Americas

Colombia Peace Plan Critical to U.S. Regional Interests


In late-November 2016, Colombia ratified a revised peace deal with the paramilitary group—the Revolutionary Armed Forces of Colombia (FARC)—after more than 50 years of violent conflict, an estimated 218,000 deaths, and displacement of 5.7 million people. The deal marks a major success story in a country that has proven remarkably resilient. However, the deal mandates ambitious rural development goals, while Colombia faces a budget shortfall and a change in U.S. administrations, thereby creating uncertainty about the continuation of decades of robust American-aid via Plan Colombia.

Image courtesy of Pedro Felipe, © 2010.

In October, I visited Colombia as part of a consulting engagement with my MBA program. At lunch with two alumni in the capital, Bogota, both emphasized how, despite violence, Colombia has experienced peaceful transitions of power for decades. Yet, they also argued that persistent issues such as urban-rural inequalities in economic and educational opportunities and poor infrastructure would likely exist with or without the violence. The new peace deal simply adds additional urgency and justification for shifting national investment and foreign aid towards these issues. Drastic improvement of the security situation means the United States can pivot to a modernized version of Plan Colombia focused on the development goals of the peace deal. U.S. foreign policy in the Western Hemisphere should be built around a sustainable Colombia that serves as a model in governance, economic growth, and security for the region.

Latin America has aggregately shifted toward the center-right, with those countries making said shift generally experiencing increased growth and stability. Left-leaning governments have generally pushed social policies with which their fragile, commodity-dependent economies cannot keep up. Even the communist FARC recently stated a desire to push Colombia to a fairer version of capitalism, but outright rejects the models of Venezuela and Cuba. Colombia’s orientation towards open markets and democratic governance aligns it with long-standing U.S. values and makes it an important regional ally. Senator Marco Rubio stressed this point in an op-ed last year, and, for similar reasons, President Obama proposed a $450 billion Colombia aid package for 2017. The FARC’s seats in Colombia’s congress, although a controversial aspect of the deal, highlights Colombia’s commitment to democracy by placing a level of responsibility and accountability on the FARC never before seen to help shape policies. Failure to sustain peace may open the door to populism led by a highly organized resistance and a return to conflict.

Colombia’s leaders have stewarded a healthy and growing economy, with GDP growth averaging around 4% annually from 2000 to 2015 and inflation in line with wealthy economies at around 3%, compared to 6.4% and 4.6% for Brazil and Chile, respectively. Colombia also diversified its economy away from dependence on fossil fuel exports, resulting in less exposure to low oil prices. Additionally, recent passage of a dividend tax, increased value-added tax, and a decreased income tax for businesses can help fill the budget hole without extreme effects on the business climate. Lastly, Colombia’s free trade agreement with the United States makes it the largest export market, with a 59% increase since 2005—creating a stable revenue source and market with considerable space for growth for years to come.

Colombia’s membership in the Pacific Alliance (PA), with Mexico, Chile, and Peru, has also helped expand its global reputation and access to markets export markets. The PA has succeeded by focusing on increasing its trade bargaining power with the Asia-Pacific. From 2010 to 2015, PA countries grew their GDP 1.5% more than and had 3.6% less inflation than the Latin American average. Furthermore, in January 2016, Forbes’ economic outlook for Latin America predicted between 2.3% and 3.4% growth for PA countries, compared to contraction for Mercosur leaders, Venezuela and Brazil. The United States can promote the PA as a validation of its models for economic growth, prosperity, and stability.

As of 2016, approximately 71% of Plan Colombia aid supported military and security needs, including about 97% during between 1999 and 2006. This has resulted in allegations of human rights abuses and neglect of poverty. However, Plan Colombia has undeniably succeeded in building capacity for Colombia to handle its own security. From 1998 to 2014, Colombia quadrupled its number of professional soldiers and expanded its state police presence to all municipalities. This helped to cut FARC’s forces in half by 2010 and reduced Colombia’s homicide rate to the lowest in three decades. Additionally, when visiting Bogota, it was apparent the large number of private guards in the city, with more than 2,450 private security firms operating across Colombia. These advancements further rationalize a shift of U.S. aid. Experts predict that sustained peace could reduce Colombia’s security costs by 1-2% annually.

In the United States, urban and rural areas each play a critical role in the nation’s economy. Modern infrastructure, technology, and federal oversight of education largely keep urban and rural centers integrated from a socioeconomic standpoint. Conversely, Colombia’s rural areas maintain poverty rates of 40.3%, compared to the national average of 27.8%. Colombia also still only maintains 300 kilometers of paved roads per 1 million inhabitants compared with Argentina’s more than 1,600 km.

Moving forward, U.S. aid to Colombia should support development of a similar urban-rural intertwinement in Colombia through investments in infrastructure and previously untapped economic sectors. This will improve mobility of people and goods and increase rural employment opportunities. Currently, Colombia only utilizes 16% of its arable land for farming, leaving considerable room for growth in agricultural employment and production of a wide array of goods in Colombia’s diverse climates. Additionally, FARC disarmament and regained government control now make many beautiful landscapes in the south and Pacific coast regions traditionally riddled with violence safer and open for tourism.

Finally, Colombia faces a revenue shortfall and potential credit rating downgrade, rendering it incapable of financing these projects alone. Primary U.S. interests in the region include expanding its reliable diplomatic partners in the region through investments that broaden democratic governance, reduce economic inequality, and improve trade links. This strategy should off-set growing Chinese influence in the region, which supports development and trade, but not democracy. Being the first to support effective implementation of these priorities will achieve these interests and sustain U.S. influence in the hemisphere.

Sam is a second-year student in the MBA program at American University’s Kogod School of Business. He also works at the U.S. Department of State in a budgetary role and as a research assistant at the Kogod Cybersecurity Governance Center. Sam regularly writes on topics at the intersection of business, the political economy, and U.S. foreign policy. He has a B.A. in International Affairs from the University of New Hampshire and previously worked in Boston for an NGO focused on sustainable development for rural communities in Central America and Mexico.

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