Tag Archives: Menges Hemispheric Security Project

FARC’s atrocities

 

Recent reports from several media outlets focused on declarations made by Colombian President Alvaro Uribe who has ordered the army to step up efforts to rescue former presidential candidate Ingrid Betancourt from the FARC. Other hostages include Betancourt’s running mate Clara Rojas and three Americans contractors from the Northrop Grumman Corp.   Marc Gonsalves, Thomas Howes and Keith Stansell. Uribe’s decision came after police officer, John Frank Pinchao, escaped on April 28, 2007 after eight years of captivity by the FARC. Mr. Pinchao gave a detailed report about the harsh conditions of their captivity.

Articulo: "Las atrocidades de las FARC."

El Presidente Colombiano Álvaro Uribe ha pedido a las fuerzas armadas de su país, que realicen todos los esfuerzos posibles por rescatar a quien fuera candidata Presidencial en el año 2002, Íngrid Betancourt, secuestrada por las FARC. Otros cautivos son la fórmula vicepresidencial de Betancourt, Clara Rojas y tres norteamericanos trabajadores de la Corporación Northrop Grumman, Tom Howes, Keith Stansell y Mark Gonsálves. La decisión de Uribe de intentar un rescate militar se produjo después de las espeluznantes declaraciones del suboficial de la Policía colombiana John Frank Pinchao quien escapó el pasado 28 de abril de un campo de concentración de las FARC,  donde estuvo cautivo desde hacía más de ocho años.

NEWS:

  • Colombia: Uribe orders hunt for hostages held by FARC. Government deal will free jailed FARC rebels to pressure the group. Uribe asks US not to punish Colombia.
  • Venezuela: Chavez warns cable TV news station, Globovision. Massive protests over close of oldest television network, RCTV.
  • Rice criticizes Spain over Cuba policy.
  • Bolivia: Congress issues arrests warrants for members of the Constitutional Tribunal.
  • Venezuela and Bolivia to sell joint bonds.
  • Brazil: energy minister resigns.
  • Mexico’s Calderon vows no backtracking in drug war.
  • Peru and Ecuador dispel border issues.
  • Ecuador president vows to battle "incompetent" media.
  • Argentina gas exports resume to central Chile.

View the full version of the Americas Report (PDF)

Ver la versión completa del Informe de Américas (PDF)

For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: mengesproject@centerforsecuritypolicy.org. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or study.

FARC’s atrocities

 

Recent reports from several media outlets focused on declarations made by Colombian President Alvaro Uribe who has ordered the army to step up efforts to rescue former presidential candidate Ingrid Betancourt from the FARC. Ms Betancourt, a dual Colombian-French national, was seized by the FARC in February 2002. Uribe’s decision came after police officer, John Frank Pinchao, escaped on April 28, 2007 after eight years of captivity by the FARC. Mr. Pinchao gave a detailed report about the harsh conditions of their captivity.

Mr. Uribe pledged to release Betancourt, and her presidential running-mate, Clara Rojas, who gave birth to a son (Emmanuel), while in captivity ( the father is a FARC member, Pinchao said), and three American contractors from the Northrop Grumman Corp.   Marc Gonsalves, Thomas Howes and Keith Stansell were seized by the FARC when their plane crashed on Feb. 13, 2003 while they were conducting a drug surveillance mission in Colombia’s cocaine-producing southern jungle. [i] It is important to keep in mind that although Ms. Betancourt has gained international media attention, there are 60 other hostages that are also imprisoned and are being treated inhumanly by the FARC.  

The Revolutionary Armed Forces of Colombia–People’s Army, (Fuerzas Armadas Revolucionarias de Colombia–Ejército del Pueblo), or FARC or FARC-EP is a communist revolutionary and illegally armed terrorist organization in Colombia. It was established in 1964-1966 as the military wing of the Colombian Communist Party , and is considered by the Colombian Government, the United States and the European Union, amongst others, as a narco-terrorist organization; for their actions against not only the government but also towards civilians and infrastructure. With an estimated 12,000-18,000 members (approximately 20 to 30% of them children under 18 years), the FARC-EP is present in 35-40% of Colombia’s territory, especially in the southeastern jungles and in the plains at the base of the Andes mountains. The FARC is Colombia’s oldest, largest, most capable, and best-equipped Marxist insurgency. It is governed by a secretariat, led by septuagenarian Manuel Marulanda (a.k.a. "Tirofijo") and six others, including senior military commander Jorge Briceño (a.k.a. "Mono Jojoy"). [ii]

The FARC has financed itself through extortions from kidnappings as well as revenues generated through extensive drug trafficking.   The latter activities include but are not limited to coca plant harvesting, protection of their crops, processing of coca leaves to manufacture cocaine and drug trade protection. They have also invaded and massacred small communities in order to silence and intimidate those who do not support their activities. They enlist new and under aged recruits by force, distribute propaganda and, more importantly, rob local banks. Businesses operating in rural areas were required to pay "vaccines" (monthly payments) which "protected" them from subsequent attacks and kidnappings. Additional, but less lucrative, sources of revenue are highway blockades where guerrillas stop motorists and buses in order to confiscate jewelry and money. [iii]

John Frank Pinchao on Ingrid Betancourt and Clara Rojas       

Colombian police officer John Pinchao escaped from the FARC last week which took him on an odyssey through the deep jungle, after nine years of captivity. He says many of the hostages are too scared to follow him. Pinchao has provided the first details about the lives of Betancourt and the three Americans since videos of them in a jungle hide-out were shown in 2003. Speaking to reporters, Pinchao said the three Americans appeared prepared to wait for the government to reach a deal to release FARC hostages in exchange for jailed guerrillas. He said Betancourt is forced to sleep chained by her neck as punishment for having tried to escape five times and suffers from hepatitis. Pinchao said the prisoners with him were sometimes chained together at the neck for 24 hours a day to keep them from escaping. Since his escape, his family has received death threats. According to Pinchao, Clara Rojas, Betancourt’s campaign manager, had given birth in captivity to a child named Emanuel, confirming reports last year by a Colombian journalist, who said a FARC terrorist was the child’s father. Pinchao also revealed that Betancourt and Rojas are kept in different groups so they don’t see each other. [iv]

Uribe, at a military ceremony, said Pinchao’s testimony "demonstrates that the FARC’s concentration camps are crueler than the concentration camps of the Nazis." He also exhorted his top generals to draft up plans to free the hostages, despite the opposition of family members who fear any rescue operation would end in a bloodbath. [v]

The Kidnapping of Ingrid Betancourt

As part of her campaign in 2002 (the election won by Alvaro Uribe Velez), Ms. Betancourt wanted to enter the demilitarized zone (DMZ) at San Vicente del Caguán to meet with FARC representatives. The problem was that the terrorist group continued with its kidnappings, military attacks, involvement in the drug trade, intimidation and displacement of the civilian population, and the purchasing of weaponry so former President Pastrana and other officials turned down her petition arguing that neither they, nor the Colombian Army, could guarantee her safety. [vi]

When denied transport aboard a military helicopter that was heading to the zone, she decided to head into the DMZ via ground transport, together with her presidential running-mate, Clara Rojas and a handful of political aides. On February 23, 2002, she was stopped at the last military checkpoint before going into the former DMZ. Military officers insisted she and her entourage were not to continue on their journey towards San Vicente del Caguán but Betancourt dismissed their warning. She was kidnapped by FARC, who have held her captive ever since. [vii]

Due to Betancourt’s French citizenship, the newly elected President of France, Nicolas Sarkozy, is already involved in the cas e. The FARC urged Sarkozy to help broker a deal for the release of Betancourt and dozens more hostages the rebels have held for years. Sarkozy’s "good offices will be definitive in this matter to secure the return home of Ms. Ingrid and the other hostages in an exchange," FARC spokesman Raul Reyes told Anncol news service, which often carries rebel statements. Sarkozy has told Betancourt’s relatives in France that he will work to secure her release, but the French government is concerned that Uribe has ordered the military to intensify efforts to rescue the hostages from secret jungle camps. Betancourt’s relatives have also approached Sarkozy and have urged him to prevent a military rescue. [viii]

Ever since Uribe became President of Colombia, violence has dropped sharply, but the FARC, is still fighting and has held hundreds of politicians, police and soldiers prisoner for years. The FARC is determined to exchange about 60 so-called political prisoners, including Betancourt and three US military contractors, for hundreds of jailed terrorists. M any non-governmental organizations (NGO’s) are pressuring Uribe to comply with the demands.

Analysts believe that the FARC are supported by Fidel Castro and Hugo Chávez who vehemently oppose "Plan Colombia", and are doing everything they can to put a stop to it.  Chávez, who has been accused of giving sanctuary to the FARC inside Venezuela sees them as a conflict party instead of condemning them as a terrorist organization. Unfortunately, many Democrats in Congress have decided to criticize Uribe and, in doing so they have unintentionally sided with the FARC, freezing up $55.2 million in military aid to the South American country. [ix] Bashing Uribe sends the wrong message to Latin America. If the U.S. turns on its closest, most loyal regional ally, other leaders will not be tempted to support American initiatives. What’s more Chavez will step in to fill the void as Uribe losses financial support from the U.S., he will most likely increase his assistance to the FARC.

As a well funded terrorist group with the capability to destabilize not only Colombia but the Andean hemisphere, the FARC continues to be a major concern. FARC activities could have powerful ripple effects here in the US, in illegal immigration, drugs and potential terrorism.

Revenues from kidnappings enable the FARC to purchase additional arms and kill innocent people. Caving into their demands of exchanging what they refer to as "political prisoners" for jailed terrorists, suggests that terrorism pays off and more of the same tactics will be used in the future. If Uribe softens his stance towards the FARC, it means that his administration is subject to be intimidated and the message to the terrorists will be that if they become more brutal with their hostages, authorities will eventually give in.

That is why it is important for Uribe to stay the course, support a military rescue and not succumb to the pressure of human rights groups and other governments which have nothing at stake here. Colombia has to do all it can to safeguard itself and protect its people and therefore the FARC must be contained and dealt with by force, if necessary.

Notes

[i] Ex rehén: Ingrid Betancourt es "el mayor enemigo" de las FARC. May 28, 2007. El Tiempo, Colombia.

[ii] Las FARC, más de cuatro décadas de desafío al poder. May 19, 2007. Diario Clarín, Argentina.

[iii] Ibid. 

[iv] Policía escapa de las FARC tras nueve años de secuestro. May 18, 2007. La Prensa, Bolivia. [v] Uribe ordena el rescate de Betancourt. Francia rechaza el uso de la fuerza. May 19, 2007. 20 Minutos, España.  [vi] Betancourt, símbolo del secuestro en Colombia. February 23, 2007.   El Mundo, España.

[vii] Ibid.

[viii] Las FARC creen que Sarkozy puede ser clave para liberar a Betancourt. May 25, 2007. Clarín, Argentina.

[ix] "The Americas Report." May 24, 2007. http://www.centerforsecuritypolicy.org/modules/newsmanager/center%20publication%20pdfs/the%20americas%20report%20may%2024%202007.pdf

 

Are the Democrats pushing Colombia away?

House leaders: ignoring U.S. allies in Colombia, claiming "friendship" with Syria.

The Americas Report has have been covering the most recent events in Colombia and Mr. Uribe’s efforts to get the funds necessary to continue with ‘Plan Colombia’ and to ratify a much expected Free Trade Agreement. But the Para-politics scandal in February 2007, which prompted the resignation of Colombia’s Foreign Minister María Consuelo Araujo, and which implicated several top ranking officials of the Uribe administration, has complicated U.S.-Colombia relations.

On January 26, 2007 we ran a full story on the importance of ratifying the FTA with Colombia and Perú.1 On February 23, 2007 we covered the ‘Paragate scandal’ in detail2 and on April, 2007 our Editor in Chief, Nancy Menges was asked to submit a statement for the hearing before the Western Hemisphere Subcommittee of the House Committee on Foreign Relations on US-Colombia Relations. The hearing took place on April 24, 2007 and was held to consider continued funding for Plan Colombia and ratification of a free trade agreement between The United States and Colombia. The statement supported the recent accomplishments of the Uribe Administration in demobilizing the paramilitaries and encouraged members of Congress to move forward with Plan Colombia and FTA.3

In these reports we have concluded that "Over the course of many years, the United States has been trying to get the cooperation of Colombia to combat narcotics trafficking and the free trade agreements were promised as a sign of recognition for their success on this front. No one can deny Uribe’s success since he has enacted tough policies to confront not only drug-trafficking but also the terrorist group inside Colombia, known as the FARC which is greatly responsible for the narcotic trafficking problem in South America. The Colombian FTA must be approved by the House Ways and Means and Senate Finance committees before they can be considered by the full Congress. The midterm U.S. elections that gave the Democrats control of Congress in January 2007, have delayed the much anticipated ratifications. President George W. Bush and his advisors are aware that these agreements are not just about trade. Latin America, under the leadership of Hugo Chavez, is radically turning towards the left, posing a threat to the stability of the region with Venezuela forming dangerous alliances with China, Russia, Syria and Iran. Since Alvaro Uribe became President of Colombia, the FARC has been expelled from the populated Bogotá – Medellín – Cali triangle. For the first time in years, Colombians can drive between most of the country’s cities without risk of abduction or extortion."4

Sadly, some Democrats in Congress and in the top echelons of US politics don’t seem to get the picture. Sen. Patrick Leahy , Chairman of the Appropriations Subcommittee dealing with foreign aid, last month held up $55.2 million in military aid to Colombia stating: "I have withheld the release of those funds because I – and other Members of Congress – are concerned about reports of paramilitary infiltration of the Colombian government and military, as well as extrajudicial executions by the military.5

According to Robert Novak, during Uribe’s most recent visit to the US, "Hopes that the Democratic majority in Congress might perceive the importance of supporting Colombia were dashed April 20 when Al Gore canceled a joint appearance with Uribe at an environmental event in Miami. Gore cited allegations of Uribe’s association with paramilitary forces a decade ago, charges vehemently denied by the Colombian president. Gore’s snub legitimized what the new congressional majority seems intent on doing. Democrats follow both left-wing human rights lobbyists and AFL-CIO President John Sweeney’s protectionist campaign against the Colombian free-trade agreement. Rep. Sander Levin, Chairman of the Ways and Means Subcommittee on Trade, as usual echoes labor’s line against the bill. In the wake of Uribe’s visit to Washington, two prominent House Republicans — former speaker J. Dennis Hastert and Rep. Ileana Ros-Lehtinen, the ranking minority member of the Foreign Affairs Committee — made a quick trip to Colombia. Visiting there for the first time in many years, they were struck by the progress. They met with Colombian national police who had just returned from Afghanistan, where they advised NATO forces on techniques for dealing with narco-terrorists."6

Regarding Nancy Pelosi, Novak states "Uribe got nothing from his meeting with House Speaker Nancy Pelosi and other Democratic leaders. After the meeting, Ms. Pelosi issued a written statement: "Many of us [Democrats] expressed our growing concerns about the serious allegations of connections between illegal paramilitary forces and a number of high-ranking Colombian officials."7 Uribe went home nearly empty-handed since military aid remains stalled, overall assistance is reduced, and the vital U.S.-Colombian trade bill looks dead. Uribe is the first Colombian president to crack down on his country’s corrupt army officer hierarchy and to assault both right-wing paramilitaries and left-wing guerrillas, but last week he confronted Democrats wedded to outdated claims of civil rights abuses and rigidly protectionist dogma. This is remarkable U.S. treatment for a rare friend in South America, where Venezuela’s leftist dictator, Hugo Chávez, can only exult in Uribe’s embarrassment as he builds an anti-American bloc of nations."8

Many Democrats seem unaware of the fact that although many of those implicated come from Mr. Uribe’s Conservative Party, (his former intelligence chief is under investigation), Uribe has not been charged with any wrongdoing . Quite the contrary, it was under his administration that more than 30,000 right-wing paramilitary fighters were demobilized last year. This initiative has facilitated the current investigations, which Mr. Uribe and his government have supported and funded.9 In addition, Democrats should consider the fact that, despite the scandal, Uribe supporters in Colombia have rallied around their president. An opinion poll released this week showed that Uribe has an approval rating of 80.4%, up from 73% a month ago.

Colombian Vice President Francisco Santos Calderón recently said in a television interview that failure to ratify the free-trade agreement would "send a message to the external enemies of the United States" (meaning Venezuela’s Chávez) that "this is how America treats its allies." He added that Colombia might "have to reevaluate its relationship with the United States." He did not specify how Colombia might revise relations with the United States, its top trade partner and source of billions of dollars in military and counter-narcotics aid to help Bogotá fight leftist guerrillas and drug traffickers.10

We believe that it is of utmost importance to help our allies and honor our commitments, especially with respect to Colombia’s Uribe who has been working very hard to destroy terrorism, even though his life has been threatened many times, install free markets, and make his country a more stable place to live. A few years ago this was hard to imagine. The stock market has gone up 500% since he’s taken office. The debt has been repaid early, the peso is soaring, unemployment is down one-third since he took office, foreign and domestic investment has skyrocketed and Colombians have regained confidence and are optimistic about the future. The economy grew at 5% last year and crime has nearly evaporated.

It is hard to understand the Democrats’ ‘strategy’ towards Latin America. Nancy Pelosi criticized President Uribe but had no problem traveling to Syria to meet President Bashar al-Assad. According to the "The American Spectator", Pelosi is planning a visit to Venezuela to meet with Hugo Chávez — one of the world’s most outspoken enemies of the United States, and apparently is planning to travel to Iran.11 Why snub Mr. Uribe, who has been doing everything he can to fight drug trafficking and terrorism and has been a loyal ally of the US and show interest in approaching Mr. Chavez instead? Why embrace Syria, who is an enemy of this country and sponsors terrorism, or Iran? If these prominent Democrats continue with this attitude towards Colombia and other allies, it could certainly send mixed messages to other countries who might be rethinking their alliances in the region, a potentially dangerous situation considering Chávez’s eagerness to win over friends to advance his so-called ‘Revolution.’

NOTES

1 "The Americas Report" January 26, 2007. http://www.centerforsecuritypolicy.org/modules/newsmanager/center%20publication%20pdfs/americas%20report%20january%2026,%202007.pdf

2 "The Americas Report" February 23, 2007. http://www.centerforsecuritypolicy.org/home.aspx?sid=56&categoryid=56&subcategoryid=91&newsid=11574

3 "The Americas Report" April 25, 2007. http://www.centerforsecuritypolicy.org/modules/newsmanager/center%20publication%20pdfs/the%20americas%20report%20april%2025%202007.pdf

4 "The Americas Report" January 26, 2007. http://www.centerforsecuritypolicy.org/modules/newsmanager/center%20publication%20pdfs/americas%20report%20january%2026,%202007.pdf

5 Colombian Seeks to Persuade Congress to Continue Aid. April 30, 2007. The New York Times.

6 How to Lose an Ally. By Robert Novak. May 10th, 2007. The Washington Post.

7 Pelosi le expresa a Uribe su preocupación por escándalo de la ‘parapolítica.’ May 3, 2007. Radio Caracol, Colombia.

8 How to Lose an Ally. By Robert Novak. May 10th, 2007. The Washington Post.  

9 Pelosi le expresa a Uribe su preocupación por escándalo de la ‘parapolítica.’ May 3, 2007. Radio Caracol, Colombia.

10 Colombia says may review US ties without trade deal. May 8, 2007. Reuters.

11 Nancy Plays Hard to Get. The American Spectator. April 27, 2007.

Democrats pushing Colombia away?

The Americas Report has have been covering the most recent events in Colombia and Mr. Uribe’s efforts to get the funds necessary to continue with ‘Plan Colombia’ and to ratify a much expected Free Trade Agreement.  But the Para-politics scandal in February 2007 has complicated U.S.-Colombia relations. An analysis of the situation and why the Democrats have frozen the funds for ‘Plan Colombia’ and why they oppose the ratification of the Free Trade Agreement.

Articulo: "El Partido Demócrata y Colombia."

El "Americas Report," ha seguido los últimos acontecimientos de Colombia y los esfuerzos del presidente Uribe por obtener los fondos para continuar con el ‘Plan Colombia,’ y por lograr la ratificación el Tratado de Libre Comercio. Pero el escándalo de la para-política ha complicado su situación. Por qué el Partido Democrata ha congelado los fondos para la lucha contra el narcotráfico y por qué se oponen a la ratificación del Tratado de Libre Comercio.

NEWS:

  • Bolivian President Evo Morales says that capitalism is the worst enemy of humanity. Morales expresses his admiration for the Cuban physicians working in Bolivia. Bolivia and Brazil’s Petrobras, seal agreement on transfer of oil refineries.
  • Uribe orders Colombian military to rescue former presidential candidate Ingrid Betancourt and three US contractors that the FARC are holding hostage. FARC targets FTA with the US.
  • Corruption scandal in Argentina (Skanka).
  • Venezuela TV closing raises fears about Press Freedom.
  • Brazil energy minister under pressure over scandal.
  • Ecuador: Economy Minister accused of speculation with foreign debt obligations. Ecuador, Argentina for Bank of the South. 
  • Peru: no evidence tying bomb attack to Shining Path.
  • Mexico opposition Party wins in Yucatan state race. Mexican drug violence escalates.
  • Guatemala: Colom lower but still ahead.

View the full version of the Americas Report (PDF)

Ver la versión completa del Informe de Américas (PDF)

For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: mengesproject@centerforsecuritypolicy.org. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or study.

Venezuelan oil bonanza

Despite an influx of oil wealth, serious problems remain for the Venezuelan economy.

By Constatin Schoehl von Norman

Despite the bonanza of Petróleos de Venezuela S.A. (PdVSA), the Venezuelan state-owned oil company, shelling tremendous amounts of foreign exchange into the Venezuelan state budget, there are indicators that the increasingly state regulated economy is missing out on diversifying its industries and creating the environment for sustainable development. Little has been done to clean up the state budget deficit and create reserves for the future. The strong growth of the Venezuelan economy is almost solely based on the oil export revenues and fiscal measures, which have further strengthened this dependency. The government has used its oil revenues to markedly increase real wages in the public sector but a large part is being consumed by the highest inflation in Latin America.

[More]The enhanced level of state regulation of the economy seems to be unable to produce sustainable results and the state budget deficit will continue to grow during 2007, despite soaring oil prices and rising tax revenues. Indicators show that extreme poverty and unemployment are being reduced but high inflation is depreciating middle class savings which cannot be transferred out of the country or converted into dollars.

Expensive labor has made core foodstuffs more expensive and governmental price controls have just induced a lower production on the whole. Whereas the business community is making profits, the middle class seems to be the economic loser of the "Bolivarian economics", so far.

Decent economic growth in Latin America and excellent terms of trade for Venezuelan exports

Fueled by high commodity prices and surging demand from China, Latin America’s economies are enjoying a renaissance. The countries of Latin America and the Caribbean grew at a 5.4 percent clip in 2006, up from 4.5 percent in 2005.1 Due to the high oil price, Venezuela is enjoying very favorable terms of trade, for now. So far it has done little in the way of investing the money wisely, such as creating reserves or concentrating on the environment for sustainable growth of other Venezuelan industries.

State deficit despite oil windfall

High world market prices for oil are boosting the governmental budget; but the impressive economic growth, induced by a massive increase in public spending, has started to impact on the 2007 state budget deficit. The latter is expected to jump from last year’s moderate 1.8% of GNP to 4.9%. During 2005 the government could have recorded a surplus; however an increase of 74% in spending could not be covered by taxes. The government can react to this threat by either printing more money or rolling over the deficit to domestic banks. The former measure would further accelerate inflation whereas the latter would create frictions between banking sector officials and government representatives. The recent "saber rattling"2 of Chavez towards the banking sector might be understood in light of this dilemma. The threats might entail nervousness on part of the stock markets and create diplomatic rifts with Chavez-friendly countries whose businesses have so far profited from the current bonanza.

The Argentinean steel producer Siderurgica del Orinoco is pressured to satisfy domestic demand, whereas foreign banks like Banco Hispano de Santander (Spain) are pushed to roll over the internal debt and lend cheaply to the domestic sector. Right after the announcements, the main index of the Caracas stock exchange fell by 2.7%.

It is unlikely that Chavez will nationalize the banks but he intends to threaten them into compliance with his domestic fiscal policy. The government expects more gratitude after a year of tremendous earnings in the banking sector during 2006. Expropriations without compensation would cause economic disaster whereas a payoff would be another negative burden on the unbalanced deficit. It remains to be seen, however, whether we are witnessing the beginning of a rift in the comradeship between the business sector and Chavez.

Spending Venezuela’s income to foster political "Chavismo" throughout Latin America

Chavez’s government has been spending much of their national resources to foster the political ends of its envisaged Latin American revolution. In the first half of 2006, total public expenditures of the central government, in nominal terms, was 74.6% higher than the first six months of 2005, while the tax revenues were "only" up by 26.8%.3 Be it the massive support of lapdog candidates in foreign election campaigns or the assistance to the rising number of "like minded" governments in Bolivia, Cuba, Nicaragua or Ecuador, this kind of political encroachment has its price.

Just to furnish the equipment for 26 broadcast stations of the National System of Community Radios of the Original Peoples, the Venezuelan Government granted $1.5 million as a "donation."4 The authorities in charge of the network of community radios admitted that the system’s purpose is more political than communicational, related to defense and the promotion of the change policies of the Morales administration.5 In Nicaragua the Venezuelan government has allocated funds supporting the Sandinista campaign , such as supplying helicopters, agricultural fertilizers, subsidized oil imports, or assistance for medical and illiteracy campaigns through the Venezuelan government.6 The massive aid for the Cuban government, for Obrador’s campaign, for Correa in Ecuador or even the social heating oil campaign in the U.S. are further examples. TELESUR and Banco del Sur, a bank project designed to replace the IMF in the region,7 will demand additional funding to really take off. Chavez thumbed his nose at the IMF this week and said after paying back the last of his country’s debt that he would withdraw from the organization. 8

Investments in promoting hegemonial goals might overstretch the current, abundant resources of Venezuela. If not now, it will definitely cause problems for them in the long run.

Some of the resources would have well been invested in sustainable development of the Venezuelan government to prepare for a time after the current oil hike. Chavez’s ventures, Venezuelan investment abroad and the growing capital flight have resulted in a negative foreign direct investment of more than half a billion dollars while neighboring Colombia attracted $6.3bn in FDI.

Despite the soaring incomes, there has been no significant increase in the international reserves of the central bank. At the beginning of November 2006, reserves stood at US$ 34.0 billion, compared with US$ 29.6 billion at the end of 2005. This is mainly attributable to the elimination of the obligation of Petróleos de Venezuela (PDVSA) to sell its foreign exchange to the central bank.

Chile is a positive example of how to use money generated from resource extraction, creating a stable budget long term: a commission of experts conservatively estimates the world market price of copper for the decade to come. The state budget is tailored to achieve a surplus of 1% of GNP, with a copper price at its long term value. Given a copper price last year well over twice the estimated long term price, Chile had a fiscal surplus of the order of 9% of GNP. The resulting surplus is saved for a rainy day. Some Middle Eastern countries show similar strategies and more sustainable investment in infrastructure.9

Banking on continuous oil price hikes

Chavez seems to be banking on the continuation of soaring oil prices. More than any other Latin American country, the tax system has become dependent on resources derived from the exploitation of its non-renewable commodities.10 Chavez’ tax reforms have furthered this dependency. His government has reduced the VAT and abolished the corporate asset tax in 2004. The latter shows that Chavez has a keen interest in keeping the business elites content, as long as he is not criticized publicly. The domestic growth, however, is slowing down. Venezuela’s GDP increased 10.3 percent in 2006, experts expect a slowdown of growth to 7.8 percent this year and 6.6 percent in 2008.11 A further decline in Venezuela’s impressive economic growth would further reduce tax revenues, and subsequently create a larger budget deficit.

As long as prices continue to be about $60 a barrel, Chavez can continue his lavish spending programs, as well as his efforts to expropriate foreign companies in the telecommunications and electric utility sectors; if he keeps his promises to pay for the nationalization.12 If prices would ever fall below $45 a barrel13 Venezuela would rapidly run into massive fiscal problems.

Positive development in the job market

On the other hand, it is fair to admit that the government seems to be effectively reducing unemployment. The unemployment rate dropped for a third consecutive year and is lower than in many parts of the region.

The government has an excellent record of paying down the foreign debt; a sustainable achievement which the Chavez administration can indeed claim. It might be motivated to some extent by the desire to leave the international finance system but the result is among the best within the general spending party. Foreign debt has at least been reduced by more than $4bn during 2006. It still amounts to a quarter of the GDP, accumulated from the times when oil prices were lower.

The increase of the minimum wage has actually generated higher income amongst impoverished Venezuelans. The real wage increase is actually stunning, more than 22.1% in 2006. The minimum wage has been increased twice during 2006 adding up to a hike of 25% over the course of one year. In the growing public sector, handouts topped the average with 33.8% reflecting the expansionistic fiscal policy at home.

It is this massive wage increase that may have the most serious repercussions in the coming years and seriously damage Venezuelan competitiveness on the Latin American market. The wage increase has, in large part, morphed into consumption, mostly in private households. As a result, a hike in imports has been fostered, yet at the same time a future dependency upon these imports has been created.

Inflation and high market prices are consuming higher wages and savings

The highest inflation in Latin America might become a growing problem for Venezuela’s economy. Only three Latin countries had higher inflation rates during 2006 as compared to the previous years. Among them, Venezuela posted by far the highest rate of 15.8% during the last year (up from 14.4% in 2005).14 Inflation is stimulated by the significant increase in private consumption which was buoyed up, in turn, by the considerable rise in public transfers to households, the recovery of real wages and the hefty increase in credit to the private sector.15

The government has tried to check inflation with classic populist means, introducing authority imposed price controls and cash-flow limitations. Currency appreciation in the Bolivarian Republic of Venezuela is due to the fact that the Central Bank of Venezuela has not altered the parity of the Bolívar since May 2005, even though the country has higher inflation than its trading partners.16

Venezuela also happens to have by far the highest variation in consumer prices. Again, the government tried to fix this problem with price controls on core edibles like eggs, chicken and bread. The success is, as mostly with socialist enforcement measures, meager. The regulated products are scarce now. The supply has dropped, since suppliers tend to produce goods whose prices are unregulated.

Prudent planning for the post-boom era

Venezuelan politics exhibit more "caudillo populism" than classic socialism. As long as the handouts to the poor keep coming and the artificially stimulated domestic sector generates handsome profits for their domestic and national enterprises, the "Chavez economic system" will keep going, and spending. However, few of these expenditures are designed to deliver sustainable results. The policy shows the antagonism of a government which immensely profits from an international free market system, while trying to ignore market mechanisms at home. So far most of the regulative measures have backfired. The whole system is tailored to the continuation of high oil revenues. Instead of using national wealth, investing in roads and infrastructure, or competitive education, the government has favored increased domestic consumption. Countries like Brazil will welcome the new MERCOSUR member and enter the market with competitive products. The good news is that Chavez’ ambition to be antagonistic towards "imperialist dominated organizations" has helped channel Venezuelan money into the reduction of foreign debt.

For now poor people and the business sector are doing better. The losers are the shrinking middle class and the political opposition who are deprived of participation in the public sector boom. If current trends continue, the Venezuelan people will have lost the chance to transform their possibly transitory petroleum bonanza into a permanent increase in long term growth rates and future prosperity.

Notes

1 Alan Field, Latin American experience, Florida Shipper, May 14, 2007.

2 See New York Times headline, "Chavez Rattles Takeover Saber at Steel Company and Banks", May 7, 2007.

3 Economic Commission for Latin America and the Caribbean (ECLAC), Preliminary Overview of the Economies of Latin America and the Caribbean, 2006, p. 70, available online, on May 11,at http://www.eclac.cl/publicaciones/xml/3/27543/lcg2327_i_chapterV_External_Sector.pdf .

4 BBC, Monitoring Latin America, May 9, 2007.

5 BBC, Monitoring Latin America, May 9, 2007.

6 Constantin Schoehl von Norman, The Americas Report, Elections in Nicaragua — how the disunity of the democratic factions may foster the recurrence of a Sandinista government, Vol. 2 – Issue 20 – October 13, 2006, Highlighted Story.

7 Chávez intends the new bank to have US$7bn in capital. What form this capital will take, whether it paid up or authorized, is unclear.

8 Brendan Boyle, Africa will survive global economic slowdown, Sunday Times (South Africa), May 06, 2007, Business Times Edition.

Hugo Chávez. Source: www.opinionist.com

9 Economic Commission for Latin America and the Caribbean (ECLAC), Preliminary Overview of the Economies of Latin America and the Caribbean, 2006, p. 71, available online, on May 11,at http://www.eclac.cl/publicaciones/xml/3/27543/lcg2327_i_chapterV_External_Sector.pdf.

10 Economic Commission for Latin America and the Caribbean (ECLAC), Preliminary Overview of the Economies of Latin America and the Caribbean, 2006, p. 57, available online, on May 11,at http://www.eclac.cl/publicaciones/xml/3/27543/lcg2327_i_chapterV_External_Sector.pdf .

11 Alan Field, Latin American experience, Florida Shipper, May 14, 2007.

12 Alan Field, Latin American experience, Florida Shipper, May 14, 2007.

13 Latin American Economy & Business, Looking good, May 3, 2007.

14 Economic Commission for Latin America and the Caribbean (ECLAC), Preliminary Overview of the Economies of Latin America and the Caribbean, 2006, p. 57, available online, on May 11,at http://www.eclac.cl/publicaciones/xml/3/27543/lcg2327_i_chapterV_External_Sector.pdf.

15 Ibid.

16 Ibid.

Venezuelan oil bonanza

Despite the Bonanza of PdVSA shelling tremendous amounts of foreign exchange into the Venezuelan state budget, there are indicators that the increasingly state regulated economy is missing out on diversifying its industries and creating the environment for sustainable development. An analysis of the current economic and fiscal policy of Venezuela.

NEWS:

  • Venezuela: Chávez closing his TV critic (RCTV). Venezuela nationalizes 18 foreign oil rigs.
  • Castro and Chávez continue to bash US ethanol plan.
  • Colombia says may review US ties without trade deal. Colombia orders lawmakers’ arrests. President Uribe backs ministers over ‘paragate’ scandal. Illegal police wiretapping operation forces top level resignations.
  • Bolivia: Morales pushes energy nationalization. Morales seeks trial against members of the Constitutional Assembly.
  • Mexico: Top anti-narcotics official slain in Mexico City.
  • Peru optimistic about ratification of FTA with the US.
  • Brazil: Lula vow to improve working conditions for cane cutters in biofuel industry. Lula will not seek third term as Brazilian President.
  • Ecuador: Correa attacks press.

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For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: mengesproject@centerforsecuritypolicy.org. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or study.

Latin American grassroots (part 3)

Despite the autonomy of indigenous populations in Ecuador, they are not immune to the increasing radicalization we witness today in Latin America.   The problem is always the form these social discontents take, in what direction they move, and what the forces are that influence such a direction. Ecuador indigenous groups in Ecuador not only have been a factor in Ecuadorian politics in the last two decades but their role in deciding the balance of powers within the Ecuadorian political system was crucial after the year 2000 and remains crucial until this very day. An analysis of The Confederation of Indigenous Nationalities of Ecuador (CONAIE), Ecuador’s largest indigenous organization and its links to Hugo Chávez.

NEWS:

  • Hezbollah builds a Western base in Tri-border area in South America.
  • Castro blames US for plane hijack attempt in Cuba. Spain’s foreign minister visits Cuba.
  • Brazil and Paraguay to join "Bank of the South." Brazil’s ‘Petrobras’ seeking refinery sale in Bolivia.
  • Bolivia : Morales takes control over hydrocarbons. Plans more nationalizations. Bolivia to nationalize biggest phone company.
  • Venezuela : Chavez to nationalize banks and largest steel producer. Venezuela rejects US anti-drug claim. Venezuela strips oil giants of Orinoco Belt oilfields. John Negroponte forecasts failure of Chavez’s policies.
  • Colombia ‘s Uribe and President Bush push trade agreement. Alvaro Uribe more popular.
  • Ecuador ‘s lawmakers fight protesters in bid to retake seats. Correa threatens to sue banks. Correa founds controversial ‘truth commission.’
  • Mercosur inaugurates Parliament.

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For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: mengesproject@centerforsecuritypolicy.org. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or study.

Ecuador’s democracy at risk

Rafael Correa
President of Ecuador

As Luis Fleischman, writing for The Americas Report, predicted last November, the Ecuadorian President, Rafael Correa, is creating a constituent assembly aimed at increasing a more authoritarian system of government.

Such a system would include the further deterioration of political representative institutions in favor of a stronger executive power. Furthermore, Fleischman pointed out that "Mr. Correa’s party is a political movement detached from a structure that sees elections only as means to gain votes, to establish himself in power and later rule without a free functioning legislative branch.

Thus, "the assembly will determine the elimination of party plurality in favor of the almighty political leader (with a direct connection to the masses). As soon as he gathers more power, Mr. Correa will proceed to dismantle political pluralism in Ecuador and will move in the direction set by Hugo Chávez" (Luis Fleischman, "Elections in Ecuador", CSP Security Forum, November 9, 2006).

Indeed, President Rafael Correa’s proposal to create a Constituent Assembly to rewrite Ecuador’s Constitution won an overwhelming 81.7% of the votes in a national Referendum on April 15, 2007. More than 70% of Ecuador’s 9.2 million voters participated. The Supreme Electoral Court has resolved to convene elections on September 30, 2007 for the 130 delegates to a Constituent National Assembly.[1]

Since being elected President of Ecuador, Mr. Correa had been pushing the idea of a new constitution ‘to fight against corruption.’ Disenchantment with congress, political parties and the judiciary were key factors in Rafael Correa’s presidential victory last year.[2] But many see the result of the Referendum as a power grab by the President who didn’t present candidates for Congress and had little support to advance his policies. One possibility is that the only way out of this stalemate was to dissolve the Legislative body and replace it with a new one that would support his agenda.

Why did Rafael Correa call for a Constituent Assembly?

Mr. Correa won the Presidential elections on November 26, 2006 in a runoff with candidate, Alvaro Noboa, but his party had few representatives in the Congress. With only minor support of a few Representatives from other political parties, his administration had difficulties in trying to create a Constituent Assembly from the start. The relationship between Congress and the President deteriorated since he assumed the Presidency on January of this year. Things got even worse in March, when Congress removed the President of the Federal Court, Jorge Acosta, for convoking a Referendum without the approval of the legislative body. In response the Electoral Court fired 57 opposition members of Congress. The right-wing opposition deputies were ousted over their refusal to go along with radical constitutional reforms promoted by Rafael Correa. They were soon replaced by 21 substitute delegates. After more than a month of turmoil, Congress finally held its first session on April 10th. Ousted lawmakers continued to meet in parallel, trying to push for some type of legal solution to their removal.[3]

But just last week, the Constitutional Tribunal ruled that the 57 opposition legislators who were fired last month should be allowed to return to their posts. In retaliation, Congress (with a majority of government-friendly parliamentarians) voted to sack all the judges on the Tribunal. In a shocking move, President Rafael Correa ordered police to block the reinstated legislators from returning to their seats while federal prosecutor, Elsa Moreno, ordered the arrest of 24 deputies, nearly half of the 50 who the country’s highest court had ordered reinstated to Congress and charged them with ‘sedition.’ Prosecutor Elsa Moreno, who is in charge of the case, alleges that the 24 lawmakers ‘plotted’ against the state and ‘acted against the government, refusing to recognize the constitution, and impeding a meeting of the Congress." (They were initially fired for allegedly interfering with a national referendum to allow Correa to pursue his aim of rewriting the constitution).

It is reported that 15 of the 50 legislators are in Colombia and have said they will ask for political asylum in that country. (Correa had already warned that if any of the dismissed lawmakers tried to enter by force, "it will be necessary to send them to prison"). In a recent development, Ecuadorian legislator Gloria Gallardo who fled to Colombia this week to seek political asylum returned to Ecuador Friday. Upon her arrival at the airport of Guayaquil, her hometown, Gallardo said that during her stay in Colombia she had denounced the political situation in Ecuador, the CRE radio network reported.[4] The Latin American Association of Human Rights President, Juan de Dios Parra, sent a letter April 26 asking the Colombian, Peruvian and U.S. governments to deny the Ecuadorian opposition legislators asylum. The letter said asylum is intended "to protect the security and lives of people who are persecuted for their ideas" and that the legislators’ lives are not in danger.[5]

Correa’s position is supported by Ecuador’s Top Electoral Court, which fired the lawmakers in March and says that it – not the Constitutional Tribunal – has the final say on electoral matters. That court’s president warned that the six constitutional tribunal judges who voted to reinstate the ousted congressmen could be charged with abusing their authority.[6]

In recent declarations, however, Correa insisted the removal of the opposition lawmakers remain in force, but that ‘he opposed the arrest order for the 24 accused of sedition.’ He said that "as the one responsible for the peace of the people," he would tell the authorities to rescind the order.[7]

Implications

The huge support Correa received on April 15, 2007 has given him the legitimacy to convoke a Constituent Assembly to change the Constitution. He will likely pursue other radical reforms including increasing state control over the natural-resource industrial sector. The renegotiation of contracts with private oil and gas firms will give the state a majority stake and increased revenue could begin as soon as this year. In addition, Mr. Correa is not planning to renew the lease on the US’s base in Manta used for drug surveillance flights. (The ten-year lease expires in 2009). About 300 US servicemen and employees work at the base, and the Correa administration has said it considers their presence an affront to Ecuador’s sovereignty. President Correa also insists that it will not renew talks for a free-trade agreement (FTA) with the United States.[8]

Opponents of the president claim he is following in the footsteps of Venezuela’s President, Hugo Chavez, who successfully pushed for the election of a constituent assembly packed with his supporters in 1999. As Chávez in Venezuela, Correa won the elections, and then called for a Constituent Assembly to rewrite the Constitution. Both Presidents have taken control of the courts and have allegedly intimidated business people, journalists and members of the opposition. They have even tried to regulate news organizations. As Mr. Chávez before, Mr. Correa opposes IMF and World Bank policies (He has already expelled the representative of the World Bank in Ecuador for ‘blackmailing’ him when he was Minister of Economy during the Palacio administration). Coincidently, on April 15th, Correa announced that Ecuador had paid off its entire outstanding debt to the International Monetary Fund, which he has long criticized for imposing harsh conditions on borrowing nations, the same day Venezuela finished paying its debt with the mentioned organization. The government still plans to restructure Ecuador’s US$16.5bn foreign debt.[9]

"Correa is trying to fix a mistake with another mistake," said Ramiro Crespo, president of Analytica Securities, an investment bank. "His lack of respect for political institutions is troubling, but Ecuador’s internal conditions may prevent him from getting too far." In contrast to other oil-exporting countries like Venezuela, Ecuador is not benefiting greatly from high oil prices. Economic growth in the last quarter of 2006 slowed to 2.2%, well below the 4% growth in the previous quarter, after output declined in oil fields seized by the government last year from Occidental Petroleum of Los Angeles, which was Ecuador’s largest foreign investor. Confusion over Mr. Correa’s economic policies has also unsettled investors, with banks lending less to builders and other companies.[10]

There are still some challenges for Mr. Correa. Once the Constituent Assembly is formed, the internal battle there could be fierce. Mr. Correa might find it difficult to achieve consensus to push forward the reforms he seeks. Delegates from Ecuador’s traditional parties might battle to maintain their groups’ privileges and authority. Former President Lucio Gutiérrez (ousted by congress in 2005), whose Partido Social Patriótico (PSP) is now the second largest party in Congress, could attempt to use the assembly to build his political power. Also, a high degree of popular mobilization, in the midst of persistent social and regional tensions, as well as weak and divided institutions, will make social unrest and political destabilization ever-present risks.[11]

What is apparently clear is that Mr. Correa and friendly political parties are consolidating their control over the courts and the Legislature. It is likely that the new Constitution will contain many of Correa’s (and Chávez’s) ideas on political and economic matters. Political uncertainty may push investors to seek greener pastures and some might want to get their money out of the country resulting in capital flight. Unemployment and difficulty with tax collection could follow. Popular unrest will increase if social demands are not met.

A new Constitution and a new legislative body do not mean that the country’s problems will disappear. It could be the beginning of a new but unstable era for Ecuador. There are many possible scenarios: the country might be headed for radicalsocialism. Correa might be very close to obtaining more, unchecked and unlimited power in order to change the political and economic structure of the nation according to his beliefs. Another possibility is that if Correa believes he has been given a blank check because of the massive support he received last week and he already sees the opposition as an obstacle to ‘re-found Ecuador,’ then he is likely to adopt an exclusivist and authoritarian type of regime.

[1] Ecuador lawmakers may seek asylum in Colombia. April 25, 2007. CNN.

[2] Ecuador, Ever Unstable, Prepares for New Leader’s Plans. April 14, 2007. The New York Times.

[3] Encuesta a boca de urna en Ecuador. April 15, 2007. El Mercurio, Chile.

[4] Ecuador lawmakers may seek asylum in Colombia. April 25, 2007. CNN.

[5] Ecuador: Deny Legislators Asylum — ALDHU Head. April 26, 2007. Stratfor.

[6] Ecuador’s Congress dismisses top judges. April 24, 2007. CNN.

[7] Lawmakers flee Ecuador in political crisis. April 25, 2007. AFP.

[8] Voters back plans to rewrite the constitution. April 17th 2007. The Economist.

[9] Encuesta a boca de urna en Ecuador. April 16, 2007. El Mercurio, Chile.

[10] Correa to Rewrite Ecuador’s Constitution after Vote. April 15, 2007. Bloomberg.

[11] Voters back plans to rewrite the constitution. April 17th 2007. The Economist.

Ecuador’s democracy at risk

President Rafael Correa’s proposal to create a Constituent Assembly to rewrite Ecuador’s Constitution won an overwhelming 81.7% of the votes in a national Referendum on April 15, 2007.  The Supreme Electoral Court has resolved to convene elections on September 30, 2007 for the 130 delegates to a Constituent National Assembly.  But many see the result of the Referendum as a power grab by the Correa who didn’t present candidates for Congress and had little support to advance his policies. Implications.

NEWS:

  • Colombia: President Alvaro Uribe visits President George W. Bush to discuss Trade and Plan Colombia.
  • Chavez wants to pull out from the World Bank and IMF. Chavez wants to control a municipality in Argentina. Venezuela set to gain control of Oil Fields. Venezuela will meet all energy needs of leftist allies. Venezuelans struggle to acquire food staples. IACHR sues Venezuela over attacks on RCTV. Venezuela will leave OAS over TV Channel.
  • Nicaraguan delegation visits Venezuela to discuss refinery outline. First 20 Cuban doctors in Nicaragua. At risk contract of Glencore in Nicaragua.  
  • United Arab Emirates and Uruguay seek to strengthen relations.
  • Argentina : Iranian ally and Kirchner loyalist publicly accuses "the Jewish right" for the AMIA bombing. Kirchner and Lula reinforce "strategic alliance" and discuss biofuels.
  • Fidel Castro fails to appear at May Day Parade.
  • Brazil and Chile sign biofuel cooperation agreement.
  • Peru ‘s Garcia voted decree powers.

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For any questions, comments, or those interested in receiving this report in the future or seeking to have their email removed from our list please contact Nicole M. Ferrand at our new e-mail address: mengesproject@centerforsecuritypolicy.org. If you have news stories that you think might be useful for future editions of this report please send them, with a link to the original website, to the same e-mail address. If you wish to contribute with an article, please send it to the same address, with your name and place of work or study.

 

Columbia: Moving toward more stability

The following is the official statement submitted by Nancy Menges, director of the Menges Hemispheric Security Project, to the House Foreign Relations Committee’s Subcommittee on the Western Hemisphere.  The statment was submitted on April 24, 2007.

Colombia, a country which was starting to look like a failed state during the late 1990s, is generally moving in the right direction under the current government.

The Uribe administration is under attack because the demobilization of the United Self-Defense Forces of Colombia (AUC) and the resulting peace process has led to the opening of old and new wounds, revealing links between the paramilitary and the political establishment.

We believe however, that the Uribe administration deserves US assistance and the ratification of a mutually beneficial FTA, sustaining the country’s rebounding economy. The peace process is messy and full of imperfections. It is however gaining momentum and providing a window of opportunity for a better future for the people of Colombia.

We further believe that US assistance at this moment can contribute to creating an environment of greater individual security that is less prone to lawlessness and organized crime. It is this environment, if sustained that will help curtail drug smuggling into the United States.

The recent "parapolitics" scandals need to be put into context: they are the symptoms of a consolidating democracy which has created a political climate where these things come to light. The investigations have started a judicial process unprecedented in Colombia’s history. The Justice and Peace Law offers only limited amnesty to all those laying down their arms. An estimated 30,000 troops of the United Self-Defense Forces of Colombia (AUC) have laid down their arms and the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN) are severely diminished. The country deserves military assistance to close the security gap and create the conditions for greater respect of human rights and lower criminality.

The advantages of a generous FTA will outweigh the competitive disadvantages for small farmers and foster agricultural diversification away from Coca planting. It will help sustain the rebounding Colombian economy and promote a consolidating democracy. Continued assistance under "Plan Colombia" will help strengthen central security. It could also send a powerful message to both the supporters and opponents of the US economic and democratic model.

Stepped up Security

The Uribe Administration is making some headway in reducing crime and violence. The issue of personal security is of great importance to the citizens of Colombia and the positive track record of the Uribe administration, in this regard, is largely responsible for the overwhelming popular support of his government, despite the recent scandals. Colombian investment in the military and security forces have lead to an overall reduction in crime and terror.

The FARC has been expelled from the populated Bogotá – Medellín – Cali triangle in central Colombia. For the first time in years, Colombians can drive between most of the country’s cities without risk of abduction or extortion. However, the FARC is diminished but not defeated. There is evidence that its members enjoy safe haven in neighboring Venezuela.

Colombia’s murder rate has dropped from 68 people per 100,000 inhabitants in 2002 to 38 people per 100,000 inhabitants in 2006. Some CAFTA members show worse statistics. Killings by right-wing paramilitary squads are on a massive decline and some top paramilitary leaders are in jail.

The Justice and Peace Law: The Disarmament of an Undefeated Military Group.

Embarking on a peace process, the paramilitaries needed an incentive to lay down their arms. The Justice and Peace Law was a necessary compromise albeit its implementation could have been more stringent. The Uribe administration has managed, however, to disarm an undefeated military group without having to offer full amnesty. The Supreme Court stiffened the law which shows that the administration is respecting the legal branch as compared to Venezuela which had the majority of Supreme Court judges resign in the first year of Chavez’s rule.

Ensuring peace could become a major achievement of Uribe’s administration. Continued US support is crucial, now that the process is gaining momentum. There is good reason to fear that the paramilitary will return to violence. An estimated number of 2,500 to 3,600 have joined "second-generation" paramilitary groups, with purely criminal motivations. This danger is likely to escalate if the military is not given adequate support and is therefore unable to counteract these various threats. If mafia structures believe that the military is a) not able to contain the FARC and ELN and b) might not be able to implement stepped up security measures all over the country, criminal elements will have an easier time resuming armed activities against a weakened Uribe government.

The Administration Entrenched in a Scandal

Uribe’s administration is under attack for alleged links to AUC. But Uribe’s current problems are, paradoxically, the result of his successful transformation of the conflict. These revelations are a byproduct of the successful disarmament of AUC. The consolidation of democracy has created a climate where prior connections can come to light. Witnesses are coming forward now that they can speak out with less fear. The scandals also present evidence for the slow return of trust in democratic and judicial institutions. It highlights the declining power of the paramilitary who have lost a lot of their leverage over a strengthened democratic apparatus. The recent scandal investigations have to be seen for what they are: a judicial process, unprecedented in Colombia’s history.

So far, there is no evidence that Uribe has had any direct contact with the paramilitary leadership. Two members of the Uribe Cabinet that were identified as having connections to the paramilitaries were asked to resign. Admittedly, most of the arrested representatives were his supporters. But it should be noted that most of the allegations against them date from 2002, when they backed the official Liberal candidate against Uribe, who then ran as an independent.

Uribe has given full support to the investigations against AUC members and affiliates. It is their testifying leaders who reveal the connections between them and political representatives; a sad reality of Colombia’s politics during the nineties. It is fair to say, however, that neither FARC nor ELN have surrendered to the peace and justice act provisions. To believe that their leader’s confessions would not reveal links to left leaning politicians is somewhat illusionary.

While the demobilization has been full of imperfections the process has acquired a momentum of its own that offers a chance for more peace and the strengthening of the rule of law.

Promoting Prosperity through Free Market Mechanisms

A generous free trade agreement is consistent with the interests of the United States. Declining the FTA would hamper the free movement of goods and damage the Colombian economy in a time of rebound. It would discourage those Colombian farmers who are willing to diversify away from coca into legal crops. The success story of Latin countries like Chile show that free trade and US-market access can help strengthen sustainable development and alleviate poverty. Illegal narcotics, on the other hand, do not face tariffs. Though the trade agreement will put competitive pressure on the Colombian agricultural sector the disadvantages posed by US competition are outweighed by the advantages of easier access to the market of Colombia’s largest trade partner.

As a result of enhanced security, the economy has rebounded as businesses ramp up investment to $10 billion last year. Colombia’s GDP has been stable under the current administration. However, during a period of economic recovery, Colombia will face competitive disadvantages without the trade agreement. The United States represents the most important market for the sale of Colombian goods. The decline in US-Colombian trade would make the country more dependent on its US-critical neighbors, Venezuela and Ecuador.

Free trade inherently creates win-win situations, meaning that an agreement would benefit the Unite States as well. Preferred access to a market comprising the second largest population of the Southern Cone (45.3 million inhabitants) will give US business a head start as the Colombian economy is likely to expand in the coming years.

Plan Colombia – a Link Between the Drug Trade and Security

Plan Colombia was started under the Clinton administration and passed by the Congress in order to combat the major drug cartels then thriving in Colombia. A rise in military expenses was crucial for combating drug production and trade. Plan Colombia has stopped the huge drug cartels from creating a criminal element that competes with the legitimate government. The smaller cartels no longer have the same concentration of power that single "drug lords" had before. Estimates are that Plan Colombia has contained the explosion of drug production despite better extraction techniques. Plan Colombia provided for the introduction of more permanent security checkpoints as well as the flexible intervention of security squads through increased use of helicopters.

Plan Colombia has helped to equip the security forces and transform them into a more effective force within the country. US assistance has been essential for that purpose, be it the delivery of hardware or training. While spraying has had negative impacts on the environment it has lead to a decrease in long standing coca plantations. It is likely that the transportation and shipping of the drugs as well as the maintenance of clandestine drug laboratories is becoming more difficult as the security situation tightens.

US-Colombia Relations in a Regional Context

In making decisions about Colombia, it is important to consider the wider political context in the Andean region. The recent trend towards left wing governments which happen to have a strong anti-American rhetoric in common leaves Colombia as one of the few remaining examples which can prove that friendship with the United States is beneficial. While two of its neighbors, Venezuela and Ecuador are rapidly moving towards a "Bolivarian Revolution", Colombia’s democracy is healthy but fragile. Colombia has fought a narco-guerilla insurgency in the form of the FARC for the past thirty years. The FARC gave rise to the paramilitaries. Now that the paramilitaries have been disbanded, and the economy is rebounding, is this the time to abandon our ally? Should Colombia falter, the balance of power in the region would change for the worse and the consequences in terms of the increase in drug shipments alone would be contrary to US interests. In that regard, President Rafael Correa of Ecuador has already said that he will not renew the lease of our base at Manta which expires in 2009, from which the majority of our planes leave on drug related missions.

With its commitment to free trade and to the United States, Colombia has accepted the de facto collapse of the Andean Community of Nations. The departure of Venezuela for MERCOSUR marked the demise of a major trade partner. Now that the tide is turning in Ecuador too, Colombia is in need of trade partners. The FARC are diminished but unbeaten. They think history is going their way: Chávez in Venezuela has expressed sympathy for them in the past; so has Rafael Correa, Ecuador’s new president. The ratification of the FTA must send a powerful message to an ascending Colombia and to its neighbors. The failure to ratify FTA would play into the hands of those Latin American leaders who advocate giving up on the United States and would shift to more colorful aid offers by populists like Hugo Chávez.

Suffice it to say, that US support has helped to stabilize Colombia so far. Continued US support is needed to help an ally that has accomplished much but requires our assistance to meet the challenges ahead.