Colombia rising?

It may not be the mother of all bubbles, but it is a whopper. Colombia’s economy is rising as fast as a hot air balloon, but one that is almost certain to burst. Mining, petroleum, industrial agriculture and construction are all growing at record rates – fueled by a flood tide of investment, much of it foreign investment – directed by the World Bank and its local allies within the government of President Juan Manuel Santos, and made possible by the dispossession of millions of Colombians from the countryside through decades of violence combined with disastrous flooding caused by global warming

By Anthony Boynton | Links International Journal of Socialist Renewal | December 26, 2011

The population of Bogotá, capital of Colombia, is about to pass 8 million.

Colombian cities have being growing as fast as any in the world. There are now more than 25 cities with populations of more than 200,000, at least five cities with more than 1 million people, three with more than 2 million; Bogotá the capital is about to pass 8 million.

The growth of these cities has been fuelled not only by a high birth rate, but by the movement of millions of people from the countryside. Since 1985, more than 6 million people have been displaced by paramilitary violence and military conflict. In the last year, 3 million more were displaced by flooding caused by back to back La niñas, which have caused two record rainy seasons in one year.

The speculative fever in real estate has caused housing prices in the cities to triple. Old neighbourhoods are being torn down in Bogotá to make room for fields of six-story apartment buildings, while cow pastures ringing the city are turning into massive industrial parks and shopping malls; 167 new malls are being built on top of the more than 100 that have sprung up in the last decade.

The wild investment binge is due to several factors.

Displacement

Most important, but rarely discussed, is that a vast new and impoverished working class has been created in the cities by the displacement of millions of people. This has added to the state and paramilitary terror against trade unions to depress wages, benefits and working conditions. Two-thirds of Colombia’s workers work in what is euphemistically called the “informal sector” where they receive even less than the state-mandated level of wages and benefits. The legal minimum monthly salary is about 630,000 pesos (566,700 plus a 67,800 transportation subsidy), which is about 250 euros or US$327.

Second, profitable investment opportunities have dried up in Europe and North America. This means that Colombian capitalists no longer speculate in Miami real estate, but look closer to home to invest their money. It also means that European, Canada and US capital is also looking towards Third World countries like Colombia for profitable opportunities.

Third, worldwide demand for coal, oil and metals skyrocketed during the last decade. Part of this was due to China’s “economic miracle”, but part was due to the maintenance of artificially high energy prices by wars and the threats of wars in the Middle East. A small part has also been due to private capital shifting out of Venezuela and moving next door.

Fourth is the perception that the Revolutionary Armed Forces of Colombia – People’s Army (FARC-EP) and the National Liberation Army (ELN) have been defeated and investors, local and foreign, no longer have to fear payments of “extortion” or “kidnapping” of their executives and workers.

Fifth, successive governments of Colombia have privatised and deregulated the economy. Import duties on mining equipment have disappeared, state-owned companies have been sold to foreign investors or turned into public-private ventures traded on stock exchanges, and “free trade agreements” have been signed with the USA, the European Union and various individual countries.

Sixth, the government of President Santos has restored good relations with Venezuela and Ecuador, which had been frozen during the government of President Alvaro Uribe. These has meant a return of good times to Colombian manufacturers, especially those in the garment and food processing industries whose main export markets have always been nearby countries.

Social tensions

Beneath the surface appearance of capitalist good times, Colombia is accumulating enormous social tensions. The 2011 oil workers’ strike and most importantly the victorious national public university strikes are likely to be the harbinger of more conflict to come.

Health care in the country, which is considered to be a right of all Colombians under the country’s constitution, is in mortal crisis. Public hospitals have been brought to verge of bankruptcy by the deliberate policy of the government of starving them of cash to promote privately owned “health provision entities”.

The rapid pace of urbanisation has led to crises of public transportation in every city, but especially in the capital of Bogotá. where the city’s “Transmilenio” system of mass transit has proven to be too little, too late for the city’s growth. State contracting to private companies has also been rife with corruption, delaying the construction of a subway system, expansion of the existing system and expansion of major highways connecting the city to other parts of the country.

The vast new work force in mining, oil and manufacturing look with envy at the relatively good wages and working conditions of the still unionised sectors of the economy, most notably the workers at the state-owned oil company Ecopetrol. The sharp conflict by workers together with communities in the oilfields against Pacific Rubiales has been largely based on demands to bring their levels up to those of the workers at Ecopetrol.

At the same time, the environmental destruction being caused to the sensitive ecologies of diverse parts of Colombia, ranging from the unique high Andean paramos endangered by gold mining, to the coastal rainforests being logged by paramilitaries and rainforests endangered by petroleum exploration have led to the formation of new environmentalist protest movements. In at least one case, that of Gold Star (a gold mining company), the protest movement has been successful.

Where things will go in 2012 is anybody’s guess. Much depends on the world economy, but much depends on the new social movements that are beginning to be born here in Colombia.

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