerrillas) and ideological (particularism, poor civic sentiment and weak national identity).

By 2001, Colombia’s 150’000-strong conscript army faced 40’000-strong array of rebel forces, right-wing vigilantes and organized crime, each driven by a mix of ideology, pursuit of wealth or - simply - revenge. Almost 40% of the country’s territory was off-bounds.



But even then, at the apex of their military power, the guerrillas in Colombia stood little chance to become a political force. In few cases in which insurgents did submit themselves to the electoral sanction, they fared very poorly. With the possible exception of extremist rural forces supported by puritan ideologies (e.g. Maoism in China and Cambodia, Taliban in Afghanistan), most revolutions only succeed when its leaders make alliances with other sectors or elites, something that FARC was unable to achieve. It is arguable if they were interested in the first place.

The rising security threats to the comfortable urban lifestyle, an epidemic of abductions, economic slump, corruption and the failure to achieve a breakthrough in negotiations with the terrorists created perfect conditions for a strongman who could command support over and above the 300-year old political axes. Early this decade, Uribe proved to be that man.

Today, there seems to be an increased sense of national pride in a country which 10 years ago had fallen to a near-pariah status. Colombians are generally embarrassed by the image problem from which the country has been suffering for decades. Linguistically, they have even learned to dismiss the seriousness of the situation by employing evasive euphemisms. Insurrection and paramilitary excesses are labeled “problemas de orden pùblico” (public order issues) and the high crime rate: “altos ìndices de violencia” (high indices of violence).

There is little doubt that the communist terrorists are cracking and a little bit of national euphoria is well deserved. But longer-term improvements in security and livelihood for all Colombians will hinge on more than just successful military actions and the liberation of captives. The nation has achieved the professionalization of the armed forces. Now it needs a roll-out of sustainable social programs, economic empowerment of lower social strata and the reinforcement of the State’s presence in all parts of the country.

But do not delay your visit until then. This is a country on the rise.