Friday, May 2, 2008

The FTA with Colombia: the Political Dimension

By Luis Fleischman*, Nicole Ferrand* and Nancy Menges.*

Last week we witnessed a number of unfortunate episodes related to the very important issue of US-Colombia relations. First, an aid to democratic presidential candidate, Hillary Clinton resigned as a result of his being part of the efforts to promote the US-Colombia Free Trade Agreement. Senator Clinton, like her opponent in the Democratic Party, Senator Barack Obama opposes the free-trade agreement. Clinton called the policies of free trade such as the North American Free Trade Agreement (NAFTA), promoted by her own husband, a “mistake”. Senator Obama voted against free trade agreements with Central America and Peru.

Though our focus is not on the benefits that free trade agreements bring to the US and to the rest of the world, it is worth mentioning that today’s global economy offers tremendous opportunities for the US. In general, lowering barriers to goods and services is in America’s interest. Though there are always some downsides, free trade and globalization has provided employment opportunities for people in countries with a long history of poverty and despair. Many of these people living in poorer countries have benefited from American investments that provided opportunities for a better life.

Grains from Trade

Why Trade? The Heckscher-Ohlin theory explains why countries trade goods and services with each other. One condition for trade between two countries is that the countries differ with respect to the availability of the factors of production. They differ if one country, for example, has many machines (capital) but few workers, while another country has a lot of workers but few machines. According to the Heckscher-Ohlin theory, a country specializes in the production of goods that it is particularly suited to produce. Countries in which capital is abundant and workers are few, therefore, specialize in production of goods that, in particular, require capital. Specialization in production and trade between countries generates, according to this theory, a higher standard-of-living for the countries involved.

The United States is Colombia’s largest trading partner representing about 40% of Colombia’s exports and 29% of its imports. Currently, there are about 250 American businesses conducting operations in Colombia. Two-way trade between Colombia and the US amounted to almost 16 billion dollars in 2006. The US would have an opportunity to increase the export of US farm products because the 11.3% percent tariffs on imported products that now exist would be eliminated in Colombia. A December, 2006 study by the US International Trade Commission estimated that the agreement would boost US exports to Colombia by $1.1 billion. Though it plays well in certain American states, there is no basis to the argument that large numbers of American jobs would be lost were the trade agreement to be passed.

However, economics is just one aspect of the US-Colombian relationship and perhaps not the most important. What is unfortunate within the Democratic Party debate is that an increasing populist domestic policy of pleasing labor unions has become paramount while (which becomes more intense as the competition between the two candidates turns more intense and uncertain), highly important issues of national security and foreign policy are being pushed to the margins. The sad reality is that union leaders in the United States want Senators Obama or Clinton to win the presidency because they expect a payoff via protectionist legislation. What is worse, Colombia is facing criticism from some sectors of our political establishment over the murder of union leaders and human rights violations. Former Vice President, Al Gore, and House Speaker, Nancy Pelosi, have been most vocal on this matter. This claim does not take into consideration the enormous progress made by Colombian President, Alvaro Uribe in diminishing human rights violations nor the harsh reality Colombia has faced in fighting a forty year long narco-guerilla insurgency.

Nancy Pelosi

Al Gore

Barack Obama

Hillary Clinton

This past week, President George Bush gave Congress ninety days to ratify the free-trade agreement with Colombia. In addition, Colombia has hired an army of lobbyists in an effort to ratify the agreement. Among those lobbying and supporting the bill are people close to former President Bill Clinton. Mr. Clinton not only supported free-trade agreements but also initiated “Plan Colombia” aimed at helping the Colombian government control drug trafficking and the highly de-stabilizing guerilla activity in the area. “Plan Colombia” was important because it enabled Colombia to strengthen its democratic institutions while making the country more governable. President Alvaro Uribe has not only been able to rebuild a state that for years was immersed in anarchy but to do so with a low number of casualties; a phenomenon almost unseen in other cases of nation building.

In formulating US policy towards Colombia, it is important to consider their history. During the 1980’s, attempts at achieving peace between the government and guerilla groups (which included the Revolutionary Armed Forces of Colombia, FARC, the M-19 and others) failed miserably. Guerilla groups continued to break truces and violate the peace process while in between they managed to assassinate half of the Supreme Court judges, carry out kidnappings and perpetrate unspeakable acts of violence. Attempts at establishing decent political democracy also failed. This situation was exacerbated by the increasing activity of drug cartels. By the late 1980’s, drug cartels were estimated to control between 75 to 80 percent of the cocaine traffic, employ nearly 100,000 Colombians and secure annual incomes of between two to four billion dollars. Thus, drug cartel activity was based upon violence and bribery of government officials including one former Colombian President. The ability of the cartels to generate enormous revenues made it possible for them to create a state within a state. Thus, Colombia was converted into a weak state submerged in a sea of anarchy. Drug cartels dynamited government buildings and banks and murdered prominent Colombian officials. The cartels also encouraged and funded violent activities that included guerilla groups such as the FARC, notorious for their murders, kidnapping activities and blackmailing.

Still Colombian leaders struggled over the years to maintain a democratic regime despite the need to strengthen the ability of the state to exercise control over its territory. Unlike many countries in Latin America, in the seventies, that used the excuse of guerilla activity to abolish democratic institutions, Colombia has been able to maintain a parliamentary and constitutional regime.

In relation to the accusation of the killing of union leaders, it has been reported by a number of sources that since Alvaro Uribe took office in 2002 the number of killings of union leaders has sharply declined. This is not a cynical statement as some have portrayed it to be. It reflects the fact that Uribe is trying hard to exercise state control over a country where the state was a disintegrated entity at the mercy of violent non-state actors from the right and from the left. Union leaders have been killed mostly by right-wing paramilitaries (even though it is estimated that one third of union activists were killed by left wing guerillas). Para-militaries emerged in the past as a result of the inability of the government to generate order. Once in existence, these para-military groups are difficult to control. Indeed, in situations of violence it could sometimes happen that there are instances of cooperation between governments and these illegal groups.

The alleged involvement of Colombia’s former intelligence chief with a para-military group, even though rightly investigated by the Colombian authorities, reflects a dilemma that we have seen in other Western democracies. A good case example would be the 1980’s government of Spain’s former Socialist Prime Minister, Felipe Gonzales. During that time death squads and para-militaries associated with his government were involved in illegal killings of Basque separatists. Such activities involved the Spanish interior minister and other high officials.

The Spanish case shows how difficult it was for a young democracy to deal with terrorist activities perpetrated by the Basque separatist group, ETA. History clearly shows that no country in the process of state formation or nation building escapes violence. A state needs to impose order and domination. Under the circumstances, Uribe’s Colombia has been remarkably effective in minimizing violence. No “dirty war” has taken place in Colombia like the one perpetrated by the Argentinean Junta in the 1970’s and 1980’s. Neither has Colombia adopted an iron fist regime like the one led by General Augusto Pinochet in Chile.

Having said all this, para-military forces should not be tolerated and in fact should be deplored. However, the Colombian government has shown significant progress in this area as more than 30,000 individuals belonging to para-military groups were peacefully disarmed in a deal with the Uribe government. The fact that pockets of para-military still exist in Colombia should not downplay this significant achievement by the Colombian government. The Colombian government has successfully fought the drug cartels eliminating high level drug lords like Pablo Escobar. In addition, it has succeeded in considerably weakening the FARC despite the fact that this group still controls about 20% of Colombian territory.

The fact that Colombia has been able to face these challenges and remain a constitutional democracy is a miracle. The fact that governance has been gradually restored and that these groups that challenged state authority have been substantially curbed is an enormous accomplishment. For this Colombia deserves much more than questioning by self-righteous individuals such as Gore and Pelosi who have conveniently chosen to judge Colombia as if it were the State of Massachusetts.

Despite all of these challenges, Colombia is still our best Latin American ally against the highly dangerous rule of Hugo Chavez. President Uribe has become a major target of US archenemy, Hugo Chavez, because Colombia is a vibrant democracy with a successful economy (growing at about 6%annually) and presents a distinct alternative to Chavez’s ever more dictatorial tendencies and failing economy. Uribe also stands in the way of Chavez’s aspirations of making the FARC into a legitimate political party and increasing their power inside Colombia as a way of weakening democratic governance. Another reason for Chavez’s animus is that Uribe confronted the Venezuelan leader and the FARC firmly and without fear. This all goes against Chavez’s aim of trying to destabilize the region and promote radicalism. The FARC is not only a local terrorist group that can transcend borders and cooperate with other violent groups in Latin America; it can also reach out to radical Islamic groups. The recent Colombian incursion into Ecuador that eliminated a senior FARC leader shows the courage and the value of Colombia. At a time when the US government is putting so few resources into Latin America and paying so little attention to the region, Colombia represents an asset that we cannot afford to loose.

The US-Colombia free trade agreement may bring economic benefits to the US but to judge the deal by only looking at the economic aspect is shortsighted. It is important that continuity be secured in Colombia. Without America’s support, it will be more difficult for President Uribe to fight against the forces that threaten Colombia’s progress and stability. Therefore, it is crucial that the US show support for this great and brave ally and ratify, without hesitation, the free trade agreement before everyone starts asking “who lost Colombia?”

*Dr. Luis Fleischman is an advisor to the Menges Hemispheric Security Project at the Center for Security Policy in Washington DC. He is also an adjunct professor of Political Science and Sociology at Wilkes Honor College at Florida Atlantic University.

* Nancy Menges, Editor in Chief of the Americas Report. Mrs. Menges, the co-founder of the Menges Hemispheric Security Project, is in charge of the weekly edition of CSP’s Americas Report. Fluent in Spanish, she holds a degree in International Relations from the University of Wisconsin-Madison and has studied at the University of the Americas in Mexico City. Her postgraduate degree has been earned from the University of Maryland. She has testified in Congress and submitted CSP’s statement regarding US-Colombian relations to the House Subcommittee on the Western Hemisphere.

*Nicole M. Ferrand is a research analyst and editor of “The Americas Report” of the Menges Hemispheric Security Project. She is a graduate of Columbia University in Economics and Political Science with a background in Law from Peruvian University, UNIFE and in Corporate Finance from Georgetown University.

1 comment:

Anonymous said...

Thank you for a thoughtful article. I agree with you. I am a retired nurse from Massachusetts, living for many years in Nicaragua, and through the years I have witnessed much destruction of Central and South America by people like Chavez and Ortega, and see the benefits for the USA of close relationships with both the presidentes of Columbia and Costa Rica, microcosms of stability.

CAFTA has been a boon to people here. For example, many of the small farmers without CAFTA need to individually carry their produce in little trucks, spending hours at the borders, taking much time, energy and losing much produce. I have seen trucks full of bananas being held at the borders for several days in the hot sun before being given permission to cross. With CAFTA, big trucks come to the individual farms, pick up the produce, pay the farmer and take the produce to the airport or ports for shipping. So much more effective. The down side is that we locals now less choice at the mercados, because most produce is leaving the country, but the farmers benefit.

If CAFTA is done away with, it will be a huge set back for developing countries here.
I think Obama and Pelosi, neither of whom has spent time with "the people" affected by CAFTA, have their own agenda, which on the short term, they think, will prevent overseas drain of American jobs. In my opinion, it will speed it up. American jobs will not stabilize until the labor unions' power is diminished. Just look at the lack of willingness in these difficult times for the auto unions to compromise.