A Political Earthquake Just Took Place in Latin America

Colombia’s presidential elections this past weekend were historical on a number of levels, not least because they portend a shift in relations with its long-term hegemon, the US.

Gustavo Petro made history by becoming the country’s first left-wing president since Colombia won independence in 1819. One of the few people who came close to achieving the feat, Jorge Eliécer Gaitán Ayala, was assassinated during his second presidential campaign, way back in 1948. His murder, during the conference that gave birth to the Organization of American States (OAS), sparked the beginning of La Violencia, a Colombian civil war that lasted until the mid-fifties and killed an estimated 300,000 Colombians.

Petro’s running mate, the veteran environmentalist Francia Marquez, also made history by becoming the country’s first ever ever Afro-Colombian vice president. The electoral coalition led by Petro and Marquez, the so-called “Historic Pact for Colombia,” obtained almost three million more votes than in the first round and 700,000 more than Petro’s opponent, the right-wing, business-friendly populist Rodolfo Hernández.

For the first time ever, a majority of Colombian voters have voted against the status quo.

Big Ambitions, Limited Room for Maneuver

Preto and Márques have big ambitions for Colombia. Their manifesto includes pledges to:

  • Demilitarize public life in Colombia, by cementing once and for all the prevalence of civil authorities over the military. Although a peace agreement was signed between Colombia’s Military Forces and the insurgent’s group, the Revolutionary Armed Forces of Colombia (People’s Army or FARC) in 2016, bringing the 50-year armed civil war to an end, violence continues in the country relentlessly. As such, peace is the number-one priority.
  • Phase out oil (Colombia’s #1 export) and coal while taking steps to protect Colombia’s invaluable ecosystems and rich biodiversity.
  • Tackle agrarian reform, one of the main goals being to reduce the extreme inequality in ownership and use of land, guaranteeing the right to land for rural families (with women as a priority).
  • Promote gender equality.
  • Provide broader public access to healthcare.
  • Reform the tax system, by introducing a more progressive system of income and wealth taxation.

For the Historical Pact for Colombia, the current tax system has a “clear bias in favor of excessively rich people.” To change that, Petro proposes a tax reform that, among other aspects, will focus on financial dividends: it will be mandatory to declare them and those receiving them will have to pay taxes on them.

In statements during the campaign, Petro said the lion’s share of the tax burden will be borne by the “4,000 largest fortunes in Colombia,” adding that his government will not target productive companies but rather unproductive assets, including dividends and transfers abroad. Transfers abroad make for an interesting target given the propensity for wealthy Latin American businesses and families to move their money overseas, particularly to Miami, whenever a government of even mild left-wing persuasion comes into power.

However, Petro will have limited room for maneuver, firstly because he will only have one four-year term in which to institute all of his government’s proposed structural changes. Also, like Peru’s President Pedro Castillo, he does not have a full majority in either of the two legislative chambers, meaning he will depend on the support of one of the dozen or so opposition parties in Congress.

In Peru, Castillo has failed miserably to overcome rabid right-wing opposition to his government, which appears to be in the process of crashing and burning. But there is one important difference between the two leaders: whereas Castillo was a virtual political nobody before riding to power on a wave of popular anger at establishment parties, Petro is a political animal who has been in the game most of his adult life. He is probably not as radical as some might hope; otherwise he probably wouldn’t have made it this far. He also presumably knows that if he wants to make big changes, he will have to choose his moment — and his political allies — carefully.

But he will also face severe economic obstacles and constraints along the way. As just mentioned, it won’t take much for large investors, both foreign and domestic, to begin yanking their money out of the country. That in itself can be enough to trigger a financial crisis. Like most countries in the region, Colombia’s public debt has surged during the pandemic while inflation is at a 22-year high. Business leaders and the market are eagerly awaiting announcements about Petro’s governing team, especially for key positions such as the finance ministry. Volatility is expected in the peso and bonds when they open trading on Tuesday after a holiday weekend.

The End of Uribismo?

The elections were historic for another reason: they appear to have dealt a final death blow to “Uribismo” — the political force that has dominated Colombia for the past 20 years. Since 2002 all governments in Colombia have been led, either directly or indirectly, by Álvaro Uribe Vélez, a scandal-tarnished right-wing politician who was credited with bringing some semblance of order and stability to Colombia after decades of fratricidal warfare. This he did by mobilizing the army and ruthless paramilitary organizations against leftist guerrilla groups as well as innocent civilians, all made possible by a $2.8 billion US “aid” package called “Plan Colombia.”

Uribe himself is now facing trial for alleged procedural fraud and witness tampering. The former head of state is under investigation for having bribed several former paramilitaries so as not to incriminate him in the extrajudicial executions known as “false positives” that occurred during his government (2002-2010). In order to boost statistics in the civil war with leftist rebel groups, the army murdered thousands of innocent peasants and falsely declared them combat kills.

If, as publications both in Colombia and overseas are now suggesting, Uribismo is indeed on its last legs, it is probably not the best of news for Washington…

Read the full article on Naked Capitalism

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