Colombia: the price of peace

New investment could stimulate Colombia’s economy enough to overcome the cost of the peace plan, announced last week between the government and the FARC, the country’s biggest rebel group, following two years of negotiation.

It will take several years before any new oil-gas field becomes profitable – assuming significant deposits exist in the first place – following recent awards of exploration licenses in areas controlled by the FARC.

Oil-gas revenue would replace income, which the FARC would abandon, derived from its involvement in cocaine trafficking.

Nor is it easy to see who will provide funds to low-income rural areas, many of them FARC-controlled.

With commodity prices down, Colombia’s economy is barely growing, while government debt increased 20% in the last two years, as a percentage of the value of national production.

Support for poor farmers is another commitment of the peace plan.

On the other hand, extensive natural and agricultural resources, abundant water, a spectacular climate and an educated, competitive workforce could motivate investors both inside and outside Colombia, to an extent sufficient to make the peace plan work.