“When they ask me, ‘What do you want to be when you’re big,’ I respond, ‘I want to be like Lula.’” The statement was not voiced by a progressive president of the region but by the most conservative of all: Juan Manuel Santos.
That’s how the President of Colombia opened the First Colombia-Brazil Investment Forum organized by the Interamerican Development Bank (IDB) in Bogota, Columbia, on August 4th, in which the most noteworthy figure was Luiz Inacio Lula da Silva.
The former president of Brazil didn’t disappoint. “It’s time that we thought of ourselves. Where’s our potential for growth? It’s between us,” he proclaimed in order to show that South America should stop looking towards the North.
“We no longer need Bolivar’s sword, but rather credit and investment banks. We don’t need to be fearful of lending money to the poor because, aside from the fact that they pay, they also become consumers of what businesses produce,” Lula concluded, while highlighting the importance of policies that reduce poverty.
The Colombia-Brazil forum demonstrates that a new partnership is forming between two nations who, until now, were very wary of one another. Former President Alvaro Uribe, a conservative and friend of George W. Bush, espoused a highly ideological view of the world and always believed that Lula’s Brazil was aligned with the FARC. Brazilians likewise mistrusted Colombia for their strong alliance with Washington.
Before 500 businessmen y authorities from both countries Lula addressed Santos as he spoke of his relationship with President Dilma Rousseff: “You two can do a lot more than what President Uribe and I did. We had a good relationship, but with a lot of mistrust. We didn’t trust one another.” Santos verified that such a large delegation of Brazilian businessmen had never set foot in Bogota.
Maintaining a close bond to Colombia is important to Brazil, and vice versa. Each has its own particular interests,contradictory in nature. They talked about the economy, investments and finances, and even politics came up, although these topics tend to be avoided in public.
Santos Sets Himself Apart
Juan Manuel Santos belongs to one of the oldest and longest established Colombian families, which amassed fortune and power by way of land possession during the independence wars 200 years ago. His grandfather’s brother was president from 1938 to 1942 and at least one other president from 1882 figures among his ancestors. Various family members participated in the process of independence.
During the 8 years that Santos governed alongside Alvaro Uribe (2002-2010) he never publicly displayed political differences. He served as Uribe’s Minister of Defense between 2006 and 2010 and was connected to the “false positive” scandal in 2008, the assassination of innocent civilians carried out by the Military in order to pass them off as guerrilla fighters killed in combat. Since the election of Barack Obama, Santos has continued to represent the country’s elite as he begins to outline a policy to distance himself from Uribe to be more in line with the new international and regional framework.
He chose Angelino Garzon as his Vicepresidential candidate. Garzon has a long career as a unionist: he was General Secretary of the Federation of Colombian Workers (CUT) between 1981 and 1990, Vice President of the Patriotic Union party (with connections to the Communist Party and the FARC) and until 1940 an activist for the M-19 Democratic Alliance. He was also Minister of Labor in Andres Pastrana’s administration and, even though he has changed, Garzon has a history of involvement with the Left, something all Colombians are aware of.
Maria Emma Mejia was nominated by the Santos government to the General Secretary of Unasur in March of 2011. She formed part of the national committee of the center-left party Democratic Alternative Poll. In addition, Mejia chairs Pies Descalzos Foundation, launched by singer Shakira, and also hosted a television program.
Why would Santos, a conservative right-winger, choose two people with a leftist background for positions that aren’t pivotal but play an important symbolic role? He maintains close ties with high finance and the interests of multinational corporations, and will continue to be an ally of Washington. However, he believes that he must adapt to new times for three main reasons.
First of all, Colombia is “surrounded” by left wing, progressive governments and can no longer count on its faithful ally, Bush, in the White House. Secondly, the U.S. and Europe are going through a very serious crisis and can no longer serve as Colombia’s principal markets. Third, once the guerrilla warfare is neutralized and Santos’ initiative in the armed conflict underway, he will attempt to defuse social conflict with policies on poverty and co-opt or neutralize social movements.
The strategy is paying off. Colombia has a very good relationship with its neighbors, including Valenzuela, Ecuador and the rest of the region. This “normalization” of relations was a necessary step that Santos’ predecessor was not able to take due to the conflicts and confrontations, at times personal, he had with various countries and presidents.
With respect to social movements, Santos has forged important partnerships. In October of 2010, he attended the Second Congress of the Embera indigenous people in El Dovio, Valle del Cauca, the first president to meet with the group. He ate breakfast with them, attended the rite of blessing and spoke to them in Embera. After vowing to respect indigenous autonomy he announced the creation of a High Level Commission composed of academics, representatives from different social and political sectors, and indigenous groups to draw up recommendations to the State so that it can fulfill its obligations to the indigenous and Afrocolombian population.
Promoted by his Vice President, Santos signed an agreement this year with the General Labor Confederation (CGT), one of the main unions, to establish a framework for negotiation, guarantee the practice of union activity and secure the right of public employees to collective bargaining that they have demanded for 40 years.
This relative autonomy of Colombia from U.S. policy and the need to insert itself with greater force in the region has been interpreted by Brazilian diplomacy as a valuable opportunity in two ways: economically, with investment and corporate presence, and geopolitically, so that Brazil can gain another ally and build an additional path to the Pacific and Caribbean waters.
Lula spoke of great strategic investments including hydroelectric dams, highways, gas pipelines, biofuels and the automobile industry, sectors in which Brazil has tremendous experience. The ex-ambassador of Colombia to Brazil, Mario Galofre Cano, was very straightforward when speaking to the Brazilians. “Here you can build your factories with an eye towards the Caribbean and Pacific markets, above all keeping in mind our energy advantage.” At the forum Luis Carlos Sarmiento Angulo, the richest man in Colombia, demanded a Free Trade Agreement with Brazil and asked for am association between the two nation’s stock markets.
Economy and Infrastructure
Colombia’s current administration, elected to office one year ago, defined 5 economic driving forces for its economy: investment in infrastructure, land and agriculture, housing, the mining industry, energy and scientific and technological innovation. The most dynamic of all, the mining and hydrocarbon industries are growing at an annual rate of around 9%. In the case of petroleum, daily production increased from an average of 788,000 barrels in August 2010, to 930,000 in July 2011.
The Inter-American Development Bank (IDB) presented its report entitled “Breaking down the wall,” at the forum, an allusion to what Uribe once said about the two countries: “it seems like the thing that separates us is a wall more than a border. ” Indeed, in spite of the 1,200 miles of common border there had not been hardly any business or investment until a few years ago. The big problem, according to IDB’s analysis, is a lack of infrastructure to facilitate commerce.
Until 2000 bilateral commerce between the two nations never exceeded $1 billion. In 2010 Brazil exported $2 billion to Colombia and imported $350 million, which represents barely 0.7% of both countries’ total commerce.Intraregional trade for both nations has already reached 20%. Brazil represents 4.2% of Colombia’s foreign commerce, a figure far below its main partner, the United States, with 34%, followed by China with 9%.
This is precisely the point. As IDB’s report demonstrates, Colombia needs Brazil because in the short term its overexposure to trade with the U.S. puts it in a bad position. Another advantage is that binational commerce consists mostly of manufactured goods while South-North commerce continues to depend on raw materials. 60% of exports from Colombia to Brazil are manufactured goods yet only 22% of Colombia’s total exports belong to the sector.
PVC, aircrafts, tires and sheet steel and iron compose 35% of Colombian exports to Brazil. However, 80% of what Colombia imports from Brazil are also manufacturing goods, the most important of which include propylene, cars, processed foods, flat-rolled steel, engines, aluminum and tires. In sum, both countries win because they develop a better commercial relationship, superior to the export of commodities.
Brazilian investments in Colombia have also increased significantly. Between 2005 and 2010 they climbed from $93 to $775 million, concentrated in manufactured goods, mining and construction. The chief investors include Petrobras, mining company Vale, steelmakers Gerdau and Votorantim, construction company Camargo Correa and car manufacturer Marcopolo. Petrobras announced it would invest $430 million to open off shore wells in the Carribbean. Until now it exploits 16 blocks, eight of which are offshore, and produces 40,000 barrels each day in Colombia.
Colombian investment in Brazil has reached $605 million in electric energy, petroleum, plastic, financial services and resins. The growing presence of private corporations in each one of the nations suggests that exports will continue to grow at a good pace. In 2010 Colombia teamed up with Embraer to develop a military transport aircraft that would rival the Hercules, the KC-390. It may lead to the installation of a parts factory in Colombia and the purchase of 12 planes.
The fundamental part of IDB’s document and the forum held in Bogota involves the strengthening of infrastructure to facilitate trade. The IBD asserts that the two countries are “much farther apart than their proximity suggests.” The distance between both nation’s major cities is 2,580 miles while the distance between Brazil and Argentina’s totals 1,485, and between Colombia and Venezuela’s 600 miles.
98% of Colombia’s exports to Brazil arrive by sea and 1.9% by land. In contrast, 45% of trade between Brazil and Argentina is by road. That means transportation represents 33% of the total cost of exports, a larger percentage than that between Colombia and Canada, which greatly increases the price of products. The conclusions that IBD draws from this are very clear: there needs to be a plan for infrastructure projects to reduce costs and propel commerce.
It is not strange that IDB would make such a statement, since they are the inspiration behind Initiative for the Integration of Regional Infrastructure in South America (IIRIS), one of the largest investments to facilitate commerce ever realized in the region. It represents a sudden change from raw materials to global markets. For Brazil it is an excellent opportunity to gain yet another passageway to the Pacific and also the Caribbean. The Bank of Brazil announced the opening of its first office in Colombia.
New and Old Alliances
In a few weeks U.S. strategy has suffered various setbacks. The electoral triumph of Ollanta Humala in Peru represents a defeat for the recently formed Pacific Alliance. Indeed, on April 28th Mexico, Peru, Colombia and Chile signed an agreement to promote free commerce that in practice was seen as an alternative to Mercosur and Unasur, in which Brazil and Argentina a lot of influence.
Three of these countries have current Free Trade Agreements with the United States. Colombia is still awaiting the ratification of its agreement by Congress. Washington used to have strong allies in the region. However, the world crisis and the success of leftist and progressive forces continue to deplete their power, above all in South America. On the regional stage the biggest winner from Humala’s victory is Brazil who will consolidate a passageway to Asia for its enormous soy production.
Colombia is much more than geopolitics and infrastructure works. It is one of the most dynamic countries of the region. Its population is close to 50 million, its gross product is third in the region bested only by Brazil and Argentina, its hydrocarbon production may expand considerably and it possesses an important industry when compared to the Andean nations. It receives more direct foreign investment than Argentina and Colombia’s direct investments abroad represent the biggest growth of the decade: from $16 million in 2001 to $6.5 Billion in 2010.
The conservative reaction to Lula’s visit was immediate. Three days after the forum in Bogota, the press issued a report from the U.S. embassy in Brazil claiming “doubts remain about how the alleged leader of the FARC, Francisco Cadena, was given refuge, allegedly due to pressure by Lula’s government.” They were referring to a diplomatic incident in 2006 when Brazil granted asylum to Cadena refusing his extradition. The incident is being used again to attack Lula.
The day in which the binational forum came to a close, the press reported that sanctuaries for the FARC still existed on Venezuelan soil. The Minister of Defense, Rodrigo Rivera, was forced to publicly dispute the allegation claiming, “Today there is no safe hiding places anywhere for criminals and terrorists of FARC to hide in the Colombian neighborhood.” Hugo Chavez asserted that Washington was behind the allegations and assured that relations with Colombia were excellent.
The White House and the Colombian Right have less and less cards to play. Without a doubt they will continue to throw a wrench in the works of Santos’ foreign policy and, in particular, his plans to strengthen relations with Brazil. Washington could gain the upper hand with the approval of the Free Trade Agreement with Colombia, but the difficulties Barack Obama’s administration is facing make it very difficult to guess the outcome.
Santos, on the other hand, has everything to gain. By maintaining relations with Washington, continuing his policy of “democratic security,” and Plan Colombia, he is able to establish solid ties with the new regional powerhouse. Indigenous, Afrocolombian and social movements have everything to lose because the repression and seizure of their territories at the hands of multinationals remain at the center of the Santos government’s policies.