1. NS4540 Winter Term 2019 Colombia: Fragile Stability

2. Colombia: Macroeconomic Trends

3. Colombia: Strength/Weaknesses

4. US/Colombia Cooperation
Colombia/US long history of cooperation. Have worked together to:
Monitor security of the Panama Canal
Contain Venezuela and
Curb drug trafficking
In May 2018 Colombia first South American country to join NATO as a “global partner”.
Colombia became a reliable U.S. ally in part because of its economic and political stability – at least relative to other countries in the region

5. Colombia: Governance

6. Colombia: Economic Freedom

7. Colombia: Competitiveness

8. Challenges I
Currently Colombia facing a number of challenges that could pose security risks down the road
1. Influx of migrants from Venezuela – could cost (World Bank) Colombia up to 0.41% of its GDP
Fear in Colombia that Venezuelans
Will take jobs from Colombians, and
Pose security risks

9. Venezuelan Migrants

10. Challenges II
2. Economic challenges include declining rates of economic growth since 2013 – only 1.8% in 2017
Government sees critical importance of FDI, but that dropped 27% in 2015
Recovered a bit since, but still not back to peak levels
Government anticipated a spike in FDI following peace with the FARC, but has not materialized
The three major credit rating agencies warn of a down grade if government does not scale down debt
Concern is the government may not be able to control its spending habits

11. Colombia: Relative Growth

12. Colombia Debt/GDP

13. Colombia: FDI

14. Challenges III
To tackle these problems government has introduced a series of austerity measures
Over next three years will cut spending by $2.2 billion
Congress debating tax reform bill that would raise an additional $4.37 billion in 2019
Reforms increase taxes for middle and upper income earners from 32% to 37%
Corporate taxes reduce by 5% to 30% to spur investment and employment
Also a controversial 17% increase in the value added tax on consumer goods
Protests against bill already in many cities

15. Colombia: Unemployment

16. Colombia: Poverty

17. Colombia: Income Distribution

18. Challenges IV
3. On security front, main challenges related to expanding organized crime and thriving cocaine industry
U.N figures show area under coca cultivation up 17% in 2017
Vacuum left by FARC opened Mexican cartels to increase presence, particularly in the west by building stronger ties with local criminal groups
Resulted in increased
competition and clashes among groups
Rising violence against local population
Increasing homicides with thousands displaced by violence
Government planning to crack down on coca production

19. Coca Cultivation

20. Challenges V
4. Organized crime in eastern Colombia, particularly along Venezuelan border, organized crime carries an extra security threat
Most groups in area operate across border with some Colombian organizations with strong ties to the Venezuelan government
Colombian rebel groups like the National Liberation Army even have camps and control territory in Venezuela
In addition to drug trafficking these groups exploit mining resources to support their operations
Some profits are funneled to the Venezuelan government
Border incursions are becoming more frequent
Altercations with Venezuela’s military are rising

21. Colombia/Venezuela

22. Assessment None of these issues on their own will destabilize Colombia
Problem is all these issues arising at the same time gives government less room to maneuver
Difficulties in one area could risk making others worse
U.S. likely to increase economic and security support for Colombia as these forces intensify.