Master thesis



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The CFTA

As the US – Colombia Free Trade Agreement (CFTA) was not established rapidly, many Colombians were left frustrated as to why Colombia still did not have an FTA with the US, while other Latin American countries with smaller economies and weaker relations to the US did have an FTA (Pardo: 89). The FTA between the US and Colombia will further strengthen the relations between both countries. It will also contribute to the economy through the creation of extra jobs as a result of removed high tariff rates on US exports, thereby allowing the market to benefit fully from international trade, as it is supposed to according to neo-liberal ideology. Furthermore, the CFTA will build more confidence in international trade through an enhanced confidence in the IR between the US and Latin America, and specifically Colombia (Shifter: 81). The CFTA was finally agreed upon due to the fact that violence has been decreasing rapidly over the past decade in Colombia, which gave the US the confidence necessary in order to establish an FTA. They also considered the fact that US exporters would lose a significant market share in Colombia without an FTA, and the economic benefits ultimately convinced the US of the importance of the CFTA. “For Colombia, an FTA with the United States is part of its overall economic development strategy” (Angeles Villarreal, 2011: 2).

It is expected that the CFTA will create economic growth for Colombia, both through a growing demand and increased competitiveness, as well as through a strong growth of FDI in the country. The CFTA will hopefully put pressure on Colombia in order to improve its infrastructure and benefit fully from the growth in its economy, but in any case the CFTA is believed to be crucial to the Colombian economy due to the greater possibilities for international trade between the two countries as a result of the FTA (Latin Trade). The importance of the FTA between Colombia and the US derives from the fact that the US is the most important trading partner for Colombia, both in imports and exports. Although in the current situation the US exports less to Colombia than it imports, there are broad opportunities for American companies in the country as Colombia has a population of 45 million inhabitants, combined with the fifth largest economy in Latin America (Export.gov). This makes the country an increasingly important economic partner for the US, which will only be enhanced by the FTA between both countries (Colombia FTA).

The political development of Colombia

President Pastrana

The political situation is one of the factors that is of great influence to the development of Colombia, especially with regards to the internal conflict. Andrés Pastrana Arango was the President of Colombia from 1998 until 2002, a period during which he was challenged by the continuously increasing amount of guerilla attacks, the widespread production of narcotics and the growth of paramilitary groups. Therefore, PC was introduced in 1999, which was presented as a six-year strategy aimed to deal with the problems Colombia was facing. The strategy was supported by the international community, however, it was mainly the US that was involved in the implementation of PC. “Plan Colombia was a comprehensive program to combat narco-terrorism, spur economic recovery, strengthen democratic institutions and respect for human rights, and provide humanitarian assistance to internally displaced persons” (State). Further details about PC and its implementation are explained in the sections about PC (cf. Plan Colombia).

In November of 1998, Pastrana created a neutral zone in the south-central part of Colombia, which was meant to serve as an area to be used for peace negotiations between the FARC-EP and the government. According to the BTW, this would allow for bargaining that could possibly eliminate the risk of internal conflict. The negotiations remained very limited, meanwhile, the attacks and extensive coca production by the FARC-EP continued, thereby weakening the possibilities of reaching an agreement (cf. Bargaining Theory of War). Ultimately, control over the neutral zone was regained by the government troops, forcing the FARC-EP to withdraw into the jungle while the number of attacks kept increasing. According to Marx’s theory of historical materialism, the FARC-EP needed to continue its struggle in order to establish change for all classes in the Colombian society, as power will not be given up easily (cf. Marxism). Colombia is not only struggling to combat various insurgencies diminishing or even eradicating governmental power in great parts of the country, it also has to deal with the illegal drug industry that has been increasingly expanding its networks throughout Colombian society and politics since the 1970s (Holmes, Gutiérrez de Piñeres & Curtin: 3).

President Uribe

President Álvaro Uribe was the head of Colombia from 2002 onwards, when he promised to keep pursuing the goals as they were set out in PC as part of a long-term strategy to improve security within the country. The strategy entailed “[…] political, economic, and military means to weaken all illegal armed groups” (State). The government, at that time, made an effort to negotiate peace with the FARC-EP under the conditions of a cease-fire as well as the end of kidnapping and drug trafficking activities. Therefore, it may be clear that bargaining was an essential part of the involvement of both the Colombian government and the FARC-EP in the internal conflict.

In 2007, following PC, the Colombian government introduced a new strategy aimed to establish government presence in the areas outside of state control. The new strategy was acknowledged as the Plan Nacional de Consolidación [National Consolidation Plan] (PNC) and intended to re-establish governance in the rural areas of Colombia that were mainly influenced by the guerilla movements. The government sought to improve its presence in these areas by “[…] improving access to social services – including justice, education, housing, and health – strengthening democracy, and supporting economic development through sustainable growth and trade […]” (ibid). Ultimately, the period between 2002 and 2008 resulted in a decrease in the number of homicides by 44%, as well as terrorist attacks by 79%, kidnappings by 88% and a 60% decrease in the number of attacks on the Colombian infrastructure (ibid). In 2008, the FARC-EP suffered three major losses in their leadership (cf. Background). Although no major multi-front attacks were executed by the FARC-EP since 2000, it remains clear that the organization continues to exist and influence the development of Colombia. Efforts to negotiate peace with the FARC-EP were finally frozen in 2010, underlined by the BTW as the theory states that internal conflict is a result of failed bargaining efforts.

President Santos

In 2010, Juan Manuel Santos took office as the President of Colombia. So far, the Santos administration has been keeping up with the positive development of an increase in security in the country, by means of capturing and killing guerilla fighters, as well as a forced decrease of the production of cocaine. President Santos is aiming to further improve domestic security, and he continues to follow the neo-liberal economic policies implemented by President Uribe (Index Mundi). Furthermore, the increased safety and security within the country shows through the fact that tourism has doubled since 2004, as well as the use of the Colombian road system.

Part of the ongoing development of Colombia is the growing attention to human and labor rights, which plays an important role in the Santos administration and is illustrated by “[…] increasing the budget for the government’s program to protect human rights defenders and labor leaders, engaging in frequent dialogues with non-governmental groups (NGOs) and unions, and reducing corruption in the government and military” (State). President Santos also introduced a new legislation guaranteeing a better distribution of the royalties deriving from the extractive industry, as well as a compensation for Colombians that lost their land as a cause of the violence in the country (Index Mundi). This illustrates that the Colombian government is aware of the impact of the internal conflict on the people and the local economy, as well as the great inequalities that exist within the country. These inequalities, which have been historically present in Colombia, resulted in what Marx would describe as a class society, of which the impact remains noticeable today. Therefore, the Colombian government is now aiming to decrease inequality and allow for victims of the internal conflict to benefit from the economic development of the country.

Ultimately, in spite of the internal conflict that has been going on in Colombia for several decades, the Colombian government is exceptionally stable, as is democracy in the country, especially when compared to other Latin American countries (Holmes, Gutiérrez de Piñeres & Curtin: 47). The internal conflict in Colombia resulted from the incapability of human beings to live in a highly unequal society, as a situation developed which is described in the Theory of War, explaining the emergence of internal conflicts as a result of inequality. Furthermore, it proves that there is no need for internal conflicts to cause the demise of a state as per the BTW, as Colombia is still an effectively functioning state (cf. Theory).



Plan Colombia

During the 1980s and early 1990s, Latin America was hoping for stronger international cooperation, especially in the Andean region. Finally, it was decided by President George Bush Senior and the presidents of Peru, Bolivia and Colombia that there would be a number of development programs established in the region, focused on eradicating the influence of drug-trafficking. Furthermore, the Andean Trade Preference Act (ATPA) “[…] established preferential access to U.S. markets for export products from Colombia, Peru, Ecuador, and Bolivia” (Pardo: 87). It was only few years later that it became clear that the US policies were not focused on the development of Latin America, but on international security issues. The only exception to this is Colombia, where PC has helped Colombia to progress steadily, in spite of the numerous challenges that continue to exist. PC is a program which aims to not only eliminate drug-trafficking, but also focuses on issues related to narco-trafficking activities such as violence and poverty. The program intends to improve both socio-economic development and law enforcement in order to eradicate the internal conflict and the issues deriving from it (Fukumi, 2008: 177). In order to achieve the goals as they are set out in PC, the power of the FARC-EP needs to be eliminated. This underlines the fact that the issues of the FARC-EP, drug-trafficking activities, violence and internal conflict in Colombia are strongly interrelated.



Coca cultivation and drug-trafficking

Colombia has been dealing with the issue of illicit economies in its territory for decades, of which drug-trafficking is an example of a problem that intensified during the mid 1970s. The repressive actions of the US government in Mexico and Jamaica, during the late 1960s and early 1970s, led to a migration of plantations of marihuana to the Colombian department of La Guajira, thereby strengthening the Colombian narco-trafficking activities. When the North American demand for cocaine exceeded the demand for marihuana during the late 1970s, the Colombian drug-traffickers replaced the Miami Cubans in the trafficking of cocaine to the US (Santos, 2006: 173). At first, the Colombians imported cocaine from Bolivia and Peru, however, during the 1990s the North-American politics forced the governments of Bolivia and Peru to eradicate the majority of their plantations. This resulted in a migration of plantations to the southern and central regions of Colombia (Guaviare, Caquetá, Cauca, Choco, Nariño and Putumayo)20, which made the country the global leading producer of coca leaf.

In a country that has been controlled by an oligarchy since its independence, where other social groups were excluded from political participation and did not profit from economic reforms and social structures, the beneficial conditions for the production of coca leaves attracted thousands of coca farmers that saw illicit cultivation as a way of survival. As can be explained through Karl Marx’s economic theory, the class system and the inequalities deriving from it influence the economic development of a country (cf. Theory). Furthermore, these conditions contributed to an exacerbation of the historical rates of violence and internal conflict, involving the state right-wing paramilitaries and leftist guerillas. The expansion of narco-trafficking added to an institutional and economic crisis, a systemic violation of human rights, attacks by the leftist guerillas against North-American oil corporations, an internal war and the possibility of the extension of the conflict to neighboring countries which made Colombia one of the priorities in the security policy of the US government by the late 1990s (ibid: 174). The initiation of the Colombian internal conflict can be explained through both the essential elements as described in the Theory of War, as well as the BTW. Originally, “[t]he Colombian government’s attempt to launch Plan Colombia was designed to involve the international community in its domestic drug control projects” (Fukumi: 178). However, in due course, PC became a plan sponsored by the US government with approximately $7.5 billion, intended to bring peace to Colombia and eradicate the problems of poverty, civil war and drug-trafficking. Over the past years, the US have been reducing funds for PC at a rate of 10 to 15 per cent annually, therefore, with an approved $465 million dollars in 2011 and $400 in 2012, the prospects for 2013 are that $332 million will be approved (El Tiempo).

The illegal-drug trade undoubtedly influenced the economic situation in Colombia, and although there may have been positive effects on the economy during the early 1980s, it is commonly accepted that the Colombian economy no longer benefits from the influence of drug trade. During a time when it was difficult for Colombia to borrow money, the drug trade provided the inflow of capital, thereby stabilizing the economy during the debt crisis in Latin America. The attribution of the illegal-drug trade to the economy was undoubtedly significant, however, disadvantages of drug trade include high costs for the state. These “[…] costs are both direct, such as governmental resources diverted to fight the problem, and indirect, such as the effects of violence and uncertainty on economic, political, and social institutions” (Holmes, Gutiérrez de Piñeres & Curtin: 105). Ultimately, in spite of the economic benefits of the drug trade, the eventual effects of illegal-drug trade on the economy are not worth the benefits.



The influence of drug-trafficking on the economy

It is commonly known that Colombia has been dealing with issues of violence and the illegal-drug industry, both harming the country’s economy. Being involved in drug-trafficking does not only support the internal conflict directly, it also influences the economic development through the fact that the illicit economy undermines the legal economy. This is illustrated by the fact that the trafficking of drugs has worsened the equal distribution of wealth in Colombia, thereby increasing the amount of violence occurring as a result of poor economic conditions. Furthermore, the FARC-EP’s involvement with drug-trafficking “[…] has hampered local development efforts, thus creating economic discontent that may benefit guerillas” (ibid: 88), as is explained through the Theory of War. Ultimately, while further examining the connection between violence and economic progress, it was concluded that “FARC violence is purported to reduce GDP […]” (ibid: 128). On the other hand, paramilitary violence aims to protect different resources, and is, therefore, expected to influence the GDP in a positive way. Ultimately, the Colombian government is making all the possible efforts to create the best possible conditions for its market to flourish, through the regulations that are set out according to the neo-liberal ideology (cf. Neo-liberalism).

The particular effect of violence on the economic development of Colombia is closely connected to the influence of drug-trafficking. National economic trends in terms of coca production, economic growth and unemployment illustrate that “[…] increases in coca cultivation negatively affect long-run employment” (ibid: 103). During the first part of the 1990s, both GDP growth and coca production remained stable, however, towards the end of the decade unemployment rose and GDP growth decreased. Furthermore, productivity declined, according to some scholars as a result from the augmentation in crime related to the illegal-drug industry. Since an income deriving from illegal activity is twice the average income in Colombia, it is more attractive for people to work in the illegal sector. The attractiveness of illegal activities is a result of the economic situation in Colombia, as can be explained through the economic theory of Karl Marx. Another explanation to the economic downfall of the late 1990s can be found in the ‘lost half decade’ of 1998 to 2002, during which economic growth was extremely weak and poverty rates grew strongly (The Citizen).

The fact that PC was aimed at controlling drug-trafficking practices and fighting guerilla movements in order to encourage economic development shows that insurgencies, such as the FARC-EP, especially when connected to the illicit drug industry, have had an impact on the development of the Colombian economy. PC aims to ameliorate the situation in Colombia in various ways, including development projects and improved law enforcement. Furthermore, the connection between economic development and the influence of drug-trafficking and illegal insurgencies such as the FARC-EP is shown through the fact that the emphasis in PC is on economic development, yet most strategies are aimed at controlling the illegal-drug industry. The original PC was altered and “[w]ith the encouragement of the United States, the emphasis was directed more to dismantling the connection between insurgency groups and drug trafficking with military involvement, rather than projects for economic development” (Fukumi: 181). These alterations did not change the overall objectives of PC, there was solely a shift in the priorities set out by Colombia, under influence of the US. Ultimately, the cocaine industry and the violent activities of insurgency groups are so closely interconnected that one cannot exist without the other, yet the international perception of PC was changed significantly by the implementation of the new focus. The lack of economic and social development programs in PC reflects the fact that issues such as inequality and weak governance affect the situation in Colombia. PC is, therefore, not able to solve core problems affecting the economic development of Colombia (ibid: 185). These core problems include the great inequality within the country, and, consequently, the class struggle that has evolved into an internal conflict.



PNDA

The Plan Nacional de Desarrollo Alternativo [National Plan of Alternative Development] (PNDA) originated as a result of the fumigation processes, and aimed to provide economic support to the affected areas. However, the livelihoods of the people affected by the fumigation process were not secured sufficiently by the PNDA. Although the economic progress of the Colombian society was to be ensured through the PNDA, even the communities that voluntarily eradicated their coca production were not assisted sufficiently and, therefore, forced to dislocate. This resulted in the inequalities and class society remaining intact. Ultimately, in spite of the promises made, “[…] the peasants feel there is no sign of alternative development” (ibid: 198).

The effectiveness of the PNDA is similarly influenced by the FARC-EP, as the safety of the people participating in the implementation of the program is at stake. Certain regions of Colombia, including the ones suffering from the fumigation processes, are controlled by the FARC-EP and paramilitary groups, which makes it dangerous for development agents to work in those areas. Other projects aimed at developing the Colombian economy are sabotaged by guerilla insurgencies. Therefore, economic development can only take place through an effective combination of factors as improved governance, law enforcement and a better social infrastructure.

Dislocation of people

The internal violent conflict in Colombia has led to the massive dislocation of people, resulting in depopulated rural areas and rapidly growing cities unable to deal with the strong growth. These factors impose a local war economy, whereby agricultural production is disrupted, for example through the strong growth in coca plantations. Furthermore, the country suffers from poor service infrastructure, whereby schools, health services and transportation facilities are unavailable. Water and electric supplies are insufficient, livestock and harvests are destroyed, the local markets are severely disrupted and people’s property is confiscated. The local population has to deal with a new “taxation” system in order to ensure their safety. Ultimately, “[t]he annihilation of local authorities and the killing and prosecution of its symbols often accompany the physical destruction of the economic infrastructure” (Pedersen, 2002: 177).

Coca production is one, however not the sole explanation for violence and internal conflict in Colombia, because other countries that produce coca do not suffer from the same amount of violence as Colombia does. Furthermore, there are other countries that do experience violence, without producing coca. It can be stated that the origin of the internal conflict in Colombia can be found in more than one explaining factor, of which the enormous coca production is just one. The eradication of coca cultivation as executed through PC has resulted in a further increase in dislocated people, forced to leave their land in search of jobs as land became unusable for cultivation and alternative economic development programs were not set in place. The people living in areas relying on coca cultivation lost everything and did not receive aid, causing them to move away. According to USAID, “[…] a great damage to the local economy was caused in the fumigated areas, but the Colombian national economy is unaffected” (Fukumi: 195).

Ultimately, the rural population is decreasing while rural inhabitants increasingly work in the service-related or manufacturing sectors instead of the agricultural sector solely. This is partly due to the fact that many people felt forced to dislocate, as a result of the violence and lagging economic development in their area, caused by the actions of the FARC-EP. “Colombia’s rural population has fallen from 47 percent to 27 percent, while there has been a simultaneous increase in rural population density […]” (Holmes, Gutiérrez de Piñeres & Curtin: 31). The rural population density21 in Colombia now is the highest amongst its Latin American peers, which allows the state to create development centers in rural areas and provide services to the residents. A side effect of the dislocation caused by the violent influence of the FARC-EP is the amount of working-age people that is forced to relocate to urban areas, which causes massive growth in urban centers as is illustrated by numerous shantytowns and satellite cities. Therefore, the indirect influence of the FARC-EP on the economic development of Colombia is the high amount of poverty and unemployment in these urban areas (Pedersen: 179). It must be clarified that Karl Marx did not have a negative image of capitalism in general, as he did see the opportunities for economic development for the entire society. However, he had a critical view of capitalism, as it often leads to disparate social relations, as is the case in Colombia. The Colombian rural population was exploited and oppressed by the capitalist class, which ultimately resulted in a class conflict and the emergence of the FARC-EP.





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