Colombia: Historic peace agreement with the FARC, but security challenges prevail

Posted by on Sep 21st, 2016 and filed under Allgemein, Breaking News, Markets. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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On 23 August, after nearly four years of negotiating, the Colombian government and the leftist insurgents of the FARC (Revolutionary Armed Forces of Colombia) finally reached a comprehensive peace agreement.

Less than a week later, on 29 August, a definitive ceasefire came into effect. As a next step, disarmament of the estimated 7,000 FARC fighters – who will move into 23 designated ‘normalisation zones’ in order to do so – is due to start in late September, after the peace accord is officially signed.

Mere weeks later, the Colombian people will then get the final say over the agreement reached, with a referendum scheduled for 2 October.

Impact on country risk

Despite the clear delay in concluding negotiations – the government of President Santos had originally hoped to do so by early 2014 – the reaching of a peace accord with the FARC is a historic event.

Indeed, with early polls indicating that the public will vote in favour of the deal, the agreement offers the prospect of ending hostilities that since the 1960s have seen more than 220,000 people killed and some 6 million displaced. In terms of economic impact, the improved security situation is due to improve resource allocation and encourage investment.

As such, the government is now more likely than before to secure private sector backing for its ambitious infrastructure development programme.

Tough external conditions – increased risk aversion on international financial markets in addition to low prices for oil and coal, Colombia’s two prime export goods – imply that such investments will be of key importance to underpin economic activity.

All that is not to say that the peace agreement with the FARC, even if approved in the referendum, will clear Colombia of all of its security challenges. For one thing, there is the risk of certain FARC factions rejecting the accord and breaking away to form criminal gangs.

Indeed, the 200-400 ‘Armando Rios first front’ fighters of the FARC announced on 6 July that they would not abide by the deal. In certain cases, FARC rebels may fear violent repercussions after laying down their weapons; in others, it may prove hard to lure them away from lucrative criminal activities – ranging from drug trafficking to illegal gold-mining, kidnapping and extortion – in favour of other, more uncertain employment opportunities.

Moreover, the FARC is not the only armed group undermining the Colombian security situation. In fact, negotiations between the government and the ELN (National Liberation Army), a smaller but equally violent leftist insurgency, have come to a halt. In addition, there are the criminal gangs that emerged from the remnants of the right-wing paramilitary groups that were formed in the 1980s and 1990s to confront the leftist rebels.

These are heavily involved in drug trafficking and – according to the government itself – have in recent years overtaken the FARC and the ELN as the biggest security threat in Colombia.

Country risk analyst Sebastian Vanderlinden , Credendo Group

Credendo Group  has used its best endeavours to ensure that all the information, data, documentation and other material (copy and images) in thisreport are accurate and complete. Credendo Group accepts no liability for errors or omissions. The views expressed herein are the author’s personal views andare not intended to reflect the views of Credendo Group. Credendo Group will not be liable for claims or losses of any nature arising directly or indirectly fromuse of the information, data, documentation or other material from this report.


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