Latin America Advisor

A Daily Publication of The Dialogue

Does Peace Still Have a Chance in Colombia?

By a narrow margin, Colombian voters on Sunday rejected their government’s peace accords with the FARC rebels. The vote was a stinging defeat for President Juan Manuel Santos following nearly four years of peace talks in Havana, though Santos and FARC leader Timochenko vowed to continue seeking peace. What are the next steps forward for Colombia? Will the government and the FARC be able to renegotiate the peace deal to voters’ satisfaction? If so, what changes must be made to the accord? Are the government and the FARC in danger of lapsing back into all-out war? How will international investors interpret the vote, and what does this mean for the government’s economic development plans?

Michael Shifter, president of the Inter-American Dialogue: “The vote is a setback for the peace process and a blow for President Santos, who was already unpopular among Colombians. Fortunately, however, all key actors—including the government, the FARC and former President Álvaro Uribe, leader of the ‘no’ campaign—have sounded conciliatory notes and have pledged to continue working for peace. It is critical to sustain this shared commitment. At the same time, the plebiscite has transformed the peace process: this is no longer a negotiation between the Santos administration and the FARC, but between the entire array of political forces—with Uribe as a leading figure—and the guerrillas. The challenge will be to incorporate the ‘no’ camp into the talks and renegotiate the deal to address Colombians’ concerns, especially about the leniency of the transitional justice system and the participation of FARC members in politics. More than four years of peace talks have also changed the calculations for FARC leaders. Their combatants have been preparing for demobilization for some time, and the guerrillas suspended all attacks more than a year ago. It is highly improbable that they would return to the jungle, but there is a limit to what they will be prepared to give up to reach a new agreement. They should also be expected to use the possibility of returning to war as a negotiating tactic. The country is no doubt sharply polarized, but the reactions to the vote have been even-tempered and without rancor, revealing the strength and stability of Colombia’s democracy.”

Daniel Velandia O., head of research and chief economist for Colombia at Credicorp Capital in Bogotá: “We think that uncertainty about the future of the peace deal will be high for a while as the questions raised after the plebiscite’s outcome will not be addressed in the very short term. The truth is that the government did not have a Plan B, which implies that the next stage of the process can be tough and even slower. That said, it is worth mentioning that all parties have affirmed that the plebiscite’s outcome is an opportunity, which creates some hope that a better deal with most Colombians’ support could be achieved in the future. In any case, we think that the main concern in the short term is the potential impact of Santos’ reduced political capital on the approval process of Colombia’s eagerly awaited and highly necessary tax reform, which is to be submitted to Congress in the coming days. The plebiscite’s outcome elevates the risk that Congress can water down the tax reform. Thus, while authorities’ commitment to fiscal consolidation remains firm, the new political environment is the main risk. As a result, we expect local assets to be relatively volatile until more information about the reform is known. Recall that Colombia’s sovereign rating of BBB has a negative outlook by two major agencies, so the importance of the tax reform for both the economy and markets cannot be overstated.”

Myles Frechette, international trade and business consultant and former U.S. ambassador to Colombia: “President Santos reacted decisively to the defeat. He will meet immediately in Bogotá with representatives of all political parties to get their views on how to proceed. This will take time. Senator Uribe has gained great political influence as the leader of the opposition to the agreement. Thus, he will play a major role in any restructuring of it while President Santos’ political influence has been seriously reduced through the end of his term in 2018. President Santos has also sent his negotiators back to Havana to try to sustain the bilateral cease-fire and keep the FARC informed on the political consultations. Despite a 63 percent abstention rate in voting on the plebiscite, the majority of those who voted opposed the peace agreement. Specifically, they rejected the lack of serious prison time for FARC leaders responsible for horrendous crimes as provided under the 2002 Rome Statute as well as guaranteeing guerrilla leaders 10 seats in Congress beginning in 2018. Thus, any changes to the peace agreement will be contentious. That said, there is hope that a return to war can be avoided, because the FARC seems to have concluded that it cannot achieve its objective of participating in politics through force of arms. International investors never expected that the peace with the FARC would stop other criminal groups from attacking or trying to extort money from foreign investments in rural Colombia. The government’s argument that peace with the FARC would immediately increase foreign investment is not realistic.”

Maria Velez de Berliner, president of Latin Intelligence Corporation: “The FARC has no alternative but to continue negotiating. Colombians gave Uribe the opportunity to be a statesman, not a politico. They forced the FARC to consider conditions different from those of President Santos. Where Colombia goes lies in the hands of Uribe and Timochenko, if they talk to each other, either directly or through representatives. Four issues have to be renegotiated: 1) The transitional justice system must be eliminated and replaced with viable penalties for atrocities committed. 2) Narcotrafficking has to remain the crime the international community recognizes it is, not a tool of political rebellion. 3) The FARC has to return its bounty and disclose its criminal modus operandi, including foreign associates and the extent of those associations in Colombia. 4) A different negotiating team must be assembled to speak for the government and for those who said no. It is unlikely that the FARC’s Central Command (the negotiators of the failed agreement) and the government will return to open war. Other FARC fronts will continue at war, joined by sundry criminal organizations. The fiscal reform Congress was to begin debating this week is on standby since the internal financing of the agreement is no longer a necessity. The Acto Legislativo para la Paz, and the extraordinary powers it granted the president beginning this week, no longer has legal standing. Therefore, Colombia is in a legal and fiscal limbo with profound, yet unclear, repercussions on the negotiations for a ‘better’ agreement, the general elections in 2018, and overall investment and development.”

Beatrice Rangel, member of the Advisor board and director of AMLA Consulting in Miami Beach: “The results of the referendum seem to confirm a very important and game-changing trend in Latin America: rule of law is at the center stage of development. This trend that started in Brazil with the Petrobras investigation is slowly but surely taking over the region. To be sure, while the overwhelming majority of Colombians (80 percent according to polls) agreed to the peace proceedings, they rejected the accord because it granted special status to former guerrilla leaders, removing all responsibility for actions that clearly broke the Colombian law. Brazil’s upholding of separation of powers has shown Latin Americans that perfecting democracy is not only possible, but desirable. Colombians accordingly decided to postpone peace agreements until they comply with law and regulations. This is a great lesson both for authorities, as well as for civil society leaders throughout the region. Democracy is built from the grassroots.”

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