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Ambassador Urges Investment in Colombia Despite Violence
The Washington Diplomat / March 1999

By Larry Luxner

Andrés Pastrana's recent inauguration as Colombia's new president is being welcomed by U.S. and Colombian executives as a breath of fresh air after four years of deteriorating relations between the two countries.

Perhaps that explains the large turnout at a Dec. 17 meeting of the Greater America Business Coalition, which sponsored a talk by Pastrana's one-time campaign manager and now ambassador to the United States, Luís Alberto Moreno Mejía.

"Colombia has the least volatile economy in Latin America," said the Bogotá businessman-turned-diplomat. "We have a solid situation relative to our external debt, and as a percentage of GDP, the overspending we've had is really still within boundaries when compared to other Latin markets."

Pastrana, who met with President Clinton in Washington before and after his Aug. 7, 1998, inauguration, won 50.4% of the 12 million votes cast, easily beating Liberal Party challenger Horacio Serpa, who garnered 46.5%. Pastrana took over the presidency from Ernesto Samper -- whose entire administration was hobbled by charges he accepted up to $6 million in campaign contributions from the Cali drug cartel.

Michael Skol, chairman of the Washington-based U.S.-Colombia Business Partnership, says Pastrana's leadership "should have a very positive effect on investment for several concurrent reasons" -- perhaps the most important one being psychological.

"There was just no possibility of any decent, normal relationship with Colombia until President Samper had left," said Skol, a former U.S. ambassador to Venezuela. "Frankly, either candidate would have sparked the revival of [bilateral] relations, giving both countries the opportunity to get back together again. The U.S. government very definitely wants to do that. We just can't afford another four years of schizophrenic relations with Colombia."

"In the case of Pastrana, the outlook is even better, because one of the major accusations against Samper was that it was the weakest of any recent government in Colombian history. Samper used money and the state to help him politically. One of the results was a kind of populist backlash away from economic reform and investment. Pastrana is a free-market capitalist."

Yet things haven't been easy since taking office, said Moreno.

"This government inherited a very tough economic situation," the ambassador told his audience. "We want to reduce our deficit from 4.5% to 2% in 1999. We've had close to 35 years of insurgency, and this has an impact on our economy -- knocking off at least 3 percentage points of GDP."

This year, he said, Colombia's economy will grow by 2.5%. That compares to just over 2% in 1998.

Moreno, 45, assumed his current job as ambassador at the time of Pastrana's inauguration, replacing former ambassador Juan Carlos Esguerra. Born in Philadelphia, Moreno had to renounce his U.S. citizenship to be considered for the job.

A close political ally of Pastrana, Moreno managed his friend's unsuccessful 1994 presidential campaign and played a key role in Pastrana's 1998 campaign as well. Throughout his career, Moreno -- a graduate of both Florida Atlantic University and Arizona's Thunderbird University -- has done everything from selling Daihatsu jeeps and Mack trucks to producing award-winning children's TV programs.

During the administration of César Gaviría, Moreno served as minister of economic development, formulating government policies in housing, tourism, industrial development and privatization. Before assuming his current post, Moreno was the telecom advisor and private consultant to Bogotá's Grupo Sarmiento; he was also associated with Westsphere Capital Inc., a $230 million private-equity fund specializing in South America.

"Colombia has never had a year of negative economic growth," notes Moreno proudly. "Very few countries can say this."

Yet very few countries also have homicide rates of 88 per 100,000 -- the second-highest in the world after El Salvador. Another claim to fame is that Colombia has the world's highest incidence of kidnapping. Violence and corruption have become facts of life in this country, in which hundreds of thousands of people have died in political strife that shows no sign of slowing down after four decades. Drug-trafficking has tainted nearly every level of society, and despite eradication efforts, production of cocaine is exploding in Colombia -- already the largest source of cocaine in the world. In a recent poll, over 40% of adults surveyed said they'd leave the country permanently if they could.

"In the last five years, Colombia has received the largest investment of any country in northern Latin America," said Moreno. "Opportunities abound in electricity, gas and coal, and in infrastructure. We have been privatizing our airports and toll roads. But Colombia has hardly been explored because of all the violence."

Asked what Pastrana is doing to try to stop fighting between government forces, leftist insurgents and right-wing paramilitary groups, Moreno didn't mince words.

"Let me be very frank: Colombia is a violent country and will not stop being a violent country overnight," he said with bluntness rare for an ambassador. "The reality is that for the last 40 years, they have not been able to control the government, and our government has not been able to destroy them.

"These insurgents want political representation, not only on a national level but also on a regional level. They also want the government to provide for peasants who grow cocaine to substitute other crops," he explained. "It's a very tough issue to deal with. I believe that, despite this, there really is an opportunity for peace."

Recently, Pastrana urged guerrilla forces to put money, not gunfires, in the country's troubled zones, as the government draws up a plan to promote economic development.

"I invite the insurgent groups, for the good of the true reconciliation of the Colombian people, to be present in the preparation, formation and implementation of the programs and projects of the Plan Colombia," Pastrana said at a public meeting in the northern town of Puerto Wilches. Under the plan, peasants in and around the town will receive state financing for the cultivation of African palm. The plan features support for the cultivation of alternative plants to replace coca, marijuana and opium poppy.

The two biggest guerrilla forces, the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN), have said they're ready to negotiate a peaceful settlement to their three-decade-old uprising. But guerrilla leader Manuel Marulanda Vélez's failure to show up for a meeting with Pastrana has raised new questions about resolving the country's civil war.

Marulanda, who has been underground for over 40 years, didn't attend a meeting with Pastrana scheduled for Jan. 7 in San Vicente del Caguán to kick off preliminary peace talks between the government and FARC. Most analysts reject the FARC claim that Marulanda stayed away because of a lack of security, saying the FARC could have provided security, since San Vicente del Caguán is under their control.

Skol says the long-running guerrilla war, which has not only has left thousands of people dead but also scared away several U.S. and foreign oil companies, "is really the most agonizing problem as far as Colombians are concerned. Pastrana obviously considers [stopping] it his No. 1 priority."

A month before the election, the Overseas Private Investment Corp. -- which had been prohibited from insuring U.S. projects in Colombia -- resumed that coverage following President Clinton's decision not to decertify Colombia's anti-drug efforts, as he had done in each of the previous two years.

"The injection of U.S. capital and technology in the development of the Colombian economy is one that creates jobs and a better standard of living for both our countries," said OPIC's president and CEO, George Muñoz, following a visit to Barranquilla, Bogota and Cartagena. According to OPIC spokeswoman Allison May Rosen, the self-supporting federal agency has supported nearly $700 million worth of investments in Colombia since 1991, including GPU International's Termobarranquilla gas-fired power plant ($350 million); Virginia-based KMR's Termovalle power facility ($200 million) and KMR's Mamonal electric facility in Cartagena ($130 million).

Rosen said that because of Clinton's decertification of Colombia's anti-drug efforts in 1996 and 1997, "our programs were not able to enter into new commitments." But following the March 1998 declaration of a national-interest waiver for Colombia, "we are now open for business again." She said 20 infrastructure projects are currently being considered for OPIC political risk insurance and other financing; together, these represent potential investments of $830 million.

"I think the evident difficulties between our country and Colombia under the old administration had a negative impact on investment," said Robert Petterson, vice-president of Caterpillar Inc. in Peoria, Ill."There are lots of opportunities for people to invest in the developing world. You need to give them reasons for choosing a particular country, not reasons to stay away from it."

Adds Michael Curtin, vice-president of Bechtel Enterprises in Washington: "The reopening of OPIC and Ex-Im Bank financing certainly helps U.S. companies doing business in Colombia. The new president has a significant political history as the mayor of Bogota, he's experienced, and I think he'll bring that experience to bear in negotiating a peace treaty with the guerrilas."

Moreno says that once Pastrana brings relative peace to his country, the government will focus on expanding commerce with the United States, with which it has $10 billion worth of trade annually, and with fellow members of the Andean Community -- which include Bolivia, Ecuador, Peru and Venezuela.

Even more important, he says, will be the eventual implementation of a Free Trade Area of the Americas. President Clinton has promised to have the FTAA in place by 2005, though opposition from lawmakers has stalled the necessary fast-track legislation on Capitol Hill -- frustrating not only Colombia but 32 other Latin American and Caribbean nations as well.

"There is no country that doesn't believe the FTAA is the best thing that can happen. All of the regional trade growth in recent years has been through blocs," he said. "The real signal will come from the United States, when Congress passes fast-track."

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