Colombia: Political Risk Analysis for 2021 and 2022
In 2021, Colombia’s longstanding problems of social cleavages, inequality, limited state capacity, violent crime and armed conflict have exacerbated the challenges posed by the Covid-19 pandemic. Over the past year, President Ivan Duque has confronted street protests in major cities by sending heavy-handed riot police officers to battle citizens who are voicing legitimate grievances. Over 100,000 Colombians have died of Covid-19. Colombia is the second most unequal economy in South America. The country’s wealthiest 10% earns annual income worth 40% of GDP. Luis Carlos Sarmiento, the country’s wealthiest businessman, is worth over $8.8 billion dollars. On the other hand, the poorest 20% earns less than 4% of total income. Around 80% of the land in Colombia is controlled by just 1% of the population. Colombia has the most unequal distribution of land in all of Latin America. Meanwhile, 42.5% of Colombia’s population lives below the poverty line. Over the past 50 years as Colombia’s economy has transformed, many of the country’s mountainous and remote rural areas have been left behind, victims of chronic under-investment in infrastructure and ongoing security problems. Over the last two decades environmentalists, activists, journalists, union leaders and human rights defenders have paid a devastating price for challenging the status quo. Over 1,200 human rights activists have been killed in Colombia since late 2016. In 2021, however, it is urban residents who are driving protests against President Duque’s government. Young urban residents are frustrated that efforts to promote economic stability and improve security have disproportionately benefited Colombia’s wealthiest families. Long-brewing frustrations are starting to boil over. Low-income urban families in Colombia struggled to survive as Colombia attempted to enforce coronavirus quarantines. GDP fell by 6.8% in 2020. Duque’s solution was to propose a wildly unpopular regressive tax reform that would have punished Colombia’s fragile urban middle class.
The medium-term political outlook in Colombia is very uncertain. On a positive note, Colombia’s economy is already starting to rebound. GDP should grow by 4.8% in 2021. But, unless progress is made on reforms the electorate isn’t likely to be appeased. Young people in Colombia want better opportunities for education and work. It’s doesn’t seem likely that a recovering economy alone can restore the public’s faith in President Duque and his allies. According to a recent poll, Duque’s approval rating sits at only 18%. With a presidential election on the horizon in 2022, the political outlook in Colombia is in flux. Foreign investors doing due diligence on potential investment projects in Colombia need to understand the full range of political risks affecting the country.
(This post originally appeared on Forbes.com)