Colombia’s violent, drug-ridden image has deterred investors and tourists alike for years, but recent changes under President Alvaro Uribe are reducing crime and improving conditions for investment.
Uribe was elected in May 2002 on a platform to restore security, and he has since negotiated for peace with illegal narco-terrorist groups and pushed back their territory significantly, according to the U.S. State Department website. A peace agreement with one major group was signed in December 2003, and talks continue with others, the site said.
In 2004, the Uribe government established, for the first time in recent Colombian history, a government presence in all of the country’s 1,098 municipalities (county seats),” according to the U.S. State Department website.
Government policies are significantly reducing drug production and trafficking, although drugs remain a problem in Colombia. The U.S. Drug Enforcement Administration estimates that more than 80 percent of the worldwide powder cocaine supply and as much as 90 percent of the powder cocaine smuggled into the U.S. is produced in Colombia, according to the U.S. State Department website.
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The Colombian government has established a voluntary eradication program for small farmers who grow coca on small individual plots, with the government providing cash compensation and tools for legitimate farming, according to the website for the Colombian embassy in Washington, D.C.
Large industrial coca farms have experienced a less friendly approach. The Colombia National Police have been destroying cocaine laboratories and actively spraying large farms from the air to destroy crops, according to the website for the Colombian embassy in Washington, D.C.
Such anti-drug strategies have been effective so far; “Coca cultivation [in Colombia] decreased by 15 percent from 2001 to 2005, while opium poppy cultivation decreased by 68 percent from 2001 to 2004,” according to the U.S. State Department website. “Coca crop eradication and cocaine and heroin interdictions are setting records,” the site said.
Crime is also decreasing. Attacks conducted by illegally armed groups against rural towns decreased by 91 percent from 2002 to 2005, according to the U.S. State Department website. And “between 2002 and 2006, Colombia saw a decrease in homicides by 37 percent, kidnappings by 78 percent, terrorist attacks by 63 percent, and attacks on the country’s infrastructure by 60 percent,” according to the site.
Infrastructure and social development are key elements to Colombia’s plan for reducing violence and drug trafficking. As of 2003, Colombia was investing $900 million in social strategies aimed to hire unqualified workers in local infrastructure projects, keep children in school, train young unemployed men and women and improve roads and other transportation infrastructure, according to the website for the Colombian embassy in Washington, D.C.
Lower crime rates are already beginning to lure tourists and businesspeople to Colombia, which has a unique South American location with coasts on both the Pacific and the Caribbean. A beautiful, lush landscape and historic cities will likely draw tourists—if they feel convinced that the country is safe and stable.
Investors who get into the market early may benefit from low prices while negative perceptions still surround Colombia, and such investors should see strong appreciation if the country succeeds in its quest for safety and stability.