Colombia: Peace Continues To Break Out

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October 29, 2015: Another good sign; election violence is down 75 percent compared to 2011. The national elections normally include widespread violence against candidates and voters as many groups try to influence the 34 million Colombians registered to vote for the elections of officials in 32 departments (provinces, plus a capital district) and some 1,100 smaller entities. Until this year these elections would normally lead to over a hundred deaths, many more wounded and thousands of incidents of bribery or intimidation. Over a decade of efforts to suppress criminal gangs and leftist rebels (and local militias organized to resist the rebels) has paid off. The drop in election violence is not surprising to most Colombians because it is in line with the general decline in criminal activity and lawlessness since 2000.

After three years of negotiations FARC appears to have really made peace with the government and is preparing to demobilize its 7,000 armed fighters. ELN, with about 2,500 armed members, is willing to talk but has not actually begun peace negotiations yet. ELN is apparently feeling the heat from a population fed up rebellions and related drug gang violence that has left nearly 300,000 dead since it all began in the early 1960s. As a result of this progress and other recent actions by FARC the government announced that it would take part in a mutual ceasefire with FARC on January 1st followed by the signing of a final peace deal before March 23rd. Success is not guaranteed because not everyone in FARC backs the peace deal and most Colombians still demand more retribution against those responsible for the most death and destruction. Face it, if you start a rebellion that goes on for half a century and leaves over 200,000 dead and millions homeless, unemployed or otherwise harmed, there is going to be a lot of bad feelings. The FARC leadership is trying to get all their followers to accept that.

Next door Venezuela is still in the midst of growing unrest and economic suffering on a massive scale. It has gotten so bad that Venezuela refuses to issue an economic forecast for 2016. There was a similar refusal for 2015. This is believed related to the negative reaction the government got when they admitted that GDP had shrunk four percent in 2014. Foreign analysts like the IMF see a ten percent GDP decline in 2015 and about six in 2016. Inflation is officially 80 percent for 2015 (and 70 percent in 2014) but unofficially more like 200 percent this year. Not much change is seen in 2016. The Venezuelan currency (the bolivar) buys less and less. Price controls in Venezuela make food and other items much cheaper to buy than the market prices prevailing in neighboring countries. Smugglers point out that it is often more profitable to smuggle Venezuelan food into Colombia than to move Colombian cocaine into Venezuela.

Many Venezuelans note that they are suffering a lot more than the worst GDP declines would indicate. There is still a lot of wealth in the country and people wonder where it has gone. It is no secret that a lot of it has been stolen. Government officials take bribes, steal when they can and have taken the lead in plundering government reserves of foreign currency. The biggest offenders in exploiting the official (far below the black market) exchange rate between dollars and the local currency are government officials. The shortages created by all this and the increased printing of Venezuelan currency have pushed inflation up to more than 500 percent a year. Thus since May the Venezuelan currency (the bolivar) has collapsed in value against the dollar (the most common foreign currency used in Venezuela). The black market rate for a dollar is now over 800 bolivars, way up from 400 in May. In 2013 it was under 30 bolivars. Before the 1999 socialist revolution inflation was about 20 percent and you could buy a dollar for six bolivars. The average inflation in neighboring countries in 1999 was under 15 percent. The official exchange rate is 6.3 bolivars per dollar but that is only available to government officials and well-connected businessmen. The Venezuelan government seems paralyzed.

The December 6th elections are going to be interesting because the current government has the support of less than 20 percent of the voters and is believed planning to rig the vote to deal with that. President Maduro recently announced that he would abide by the results of the election but at the same time he has prohibited foreign voting observers. Actually the government invited foreign voting observers but banned anyone they thought “unsuitable”. The government is cracking down on opposition political parties and leaders but that may not be enough to avoid a vote that would either remove the current government or trigger a coup and imposition of a leftist dictatorship. The government appears aware of the risks but it is unclear how far they would go to hold onto power.

The low oil prices are threatening the special relationship Venezuela has with Cuba. As part of that deal Venezuela sells Cuba at least 100,000 barrels oil a day at low prices. In return Cuba provides “security advisors” and some 40,000 other professionals (most of them doctors and nurses) to replace the many Venezuelan professionals who have fled the country because of the worsening economic and political conditions. This was a very profitable deal for Cuba until the oil price collapsed. Not only did Cuba get much needed foreign currency by selling some of that oil at world prices, but the Cuban professionals in Venezuela were paid according to the price of oil. The low oil prices mean little foreign currency for Cuba and very low pay for Cubans sent to work in Venezuela. Some of these Cubans have already fled (and not back to Cuba) and more are expected to follow if their compensation problems are not taken care of. The problem is that neither Venezuela nor Cuba have the cash to do that. If Venezuela losses a lot of these professionals what is left of the medical care system will collapse and the economy will suffer even more because of the lack of technical experts.

There are still some Venezuelan professionals left and some of them working for the government. But a growing number of these (usually the non-corrupt ones) are getting fed up and leaving. Some were senior officials in the government and got fired for criticizing government inefficiency and inability to deal with the growing economic problems. Some of these former officials, once safely out of the country, provide confirmation and details about mistakes that have been made and continue to be made in Venezuela. All this confirms that the government abuses its power. This is no secret to more Venezuelans who see the police acting as they wish regardless of laws. This is especially true when it comes to the growing number of outspoken critics of the government.

Some of the problems with poorly treated professionals has become very public. For example the 40,000 teachers at the 18 public (low or no tuition) universities have been on strike for months seeking more money to deal with the inflation and shortages. The government refuses so 300,000 university students find themselves idle. The striking teachers also want more money for supplies (books, lab materials and so on) but there is no money for that either.

A major reason why the government has no cash for domestic emergencies (like the closed universities) is the effort to avoid defaulting on foreign debt and getting banned from international borrowing. To avoid default the government has had to take extraordinary measures (like selling off the gold reserve) and is apparently going to reach the end of the year without defaulting. This surprised international bankers as through most of the year credit default swaps (a form of market based “insurance” on bonds and loans) activity for Venezuelan debt showed that most owners of Venezuelan debt (bonds and other loans) believed default and economic collapse was likely by 2016 at the latest. The credit default swaps markets still thinks Venezuela will default, but not as soon as once believed. If Venezuelan leaders have a workable plan for getting out of this mess they have not shared it with anyone and that is scary to Venezuelans and most of the neighbors, especially Colombia.

October 27, 2015: Venezuela has declared martial law (a “state of exception”) in an eighth area (Atures) on the Colombian border.  The Venezuelan blames a disproportionate amount of their economic problems on smugglers who profit by sneaking subsidized Venezuelan goods into Colombia where the stuff can be sold for a huge profit.

October 26, 2015: In northern Colombia  (Bachira) ELN ambushed a convoy carrying election records and killed eleven soldiers and a policeman. Two other soldiers were taken prisoner. Troops and police reinforcements soon arrived and within a day three local ELN members were captured and another wounded. This attack is likely to delay efforts to start peace talks with ELN.

October 22, 2015: In the north (Bolivar) security forces clashed with the ELN, killing six of the leftist rebels and wounding another.

October 19, 2015: The head of the ELN announced that he was ready for peace talks but it was up to the government to convince the ELN that the terms of any peace deal would be adhered to. ELN leaders believe the government peace offers are merely a trick to get the ELN to disarm so the government can attack. The ELN has always been considered more hard core and paranoid than the larger FARC.

October 17, 2015: Another detail of the FARC peace deal was settled as FARC agreed to assist the government in finding the bodies of the 45,000 Colombians who “disappeared” since the 1960s as a result of the fighting with the leftist rebels. FARC was responsible for many of these victims and has members or records of what happened to many of the people who were “disappeared” by itself and other outlaw organizations.

October 2, 2015: FARC ordered its personnel to suspend military training, with such training to be dropped entirely as the terms of the peace deal come into play in early 2016 and FARC transforms into a political organization.

 

 

 


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