Colombia Defence and Security Report Q4 2008
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27.11.2008 00:17:01 Colombia Defence and Security Report Q4 2008 - a new market research report on www.companiesandmarkets.com
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As we enter Q408, it is fair to say that regional security in Columbia has significantly improved throughout the year. Indeed, recent events have helped raise the country´s short-term political score to a high of 70.6.
The changing fortunes of the Fuerzas Armadas Revolucionarias de Colombia (FARC) have been largely behind the improvement in Columbia’s security position. The insurgent group, which
has dominated Colombian politics in recent years, has suffered a number of significant defeats in recent months that have left the group severely hobbled – not least the high-profile release of French/Columbian hostage Ingrid Betancourt, the rebels’ most valuable bargaining chip.
In July 2008, at least seven FARC guerrillas were killed in an air strike on a camp in the southern province of Cauca, and in August the defence minister, Juan Manuel Santos, revealed that police in Bogotá had arrested five members of FARC who were planning to carry out a series of attacks in the capital. Earlier in the year, FARC suffered setbacks with the death of veteran leader Manuel ‘Tirofijo’ Marulanda Velez and the surrender to police of Nelly Avila ‘Karina’ Moreno. FARC also lost its deputy commander, Raúl Reyes, and secretariat member Iván Rios.
Another interesting development, which further undermines FARC’s capabilities, has been the recent turnaround in previously fraught relations with neighbouring Venezuela. Venezuelan President Hugo Chávez, previously considered the unique supporter of its political aims, has changed his stance to one of pressuring the organisation for non-violence and the release of hostages. This is in line with the Columbian government’s stance and thus frees the way for its anti-crime solutions (which are highly militarised).
Meanwhile, relations with bordering Ecuador appear to have some way to go. Ecuadorian President Rafael Correa reiterated this quarter that there would be no resumption of diplomatic relations with Colombia while President Álvaro Uribe remains in power. Ecuador broke off diplomatic relations with Colombia in Q308 in the wake of the attack on FARC’s base on Ecuadorian territory. Earlier in the year, in response to Colombian accusations that Ecuador has supported FARC, Ecuadorean Foreign Minister Maria Isabel Salvador called on the Organisation of American States (OAS) to investigate matters further.
Our view is that FARC is being significantly weakened by political pressures from neighbouring governments, a drop in previously enjoyed public favour, and financial difficulties. While we believe that desperation could force the remaining FARC elements to resort to increasingly violent activity, we think the overall security threat, and consequently Colombia´s political risk profile, could improve significantly in the medium term.
An additional factor undermining FARC’s future is that its financial earnings have been in decline, as a result of the disruption to drugs-smuggling by a combination of US, Mexican and Colombian policing.
There is no sign of a let-up on this stronger policing approach and therefore FARC’s income will continue to be under pressure.
BMI believes that the Colombian economy has strong growth potential despite the forecast decline in real GDP growth from 7.5% in 2007 to 5.1% in 2008. Private consumption, which already accounts for more than 60% of GDP, is likely to be the main engine of growth, with household expenditure playing an increasing important role in the decision-making of local banks and businesses. However, the supporting external factors of the previous economic cycle will probably soften. Colombia is likely to feel the negative effects of increased commodity prices, tight monetary policy conditions, and the financial volatility of the US economy.
As we enter Q408, it is fair to say that regional security in Columbia has significantly improved throughout the year. Indeed, recent events have helped raise the country´s short-term political score to a high of 70.6.
The changing fortunes of the Fuerzas Armadas Revolucionarias de Colombia (FARC) have been largely behind the improvement in Columbia’s security position. The insurgent group, which
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In July 2008, at least seven FARC guerrillas were killed in an air strike on a camp in the southern province of Cauca, and in August the defence minister, Juan Manuel Santos, revealed that police in Bogotá had arrested five members of FARC who were planning to carry out a series of attacks in the capital. Earlier in the year, FARC suffered setbacks with the death of veteran leader Manuel ‘Tirofijo’ Marulanda Velez and the surrender to police of Nelly Avila ‘Karina’ Moreno. FARC also lost its deputy commander, Raúl Reyes, and secretariat member Iván Rios.
Another interesting development, which further undermines FARC’s capabilities, has been the recent turnaround in previously fraught relations with neighbouring Venezuela. Venezuelan President Hugo Chávez, previously considered the unique supporter of its political aims, has changed his stance to one of pressuring the organisation for non-violence and the release of hostages. This is in line with the Columbian government’s stance and thus frees the way for its anti-crime solutions (which are highly militarised).
Meanwhile, relations with bordering Ecuador appear to have some way to go. Ecuadorian President Rafael Correa reiterated this quarter that there would be no resumption of diplomatic relations with Colombia while President Álvaro Uribe remains in power. Ecuador broke off diplomatic relations with Colombia in Q308 in the wake of the attack on FARC’s base on Ecuadorian territory. Earlier in the year, in response to Colombian accusations that Ecuador has supported FARC, Ecuadorean Foreign Minister Maria Isabel Salvador called on the Organisation of American States (OAS) to investigate matters further.
Our view is that FARC is being significantly weakened by political pressures from neighbouring governments, a drop in previously enjoyed public favour, and financial difficulties. While we believe that desperation could force the remaining FARC elements to resort to increasingly violent activity, we think the overall security threat, and consequently Colombia´s political risk profile, could improve significantly in the medium term.
An additional factor undermining FARC’s future is that its financial earnings have been in decline, as a result of the disruption to drugs-smuggling by a combination of US, Mexican and Colombian policing.
There is no sign of a let-up on this stronger policing approach and therefore FARC’s income will continue to be under pressure.
BMI believes that the Colombian economy has strong growth potential despite the forecast decline in real GDP growth from 7.5% in 2007 to 5.1% in 2008. Private consumption, which already accounts for more than 60% of GDP, is likely to be the main engine of growth, with household expenditure playing an increasing important role in the decision-making of local banks and businesses. However, the supporting external factors of the previous economic cycle will probably soften. Colombia is likely to feel the negative effects of increased commodity prices, tight monetary policy conditions, and the financial volatility of the US economy.
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