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COLOMBIA: THE ECONOMY, NARCOTICS AND WAR – SNAPSHOTS OF MOVING TARGETS – U S EMERGENCY AID STUCK IN CONGRESS The Pastrana Administration was successful at bringing down inflation in 1999 to about 11% compared to 16.7% in 1998 but unemployment increased to about 20%. GDP decreased by 3.5% after growing by only 0.4% in 1998. The fiscal deficit grew from 3.1% of GDP to 5.9% in 1999 as VAT taxes and others were lower due to the recession. The deficit on the current account of the balance of payments improved significantly, due largely to lower demand because of the recession, going from 5.9% of GDP in 1998 to a healthier 1.3% in 1999. Foreign debt was 41% of GDP in 1999. In spite of signing 12 new oil exploration contracts with foreign companies in early February 2000, the Minister of Energy and Mines announced that Colombia would import oil by 2004 because of dwindling reserves and the long lead time needed to bring newly found reserves (if any are found) into production. On the trade policy side, Colombia continues to work actively in the Negotiating Groups of the FTAA, and President Pastrana announced the GOC is preparing a request to the three NAFTA members to begin negotiations with Colombia on its accession to NAFTA. On December 20, 1999, the Board of Directors of the International Monetary Fund approved a three-year Extended Financing Facility loan worth 1.957 billion SDR´s to support the GOC´s macroeconomic and financial program. In November 1999, the World Bank approved a $506 million loan to support financial sector adjustment and reform (in January 2000 the system lost 32.8 million pesos and in February the Banco Hipotecaria closed). The loan “is part of a revised World Bank strategy for Colombia that includes intensified lending through to 2001 to help the country promote peace, ease the impact of the recession on the poor, and rebuild after last January's earthquake. It is also part of a $1.4 billion package announced in September to help bolster Colombia's economy.” Historically Colombia had done well in macroeconomic management throughout the last quarter century, but its enduring and enervating problem is political. Narcotics trafficking and production, mind numbing violence and Marxist insurgency groups are the main cause of its economic malaise and are what stands in the way of Colombia realizing the full potential that its endowments promise. In spite of serious eradication efforts by the Pastrana Administration, the cultivation of coca plants to produce cocaine and of poppy plants to produce heroin has increased geometrically. The Clinton Administration has sent to the US Congress an assistance package that would greatly improve the GOC´s capacity to discourage coca and poppy production, interdict the shipment of processed drugs and capture and convict “narcotraficantes”. The US assistance is in support of a comprehensive plan developed by the Pastrana Administration called Plan Colombia to achieve the economic and political rejuvenation of Colombia. The Plan calls for total funding of $7.5 billion of which $4 billion will come from internal sources. The GOC is also seeking European support for the Plan. The US assistance would be $1.3 billion over two years which, when combined with the $300 million already committed, totals $1.6 billion. This assistance will be used to:
The Colombian aid package would be financed by a special appropriation, which has been the subject of hearings and debate in the House and has passed the Appropriations Committee. However, at this juncture, passage in the full House is in question, and Senate consideration is currently delayed by disagreement as to the true emergency status of the Colombia measure, which is part of a package with aid for Kosovo peacekeeping activities. Senate Majority leader Trent Lott is particularly reluctant to process the package as it stands, and has suggested it should be part of the regular Fiscal Year 2001 legislative process, which would delay consideration until the Fall Congressional Session. The political fallout for the Pastrana government of further delay and doubt is serious and growing. The FARC and ELN can read the newspapers and are keenly aware of the details of the political difficulties the US assistance package has encountered in the Congress. Drug production in Colombia has produced a scourge of increased domestic use, corruption of large parts of the public and private sectors and horrific violence. GOC-USG cooperation to drastically reduce drug production was a glimmer of hope. The FARC has admitted profiting from protection of the multi-million dollar narcotics trade but continues to insist that they are not themselves narcotics traffickers, in the face of weighty evidence to the contrary. Nonetheless, the FARC has criticized US assistance to the anti-drug effort of the GOC. Thankfully, so far this has not led to a breakdown in FARC - GOC communication on the peace process, which continues to move forward. The Pastrana Administration has staked its major political effort on a persistent and committed attempt to find a peaceful end to the internal conflict with the Marxist guerrillas of the ELN and the FARC. In spite of recent blockage by the ELN of the road between Bogota and Medellin and continuing FARC activities in the South, the fires of peace were stoked by: i) a GOC - ELN agreement to enter into talks and granting them a secure area in the North, and ii) a delegation of FARC leaders studying democracy in action in various European capitals, especially in the Nordic countries. Nevertheless, recent ELN destruction of eleven power line towers has again thrown the discussions into turmoil. Former President Ernesto Samper´s use of drug money to finance his political campaign cast a pall over Colombia - US relations throughout his administration. The election of President Pastrana opened the door to improved relations. Pastrana´s easy-going and open style easily won friends. The President´s use of sound economic practices to try and turn the economy around, his commitment to seriously search for a negotiated end to the insurgency and his commitment to strenuously implement coca and poppy eradication and drug interdiction efforts won him many supporters in the Clinton Administration and in the US Congress. Consequently, Colombia - US relations and cooperation in all areas are better than they have been for a long time. True, Colombia still faces a faltering economy, persistent efforts by an outlaw narcotics sector to expand poppy and coca plantings and drug trafficking and well-organized and capable Marxist insurgent groups, but at least there is hope for improvement on all fronts as Colombia enters the new millennium.
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