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Factba.se: Australia DFAT Country Briefs - Colombia
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COUNTRY BRIEFS


INTRODUCTION

Australia and Colombia share a positive and expanding relationship. We cooperate on a range of international issues including trade and investment reform, the environment, climate change, transnational crime and disarmament. Australia and Colombia work together to pursue free and fair agricultural trade through our joint membership of the Cairns Group. Colombia hosted the Cairns Group Ministerial Meeting in 2005.

Colombia's focus on the Asia-Pacific has increased in recent years. Colombia is now a full member of the Pacific Basin Economic Council (PBEC) and a member of two APEC working groups. It is seeking full membership of APEC and has expressed an interest in the Trans-Pacific Partnership Agreement (TPP). Like Australia, Colombia also participates in the Forum for East Asia-Latin America Cooperation (FEALAC). Colombia co-chairs FEALAC's Political, Cultural and Education Working Group, which held its last meeting in Bogotá in March 2009.

Colombia re-opened its Embassy in Australia in 2008. The Australian Ambassador to Chile is accredited to Colombia on a non-resident basis. Australia established an Honorary Consulate in Bogotá in 1989 and maintains an Australian Federal Police Liaison Office in Bogotá. Austrade maintains a 'virtual office' in Bogotá, to promote trade and investment opportunities and service Australian business interests.

Colombia's then Minister for Foreign Affairs, Mr Jaime Bermudez, visited Australia in March 2010. The visit further strengthened political and business links, including the formal announcement of the establishment of an Australia-Colombia Business Council.

Colombia's then Minister of Trade, Industry and Tourism, Mr Luis Guillermo Plata, visited Australia in March 2009, accompanied by a business delegation. The visit provided an opportunity to expand bilateral commercial links with Colombia and led to the conclusion of a Memorandum of Understanding to strengthen bilateral trade and investment, which then Trade Minister Mr Crean and Mr Plata signed this MOU in Geneva on 29 November 2009.

An Australian Parliamentary delegation visited Colombia in August 2008. The delegation met with then President Uribe and Foreign Minister Bermudez, as well as their Colombian Parliamentary counterparts. A Colombian Parliamentary Delegation visited Australia in June 2009. Senate President John Hogg visited Bogota and Cartagena in September 2009 and met with Colombian Vice-President Santos. Then Vice President Santos also met with Parliamentary Secretary Bob McMullan in December 2009, in the margins of the Cartagena Mine Ban Conference to discuss joint aid initiatives.

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POLITICAL OVERVIEW

Background

Colombia has a democratically-elected representative government with a strong executive. The President, who is the head of state, is elected for a four-year term and may stand for one consecutive re-election. The legislature is a bicameral Congress consisting of a 102-member Senate, and a 166-member Chamber of Representatives with all members directly elected for four-year terms. In recent decades, Colombia has enjoyed virtually uninterrupted constitutional and institutional stability, with only limited influence from the military. The Constitution ensures a strict separation of powers between the executive, the legislature and the judiciary.

Political outlook

On 20 June 2010, the conservative-liberal Social Party of National Unity (UP) candidate, Juan Manuel Santos, won a comfortable victory in the presidential run-off election. President Santos was inaugurated and his cabinet sworn-in on 7 August 2010. While Santos is committed to maintaining Uribe’s tough stance on security and the country’s strong ties with the US, he has also indicated an increased emphasis on the social and economic agenda. Relations within the region and particularly with the United States are likely to remain Colombia's foreign policy priorities. Santos has already signalled a desire to thaw tense relations with Colombia’s neighbours, although this may be challenging given his role as Defence Minister where he oversaw a number of defence related issues which heightened tensions with Venezuela.

President Santos’ inauguration signals the end of President Alvaro Uribe’s eight years in power. Uribe transformed Colombia through his hard stance against the FARC and other leftist guerrilla groups. His victory as an independent conservative also changed the traditional balance of the three main political parties, the centre left Partido Liberal (PL), the leftist Polo Democratico Alternativo (PDA) and the conservative Partido Social Conservador (PSC). Uribe left the PL to run for his first term, and a new coalition coalesced around his leadership. He also won the support of other minor parties and many of his former PL colleagues. In congressional elections in March 2006, PL reflected this change, giving the Uribe Government a clear majority in both the Congress and Senate.

President Uribe’s Government followed disciplined macroeconomic policies aimed at improving public finances, reducing inflation and boosting growth, along with his tough policies on security and drugs. The strong relationship with the United States delivered significant political and economic benefits, although gaining US Congressional approval for a bilateral FTA became increasingly difficult based on concerns about human rights and labour movement freedoms. Within the region, these close ties drew criticism from neighbours, particularly over the Colombian decision to continue to allow the United States access to Colombian military bases. Colombia is also focused on strengthening relations and seeking economic opportunities within the broader Asia Pacific region.

Political history: guerrilla warfare and the peace process

The deep political divisions shaping Colombia's modern development have strong historical roots, emerging shortly after independence from Spain. Colombia initially declared independence in 1810, but did not secure a lasting separation until 1819, when Simon Bolivar defeated the loyalists at Boyacá. Struggles between the conservative right and the free-thinking left emerged soon after, and this rivalry continued throughout the 19th and early 20th century. The political tension came to a head in La Violencia (1948-1958), a period during which an estimated 250,000 people lost their lives. La Violencia was resolved by the formation of a National Front in which the two main political parties, the Liberal and Conservative Parties, agreed to rotate the presidency and share cabinet positions. Presidential rotations continued until 1974 when the power sharing agreement lapsed.

During the 1960s, several guerrilla groups emerged due to continued social, economic and political problems, including the Fuerzas Armadas Revolucionarias de Colombia (FARC), the now demobilised M-19, the Ejército Nacional de Liberación (ELN), the Ejército Popular de Liberación (EPL) and the indigenous-based group Quintin Lame. The FARC and the smaller ELN emerged as the major guerrilla groups. Their struggle has largely lost its ideological flavour and in the 1980s and 1990s the two groups became heavily involved in the lucrative narcotics and kidnapping industries.

This situation was further complicated by the emergence of various right-wing paramilitary groups who took up arms against the guerrillas. Over time, many of these groups too became involved in drug trafficking and other areas of organised crime, and have been the target of accusations of serious human rights abuses, including in concert with the military.

President Uribe's victory in 2002 elections was a sign of public dissatisfaction with the Pastrana Government and its inability to bring security to the country, highlighted by the dramatic collapse of peace negotiations following the hijacking of a Colombian airliner. Violent crime and kidnappings, while still high, reduced significantly under President Uribe and the broader security situation improved markedly. Under the “law on peace and justice”, negotiations with the main right-wing paramilitary groups led to over 40,000 paramilitaries demobilising and giving up their arms, although some right wing groups have consolidated their membership and continue to be involved in organised crime.

Under Uribe, the FARC suffered some significant setbacks in their guerrilla campaign as their control of areas of the Colombian countryside diminished. A 2008 raid by elite Colombian troops was successful in releasing 15 more long-term hostages, including the high-profile French-Colombian national and former Senator Ingrid Betancourt and three American contractors. The raid was a significant blow to the FARC, as Betancourt and the US hostages were a powerful bargaining tool. In the same year, FARC leader Manual Marulanda died from a heart attack and an incursion into Ecuador by Colombian forces resulted in the death of senior FARC figure Raul Reyes.

However, the incursion led to Ecuador and Venezuela breaking off diplomatic ties with Colombia. While relations with both countries were initially renewed, President Uribe’s decision to present evidence to the Organisation of American States that FARC guerrillas were using the Venezuelan border as a safe-haven resulted in President Chávez ordering the expulsion of Colombian diplomats from Venezuela. These problems add to regional tensions over the US military presence in Colombian.

Despite real progress under Uribe, President Santos inherits a difficult security situation, particularly in rural areas bordering Venezuela and Ecuador, affected by the conflict and by violence related to the drugs cartels and guerrilla groups. While the FARC are significantly weakened, they continue to show their strength, especially in the oil rich south-east and the coal basins in the north-east, and there is no imminent end to the conflict.

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NARCOTICS

Colombia is major global supplier of cocaine, marijuana and heroin. The illicit narcotics trade is estimated to be worth around 5-10 per cent of GDP. The activities of the drug cartels continue to have a negative impact on security, the formal economy and the environment. Cartels challenge Government control seeking to secure significant areas for cultivation and trafficking. The uncontrolled use of fragile tropical and jungle ecosystems to grow coca has caused considerable environmental harm, as has the indiscriminate use of chemicals and fertilisers.

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HUMAN RIGHTS

The major source of human rights abuses in Colombia has been stemmed from the internal armed conflict between the Colombian army, paramilitaries and the guerrillas. Massacres, extrajudicial execution, murder, torture, forced disappearance and kidnapping, threats and forced displacement have occurred. This history of violence and insecurity gave rise to considerable international concern regarding the protection of human rights in Colombia. In response, an office of the UN High Commissioner for Human Rights was established in Bogotá in April 1997. While human rights abuses continue, the situation improved under the Uribe Government, including targeted efforts in relation to human rights abuses by the military. Australian Ministers and the Embassy in Santiago regularly raise the issue of human rights with Colombian authorities.

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ECONOMIC OVERVIEW

Economic and trade policy directions

President Santos has committed to continuing the market-oriented policies initiated under Uribe, along with fiscal consolidation (balancing the budget by 2014), labour market reforms, targeting of corruption and additional spending on education. He is also expected to continue Colombia’s outward looking approach to trade and investment, including through increased ties in the Asia Pacific region.

Colombia remains committed to the Cairns Group and further agricultural liberalisation. It is at the forefront of the development of regional trade agreements and groupings such as the Andean Community (with Bolivia, Peru and Ecuador — Venezuela withdrew in 2006) and the G3 (Colombia, Mexico and Venezuela).

Economic outlook

President Santos inherits a robust economy with growth expectations of 2.5-3% and 3.8% for 2010 and 2011, respectively. However, relatively high unemployment, weak demand from Colombia’s export markets for non-commodity exports, adding to the impact of the effective freeze in bilateral trade with Venezuela since 2009 which had accounted for 17.5% of all Colombian exports, and increasing debts are likely to create some economic challenges.

Colombia has encouraged increasing levels of foreign direct investment in recent years. According to Proexport Colombia, flows of foreign direct investment in Colombia reached US$7,201 million in 2009. The principal sector for investment was mining and quarries with US$3,094 million, followed by the petroleum sector with US$2,633 million.

Bilateral economic and trade relationship

Australia and Colombia enjoy growing bilateral commercial relations in the mining, energy and education sectors. Australia's two-way merchandise trade with Colombia totalled around A$87 million in 2009, of which Australian exports to Colombia totalled A$57 million. Major export items included nickel ores and concentrates, and electrical equipment. Australia's imports from Colombia amounted to A$32 million, with coffee being the main import.

Australian businesses already have a major presence in Colombia, particularly in the mining sector. For example, BHP Billiton is the single biggest foreign investor with operations in the Cerrejón Norte coal mine complex and Cerro Matoso nickel mine. Other key Australian companies active in Colombia include; Orica, Xstrata Coal, Ludowici, Runge, Ausproof, QBE Insurance, Qantas, Nufarm, Orica Chemicals, Sedgman Limited, Heldwell Ltd, S&A Capital Investment Bank, Australian Drilling Associates, The Sentient Group, and Redflex Traffic Systems.

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EXPORT OPPORTUNITIES

A number of areas, principally in the mining and agriculture sectors, have potential to provide further long-term opportunities for Australian investment in Colombia, although much depends on continued improvements in the security situation.

Mining

Colombia has the largest coal reserves in Latin America and the Colombian Government is encouraging the development of coal-related infrastructure. Opportunities for Australian business range from infrastructure development, concessions, mine system operation, coal washing and remote mine site catering. Colombia also has significant reserves of gold, silver, platinum and iron ore.

Education

Colombia is second only to Brazil as a source of international students to Australia from South America, with 6,799 Colombian students commencing studies atAustralian educational institutions in 2009. Australian education fairs in Colombia consistently attract thousands of interested students. Education-related services exports to Colombia amounted to A$202 million in 2008. Interest in Australia as a quality source of education has grown rapidly since 1996, and to encourage this trend further some universities in Australia now offer scholarships to Colombian students. Colombian students are also eligible for the Australia Awards scholarships offered by AusAID.

While the majority of Colombian students undertake ELICOS courses (English Language Intensive Courses for Overseas Students) in Australia, there is also a large demand for university and vocational education and training placements.

Agribusiness

There is significant Colombian interest in Australian agribusiness expertise. The agribusiness sector provides potential opportunities for technical cooperation and technology transfer, especially in the sugar cane, dairy, livestock and tropical fruit industries. Demand for bovine genetics offer great potential for Australian breeders of tropical cattle such as Brahman. In February 2008, Austrade worked closely with AQIS and the Colombian sanitary body ICA to finalise protocols allowing the importation of Australian bovine embryos.

Other commercial opportunities

Other prospects include rail and port infrastructure, and information technology. Colombia has also shown interest in defence related technology through contact with a range of Australian companies.

Colombia's tourist industry on the Atlantic Coast is experiencing growth and opportunities may exist for Australian manufactures of ferries, catamarans and leisure craft.

There is also growing interest in Australian wines, with several brands now available in supermarkets and in restaurants.

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Last Updated: August 2010

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