The pirates are circling
The plunge in aggregate demand, coupled with reduced remittances of profits abroad, cut Colombia’s current account deficit by half a percentage point of GDP between Q1 and Q2. Since the downturn continued during Q3, the risk of worsening external imbalances vis-à-vis 2019 is low. With abundant liquidity in international markets, the public sector was able to obtain substantial financial resources abroad in Q2. These flows helped to finance the CAD, amid a fall in net FDI and important outflows from domestic financial institutions.
The author Robert Kaplan concluded that a united Eurasia would demand as a balancer a united North America. He argued that if the United States should to keep deepening links with Mexico, Central America and Colombia. In contrast, in recent years, Venezuela and some of its southern neighbors slipped into a hostile political orbit. Though American naval power still dominates the waters where most West-East world trade crosses, the largest land mass surrounding the Caribbean is now dominated by regimes unfriendly to the United States. The only big nearby country that still has a pro-market agenda is Colombia, which makes it an obvious target for the (alleged) socialist coalition. This increases the stakes for the 2022 Colombian elections. America, paying attention to its November 3rd elections, apparently does not want to see this dynamic, which would be the true sequel to The Pirates of the Caribbean.
A high-level U.S. commission came to Colombia to seal an important cooperation initiative dubbed “The New Plan Colombia,” aimed at combatting criminal organizations, especially drug trafficking. Funds hasn’t been disclosed, and would be mostly credit. The first Plan Colombia in the late 1990s amounted to $7 billion transfers over a decade. Interestingly, Colombian President Iván Duque has affirmed his support for new Inter-American Development Bank head Mauricio Claver-Carone, a Cuban-American whose appointment breaks with the tradition that a Latin American lead the IADB. Could the rush to announce Plan Colombia 2.0 have been meant to allow Colombia to save face over this choice, and to seal Colombia’s commitment to President Donald Trump’s re-election campaign? If Democratic challenger Joe Biden wins the U.S. presidency, that would prove costly.
Duque’s implementation of the peace accord with the FARC has been dismal, and the weakening of the rule of law in the most affected regions is appalling. Mass killings, and assassinations of former FARC members, have been frequent. Duque has been filling up with words what he has been unable to cover with effective management. In May 2022, votes will be the final test for the peace accord; for the high-minded and poorly-thought-out Plan Colombia 2.0; and for the phraseology-rich but less-than-effective Duque presidency.
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