Colombians Protest Economic Policies

21 October 2004 by Garry Leech


Last week, more than one million Colombians marched through the streets of cities throughout the country to protest President Alvaro Uribe’s economic policies. More than 300,000 crowded into Bogotá’s Plaza Bolívar where they burned a U.S. flag and voiced their displeasure with ongoing discussions between Colombia and the United States aimed at establishing a free trade agreement. With unemployment and poverty also on the rise, Colombia’s largest daily El Tiempo asked if the demonstrations marked the beginning of the end of the “Teflon presidency.” While Uribe still maintains substantial popular support, his approval rating has dropped six points in the latest polls as more and more Colombians have become disenchanted with his neoliberal economic agenda.

More than two years into his presidency, opposition to Uribe’s policies is increasing. While his willingness to implement structural reforms pushed by the International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
(IMF) has improved Colombia’s economy from a macroeconomic perspective, it has done little to create jobs and alleviate poverty. Like the United States, Colombia is experiencing a jobless economic recovery. In other words, the economy’s almost four percent growth rate last year did not translate into jobs and improved living conditions for Colombians.

Bush administration officials and Wall Street analysts have repeatedly praised Uribe for implementing policies that have led to impressive economic growth. But that is because these policies have created an investment-friendly climate that favors transnational capital at the expense of the Colombian worker. In order to carry out structural reforms demanded by the IMF in return for almost $5 billion in loans over the past five years, Uribe has restructured and privatized state-owned companies.

This process has achieved three of the principal objectives desired by the IMF and transnational capital. Firstly, it has established more favorable conditions for foreign investment, particularly in the energy sector where foreign oil companies now pay lower royalties and no longer have to enter into partnership with the state. The restructuring and privatization of state-owned energy, telecommunications and utility companies have also downsized the nation’s workforce, making these industries more profitable while increasing unemployment.

The additional revenue earned by the state from these more efficient entities helps the government achieve the second objective of structural reform, which is to increase the percentage of government revenue used to make foreign debt payments. The final objective is the continued weakening of the country’s unions, which have been devastated by both the restructuring and a dirty war being waged by right-wing paramilitaries closely-allied with the Colombian military.

As a result of IMF-imposed structural reforms, Colombia’s economy grew by an impressive rate of almost four percent last year. However, it is not Colombian businesses, but foreign companies taking advantage of the increasingly favorable investment climate that are responsible for much of this growth. Inevitably, most of the profits leave Colombia with little benefit to the Colombian people. The benefits from the growth that go to the government are used to make foreign debt payments in order to maintain the country’s credit rating so it can obtain future loans, which will inevitably be linked to demands for more structural reforms favorable to transnational capital.

Last week’s protesters consisted of workers, farmers, indigenous groups and democratic leftist parties who, according to the organizers, “joined efforts against free trade and pension reforms, policies directed from the IMF to secure Colombia’s paying of its foreign debt.” These protesters also opposed a free trade agreement currently being negotiated between the United States and Colombia that will likely further increase unemployment when small Colombian businesses are forced to shut down because of their inability to compete with foreign industries of scale. For their part, Colombian farmers will also be unable to compete with cheap U.S. agricultural products that will likely flood the country under a free trade agreement.

Protesters were also unhappy with Uribe’s plans to increase the sales tax and apply it to basic foods like milk and meat. This regressive tax plan places a greater financial burden on the 64 percent of the population that lives in poverty, while the country’s wealthy continue to pay little income tax. In fact, only one million of Colombia’s 42 million people pay any income tax.

Following the protests, a commentator for the Bogotá daily El Nuevo Siglo argued, “Now more than ever, under the present government, the economic crisis has become sharper. We are facing political and social meltdown.” Linking Uribe’s economic policies to the ongoing civil conflict, he claimed, “There will never be peace without economic and social justice.”

The increasing disenchantment among Colombians and the more frequent criticism of Uribe’s policies found on the country’s editorial pages suggest that the president’s long honeymoon may finally be over. Uribe has been criticized in recent months for his floundering peace process with right-wing paramilitaries responsible for a majority of the country’s human rights abuses.
Additionally, he is also under fire from some sectors of Colombian society for trying to amend the constitution to allow him to seek reelection. Meanwhile, international human rights groups have criticized the esacalating human rights abuses being perpetrated by state security forces, particularly the record number of Colombians being “disappeared.”

In recent years, Latin Americans throughout the region have become increasingly disillusioned with neoliberal economic reforms being pushed by the IMF and the United States. It appears that the political and social upheavals that have shaken Bolivia, Argentina and Ecuador are now becoming increasingly evident in Colombia. As a result, President Uribe may find it increasingly difficult to implement his economic and security agenda during his final two years in office.



Source: Colombia Report (http://www.colombiareport.org), October 18, 2004.

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