Will Colombia’s Next President Embrace the Private Sector? Breaking Down the Candidates
With Colombia’s presidential election less than a year away, Finance Colombia takes a look at which candidates are likely to be friends to the business community.
The field is still wide open. It is anyone’s guess who will take over as head of state after the departure of President Juan Manuel Santos, who will be obligated to leave the Casa del Nariño next year after fulfilling his second and final term.
But among a crowded field of candidates, five hopefuls are faring better than the rest of the pack in the early campaign stages of Colombia’s 2018 presidential election.
As is to be expected, many uncertainties remain this far before voters head to the ballot on May 27. Even determining a frontrunner, in fact, depends upon which public opinion poll you choose to believe.
A poll released on September 20, for example, put former Vice President German Vargas Lleras (11%) and ex-Bogotá Mayor Gustavo Petro (9%) ahead of the other two dozen or so names being thrown around. But perhaps most notable in this survey was not who was leading — but what: nearly a quarter of Colombian voters said they would rather cast a blank-vote protest ballot (voto en blanco) than vote for anyone who has expressed interest in leading the country.
That survey, dubbed La Gran Encuesta and conducted for the news media association Alianza de Medios, asked 1,250 voters spread across 60 municipalities around the country who they would vote for if the election were held tomorrow. Though Vargas Lleras and Petro came out slightly ahead, their number-one and number-two positions were well within the survey’s 3.3% margin of error.
Eight days later, the results of another public opinion survey were released, which put Sergio Fajardo, a former Antioquia governor and former Medellín mayor of Medellín, in the clear pole position. With 21% support, he finished 8.5 percentage points ahead of Vargas Lleras and nearly 10 points ahead of the third-place Green Alliance Party Senator Claudia López. This time, the voto en blanco protest vote fell to a meager 2.1%.
With the election still seven months away, more surveys will continue emerge. The results are likely to continue to vary wildly. But to add some perspective on which key issues are beginning to drive the race, we are profiling some of the notable contenders. Here, we highlight their positions on the top issues to help understand who is most likely to create a welcoming climate for financial markets, entrepreneurs, energy companies, mining firms, infrastructure development, and the private sector as a whole.
Though it is still early days and there is more campaigning and political maneuvering ahead, opinions are being formed, policy platforms are being drafted, and alliances are being made. A number of yet-unforeseen factors will likely determine who pulls ahead of the pack as we approach election day. But one thing is certain: It would be wise to keep an eye the leading candidates throughout the race — as one of them is likely to become Colombia’s next head of state.
(Though not discussed below, the following, among others, are some of the other candidates to watch: Alejandro Ordóñez, Antonio Navarro Wolff, Clara López, Martha Lucía Ramírez, and Humberto de la Calle.)
Germán Vargas Lleras
Perhaps one of the strongest contenders in the election, the former vice president is considered to go far, so much so that the Economist Intelligence Unit has predicted that he will be the next president of Colombia.
Oil and Gas
Germán Vargas Lleras is a friend of the industry and is regarded as a thought leader. On a number of occasions he has been invited to speak at national oil and gas industry conferences in Colombia. Shortly after the fall of oil prices in 2015, then-Vice President Vargas Lleras’ voice was among the loudest calling on the industry to remain competitive by maintaining high levels of production and exploration. The same year, he was instrumental in a deal that saw the construction of an oil refinery in Cartagena. “The project is our insurance against an energy rationing, in case we have the El Niño phenomenon,” he said at the time.
Vargas Lleras likes to build things. In 2014, he took charge of an ambitious multi-year plan by the Santos government to build 400,000 new affordable homes around the country and another 100,000 free houses to be made available to the poorest Colombians and those who have been displaced by violence. He was also the one to announce 21 different construction projects to widen and extend roadways along several key arteries in and out of Bogotá. The public-private-partnership projects aimed to ease traffic and to provide better connectivity between the capital and surrounding cities.
As the vice president to an administration that signed a peace deal with the FARC guerrillas, Vargas Lleras was supportive of the peace deal. But that support appears to be waning. On September 28, he and his Cambio Radical (Radical Change) party — once a faithful member of the Santos government’s coalition — withdrew support for the Special Jurisdiction for Peace (which goes by the Spanish acronym JEP). The transitional court body that is currently awaiting congressional approval will have the power to pass judgment on those who have committed war crimes — not only on FARC members, but also former paramilitaries, Colombian military, and even politicians.
Though Vargas Lleras has not commented on the special tribunal directly, his party issued a statement saying that it “rewards in a significant and unbalanced way members of the ex-guerrilla movement.” There are also rumors swirling in the media and on social media of the possibility of talks between the Vargas Lleras and right-wing former president Álvaro Uribe, a strident critic of the peace deal with the FARC.
The ex-VP was under investigation for alleged ties to paramilitary groups in the so-called “parapolitics” scandal, and many members of his party are in prison or under investigation for similar ties. A supreme court justice absolved Vargas Lleras, but the very justice who absolved him is currently under investigation for accepting bribes in return for favorable court rulings or a refusal to hear cases.
The smell of corruption doesn’t end there. Just this week, on October 23, Vargas Lleras was accused of illegal campaigning in the departments of Santander and Tolima, allegedly by using his influence to pressure local officials to gather signatures from residents there — a prerequisite if a candidate wishes to run as an independent.
Unlike other candidates, the ex-Medellín mayor and former governor of Antioquia enjoys a generally positive outlook by the average Colombian voter. He has been successful in positioning himself as the pragmatic leader of a center-left coalition that includes fellow presidential hopefuls Claudia López and Jorge Enrique Robledo.
Sergio Fajardo was viewed most favorably in a survey of 325 businesspeople in the National Business Association of Colombia (ANDI), an association that represents hundreds of production, financial, agro-industrial, food, commercial, and service sectors. In the ANDI survey, conducted in August, the ex-Antioquia governor and Medellín mayor received 19.1% support. He was followed by Humberto de la Calle (16%), Iván Duque (13.5%), and German Vargas Lleras (9.5%).
During his tenure as mayor of Medellín (from 2004–2007), he was widely praised for responsible public spending, record social investment, a pronounced decrease in crime, and innovative social inclusion policies.
During his time running Colombia’s second city, he helped address the Medellín’s chronic violence and poverty by focusing on giving the most low-income paisas a path to upward mobility. With the aim of increasing social cohesion, Fajardo initiated the construction of “the most beautiful buildings in the city” in the comunas, the poorest and most crime-ridden part of Medellín. He was behind the development of schools, libraries, cultural centers, and eco-parks in those areas. He also expanded the city’s Metro system, connecting it with the Metro Cable to provide the lower income inhabitants easier access to the rest of the city.
Fajardo is generally supportive of the peace process with the FARC, though it is unlikely to be a main pillar of his campaign. With regards to Colombia’s half-century civil conflict, he said in July this year that “we must turn the page of violence and destruction to write the page of opportunities.”
Fajardo has solid experience in addressing social issues and is perceived to be an honest politician, which will help to boost his attractiveness to those concerned about corruption. He has however, not escaped scandal. In August, ex-Medellín city official Gustavo Villegas was arrested on suspicion of having ties to the Oficina de Envigado drug trafficking group. Villegas is a friend and close political ally Fajardo’s, which may tarnish the former Antioquia governor’s reputation as someone who can effectively fight corruption.
This Green Party Senator is a fearless crusader against corruption and a staunch critic of Colombia’s political establishment, and dynasty politicians, including President Santos and former President Álvaro Uribe.
It is difficult to know exactly what Senator Claudia López’s plans would be for Colombia’s economy should she become president. As one of the first candidates to secure a nomination from her party for a presidential bid, she is one of the few candidates to have a website dedicated to outlining her policy platform.
But other than fine-sounding platitudes, there is not much in the way of an economic policy. López speaks of improving the quality of public investment by cleaning up corruption, reducing poverty, improving regional development, and modernizing rural areas of the country. But there is almost no explanation about how she plans to achieve these aims.
Oil and Gas
López is generally supportive of Colombia’s oil and gas sector, as well as coal, as she recognizes the need for a cheap and abundant energy supply (Colombia has vast coal reserves). She does have reservations, however, including the need to respect the right of local communities to have a genuine say in the extraction and exploration activities that take place on their land and the right to reject such activity if they are not convinced that the projects won’t contamination the environment or drinking water.
She is opposed to the use of fracking in the extraction of oil and gas. “Due to the lack of scientific knowledge in the country about the use of this method…I will not play with the industry, nor with the lives of Colombians,” she has said.
López has proposed eliminating income tax and lowering and simplifying the business tax rate to a single rate of 33%. This would, in her eyes, reduce the tax burden on companies and promote economic growth, which, in turn, would lead to job creation. In an effort to boost the capital markets, she floated the idea of a temporary exemption to firms listed on the local stock exchange.
Corruption is where Claudia López shines. She has made a name for herself as a zealous campaigner against all forms of corruption in Colombia. Her findings about ties between members of congress and paramilitary groups while working as a columnist at Semana, the nation’s largest magazine, laid the groundwork for what would become known as the “parapolitics” scandal. Her revelations led to investigations of dozens of congressmen, with 42 of them being convicted for having direct links to paramilitary groups.
In July this year, she spearheaded a petition to demand far-reaching anti-corruption reforms in Colombia. The drive succeeded in collecting four million signatures — prompting election authorities to call a referendum on the issue, which is likely to take place in January or February 2018. The measures that will be put to a popular vote include: all elected officials making their personal assets and budget public record, imposing term limits for members of congress, and mandatory jail sentences for people convicted of corruption.
The ex-M19 guerrilla and socialist former Bogotá mayor has positioned himself as a political outsider and the only one who can clean up the country’s political establishment.
Gustavo Petro speaks frequently about the need for Colombia to diversify its economy and not rely so heavily on oil and coal, a mistake he said Venezuela made. (This is perhaps the only criticism he’s ever uttered of the regime; Petro mostly speaks favorably of Venezuela and the government of Nicolas Maduro). He has proposed investing heavily in agriculture, developing unspecified agro-industries, making better use of fertile land, and supporting these initiatives with a more equitable distribution of water in the countryside. But at this stage, the ex-Bogotá mayor has not provided details about how he plans to do these things.
For the leftist politician, climate change is not just a threat to the globe but has very real and deadly consequences here in Colombia. As evidence of the effects of climate change, he has cited the heavy rains that caused a mudslide that devastated the town of Mocoa on April 1, killing close to 330 people. Petro rather uncontroversially states that the burning of oil and coal, primarily by richer, more-developed countries, is the main cause, and has also claimed on Twitter that fossil fuel burning leads to stronger and more severe hurricanes.
Oil and Gas
The only thing that Petro has said publicly about the industry is that the Colombian economy must diversify and gradually move away from its reliance on fossil fuels. He has been critical of the multi-billion dollar sector, writing that it “leads to the corruption of the Colombian political class.” In August, Petro penned a blog post saying that “oil and coal are not only the raw materials that…carry the most serious threat to life on the planet in millions of years, they also lead to political, social and military dynamics that produce the capture of oil revenue and lead to barbarism.”
Gustavo Petro said that, if elected president, he would invest in infrastructure related to developing water distribution in the countryside, railway networks, clean energy, and universities. But a look at how he handled city infrastructure projects while mayor of Bogotá is telling. Many city projects were left half-completed and carried out in an unorganized patchwork. Others never got off the ground. Petro promised to extend the TransMilenio bus system with a new route along the Avenida Boyaca artery of the city before he completed his term; the project never got past the design phase. He also promised to have 5 kilometers of Bogotá’s proposed metro system completed before he left office; he never even broke ground. The list goes on, and his term as mayor was widely criticized by people of various political hues as a case study in mismanagement.
Gustavo Petro likes to style himself as a crusader against corruption, and he made a name for himself doing so while he was in Congress. But as the man in charge of running the Colombian capital, dozens of projects were inexplicably handed over directly to one bidder, instead of being put up for public tender as is required by law, particularly in the health sector. According to an investigation by the capital’s comptroller, for every 100 pesos contracted by hospitals and health entities under Petro, 93.9 were contracted directly and only 2.4 were put up for bidding. In 2016, Bogotá’s comptroller called such a practice “a breeding ground for corruption.”
Juan Manuel Galán
Senator Juan Manuel Galán is the son of murdered presidential candidate Luis Carlos Galán, who was gunned down by Pablo Escobar’s henchmen during a campaign speech in 1989. He is following in his father’s footsteps.
Galán’s vision for the Colombian economy involves a business development plan that drives productivity, which he believes will lead to economic growth of 5% — or more — per year. He also emphasizes the need to end the “culture of clientelism” and foster a climate in which everyone has an equal opportunity to succeed. But like many of his presidential rivals, Galán’s plan is thus far light on detail.
If Juan Manuel Galán were to be elected president, he says he would cut corporate taxes and create a single progressive tax rate. He would also eliminate the great number of tax exemptions that he says costs the country 30 billion pesos ($10 million USD) per year, money he would use to invest into his business stimulus plan. There would also be special tax incentives for small- and medium-sized enterprises (SMEs) under Galán’s tax policy.
The Liberal senator says there are dozens, probably hundreds of unfinished local and regional infrastructure projects around the country, and the primary cause of these white elephants is corruption on an industrial scale. Such uncompleted works include roadways, aqueducts, schools, hospitals, sports complexes, local courts, and even police stations. Galán indicated he would invest a grand total of 1.3 trillion of pesos ($440 million USD) to complete these projects — but would require outside oversight over how the money is spent to prevent local officials from skimming off the top once again.
Like his father, Galán is a fierce critic of the system of patronage and clientelism that not only persists in Colombia’s political and business spheres, but also in the average citizen. It’s a symptom of corruption, and on the whole, the systems of nepotism and favoritism costs the country roughly 5% of GDP per year, Galán said during an interview with RCN Radio on October 3. “In all sectors of our society there is a clientelist mentality, and it is a yoke, it a weight that we carry…that generates the cultivation of corruption,” he said.
Republished with permission from Finance Colombia.