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NS4540 Winter Term 2019 Colombia: Fragile Stability
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Colombia: Macroeconomic Trends
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Colombia: Strength/Weaknesses
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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
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Colombia: Governance
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Colombia: Economic Freedom
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Colombia: Competitiveness
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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
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Venezuelan Migrants
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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
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Colombia: Relative Growth
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Colombia Debt/GDP
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Colombia: FDI
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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
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Colombia: Unemployment
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Colombia: Poverty
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Colombia: Income Distribution
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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
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Coca Cultivation
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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
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Colombia/Venezuela
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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.
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