Brookings: Topics - Colombia

Presidential Pandering: How Elections Determine the Exercise of Executive Power in the U.S. and Colombia

Brian M. Faughnan and John Hudak — Fri, 02 Nov 2012 11:33:00 -0400

Campaigns consume presidents. They raise funds, hire staff, hold rallies, and give speeches all to advance their electoral goals. However, they also use their official powers to do the same. The electorally-strategic exercise of executive power is not a strictly American syndrome, but is also true throughout the world, write Brian Faughnan and John Hudak. Because electoral success matters for the political survival of the world's executives, their actions reflect these interests and the rules governing elections. Faughnan and Hudak note that presidents rely heavily on direct actions, directives unchecked by other elected branches, to target policy benefits to critical constituencies. Such strategies have substantial consequences for public policy and affect the daily lives of citizens.

In this paper, Faughnan and Hudak examine presidential behavior in the United States and Colombia. They illustrate how presidents in both countries employ an electoral strategy when using direct actions. This strategy ensures presidents have nearly total control over the character of public policy and can select precisely which constituents will benefit. Although the motivation for such behavior is consistent across nations, the precise strategies vary by electoral system. Executives seek to satisfy, key constituencies, and a nation's electoral rules determine the identity of those constituencies. Juan Manuel Santos thinks not about residents of Risaralda or Nariño or Bolívar, but about Colombians. President Obama cannot focus broadly on Americans, but rather must think about Ohioans, Virginians and Floridians.

Presidents are always considered unique players in their respective political systems, and often notably distinct actors across democracies. However, executives throughout the world are motivated by similar needs and interests that lead them to exercise official powers in predictable ways. Understanding similarities in the uses of executive power is essential to determining the causes and consequences of public policy. In the context of electoral motivations, presidents discriminate when delivering public policy to constituents. To know who gets what, where, and when, Faughnan and Hudak argue what matters are the incentives that presidential elections create.

Hudak and Faughnan offer important observations about presidential behavior and its impact on public policy:

The same electoral forces motivate presidents in the U.S. and Colombia. Despite a tendency to distinguish the American president from his counterparts abroad, he, like them, is an election-driven actor.
Executives use official powers to target constituencies that are critical in elections.
Differences in the Electoral College in the U.S. and the two-round national vote in Colombia do not affect the motivation for executive action, but instead influences who benefits from such actions.
Electorally-strategic executive action can moderate policy and induce presidents to be highly responsive to citizen needs.
Electoral rules drive the U.S. president to target policy to small subsets of the population—swing states. Alternatively, Colombia's rules actually motivate the president to deliver policy to a broad portion of the electorate.
Despite the attention paid to each nation's presidential elections, we know little about how they influence domestic policy throughout the world. More work must seek to connect electoral motives to policy decisions.

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Authors

Brian M. Faughnan
John Hudak

Image Source: © Kevin Lamarque / Reuters

Celebrating Colombia’s Free Trade Agreement

Diana Villiers Negroponte — Thu, 17 May 2012 12:41:00 -0400

For the last four years, both the Colombians and supporters in the United States have waited for the U.S. congress to ratify the Free Trade Agreement. The Congress approved the FTA on October 23, 2011 and this week, the agreement comes into force. Free trade in goods, services and investment will be introduced gradually over fifteen years. The United States is Colombia’s leading trading partner, but Colombia accounts for less than 1% of total U.S. trade. Given the asymmetric trading relationship, why does this FTA make a difference to the United States?

Colombia, a country of 45.9 million people with access to both the Pacific and Caribbean seas has battled the FARC insurgency and the paramilitary groups for close to three decades. The U.S. government made a significant contribution to the security of Colombia both in the 1980s and then through Plan Colombia. With success in restoring a degree of citizen security and reducing the FARC to a few hundred men, it became important to strengthen the trade relationship. President Uribe asked and Washington responded positively to move beyond a preferential tariff agreement with Andean nations to a full FTA with Colombia. U.S. labor unions and Human Rights Watch demanded an end to judicial impunity for the assassins of teachers and union members. With notable progress in these areas, President Obama agreed to seek Congressional ratification of a FTA with Colombia, as well as South Korea and Panama.

Under the Andean Trade Preference, 80 percent of U.S. goods were imported into Colombia duty free and the remainder entered with substantially lower tariffs. However, this preferential agreement failed to provide the long term and sustained trading relationship within which investors could make long term investment plans. Indeed, in 2011, Congress suspended the Andean Trade Preference for reasons having nothing to do with Colombia. In the eight months suspension, Colombian importers had to pay the full tariff on imported goods; a significant sum of money that the US government has since repaid.

In contrast to a preferential trade agreement, a FTA confirms the trading and investing “rules of the game.” It provides a framework for the Trade Ministers of both countries to engage in permanent interaction and procedures to resolve disputes. A higher degree of predictability provides the certainty needed for U.S. investors to make commitments in earth moving, mining, road building, electrical transmission and hospital equipment. It provides highly skilled U.S. jobs in design, engineering and financial management. It also provides opportunities for Colombia’s burgeoning middle class to access quality education and world-class health care. Colombia, with a growing GDP of approximately 6% a year is rapidly becoming a middle class nation with increased demands for better health care, education, food and consumption goods. U.S. technical knowhow, equipment and management skills will find ready customers among people who, in a post conflict environment, understand the value of contracts and the rule of law.

However, significant challenges lie ahead: Colombian customs’ agencies are not equipped to handle the influx of U.S. goods. Government personnel need to be trained, systems created and bureaucracy made effective in order to avoid bottle necks and delays. Today, in Colombia, government officials are reluctant to make decisions out of fear of reprisal from the judicial system. Bureaucratic paralysis has held back investments in roads, rail and expanded ports. The Instituto Nacional de Concesiones (INCO), responsible for seeking investors in major infrastructure projects had to be disbanded in 2011 for ineffectiveness. In its place, the Agencia Nacional de Infraestructura (ANI) was created to work with the private sector in undertaking major infrastructure projects.

Work has already begun on guaranteeing labor contracts and assuring labor the right to organize. Harassment of workers has declined and labor rights are more likely to be respected. However, the problem of impunity for those who harass organizers for the labor movement remains a problem, albeit one much less than before.

Going forward, the challenge for both the United States and Colombia is to employ the complementary assets of each country so as to compete effectively in a global economy. No longer can Colombian hold on to traditional ideas and frequently look into the rear mirror. Colombian agriculture has been protected by a regime of no-taxes, but it will now face large-scale and more efficient U.S. producers. Small manufacturers will need to invest in computer and electronic equipment to develop their budgets, and marketing strategy. Business education with computer systems must be introduced in order for medium and small enterprises in Colombia to take advantage of the FTA and not sink under U.S. and global competition. A new focus on educating business men and women, as well as the training in new technologies must accompany this FTA. The workers in both countries have the opportunity to develop their business and their markets. The ‘Entry into Force’ of Colombia’s FTA signals the start of a long term commercial relationship.

Authors

Diana Villiers Negroponte

Image Source: John Vizcaino / Reuters

The Cartagena Summit: Positive Voices amidst Rancor

Richard Feinberg — Fri, 20 Apr 2012 11:33:00 -0400

While the headlines from the recently concluded sixth Summit of the Americas in Cartagena, Colombia focused on the deeply divisive issues of Cuba, the Falklands/Malvinas islands, and counter-narcotics strategies, the gathering nevertheless registered some notable progress toward building a genuine community of democratic nations.

Summits these days are not solely meetings among heads of state. In the western hemisphere and elsewhere, they convene representatives from civil society, social movements, and the private sector. The Summit of the Americas specifically has come to resemble an annual association meeting, gathering a wide range of players interested in inter-American relations. Summits are efficient opportunities for personal networking and information gathering, for job-hunting and deal-making, and for advancing policy agendas.

The leaders’ meetings are the centerpiece of summitry, but the Summits of the Americas have become multi-ring circles of specialized conferences. One such circle, the Civil Society Forum, has evolved over the years from being heavily attended by Canadian and U.S.-based non-governmental organizations (NGOs) to being dominated by NGO leaders and society movements from Latin American and Caribbean.

At the catastrophic 2005 summit in Mar del Plata, Argentina, many civil society organization banded together to stage a noisy counter-summit in the streets. That year, left-leaning presidents Evo Morales of Bolivia and Hugo Chavez of Venezuela vacated their seats at the official table to express their solidarity with the protestors. To avoid a repetition of this divisiveness, Colombian president and Summit host, Juan Manuel Santos, traveled to Bolivia to persuade Morales not to repeat the antics of Mar del Plata; rather, he invited him into the main tent and offered him the honor of closing speaker at the official Civil Society Forum. To provide him with a friendly audience, a private plane flew 83 of his indigenous and other grassroots supporters to Cartagena with their brightly-colored traditional garb and visible black hats standing out amidst the crowd. They alternately chewed coca leaves and cheered their leader.

To bolster the prestige of the Civil Society Forum, Colombia’s capable foreign minister, Maria Angela Holguin, chaired key sessions and Santos delivered a full-length speech. At the closing session, civil society representatives presented their recommendations to foreign ministers and the ministers of Brazil and Argentina, among others, offered lengthy responses. To the thrill of the crowd, Hillary Clinton delivered remarks just prior to Morales’ closer. Overall, the tone of the Civil Society Forum was constructive and respectful, and the recommendations presented to foreign ministers avoided heated rhetoric in preference to very specific proposals. Presentations by representatives of another parallel conference of hemispheric youth were remarkable in their maturity and specificity.

At Cartagena, attendance by U.S.-based NGOs was spotty. Some U.S. NGOs question whether such forums have much impact on leaders’ deliberations, and choose to engage in consultations that are offered by the Organization of American States (OAS) in the months leading up to the summit. Others doubt the efficacy of summits altogether and prefer to focus their energies directly on their own government’s programs. They may want to reconsider their attendance at future gatherings.

Corporate executives have attended previous summits under various umbrellas, but it took the duet of two powerful Colombians – President Santos and the head of the Inter-American Development Bank, Luis Alberto Moreno – to orchestrate the first-ever “CEO Summit of the Americas.” To attract corporate big-wigs, the Santos-Moreno team called upon their many friends in foreign ministries and presidencies to participate in the CEO Summit, which directly preceded the leaders’ meeting. Most impressive was a panel of presidents, where Barack Obama traded barbs with Brazilian president Dilma Rousseff. Santos comfortably sat between the two contenders for hemispheric leadership, declaring himself the reasonable centrist sandwiched between the two regional powers. To add luster, NBC’s Christopher Matthews moderated the presidential panel.

The 700 corporate executives attending the CEO Summit sat mesmerized while Colombian pop star Shakira urged them to join with her in support of early childhood development programs. (More than one executive commented on her poise and intelligence and speculated as to whether she might one day become president of Colombia.) The CEO Summit was capped by an energetic performance by another iconic Colombian performer, singer Carlos Vives, who literally had conference participants dancing in the aisles.

At both the Civil Society Forum and CEO Summit, speakers expressed growing confidence in the Americas, in the prospects for sustained growth and rising living standards, and for ever-greater connectivity among citizens within nations and across borders, even as the full inclusion of various minorities remains an enduring challenge. Chris Matthews summed up the buoyant mood, referring to “the unusual optimism, the positive zeitgeist” of the CEO Summit, in contrast to the gloomy mood in Europe and other regions in the world suffering from economic recessions or political turmoil.

The Civil Society Forum and CEO Summit also contrasted with the contentious atmosphere at the central leaders’ meeting. In preparatory sessions, the region’s diplomats had agreed upon a rich agenda of initiatives covering economic integration, citizen security, disaster relief, and poverty reduction. But some countries decided to poison the deliberations by purposefully injecting divisive issues that diverted the attention of leaders and the media from more constructive tasks.

It was a shame that the diplomats of some countries did not follow the more positive examples of civil society and corporate leaders also present at Cartagena, who saw the Summit not as an opportunity to score points against their rivals but rather as a moment to build bridges and seek common ground.

Authors

Richard Feinberg

Image Source: © Ricardo Moraes / Reuters

Implementing the Colombia Free Trade Agreement — Now the Work Begins

Joshua Meltzer — Tue, 17 Apr 2012 16:05:00 -0400

During President Obama’s recent participation in the Summit of the Americas in Cartagena, Colombia, he announced that the Colombia-U.S. free trade agreement would enter into force in the United States on May 15 of this year, following Congress’s passage of the FTA in October 2011.

We should not forget that most Colombian exports already enter the U.S. duty free under the Andean Trade Promotion and Drug Eradication Act. Therefore, many of the economic benefits from the Colombia-US FTA will accrue to U.S. business as a result of improved market access in Colombia. However, the Colombia-FTA will increase Colombia’s exports and should stimulate U.S. investment in Colombia, resulting in economic growth and jobs.

In addition to the benefits of the FTA in terms of increased trade and investment, the Colombia-U.S. FTA needs to be understood as a comprehensive framework for addressing a full range of bilateral trade and economic issues, from investment to telecoms regulation, to protecting the environment and labor rights. For instance, labor rights groups are concerned that Colombia has not done enough to implement its commitments in the Action Plan Related to Labor Rights and the FTA’s labor chapter. Although Colombia has made important progress on labor rights including establishing a Labor Ministry and passing legislation to prosecute employers who undermine labor rights, labor rights advocates argue that this is not enough. Now, however, the U.S. government can work through the Labor Affairs Council created in the FTA to develop a cooperative work program with the Colombian government to address current and future labor rights issues.

More broadly, working within the FTA framework will allow U.S. and Colombian officials to develop greater trust and understanding of each other and to build a constructive and forward looking economic partnership. And if issues do arise, the U.S. can always resort to dispute settlement under the FTA if it believes that Colombia has failed to comply with its FTA commitments.

Authors

Joshua Meltzer

Image Source: © Kevin Lamarque / Reuters

Internally Displaced Persons and Host Communities: The Limits of Hospitality?

Thu, 22 Mar 2012 12:00:00 -0400

Event Information

March 22, 2012
12:00 PM - 1:30 PM EDT

Saul/Zilkha Rooms
The Brookings Institution
1775 Massachusetts Avenue, NW
Washington, DC 20036

Most of the world’s 27 million people who have been internally displaced by conflict do not live in camps; rather they live with family members or friends or are dispersed within communities. One frequently overlooked aspect of displacement is the impact of internally displaced persons (IDPs) on the communities which host them—communities which are often poor and marginalized themselves.

On March 22, the Brookings-LSE Project on Internal Displacement and the International Committee for the Red Cross (ICRC) hosted a discussion of two recent reports on IDP and host community relations: "Can You Be an IDP for Twenty Years? A Comparative Field Study on the Protection Needs and Attitudes Toward Displacement Among IDPs and Host Communities in Azerbaijan” and “The Effects of Internal Displacement on Host Communities: A Case Study of Suba and Ciudad Bolívar Localities in Bogotá, Colombia.” Panelists included Chaloka Beyani, United Nations special rapporteur on the human rights of internally displaced persons and co-director of the Brookings-LSE Project on Internal Displacement, and Roberto Vidal, professor of law at Pontifica Universidad Javierana in Bogota, Colombia. Mary Werntz, head of delegation at the ICRC, provided introductory remarks. Senior Fellow Elizabeth Ferris, co-director of the Brookings-LSE Project on Internal Displacement, moderated the discussion.

After the program, the panelists took audience questions.

Participants

Moderator

Panelists

Mary Werntz

Head of Regional Delegation
International Committee for the Red Cross

Chaloka Beyani

UN Special Rapporteur on the Human Rights of IDPs
Co-Director, Brookings-LSE Project on Internal Displacement

Roberto Vidal

Professor of Law
Pontifica Universidad Javierana

Lessons on Crime Reduction from Colombia for Mexico?

Vanda Felbab-Brown — Fri, 24 Feb 2012 00:00:00 -0500

Editor's note: This article was originally published in ReVista magazine.

One of the things that struck me most on my last trips to Colombia in January and June 2011 was the great level of optimism regarding the country’s security accomplishments after several decades of civil war. Many of my interlocutors were brimming with confidence that Colombia was the model to be emulated by other countries facing the witches’ brew of insurgency, organized crime, poverty, and marginalization of social sectors. Government officials especially have been touting the many things Colombia can train other countries in, offering to teach Afghanistan how to conduct counternarcotics operations, the Philippines how to demobilize former fighters, the countries of Central America how to carry out police reform, Mexico how to suppress organized crime.

Mexico especially has been an eager believer, as I discovered during my research in March 2011. The mood there was the opposite: people were gripped by fear of criminal groups and communities ached from the drug-related violence that topped 47,000 dead since President Felipe Calderón came to power and declared a war on Mexico’s drug trafficking groups (DTOs). Despite a steady parade of arrested drug traffickers displayed to TV cameras, few believed that Mexico was making progress against organized crime. But from government offices in Mexico City to NGO meetings in Michoacán and business conferences in Ciudad Juárez, many were latching onto the Colombia model. Businessmen in Ciudad Juárez and Monterrey have hosted delegations from Medellín; Colombian intelligence and police officers have been advising the Mexicans on police reform and intelligence gathering.

Los Pinos, Mexico’s White House, was among the very early buyers of the Colombian way. Its strategy against Mexico’s organized crime had been based on the premise that the threat posed by organized crime will be reduced from one of national security to one of public safety if Mexico’s drug trafficking organizations (DTOs) are broken up into smaller groups as they were in Colombia and that the way to accomplish this was to arrest the groups’ key leaders—the so-called high-value targets. As part of the strategy, Mexico’s law enforcement institutions were to be reformed, cleansed of corruption and strengthened in their capacity. Meanwhile, the military was sent to the streets of Mexico to replace or reinforce the overwhelmed police.

But drawing incomplete or distorted lessons, glossing over the complexities of the Colombian story and ignoring particular contexts can deeply undermine the effectiveness of the emulated policies and at times even backfire. To some extent, that has already happened in Mexico.

Take, for example, the central premise of the Mexican strategy that if the DTOs are broken up into smaller entities, security in Mexico will improve. The effect of Colombia’s anti-crime policies in the early 1990s was indeed the emergence of many small groups instead of the two large Medellín and Cali cartels that until then had dominated Colombia’s and the Western Hemisphere’s drug trafficking. None of the smaller groups has managed to accumulate the same level of coercive power and corruption capacity that the Medellín and Cali cartels had. But Colombia’s context was different from Mexico’s, and the break-them-up policy came with different, but in each case highly negative side effects.

The Colombian government finally decided to go after the Medellín cartel with its gloves off in the early 1990s after a decade of on-and-off confrontation and negotiations with its leader, Pablo Escobar, and his cohorts. During the decade, Escobar progressively escalated violence—killing scores of judges and prosecutors, assassinating leading politicians, and blowing up an airliner and major government security agencies.

Critical to the success against the Medellín cartel was cooperation from the Cali cartel, which provided intelligence and eliminated many of Escobar’s people. Although neither DTO was a true “cartel” in the sense of controlling the market price of cocaine, and both operated more as two large franchises under whose umbrella smaller DTOs and traffickers functioned, the market was essentially dominated by the two groups. The Cali cartel, always far less violent and far more integrated into Colombia’s political and business circles than the Medellín cartel, expected that after the demise of its rival, it would be able to take over most of Colombia’s drug market. The Cali cartel was in fact for a while the unchallenged cocaine supplier. It was only the revelation that the Cali cartel contributed vast sums of money to the presidential campaign of Colombia’s President Ernesto Samper and the great pressure from the United States on the Colombian government that ultimately motivated the Samper administration to target the Cali cartel as well.

When President Felipe Calderón decided to take on the DTOs, the Mexican drug market did not have such a neat “bipolar” structure of being divided into two predominant groups. Instead, there were at least six large DTOs. Thus Mexican law enforcement moves against the groups weakened them but did not clearly transfer power to either the state or another criminal group. Instead, the state’s actions disturbed the balance of power among the DTOs and their ability to control territory and smuggling routes and project power to deter challengers. This lack of clarity about the balance of power on the criminal market tempted the DTOs to try to take over one another’s territory and engage in internecine warfare. It has also given rise to highly fluid and unstable alliances among them. Continuing hits by the state against the DTOs without much prioritization have also led to the splintering of the DTOs, giving rise to many new offshoots and new DTOs. They too have been drawn to the fight to survive and expand their power and territorial control. Many have also diversified their operations into other illegal rackets and extortion. The groups may be smaller but the criminal market is far more violent.

Moreover, in neither Colombia nor Mexico did the state effectively fill in the vacuum. In Colombia, the state continued to be unable and often uninterested in providing security and other public goods to its many marginalized citizens. The deficiencies in multifaceted state presence in large parts of country and the power vacuum on the criminal market were filled by other violent non-state actors—the paramilitaries who later in the 1990s created an umbrella political organization, Autodefensas Unidas de Colombia (AUC), and the leftist guerrillas Fuerzas Armadas Revolucionarias de Colombia (FARC). The two groups were able to take over Colombia’s cocaine market, with many independent drug traffickers buying positions of power and military commander titles in the AUC. They also escalated Colombia’s civil war to one of its bloodiest phases ever during the latter half of 1990s and early 2000s.

The lesson that Mexico should have drawn from the Colombian case is that merely breaking up the cartels is insufficient; the state needs to increase its presence in a multifaceted fashion and strengthen not only its authority, but also its legitimacy.

Similarly, the simplistic notion that the Medellín cartel was destroyed when Escobar was dramatically shot on the city’s rooftops reinforced Mexican security officials’ fondness for high-value-target (HVT) decapitation. Also practiced in counterterrorism and counterinsurgency operations in Iraq and elsewhere, HVT interdiction is based on the assumption that the destruction of a group’s key leadership will make the group lose its operational capacity. Yet there are two flaws present in this assumption and its application to Mexico’s anti-crime efforts. One is that the ability of DTOs to replace fallen leaders is far greater than the ability of insurgent and terrorist groups to do so, in part because the leadership requirements for a drug trafficker tend to be far lower than for a terrorist or insurgency leader. A DTO’s capacity to regenerate leadership is great. Second, the Medellín cartel was destroyed well before Escobar died. Colombian security forces, the Cali cartel, and Los Pepes (an anti-Escobar militia and a core of the future paramilitaries) killed hundreds of Escobar’s lieutenants and foot soldiers before they got Escobar. Essentially, the entire middle-level of the Medellín cartel was eliminated beforehand.

Focus on the middle layer is highly prominent in U.S. and British interdiction operations precisely to prevent an easy and violent regeneration of the leadership of the targeted criminal group. Thus, U.S. interdiction operations often run for months or years and the goal is to arrest as much of the middle layer at once as possible—often hundreds of people are arrested in one sweep. But the Mexican government has been deeply challenged in conducting interdiction in this way— lacking both tactical and strategic intelligence on the DTOs and fearing that sitting on any intelligence piece or asset too long risks its leaking out and going cold.

The story of the so-called Medellín Miracle of using socio-economic policies to combat organized crime that several Mexican cities seek to emulate is also complicated. During the 1980s reign of Escobar and the 1990s reign of the paramilitaries and the FARC, Medellín was one of the world’s most violent cities. In many ways, it was the epitome of drug violence. Colombian president Álvaro Uribe made restoring Medellín a key priority and sent the military to the city in 2002 to retake the poor comunas (slums) ruled by the FARC. The success of “Operation Orion” in defeating the FARC in Medellín was followed by the adoption of a set of progressive social policies by mayors Sergio Fajardo and Alonso Salazar. They took advantage of the greater security in the city and extended a host of development activities to the poor comunas, including infrastructure and public spaces such as libraries. Homicides and kidnapping dropped dramatically.

The policies that Fajardo and Salazar implemented deserve a lot of praise. They connected the poor neighborhoods to the economically productive center, increasing access to jobs and education for the poor population of the crime-ridden comunas. They also restored some hope among the comunas’ residents in a better future and increased the bonds between those marginalized areas and the state that had long ignored them.

But for all these accomplishments, the effect of the policies on violence reduction should not be overstated. More than reducing violence, the policies were enabled by a prior reduction in violence. The FARC defeat in Medellín allowed the crime-lord-cum-paramilitary leader Don Berna to consolidate his control over the city’s criminal markets. His firm grip on the poor comunas and on the city’s criminal rackets drove the significant drop in homicides during much of the first decade of the 2000s. In the latter part of the decade, Don Berna was imprisoned and extradited to the United States, ending his narco-peace, as emerging criminal groups began to fight over drug smuggling and other criminal enterprises in Medellín and the surrounding state of Antioquía. Homicide levels rose close to the pre-Don Berna era. Socio-economic policies have been unable to fully compensate for the persisting lack of public safety in the city and the continuing deficiencies in police capacity to go after the city’s criminal groups.

Over the past decade, also reflecting the results of U.S. assistance, Colombia has experienced very significant progress. Nonetheless, the success is incomplete. It is thus important not to be blinded by the achievements and uncritically present policies adopted in Colombia as a blanket model to be emulated in other parts of the world, including Mexico. While its accomplishments, including in police reform and strengthening of the judicial system, need to be recognized and indeed may serve as an example, the limitations of progress equally need to be stressed. And as with all public policies, molding anti-crime strategies to local institutional and cultural context continues to be a critical determinant of their effectiveness.

Authors

Vanda Felbab-Brown

Publication: ReVista

Image Source: © Jaime Saldarriaga / Reuters

No Stairway to Heaven: Rescuing Slums in Latin America

Vanda Felbab-Brown — Thu, 02 Feb 2012 11:02:00 -0500

The Christmas inauguration of a giant outdoor escalator to Medellín’s notorious slum Comuna 13 is an admirable continuation of recent efforts across Latin America to reduce the immense divide between the prosperous parts of its cities and the vast dire slums. To reduce crime, Medellin and Bogota in Colombia, Rio de Janeiro and Sao Paulo in Brazil, and Monterrey and Ciudad Juarez in Mexico all have endeavored to extend permanent police presence and economic development to at least some of their poor neighborhoods. Yet to be effective, such policies need to overcome a multitude of complex challenges. Infrastructure projects rarely do the trick on their own.

Although inhabited by millions, Latin slums tend to lack elementary public goods while they are plagued by intense violence and ruled by criminal gangs. When bringing the state to the slum, governments thus need to pursue two interrelated objectives: to better establish the state’s physical presence and to realign the allegiance of slum residents away from criminal gangs and toward the state.

Initial law-enforcement actions, such as in Rio’s Alemao and Rocinha favelas, at times involve the insertion of heavily-militarized force in operations that can resemble urban warfare. As traumatic as the clearing operations can be, sustaining security afterwards tends to be even more difficult. Unlike the heavily-armed forces, traditional police forces, especially if designed as community police monitored by joint police-citizen boards, can develop trust of the community and ultimately focus on crime prevention. But developing such trust takes a long time. Meanwhile, training community police has been a major challenge, even for Rio’s Pacification program that is built around them. In Medellin’s comunas, local police continue to lack capacity and to be aligned with local crime gangs.

Paradoxically, street crime in the slum often rises significantly after the state disrupts the criminal order. Gangs that used to rule the slum function as regulators of life on the street, even providing dispute resolution mechanisms. Yet newly-inserted police units, lacking an understanding of the community, often fail to address street crime and new criminality such as land speculation. If fighting over existing criminal markets, including drug distribution, extortion, and prostitution, breaks out among the remnants of the deposed criminal groups, violence can escalate dramatically, as it has in Medellin since 2008. Such an increase in street crime can again alienate the population from the state and stimulate a hankering for militias and the resurrection of criminal order.

One of the acute dilemmas encountered by law enforcement in retaken slums is whether or not, how quickly, and in what form to suppress the slums’ illegal economies, such as local drug distribution. Reasons for doing so include concerns over leakage of illicit flows to other locales, a belief that the profitability of illicit profits will dissuade slum residents from switching to legal economies, and a fear that the persistence of illegal economies will pull in new violence and perpetuate anti-social and anti-state values among the residents. However, suppressing local illegal economies comes with significant costs, including massive drops in household income, new alienation of the slum residents from the state, expansion of other criminal activity, such as extortion, and the dissipation of law enforcement.

Generating legal livelihoods in urban spaces requires that the economic development strategy addresses all structural deficiencies. Beyond providing for public safety and the rule of law, such a comprehensive approach requires the establishment of stable property rights, access to microcredit, expanded availability of heath care and education, and the building of crucial infrastructure. But none of these necessarily solve the most challenging problem of all: generating sustainable legal jobs. For that, the private sector needs to find a reason enter the slum and do so in a labor-intensive way.

Limited, isolated, discreet interventions, even when responsive to the wishes of the local community, are particularly ineffective in changing socioeconomic dynamics in a marginalized community. They neither alter basic social patterns nor generate jobs in the community, and therefore, do not reduce crime. If they amount largely to patronage handouts, they can produce complex negative equilibria between criminal and political patrons or a crime-pays mentality.

Moreover, economic development in marginalized urban spaces is rarely politically neutral. While it does strengthen marginalized communities and potentially their bonds to the state, it also threatens established powerbrokers who straddle both the crime and the official political worlds by depriving them of their agent-patron role. Thus, they have an interest in subverting such state-building efforts. A failure to neutralize such powerbrokers can easily unravel the strategy.

Neither Medellin’s escalator and its famous predecessor the Metrocable, nor Bogota’s Transmilenio, nor the planned infrastructure in Monterrey are stairways to city heaven. But they are important, if only initial steps toward improving the lives of marginalized urban communities plagued by violence, poverty, and social ostracism.

Authors

Vanda Felbab-Brown

Image Source: © Edgard Garrido / Reuters

U.N. International Year of Volunteers Ignites Colombia’s Youth to Volunteer

David L. Caprara and Matt Clausen — Tue, 06 Dec 2011 12:31:00 -0500

Last October, 200 students from Colombia's Servicio Nacional de Aprendizaje (SENA) worked the floor of the campus coliseum at Universidad del Norte in Barranquilla. They were among 900 youth volunteer leaders from nearly 40 nations who had traveled the globe to join the second World Summit for Youth Volunteering, convened by Partners of the Americas and the International Association for Volunteer Effort (IAVE) on the 10th anniversary of the United Nations International Year of Volunteers.

As a developing country, Colombia’s increased civil society participation through volunteering is focused on extending poverty-reduction efforts to levels that the government cannot achieve on its own. Volunteers represent a powerful demographic for a new "service generation" by providing a dual benefit. First, volunteering provides critical services in areas such as education and asset development, which are needed to reduce extreme poverty; second, it connects a new generation with like-minded individuals across the world, which provides young people the professional and leadership skills needed to further access to employment opportunities including entrepreneurship.

For SENA, one of the world's largest educational institutions with more than four million students across Colombia, the opportunity was clear: engage talented and often under resourced youth in Colombia — one of the most economically unequal countries in the world– with innovative global volunteer leaders. According to research from Brookings and the Center for Social Development at Washington University, these types of global volunteering connections have the potential to enhance skills development while increasing social capital networks.

Extreme poverty, along with armed conflict, is one of the highest priorities of the Colombian government. Coincidentally, during the same week as the World Summit, the Colombian armed forces eliminated the Revolutionary Armed Forces of Colombia (FARC) leader Alfonso Cano while President Santos created a new national superagency to combat extreme poverty. The strategic focus on poverty reduction includes a strong role for civil society as a partner with the government in meeting the U.N. Millennium Development Goals and other development commitments. Civil society plays an essential role in overcoming internal conflict. And the youth services generation is among some of the most effective in civil society in working to help their country tackle poverty.

Colombia is certainly not the only country where youth have taken the lead through service to combat poverty. Attendees at the summit heard from Australian humanitarian Hugh Evans, who at 14 began his work to create the Global Poverty Project. In 2006, Evans became one of the pivotal leaders behind the successful Make Poverty History campaign, leading a team across Australia to lobby the country’s government to increase its foreign aid commitment to 0.7 percent of gross national income.

Whether or not SENA’s youth will be able to capitalize on their new connections with global service leaders to combat extreme poverty in Colombia is left to be seen. But the SENA volunteers and their international counterparts are more motivated to do so after gaining access to resources and social capital networks with other inspiring young leaders. That is a cause for celebration as the United Nations releases its State of the World Volunteering report in New York in December at a special session of the U.N. General Assembly.

Authors

David L. Caprara
Matt Clausen

Image Source: Â© Fredy Builes / Reuters

Confronting Organized Crime and Urban Violence in Latin America

Vanda Felbab-Brown — Mon, 05 Dec 2011 14:59:00 -0500

EXECUTIVE SUMMARY

Public safety is increasingly determined by crime and security in urban spaces. How the public safety problem in urban spaces is dealt with in the 21st century as urbanization intensifies will determine citizens’ perceptions of the accountability and effectiveness of the state in upholding the social contract between the citizens and the state. Major cities of the world, and the provision of security and order within them, will increasingly play a major role in the 21st century distribution of global power. In many of the world’s major cities, law enforcement and social development have not caught up with the pace of urbanization, and there is a deep and growing bifurcation between developed and reasonably safe sectors of economic growth and social advancement and slums stuck in a trap of poverty, marginalization, and violence. Addressing the violence and lifting the slums from this trap will be among the major challenges for many governments.

There are many forms of urban violence. This article presents some of the key law enforcement and socioeconomic policy lessons from one type of response to urban slums controlled by non-state actors: namely, when the government resorts to physically retaking urban spaces that had been ruled by criminal or insurgent groups and where the state’s presence had been inadequate or sometimes altogether nonexistent. Its focus is on Latin America—specifically Brazil, Mexico, Colombia, and Jamaica; but its findings apply more broadly and are informed by similar dynamics between non-state actors and state policies in places like Karachi, Pakistan, and Johannesburg, South Africa.

In response to a crime epidemic afflicting Latin America since the early 1990s, several countries in the region have resorted to using heavily-armed police or military units to physically retake territories controlled de facto by criminal or insurgent groups. After a period of resumed state control, the heavily-armed units hand law enforcement functions in the retaken territories to regular police forces, with the hope that the territories and their populations will remain under the control of the state. To a varying degree, intensity, and consistency, Brazil, Colombia, Mexico, and Jamaica have adopted such policies since 2000.
During such operations, governments need to pursue two interrelated objectives: to better establish the state’s physical presence and to realign the allegiance of the population in those areas toward the state and away from the non-state criminal entities.
From the perspective of law enforcement, such operations entail several critical decisions: whether or not to announce the force insertion in advance; how to generate local intelligence; and when to hand over law enforcement to regular or community police forces.
With respect to announcing the force insertion in advance, the element of surprise and the ability to capture key leaders of the criminal organizations has to be traded off against the ability to minimize civilian casualties and force levels. The latter, however, may allow criminals to hide and escape capture. Governments thus must decide whether they merely seek to displace criminal groups to other areas or maximize their decapitation capacity.
Intelligence flows rarely come from the population. Often, rival criminal groups are the best source of intelligence. However, cooperation between the state and such groups that goes beyond using vetted intelligence provided by the groups, such as the government’s tolerance for militias, compromises the rule-of-law integrity of the state and ultimately can eviscerate even public safety gains.
Sustaining security after initial clearing operations is, at times, even more challenging than conducting the initial clearing operations. Although unlike the heavily-armed forces, traditional police forces, especially if designed as community police, have the capacity to develop trust by the community and ultimately to focus on crime prevention, developing such trust often takes a long time.
To develop the community’s trust, regular police forces need to conduct frequent on-foot patrols with intensive nonthreatening interactions with the population and minimize the use of force. Moreover, sufficiently robust patrol units need to be placed in designated beats for substantial amounts of time, often at least over a year.
Ideally, police develop not only local police forces, but community-based and problem-oriented policing as well.
Establishing oversight mechanisms, including joint police-citizen boards, further facilitates building community trust in the police.
After the disruption of the established criminal order, street crime often significantly rises and both the heavily-armed and community-police units often struggle to contain it. The increase in street crime alienates the population of the retaken territory from the state. Thus, developing a capacity to address street crime is critical.
Addressing street crime, especially when through problem-oriented policing approaches, also often tends to be relatively simple and inexpensive. Moreover, preventing at least some street crime through such measures allows police forces to concentrate on more complex street and organized crime.
Moreover, community police units tend to be vulnerable (especially initially) to efforts by displaced criminals to reoccupy the cleared territories. Ceding a cleared territory back to criminal groups is extremely costly in terms of losing any established trust of the local population and being able to resurrect it later. Rather than operating on a predetermined handover schedule, a careful assessment of the relative strength of regular police and the criminal groups following clearing operations is likely to be a better guide for timing the handover from heavy forces to regular police units.
Cleared territories often experience not only a peace dividend, but also a peace deficit—in the rise new serious crime (in addition to street crime). Newly-valuable land and other previously- inaccessible resources can lead to land speculation and forced displacement; various other forms of new crime can also significantly rise. Community police forces often struggle to cope with such crime, especially as it is frequently linked to legal businesses outside of their area of operation. Such new crime often receives little to no attention in the design of the operations to retake territories from criminal groups. But without developing an effective response to such new crime, the public-safety gains from the clearing operations can be completely lost. Instead of countering the causes of illegal economies and violent organized crime through strengthening effective and accountable state presence, government intervention may only alter the form of criminality and displace existing problems to other areas.
Expanding the justice system to cover areas where no courts were previously present usually takes considerable time. As a result, a dispute-resolution vacuum often emerges immediately following the clearing operations. This near-term absence of dispute resolution processes and enforcement is one impetus for the rise of crime and disorder in the post-clearing phase.
One of the acute dilemmas encountered by law enforcement forces in the retaken territory and managers of the operation is whether or not, how quickly, and in what form to suppress illegal economies that exist in the retaken territory. There may be several reasons why the state would want to suppress the illegal economy. These include the leakage of illicit flows to other locales, a belief that the profitability of illicit profits will dissuade slum residents from switching to legal economies, and a fear that the persistence of illegal economies will pull in new violence and perpetuate anti-social and anti-state values among the slum residents.However, suppressing local illegal economies in urban spaces comes with significant costs, such as massive drops in household income of slum residents, new alienation of the population from the state, expansion of criminal activity and the rise of extortion, and the dissipation of law enforcement focus.
Generating legal alternative livelihoods in urban spaces requires that the economic development strategy addresses all the structural drivers of illegal economic production. Beyond providing for security and the rule of law, such a comprehensive approach requires that stable property rights be established, access to microcredit developed, access to education and health care expanded, and crucial infrastructure deficiencies redressed.
Often the most challenging problem for economic development in such situations is to generate sustainable legal jobs.
Limited, isolated, discreet interventions, even when responsive to the wishes of the local community, are particularly ineffective in changing socioeconomic dynamics in a marginalized community. They do not have the capacity to alter basic social patterns or generate jobs in the community, and therefore, do not reduce crime. If they amount largely to patronage handouts, they can generate complex negative equilibria between criminal and official political patrons or a crime-pays type of mentality.
Saturating an area with money in order to buy the political allegiance of the population produces neither sustainable economic development nor desirable social and political practices. Such massive cash infusions distort the local economy, undermine local administration, and can fuel corruption, new crime (such as extortion and resource theft), and moral hazard.
Economic development of marginalized urban spaces is rarely politically neutral. While it does strengthen marginalized communities, it has the potential to undermine established powerbrokers (especially those who straddle the crime world and the official political world) by depriving them of their agent-patron role. Such powerbrokers, therefore, have an interest in hampering and limiting the extent to which the state is extended to the marginalized areas.
Coordination across different line-ministries and agencies, and across different levels of government is often difficult to achieve, but failure to achieve good coordination can undermine the entire effort.

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Authors

Vanda Felbab-Brown

Image Source: Â© Jorge Silva / Reuters

Using the Colombia Model in Afghanistan

Michael E. O'Hanlon and Paul Wolfowitz — Fri, 28 Oct 2011 11:38:00 -0400

President Barack Obama made clear this week that the remaining troops will soon come home from Iraq. Some 10 years after the first troops landed in Afghanistan, we're now nearly back to a one-front war. But where are we, really? It's clear that both citizens and Washington alike are collectively weary of war and frustrated by this particular mission, with its interminable timelines and uncertain partners in Kabul and Islamabad, even if it has only been three to four years since the United States intensified its collective focus and resources on this mission.

In both Iraq and Afghanistan, the temporary surge of U.S. forces was used for two purposes: First, to increase the size and quality of Iraqi and Afghan security forces so that they could take over most or all of the fight—this might be called "the surge that stays behind" or the "permanent surge"; and second, to create conditions sufficiently stable so that what we hand off to indigenous forces is not a losing hand that is doomed to fail, but one with a reasonable chance of success. The surge in Iraq produced dramatic results in a relatively short period of time; the results in Afghanistan have been more limited. With the president having announced that U.S. forces will withdraw by 2014, the question bears asking: Is victory in Afghanistan now beyond our grasp?

Many analysts have noted that the surge strategy in Afghanistan needs to be fundamentally different from that in Iraq. It is not an accident but rather a product of geography and the demography that Iraq has had strong central governments over the course of thousands of years, whereas Afghanistan has never had one. An Iraqi government can aspire to control all or nearly all of its territory. Indeed, any notion of success in Iraq virtually requires it. An Afghan government, on the other hand, cannot aspire to such an ambitious goal and, critically, success in Afghanistan does not require it.

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Authors

Michael E. O'Hanlon
Paul Wolfowitz

Publication: Foreign Policy

Image Source: Â© Ahmad Nadeem / Reuters

Colombia’s Elections and Consolidation: Moving Beyond FARC and the Paramilitaries?

Fri, 21 Oct 2011 10:00:00 -0400

Event Information

October 21, 2011
10:00 AM - 11:30 AM EDT

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

After significant improvements in Colombian security over the past decade, President Juan Manuel Santos has increased focus on social progress, unveiling a series of social and economic changes addressing issues from poverty reduction to land reform. While emphasizing these important reforms, President Santos has also worked to continue the fight against urban crime, the leftist guerrilla group, the Revolutionary Armed Forces of Colombia (FARC), and the criminal networks that have emerged after the demobilization of the paramilitaries. With municipal elections just around the corner, expectations for the Santos administration continue to grow as many in Colombia wonder if the positive changes achieved will continue or if additional security and social challenges will once again overwhelm the state’s capacity.

On October 21, the Latin America Initiative at Brookings hosted a discussion on the current achievements and challenges ahead for the Santos administration. Panelists included Brookings Fellow Vanda Felbab-Brown; Adam Isacson, director of the Regional Security Policy program in the Washington Office on Latin America; Virginia Bouvier, senior program officer at the United States Institute of Peace; and Claudia López, a prominent Colombian journalist now at Northwestern University. Senior Fellow Kevin Casas-Zamora, interim director of the Latin American Initiative at Brookings, provided introductory remarks and moderated the discussion.

After the program, the panelists took questions from the audience.

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Colombia’s Elections and Consolidation: Moving Beyond FARC and the Paramilitaries?

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Event Materials

20111021_colombia_elections

Participants

Panelists

Virginia Bouvier

Senior Program Officer, Center for Mediation and Conflict Resolution
United States Institute of Peace

Adam Isacson

Director, Regional Security Policy Program
Washington Office on Latin America

Claudia López

Ph.D. Candidate
Northwestern University

Narcoterrorism and the Long Reach of U.S. Law Enforcement

Vanda Felbab-Brown — Wed, 12 Oct 2011 10:35:00 -0400

In testimony before the U.S. House of Representatives Subcommittee on Terrorism, Nonproliferation and Trade, Vanda Felbab-Brown speaks on the relationship between drug trade and criminal and belligerent groups in Afghanistan, Mexico, Colombia and West Africa. Felbab-Brown outlines several recommendations for U.S. policy addressing this difficult and complex problem.

Mr. Chairman and Members of the Subcommittee:

I am honored to have this opportunity to address the Subcommittee on the important issue of the relationship between the drug trade and criminal and belligerent groups. Illicit economies, organized crime, and their impacts on U.S. and local security issues around the world are the domain of my work and the subject of my Brookings book, Shooting Up: Counterinsurgency and the War on Drugs. I have conducted fieldwork on these issues in Latin America, Asia and Africa. I will focus my comments on the general dynamics of the drug-violent conflict nexus and the role of belligerent actors and crime groups and then provide a survey of the manifestations of these dynamics in Afghanistan, Mexico, Colombia and West Africa. I will conclude with some policy implications for U.S. policies for dealing with this difficult and complex problem.

I. The Complex Dynamics of the Drug-Terror Nexus

Organized crime and illegal economies generate multiple threats to states and societies. They often threaten public safety, at times even national security. Extensive illicit economies can compromise the political systems by increasing corruption and penetration by criminal entities, undermine the legal economies, and eviscerate their judicial and law enforcement capacity.

Yet, although the negative effects of high levels of pervasive street and organized crime on human security are clear, the relationships between human security, crime, illicit economies, and law enforcement are highly complex. Human security includes not only physical safety from violence and crime, but also economic safety from critical poverty, social marginalization, and fundamental under-provision of elemental social and public goods such as infrastructure, education, health care, and rule of law.

Multifaceted institutional weaknesses are at the core of why the relationship between illegality, crime, and human security is so complex. For many, participation in informal economies, if not outright illegal ones, such as the drug trade, is the only way to satisfy their basic livelihood needs and obtain any chance of social advancement, even as they continue to exist in a trap of insecurity, criminality, and marginalization.

The more the state is absent or deficient in the provision of public goods – starting with public safety and suppression of street crime and including the provision of dispute-resolution mechanisms and access to justice, enforcement of contracts, and the provision of socioeconomic public goods, such as infrastructure, access to health care, education, and legal employment – the more communities are susceptible to becoming dependent on and supporters of criminal entities and belligerent actors who sponsor the drug trade and other illegal economies.

By sponsoring illicit economies in areas of state weakness where legal economic opportunities and public goods are seriously lacking, both belligerent and criminal groups frequently enhance some elements of human security of those marginalized populations who depend on illicit economies for basic livelihoods, even while compromising other aspects of their human security and undermining national security. At the same time, simplistic law enforcement measures can and frequently do further degrade human security. These pernicious dynamics become especially severe in the context of violent conflict.

Belligerent groups thus obtain far more than simply increased physical resources from their participation in illicit economies. They also derive significant political capital – legitimacy with and support from local populations - from their sponsorship of the drug and other illicit economies, in addition to obtaining large financial profits. They do so by protecting the local population’s reliable (and frequently sole source of) livelihood from the efforts of the government to repress the illicit economy. They also derive political capital by protecting the farmers (or in the case of other illicit commodities, the producers) from brutal and unreliable traffickers (bargaining with traffickers for better prices on behalf of the farmers), by mobilizing the revenues from the illicit economies to provide otherwise absent social services such as clinics and infrastructure, as well as other public goods, and by being able to claim nationalist credit if a foreign power threatens the local illicit economy.

Criminal groups too provide public goods and social services, suboptimal as they may be. For example, such public goods provision has allowed Brazil’s drug gangs to dominate many of Brazil’s poor urban areas, such as in Rio de Janeiro (at least until the adoption of a government to pacify the slums known as the UPP). Criminal groups and belligerents can even provide socio-economic services, such as health clinics and trash disposal.

In short, sponsorship of illicit economies allows non-state armed groups to function as security providers and economic and political regulators. They are thus able to transform themselves from mere violent actors to actors that take on proto-state functions.

Although the political capital such belligerents obtain is frequently thin, it is nonetheless sufficient to motivate the local population to withhold intelligence on the belligerent group from the government if the government attempts to suppress the illicit economy. Accurate and actionable human intelligence is vital for success in counterterrorist and counterinsurgency efforts as well as law enforcement efforts against crime groups.

Four factors determine the size of the political capital which belligerent groups obtain from their sponsorship of illicit economy: the state of the overall economy; the character of the illicit economy; the presence (or absence) of thuggish traffickers; and the government response to the illicit economy.

The state of the overall economy – poor or rich - determines the availability of alternative sources of income and the number of people in a region who depend on the illicit economy for their basic livelihood.

The character of the illicit economy – labor-intensive or not – determines the extent to which the illicit economy provides employment for the local population. The cultivation of illicit crops, such as of coca in Colombia or Peru, is very labor-intensive and provides employment to hundreds of thousands to millions in a particular country. Production of methamphetamines, for example, such as that controlled by La Familia Michoacana (one of Mexico’s drug trafficking organizations), on the other hand, is not labor-intensive and provides livelihoods to many fewer people.

The presence of thuggish traffickers influences the extent to which the local population needs the protection of the belligerents against the traffickers.

The government responses to the illicit economy (which can range from suppression to laissez-faire to rural development) determine the extent to which the population depends on the belligerents to preserve and regulate the illicit economy.

In a nutshell, supporting the illicit economy will generate the most political capital for belligerents when the state of the overall economy is poor, the illicit economy is labor-intensive, thuggish traffickers are active in the illicit economy, and the government has adopted a harsh strategy, such as eradication, especially in the absence of legal livelihoods and opportunities.

In addition, both criminal entities and belligerent groups also often provide security. Although they are the source of insecurity and crime in the first place, they often regulate the level of violence and suppress street crime, such as robberies, thefts, kidnapping, and even homicides. To function as providers of public order and rules brings criminal groups important support from the community, in addition to facilitating their own illegal business since illicit economies too benefits from reduced transaction costs and increased predictability.

Both organized-crime groups and belligerent actors, such as the Primero Comando da Capital in Sao Paulo’s shantytowns, can also provide dispute resolution mechanisms and even set up unofficial courts and enforce contracts.

The ability of illegal groups to provide real-time, immediate economic improvements to the lives of the population also explains why even criminal groups without ideology can garner strong political capital. This effect is especially strong when the criminal groups couple their distribution of material benefits to poor populations with the provision of otherwise-absent order and minimal security. By being able to outcompete with the state in provision of governance, organized criminal groups can pose significant threats to states in areas or domains where the government’s writ is weak and its presence limited. Consequently, discussions of whether a group is a criminal group or a political one or whether belligerents are motivated by profit, ideology, or grievances are frequently overstated in their significance for devising policy responses.

The extent to which criminal groups and belligerents provide these public goods varies, of course, but it often takes place regardless of whether the non-state entities are politically-motivated actors or criminal enterprises. The more they do provide such public goods, the more they become de facto proto-state governing entities.

Nonetheless even criminal groups without a political ideology often have an important political impact on the lives of communities and on their allegiance to the state. They also often have political agendas, even without having an ideology.

But although criminal groups and belligerent groups often interact with illicit economies in the same way, they have not morphed into a homogenous monolithic entity. Rather a crime-terror nexus is far from stable or necessarily inevitable. Indeed, such relations are often characterized as much by violent conflict between the criminal organizations and the terrorist groups as by cooperation. Moreover, how successfully outside terrorist groups navigate new territories where they may be drawn to because of the presence of illicit economies depends on their intelligence capacity, their cultural and human terrain awareness, their understanding of the complex relationship between official politicians, governing elites and illegal economic networks.

II. Some Key and Some New Areas of the Nexus of Organized Crime and Violent Conflict

Afghanistan

Perhaps nowhere in the world does the presence of a large-scale illicit economy threaten U.S. primary security interests as much in Afghanistan. There, the anti-American Taliban strengthens its insurgency campaign by deriving both vast financial profits and great political capital from sponsoring the illicit economy. The strengthened insurgency in turn threatens the vital U.S. objectives of counterterrorism and Afghanistan’s stability plus the lives of U.S. soldiers and civilians deployed there to promote these objectives. However, the Taliban derives large income from many economic activities, taxing anything with areas of its influence – be it poppy, sheep herds, illegal logging, economic aid programs, or trucks carrying supplies to U.S. troops.

Moreover, many actors other than the Taliban derive profits from such war economies, including the drug trade, such as many official and unofficial powerbrokers linked to the Afghan government. The large-scale opium poppy economy thus intensifies widespread preexisting corruption of Afghanistan government and law enforcement, especially the police forces.

A failure to prevail against the insurgency will result in the likely collapse of the national government and Taliban domination of Afghanistan’s south, possibly coupled with civil war. A failure to stabilize Afghanistan will in turn further destabilize Pakistan, emboldening the jihadists in Pakistan and weakening the resolve of Pakistan’s military and intelligence services to take on the jihadists. Pakistan may likely once again calculate that it needs to cultivate its jihadi assets to counter India’s influence in Afghanistan – perceived or actual.

But the seriousness of the threat and the strategic importance of the stakes do not imply that aggressive counternarcotics suppression measures today will enhance U.S. objectives and global stability. Indeed, just the opposite. Premature measures, such as extensive eradication before legal livelihoods are in place, will simply cement the bonds between the rural population dependent on poppy for basic livelihood and the Taliban, limit intelligence flows to Afghan and NATO forces, and further discredit the Afghan government and tribal elites sponsoring eradication. Nor, given the Taliban’s large sources of other income, will eradication bankrupt the Taliban. In fact, eradication so far has failed to accomplish that while already generating the above mentioned counterproductive outcomes.

After years of such inappropriate focus on eradication of the poppy crop, the new counternarcotics strategy for Afghanistan, announced by U.S. government officials in summer 2009, overall meshes well with the counterinsurgency and state-building effort. By scaling back eradication and emphasizing interdiction and development, it helps separate the Afghan rural population from the Taliban. A well-designed counternarcotics policy is not on its own sufficient for success in Afghanistan. But it is indispensible. Counterinsurgent forces can prevail against belligerents profiting from the drug trade when they increase their own counterinsurgency resources and improve the strategy.

The Obama strategy appropriately focuses on two tracks – interdiction of Taliban-linked traffickers and rural development to wean the rural population of dependence on poppy. But implementation of the strategy critically influences its effectiveness and there are some elements for concern where better balancing of short-term imperatives and long-term sustainability would be highly desirable.
The interdiction element has been geared toward Taliban-linked traffickers. ISAF forces from those countries that want to participate in the interdiction program – mainly U.S. and U.K. forces – have concentrated on reducing the flows of weapons, money, drugs, precursor agents, and improvised explosive device (IED) components to the Taliban, with the goal of degrading the Taliban’s finances and physical resources through interdiction. Although tens of interdiction raids have now been conducted, especially in the south, and large quantities of opium and IEDs have been seized in these operations, it is questionable whether the impact on the Taliban’s resource flows has been more than local. Large-scale military operations to clear the Taliban from particular areas, such as in Marja, Helmand, have also of course affected the insurgents’ funding capacity and resource flows in those particular areas. But so far, the cumulative effects of the narcotics interdiction effort to suppress financial flows do not appear to be affecting the Taliban at the strategic level. This is because, as explained above, the Taliban fundraising policy has long been to tax any economic activity in the areas where the insurgents operate. The strongest effect of focusing interdiction on Taliban-linked traffickers appears to be at least temporarily to disrupt its logistical chains since many of its logistical operatives handle both IED materials and moving drugs. In combination with ISAF’s targeting focus on mid-level commanders, the prioritization of the counternarcotics-interdiction focus is probably palpably complicating the Taliban’s operational capacity in Afghanistan’s south, where both the military surge and counternarcotics efforts have been prioritized.

Whatever its benefits on disrupting the Taliban’s logistical chains, the interdiction policy also has a negative side-effect of signaling to Afghan powerbrokers that the best way to conduct the drug business in Afghanistan is to be linked to the government of Hamid Karzai, further undermining the domestic legitimacy of the Afghan government and rule of law. But tackling corruption in Afghanistan is a no-easy task because of the international community’s continuing dependence on problematic, but “useful” interlocutors, competing priorities, and the domestic political sensitivities and dependencies of the Karzai government.

A comprehensive sustainable rural and overall economic development is critical for Afghanistan’s future, including for its ability to reduce the drug cultivation and trade in the country. But the so-called economic stabilization programs that are a key aspect of the rural development program are of concern because they are not highly effective and can be counterproductive. Their goal is to keep Afghan males employed so that economic necessities do not drive them to join the Taliban and to secure the allegiance of the population who, ideally, will provide intelligence on the insurgents. Under this concept, U.S. economic development efforts have prioritized the most violent areas. Accordingly, the vast majority of the $250 million USAID Afghanistan budget for 2010 went to only two provinces: Kandahar and Helmand. In Helmand’s Nawa district, for example, USAID spent upward of $30 million within nine months, in what some dubbed “[the] carpet bombing of Nawa with cash.”

Although U.S. government officials emphasize that these stabilization programs have generated tens of thousands of jobs in Afghanistan’s south, many of the efforts have been unsustainable short-lived programs, such as canal cleaning and grain-storage and road building, or small grants, such as for seeds and fertilizers. Characteristically, they collapse as soon as the money runs out, often in the span of several weeks.

There is also little evidence that these programs have secured the allegiance of the population to either the Afghan government or ISAF forces or resulted in increases in intelligence from the population on the Taliban. Nor have these programs yet addressed the structural deficiencies of the rural economy in Afghanistan, including the drivers of poppy cultivation. A microcredit system, for example, continues to be lacking throughout much of Afghanistan. In fact, many of the stabilization efforts, such as wheat distribution or grant programs, directly undermine some of the long-term imperatives for addressing the structural market deficiencies, such as the development of microcredit or the establishment of local Afghan seed-banks and seed markets and rural enterprise and value-added chains. Shortcuts such as the so-called Food Zone in Helmand and similar wheat distribution schemes elsewhere in Afghanistan are symptomatic of the minimal short-term economic and security payoffs (but substantial medium-term costs) mode with which the internationals have operated in Afghanistan. The result: persisting deep market deficiencies and compromised rule of law. There is a delicate three-way balance among long-term development, the need to generate support among the population and alleviate economic deprivation in the short term, and state-building. Merely prioritizing short-term expediency over long-term sustainability and the fostering of good governance – whether on the battlefield in the form of militias or in the agricultural field in the forms of unsustainable quick-impact projects -- will ultimately undermine stability and development.

Mexico

The Obama Administration has also embraced a multifaceted approach to dealing with organized crime and illicit economies. Indeed, a focus on reinforcing the relationship between marginalized communities in Mexico’s cities, such as Cuidad Juarez, and the state is now the fourth pillar of the new orientation of the Merida Initiative, “Beyond Merida.” Beyond Merida recognizes that there are no quick technological fixes to the threat that DTOs pose to the Mexican state and society. It also recognizes that high-value-targeting of drug capos alone, even while backed up by the Mexican military, will not end the power of the Mexican DTOs. Indeed paradoxically, it is one important driver of violence in Mexico, with all its deleterious effects on rule of law and society.

Instead, Beyond Merida focuses on four pillars: a comprehensive effort to weaken the DTOs that goes beyond high-value decapitation; institutional development and capacity building, including in the civilian law enforcement, intelligence, and justice sectors; building a 21st century border to secure communities while encouraging economic trade and growth; and building community resilience against participation in the drug trade or drug consumption. Beyond Merida thus seeks to expand interdiction efforts from a narrow high-value targeting of DTO bosses to a more comprehensive interdiction effort that targets the entire drug organization and giving newly trained police forces the primary street security function once again while gradually putting the military in a background support function. By focusing on the building of a secure but smart U.S.-Mexico border that also facilitates trade, the strategy not only helps U.S. border states for which trade with Mexico often represents an economic lifeline, but also helps generate economic opportunities in Mexico that reduce the citizens’ need to participate in illegality for obtaining basic livelihood. Pillar three then critically meshes with fourth pillar – focused on weaning the population away from the drug traffickers – which again seeks to build resilient communities in Mexico to prevent their takeover by Mexican crime organizations.

Beyond Merida is designed to also significantly enhance the capacity of the government of Mexico. Social programs sponsored by the U.S. fourth pillar, such as Todos Somos Juarez, aim to restore hope for underprivileged Mexicans – 20% of Mexicans live below the extreme poverty line and at least 40% of the Mexican economy is informal – that a better future and possibility of social progress lies ahead if they remain in the legal economy. Such bonds between the community and the state are what at the end of the day will allow the state to prevail and crime to be weakened. But they are very hard to effectuate – especially given the structural deficiencies of Mexico’s economy as well as political obstacles.

Notwithstanding the level of U.S. assistance so far, including having generated over several thousand newly trained Mexican federal police officers, Mexico’s law enforcement remains deeply eviscerated, deficient in combating street and organized crime, and corrupt. Corruption persists even among the newly trained police. Expanding the investigative capacity of Mexico’s police is an imperative yet frequently difficult component of police reform, especially during times of intense criminal violence when law enforcement tends to become overwhelmed, apathetic, and all the more susceptible to corruption. The needed comprehensive police reform will require sustained commitment over a generation at least.
U.S. assistance to Mexico in its reform of the judicial system and implementation of the accusatorial system, including training prosecutors, can be particularly fruitful. Urgent attention also needs to be given to reform of Mexico’s prisons, currently breeding grounds and schools for current and potential members of drug trafficking organizations.

Such a multifaceted approach toward narcotics and crime and emphasizing social policies as one tool to mitigate crime, is increasingly resonating in Latin America beyond Mexico. Socio-economic programs designed to mitigate violence and crime -- for example, the Virada Social in Sao Paolo or the socio-economic component of the Pacification (UPP) policy in Rio de Janeiro’s favelas -- have been embraced by state governments in Brazil.

Colombia

In Colombia President Juan Manuel Santos has initiated a range of socioeconomic programs, such as land restitution to victims of forced displacement. The National Consolidation Plan of the Government of Colombia also recognizes the importance of addressing the socio-economic needs of the populations previously controlled by illegal armed actors. But state presence in many areas remains highly limited and many socioeconomic programs often consist of limited one-time handouts, rather than robust socioeconomic development. The government of Colombia also lacks the resources to robustly expand its socioeconomic development efforts and its security and law enforcement presence to all of its territory and even its strategic zones.

Although the size and power of illegal armed groups, such as the leftist guerillas, the Fuerzas Armadas Revolucionarias de Colombia (FARC) have been substantially reduced, and the guerrillas have been pushed away from strategic corridors, they still maintain a presence of perhaps several thousand, critically undermine security in parts of Colombia, and participate in the drug trade and extortion. Despite the formal demobilization of the paramilitary groups, new paramilitary groups, referred to by the Government of Colombia as bandas criminales, have emerged and by some accounts number ten thousand. They too participate in the drug trade and undermine public safety in ways analogous to the former paramilitaries. Such paramilitary groups have also penetrated the political structures in Colombia at both the local and national levels, distorting democratic processes, accountability, and socioeconomic development, often to the detriment of the most needy. New conflicts over land have increased once again and displacement of populations from land persists at very high levels. Homicides and kidnapping murders are up in Bogotá and Medellín, once hailed as a model success. The government’s provision of security in many areas remains sporadic and spotty.

Yet the government of President Santos needs to be given major credit for recognizing the need to focus rigorously on combating the bandas criminales. The government also deserves credit for focusing on combating street crime and urban violence and for unveiling a well-designed plan for combating urban crime, Plan Nacional de Vigiliancia Comunitaria por Cuadrantes, emphasizing crime prevention, community policing, and local intelligence.

Critically, with all its emphasis on social policies, the Santos Administration has yet to move away from the ineffective and counterproductive zero-coca policy of inherited from Colombia’s previous administration. The zero-coca policy conditions all economic aid on a total eradication of all coca plants in a particular locality. Even a small-scale violation by one family disqualifies an area, such as a municipality, from receiving any economic assistance from the Government of Colombia or from cooperating international partners. Such a policy thus disqualifies the most marginalized and coca-dependent communities from receiving assistance to sustainably abandon illicit crop cultivation, subjects them to food insecurity and often also physical insecurity, pushes them into the hands of illegal armed groups, and adopts the wrong sequencing approach for supply-side counternarcotics policies. In cooperating with the Santos administration in Colombia, the United States government should encourage the new Colombian leadership to drop this counterproductive policy.

Over the past nine years, reflecting the results of U.S. assistance under Plan Colombia and the Andean Counterdrug Initiative, Colombia has experienced very significant progress. Nonetheless, the success remains incomplete. It is important not to be blinded by the success and uncritically present policies adopted in Colombia as a blanket model to be emulated in other parts of the world, including in Mexico. While its accomplishments, including in police reform and the impressive strengthening of the judicial system, need to be recognized and indeed may serve as a model, the limitations of progress equally need to be stressed, for it is important to continue working with Colombia in areas of deficient progress and to avoid repeating mistakes elsewhere around the world.

Furthermore, in counternarcotics and anti-crime policies, as in other aspects of public policy, it is important to recognize that a one-shoe-fits-all approach limits the effectiveness of policy designs. Local institutional and cultural settings will be critical determinants of policy effectiveness; and addressing local drivers of the drug trade and criminal violence and corruption will be necessary for increasing the effectiveness of policies.

West Africa

Although the next section briefly sketches illicit economies in West Africa, it is important to emphasize that despite some overall common characteristics of West African countries, their political arrangements and institutions, patterns of economic (under)development, and integration of illegal economies into the political terrain are hardly uniform. Nor is West Africa a monolithic region. Rather, it is characterized by a great diversity of political, economic, and social institutional arrangements and historic developments and legacies. There are great differences in political institutionalization, the quality of governance, economic performance and potential, and overall state-building trends in the region. Politically, economically, socially, and culturally, Ghana is not the same as Equatorial Guinea, for example. Nor does Senegal’s development over the past twenty years mimic that of Cote d’Ivoire or Liberia. West Africa’s various countries continue to experience divergent trends, with some previously affected by predatory rentier behavior and wars over economic rents showing important progress recently in managing their resources and combating illegal economies, while others have failed to do so.

In West Africa, the level of drug trafficking—especially cocaine from South America en route to Europe—has increased dramatically over the past decade. Driven by the newly intensified demand for cocaine in Western Europe, the shrinking of demand for cocaine in the United States, and the pressure on cocaine smuggling from interdiction operations in the Caribbean, the level of trafficking through West Africa has increased to a quarter of Europe’s annual consumption. With some countries, such as Guinea-Bissau, appearing to be overrun by drugs and significant political instability, coups, and assassinations linked to organized crime and the drug trade in the country, analysts worry about the threat that the drug trade poses to the rule of law, political stability, and the quality of governance in the region.

However, many of these institutional conditions have existed for years in West Africa and predate the emergence of the current intense drug trafficking through the region. Neither illicit economies nor the drug trade are new to West Africa. Indeed, the region has been characterized by a variety of illicit economies and their deep integration into the political arrangements and frameworks of the countries in the region. Much of the political contestation in the region has focused on getting access to the state to control rents from various legal, semi-illegal, or outright illegal economies—such as diamonds (Sierra Leone, Liberia), gold and other precious metals, stones, and timber (Liberia, and Sierra Leone), the extraction, monopolization, and smuggling of agricultural goods, such as cocoa (Cote d’Ivoire), trafficking in humans for sexual exploitation and domestic slavery (Mali, Togo, Ghana), oil (Nigeria), and fishing (often conducted illegally and destructively by international fleets from outside West Africa). Political contestation in these countries has often centered on taking over the state in order to control the main sources of revenue. In essence, the government has been seen as a means to personal wealth, not service to the people.

Fearing internal coups and yet facing little external aggression even in the context of very porous borders, many ruling elites in West Africa after independence systematically allowed their militaries and law enforcement institutions to deteriorate. To the extent that police forces—both street cops and anti-organized crime units—have been nurtured at all, they have mainly served as political tools to be used against political opposition and personal protection forces of ruling elites. Both law enforcement and the justice systems have been especially underdeveloped, under-institutionalized, and corrupt. Instead of having a professional ethic of serving and protecting all citizens, law enforcement in West Africa has often been highly abusive and rapacious. Police forces tend to be vastly undertrained and under-resourced for tackling either street crime or organized crime.

Yet it would be a significant and often inappropriate leap of analysis to assume that “the drug trade epidemic” in West Africa will necessarily challenge political stability and threaten the existing governments and power of ruling elites. To the extent that external drug traffickers make alliances with internal outsiders—former or existing rebels not linked to the official system or young challengers who seek social mobility in an exclusive system—the traffickers will develop a conflictual relationship with the state, and political instability may well follow. To the extent that the governing elite captures the new rents, a symbiosis between external (and internal) drug traffickers and the ruling elites may develop. Drug traffickers will enjoy a sponsored safe-haven, and while democratic processes and institutional development of the county will be threatened, political stability and the existing political dispensation may well be strengthened.

Similarly, whether the intensification of the drug trade in West Africa results in the emergence of a nexus with international terrorism is highly contingent on local conditions and the terrorist group’s skills. The level and shape of law enforcement against illegal economies in West Africa will critically influence the tightness of the crime-terror nexus. It is critical to avoid inadvertently driving the two actors together.

Policy Implications

In areas of state weakness and under provision of public goods, increased action by law enforcement agencies to suppress of crime rarely is a sufficient response. Effective state response to intense organized crime and illicit economies usually requires that the state address all the complex reasons why populations turn to illegality, including law enforcement deficiencies and physical insecurity, economic poverty, and social marginalization. Such efforts entail ensuring that peoples and communities will obey laws. One component is increasing the likelihood that illegal behavior and corruption will be punished. An equally important component is creating a social, economic, and political environment in which the laws are consistent with the needs of the people and therefore can be seen as legitimate and can be internalized.

• Eradication of illicit crops has dubious effects on the financial profits of belligerents.
Even when carried out effectively, it might not inflict serious, if any, financial losses upon the belligerents since partial suppression of part of the illicit economy might actually increase the international market price for the illicit commodity. Given continuing demand for the commodity, the final revenues might be even greater. Moreover, the extent of the financial losses of the belligerents also depends on the ability of the belligerents, traffickers, and farmers to store drugs, replant after eradication, increase the number of plants per acre, shift production to areas that are not subject to eradication, or use high-yield, high-resistance crops. Belligerents also have the opportunity to switch to other kinds of illicit economies such as synthetic drugs. Yet although the desired impact of eradication - to substantial curtail belligerents’ financial resources - is far from certain and is likely to take place only under the most favorable circumstances, eradication will definitely increase the political capital of the belligerents since the local population will all the more strongly support the belligerents and will no longer provide the government with intelligence.

• Policies to interdict drug shipments or measures to counter money laundering, while
not alienating the local populations from the government, are extraordinarily difficult to carry out effectively. Most belligerent groups maintain diversified revenue portfolios. Attempts to turn off their income are highly demanding of intelligence and are resource-intensive.

• Effectiveness of law enforcement efforts to combat organized crime is enhanced if
interdiction policies are designed to diminish the coercive and corruption power of criminal organizations, rather than merely and predominantly to stop illicit flows. The former objective may mandate different targeting strategies and intelligence analysis. Predominant focus on the latter objective often weeds out the least capacious criminal groups, giving rise to a vertical integration of the crime industry and “leaner and meaner” criminal groups.

• Counterinsurgency or anti-organized crime policies that focus on directly defeating the
belligerents and protecting the population tend to be more effective than policies that seek to do so indirectly by suppressing illicit economies as a way to defeat belligerents. Efforts to limit the belligerents’ resources are better served by a focus on mechanisms that do not harm the wider population directly, even though such discriminate efforts are difficult to undertake effectively because of their resource intensiveness.
Therefore, counternarcotics policies have to be weighed very carefully, with a clear eye as to their impact on counterinsurgency and counterterrorism. Seemingly quick fixes, such as blanket eradication in the absence of alternative livelihoods, will only strengthen the insurgency and compromise state-building, and ultimately the counternarcotics efforts themselves.

• Effectiveness in suppressing illicit economies is critically predicated on security.
Without constant and intensive state presence and security, neither the suppression of illicit economies nor alternative livelihoods programs have been effective.

• An appropriate response would be a multifaceted state-building effort that seeks to
strengthen the bonds between the state and marginalized communities dependent on or vulnerable to participation in the drug trade for reasons of economic survival and physical insecurity. The goal of supply-side measures in counternarcotics efforts would be not simply to narrowly suppress the symptoms of illegality and state-weakness, such as illicit crops or smuggling, but more broadly and fundamentally to reduce the threat that the drug trade poses to human security, the state, and overall public safety.

• In the case of efforts to combat illicit crop cultivation and the drug trade, one aspect of
such a multifaceted approach that seeks to strengthen the bonds between the state and society and weaken the bonds between marginalized populations and criminal and armed actors would be the proper sequencing of eradication and the development of economic alternatives. Policies that emphasize eradication of illicit crops, including forced eradication, above rural development or that condition alternative livelihoods assistance programs on prior eradication of illicit crops, such as Colombia’s so-called zero-coca policies, have rarely been effective. Such sequencing and emphasis has also been at odds with the lessons learned from the most successful rural development effort in the context of illicit crop cultivation, Thailand. Indeed, Thailand offers the only example where rural development succeeded in eliminating illicit crop cultivation on a country-wide level (even while drug trafficking and drug production of methamphetamines continue).

• Effective rural development does require not only proper sequencing of security,
alternative livelihoods development, but also a well-funded, long-lasting, and comprehensive approach that does not center merely on searching for a replacement crop. Alternative development efforts need to address all the structural drivers of why communities participate in illegal economies -- such as poor access to legal markets, deficiencies in infrastructure and irrigation systems, no access to legal microcredit, and the lack of value-added chains.

• But the economic approaches to reducing illegality and crime should not be limited
only to rural areas: there is great need for such programs even in urban areas afflicted by extensive and pervasive illegality where communities are vulnerable to capture by organized crime, such as in Mexico. Often the single most difficult problem is the creation of jobs in the legal economy, at times requiring overall GDP growth. But GDP growth is often not sufficient to generate jobs and lift people out of poverty as long the structural political-economic arrangements stimulate capital-intensive growth, but not job creation.

• It is important that social interventions are designed as comprehensive rural development or comprehensive urban planning efforts, not simply limited social handouts or economic buyoffs. The handout and buyoff shortcuts paradoxically can even strengthen criminal and belligerent entities. Such buyoff approach can set up difficult-to-break perverse social equilibria where criminal entities continue to control marginalized segments of society while striking a let-live bargain with the state, under which criminal actors even control territories and limit state access.

• An effective multifaceted response by the state also entails other components:
- Addressing street crime to restore communities’ associational capacity and give a boost to legal economies;
- Providing access to dispute resolution and justice mechanisms – Colombia’s casas de justicia are one example;
- Encouraging protection of human rights, reconciliation, and nonviolent approaches;
- Improving access to effective education as well as health care – a form of investment in human capital;
- Insulating informal economies from takeover by the state and limiting the capacity of criminal groups to become polycrime franchises;
- And creating public spaces free of violence and repression so that civil society can recreate its associational capacity and social capital.
• It is also important to note that some alternative illicit economies, and new smuggling methods to which belligerents are pushed as result of suppression efforts against the original illicit economy, can have far more dangerous repercussions for state security and public safety than did the original illicit economy. Such alternative sources of financing could involve, for example, obtaining radioactive materials for resale on the black market. If true, reported efforts by the FARC to acquire uranium for resale in order to offset the temporary fall in its revenues as a result of eradication during early phases of Plan Colombia before coca cultivation there temporarily rebounded, provide an example of how unintended policy effects in this field can be even more pernicious that the problem they are attempting to address. The FARC’s switch to semisubmersibles for transportation of drugs is another worrisome example of unintended consequences of a policy, this time of intensified air and maritime interdiction. The more widespread such transportation technologies are among non-state belligerent actors, the greater the likelihood that global terrorist groups will attempt to exploit them for attacks against the U.S. homeland or assets.

• Similarly, in the absence of a reduction of global demand for narcotics, suppression of a narcotics economy in one locale will only displace production to a different locale where threats to local, regional, and global security interests may be even greater. Considerations of such second and third-degree effects need to be built into policy. If counternarcotics policies, for example, shifted opium poppy cultivation from Afghanistan to Pakistan, the security consequences for the United States would be far more dire than even the highly undesirable poppy cultivation in Afghanistan.

• A policy design must be cognizant of the fact that it is unrealistic to expect that external policy interventions can eradicate all organized crime and illicit economies in a particular place or, for that matter, all drug trade in that place. The priority for the United States and the international community needs to be to combat the most disruptive and dangerous networks of organized crime and belligerency: those with the greatest links or potential links to international terrorist groups with global reach and those that are most rapacious and predatory to the society and equitable state and most concentrate rents from illicit economies to a narrow clique of people. These two criteria may occasionally be in conflict and thus pose a difficult dilemma. In addition to considering the severity of the threat posed to the international community and to the host state and society, the estimated effectiveness of policy intervention with respect to each type of groups needs to be factored into the analysis of such policy choices.

• It is important to realize that indiscriminate and uniform application of law enforcement – whether external or internal – can generate several undesirable outcomes that need to be guarded against:
- First, the weakest criminal groups can be eliminated through such an approach,with law enforcement inadvertently increasing the efficiency, lethality, and coercive and corruption power of the remaining criminal groups operating in the region.
- Second, such an application of law enforcement without prioritization can indeed push criminal groups into an alliance with terrorist groups – the opposite of what should be the purpose of law enforcement and especially outside policy intervention. Both outcomes have repeatedly emerged in various regions of the world as a result of opportunistic, non-strategic drug interdiction and law enforcement policies.
• Rather than rushing to assistance wherever organized crime reaches visibility, the United States need to engage in law enforcement, anti-organized crime, counternarcotics, and counterterrorism assistance with extreme caution. A do-no-harm attitude and careful evaluation of the side-effects of policy actions need to prominently figure in policy considerations.

•There are multiple dangerous risks in rushing to provide external assistance:
- First of them is the danger that with minimal monitoring presence and rollback capacity of the United States on the ground, U.S.-trained law enforcement forces will “go rogue” and the international community will only end up training more capable drug traffickers or coup forces.
- Second, there is a not-insubstantial risk that some governments will come to see international counternarcotics or anti-organized crime aid as yet another form of rent to be acquired for their power and profit maximization, in the same way that anti-Communist or counterterrorism aid had often been manipulated. Such funds can be diverted for personal profits; or worse yet against domestic political opposition and undermine institutional development and effective and accountable governance in the country.
- Third, building up law enforcement capacity and intervening against illicit economies may often been perceived by local populations as antagonistic to their interests. Such a misalignment between state and societal interests may at the minimum limit the effectiveness of policy intervention; at worst compromise other, more important U.S. and international interests, such as to reduce violent conflict and suppress terrorism.
•The United States can limit these dangers by following some overarching guiding principles regarding extending outside assistance to suppress organized crime.
- First, international assistance should be carefully calibrated to the absorptive capacity of the partner country. In places where state capacity is minimal and law enforcement often deeply corrupt, an initial focus on strengthening the police capacity to fight street crime, reducing corruption, and increasing the effectiveness and reach of the justice system may be the optimal initial interventions. Only once careful monitoring by outside actors has determined that such assistance has been positively incorporated, may it be fruitful to increase assistance for anti-organized crime efforts, including advanced-technology transfers and training. Careful monitoring of all anti-organized crime programs -- including their effects on the internal political arrangements and power distribution within the society and their intended effects on the power of criminal groups and their links to terrorist groups -- needs to be consistently conducted by outside actors.
- Second, as detailed above, the international policy package needs to include a focus on broad state-building and on fostering good governance. Policy interventions to reduce organized crime and to suppress any emergent crime-terror nexus can only be effective if there is a genuine commitment and participation by recipient governments and sufficient buy-in from local communities.

Thank you for giving me this opportunity to address the Subcommittee on this important issue.

Authors

Vanda Felbab-Brown

Publication: U.S. House of Representatives Subcommittee on Terrorism, Nonproliferation and Trade

Image Source: Â© Carlos Duran / Reuters

It Is Time to Pass the Free Trade Agreement with Colombia

Vanda Felbab-Brown — Tue, 11 Oct 2011 09:08:00 -0400

With good reasons, there is a great sense of optimism in Colombia today. After significant improvements in security over the past decade, President Juan Santos embraced the public desire for social progress that took a back seat to security during Álvaro Uribe’s presidency and unveiled a package of social and economic reforms. Reducing poverty is high on his agenda, and restoration of land to those forcibly displaced by armed groups has become his signature issue. Out of the more than two million displaced, his plan is to resettle about 160,000 families over the next two years.

There are even talks about land reform in Bogota, not merely land restoration. President Santos has shaken up the Ministry of Agriculture, historically an obstacle to meaningful agricultural reform and an institution that has privileged big landlords at the expense of small farmers, thus serving as a critical impediment to making alternative livelihood efforts for Colombia’s coca farmers more effective. The Santos government has also recognized the need to increase the state’s fiscal capacity: like in many Latin American countries, land and the rich are taxed very lightly, the poor often work in informal or illegal economies, and thus the middle class bears much of the tax burden. Such a tax policy has done little to generate jobs even during times of national economic growth.

One way to think of Colombia’s tortured history is as a precarious effort to sustain a strong and developed center on the back of a neglected and exploited periphery. Every so often the periphery’s seething socio-economic problems erupt and a periphery-based militancy starts encroaching on the center. The center mobilizes, suppresses the militancy, but fails to address the root causes of the troubles and to bring a stronger, more multifaceted, and more equitable state to the periphery. Eventually, seething problems and militancy start bubbling up again and spill over onto the center. Colombia now has a chance to break this pattern.

A free-trade agreement (FTA) with Colombia would give an important political boost to the reformist government of President Santos and to some extent directly facilitate socio-economic development in Colombia. Further holding up the FTA will accomplish little. Here are three reasons to pass the FTA.

The FTA is likely to promote economic growth in Colombia. However, how much such a growth would dominantly accumulate to capital-intense industries or trickle down to labor-intensive economies and stimulate job-generating growth in either the countryside or the cities depends heavily on fiscal policies in Colombia. Currently, these policies in Colombia do not privilege job creation or poverty reduction.

In the absence of major fiscal and institutional reform in Colombia, the FTA on its own is thus unlikely to have profound effects on violence levels as it is unlikely to redress the lack of employment opportunities in Colombia or the continuing state absence in both rural and urban peripheries. However, a FTA with the United States in combination with fiscal and institutional reform in Colombia that stimulates job creation and expands economic access opportunities in the periphery (such as access to microcredit, for example), could have pronounced effects on employment, reduce violence, and better link Colombia’s citizens with its government.

Far more so than its predecessor, the Santos administration is focusing on such socio-economic issues in Colombia and seeking to address the country’s deep-seated poverty. It has demonstrated a willingness to undertake the badly needed economic reforms to reduce poverty and marginalization.

How comprehensively and effectively they will be implemented remains yet to be seen. But the FTA is likely to provide a political boost to the Santos administration that would facilitate its pushing for stronger reforms and give it some political capital to bargain with strong interest groups in Colombia opposed to such reforms.
While the political and economic implications of a Colombia FTA are likely to be more modest than often stated, it is not clear that further withholding the FTA will induce the government of Colombia to make any further concessions or modify its policies, such as regarding labor issues. There is very much a sense in the Colombian government and Colombian political system that Colombia already adjusted its policies to a full extent possible to accommodate U.S. concerns. Any further concessions are likely to be marginal.

Although violence against union leaders and other community and social activists persists, it is far reduced from its critical levels in the 1990s and early 2000s. Moreover, the Santos administration appears genuinely determined to redress the historic discrimination and neglect of socially, politically, and economically marginalized segments of the Colombian population.

The Santos administration has also shown a commitment to tackle illegal armed actors, including critically, the so-called bandas criminales which have emerged in the wake of the demobilization of paramilitary groups and sometimes directly originate in the old paramilitary groups.
Apart from the internal economic and political implications for Colombia, the FTA would strengthen Colombia’s relationship with the United States. The FTA is an important mechanism for the United States to recognize the progress Colombia achieved in the security and rule of law areas and the commitment of the Santos administration to take on socio-economic issues, such as land restitution.

Even in the absence of the FTA, Colombia will, with frustration, continue to look to the United States as its key international ally, even as it seeks to expand the range of its alliances and strategic partnerships. But at least to some extent, the FTA is likely to reduce Colombia’s determination to diversify its alliances and focus away from the United States, such as on China.

Bottom-line: Without deeper internal reforms designed to address poverty and social marginalization, the FTA will likely have only modest effects on either economic patterns or violence levels in Colombia. If major reforms were undertaken in Colombia, as the Santos administration is attempting to do and which the FTA has a modest chance of facilitating at the political level, the FTA could have more pronounced and positive effects on violence levels and poverty and underdevelopment in Colombia. And the FTA will importantly strengthen U.S.-Colombia relations. Withholding the FTA was an important mechanism to get the government of Colombia to focus on social and human rights problems in Colombia. But it is now time to recognize Colombia’s progress and pass the FTA.

Authors

Vanda Felbab-Brown

Image Source: © Jose Gomez / Reuters

The Effects of Internal Displacement on Host Communities

Clara Inés Atehortúa Arredondo, Roberto Carlos Vidal López and Jorge Salcedo — Sat, 01 Oct 2011 00:00:00 -0400

EXECUTIVE SUMMARY

During the many years of conflict in Colombia, internal displacement has been dominated by movements of populations from rural areas, smaller cities and towns across the country to large cities, particularly to the capital city, Bogotá. Upon arrival, displaced persons typically reside in peripheral and poor areas of these urban centers.

This study was based on focus groups composed of internally displaced persons (IDPs) and host communities in the localities of Suba and Ciudad Bolívar in Bogotá, which both have large IDP populations, as well as interviews with state officials and members of aid and outreach organizations working in the area.

Suba and Ciudad Bolívar lie on the outskirts of Bogotá and were consolidated as parts of the city over the last 20 years through a process of spontaneous and unregulated urbanization. As such, there has been no urban planning and limited access to public services. The majority of inhabitants in these areas are internally displaced persons from all parts of the country who fled violence, as well as some economic migrants.

In this study, the term ‘host communities’ refers to individuals who have lived in Suba and Ciudad Bolívar for more than ten years. Although many in the host community were at one point forcibly displaced as well, the term ‘internally displaced persons’ –according to local usage and adopted in this study–only refers to those who were forcibly displaced to these areas in the past decade. Besides more recent arrival, another distinction between the populations is that the IDP community has received government assistance through the system established under Colombia’s law on internal displacement, Law 387 of 1997.

Institutional Relationships
Despite its limitations and problems, the state system of support for internally displaced persons is essential to their survival. All of the IDPs with whom the researchers spoke had received some sort of assistance. Nonetheless, it was also clear that state benefits are insufficient and temporary. Although IDPs have typically been displaced for long periods of time, they receive assistance only for the short term or, at most, the medium term.

The relationship between the national, municipal and local systems of assistance to displaced persons is extremely important in terms of the overall delivery of assistance to displaced persons. Suba relies more heavily on the national system of assistance to IDPs, whereas in Ciudad Bolívar the system is aided to a larger extent by local initiatives. The difference in approach stems from the issue of forced displacement being more prominently placed on the local public agenda in Ciudad Bolívar than in Suba.

The state accords minors preferential access to public services including primary and secondary education and healthcare. In the capital, there is almost universal access to public education. Nevertheless, these rights are not fully fulfilled for IDP children. For certain age groups the barrier to accessing education is schools located in dangerous neighborhoods. In terms of access to healthcare, the researchers found significant limitations in IDPs’ ability to obtain medical treatment.

In addition, IDPs are characterized by lower levels of political participation in comparison to members of the host community, who have better established political networks. However, IDPs have begun to advocate for their rights through IDP organizations as well. Some of the most active organizations are run by Afro-Colombian IDPs, which carry out important activities in their communities. Importantly, IDPs have also gained political influence through legal action with considerable success at the Constitutional Court in particular.

Non-governmental social organizations are also an important source of assistance to displaced persons. The role of the Catholic Church is of particular note for leading many support and protection activities for the IDPs in their parishes.

Economic Relationships
The main problem IDPs face in securing economic stability in poor urban areas is obtaining a regular source of income. Access to the formal labor market is quite limited, particularly for IDPs. They typically only have occasional and temporary access to jobs in construction or domestic service. Participating in the formal work sector and social security system renders registered IDPs ineligible for state assistance offered to IDPs, which is another important consideration they must take into account when seeking employment.

Both IDPs and a significant proportion of the host community obtain what unsteady income they generate through the informal employment sector. State support for income generation enables IDPs to establish small, informal businesses. However, while providing them with income in the short term, these informal efforts in entrepreneurship are not reliable sources of income in the medium and long term due to the difficulty of sustaining the projects.

The growing demand for housing in urban spaces and rising prices render home ownership difficult for everyone in Suba and Ciudad Bolívar. This has led to an increased demand for rental housing that increases even further with each influx of displaced persons. By using state rental subsidies–which are temporary and intermittent–to rent houses or rooms in the homes of host community members, IDPs often find themselves in a complex economic relationship with host communities.

Host community members who own their homes often build additions to rent to IDPs as additional sources of income. The fact that the income of IDPs is often unstable and that there are often cultural differences between IDPs and their hosts means that the landlord-tenant relationship is one often characterized by conflict.

Relations between Internally Displaced Persons and Host Communities
Both internally displaced persons and host communities on the outskirts of Bogotá in Suba and Ciudad Bolívar live in poverty, but under different conditions. The host communities enjoy greater access to housing, services and work in both the formal and informal sectors. In contrast, displaced families are largely disadvantaged due to their lack of social networks, their dependence on state assistance and their difficulty in accessing formal and informal labor markets.

In the locations studied, the host communities single out IDPs based on their recent arrival to the neighborhood, where in Colombia they have arrived from and their access to state assistance.

Relations between host communities and displaced persons are complex. When IDPs first arrive there is often an expression of solidarity and support as friends or family members help them to get settled. But such good will is often short-lived due to the limited resources of the host community.

In general, IDPs are often treated with hostility by the general public. They may be viewed with fear, subjected to persecution for being displaced and blamed for increased crime rates. Cultural, regional and ethnic differences often produce conflicts between the two communities and become excuses for racism and discrimination in daily life, such as in the workplace and in the landlord-tenant relationship. Furthermore, host communities often do not understand the state assistance programs for IDPs. This can lead to hostility toward IDPs and unsubstantiated accusations regarding IDPs’ supposed inability to use state assistance effectively, organize themselves or overcome their present situation.

Recommendations

The recommendations, which begin on page 27, focus on the following areas:

Standardizing the urbanization process.
Generating a supply of public housing for IDPs.
Supporting family and neighbor networks.
Raising the level of awareness of the host community about IDPs.
Maintaining and deepening the state’s assistance programs for IDPs in accord with the existing legal and constitutional framework.
Reviewing policies of assistance to the displaced with a long-term perspective.
Implementing the joint responsibility of the national government and its municipalities.
Providing on-going training for officials.
Promoting and protecting the political participation and representation of IDPs.
Maintaining the involvement of international and non-governmental organizations through actions which bring together host communities and IDPs.
Training IDPs for jobs in the formal sector.

Generating permanent long-term income for IDPs as well as enhancing their connection to the economy’s formal work sector.

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Authors

Clara Inés Atehortúa Arredondo
Roberto Carlos Vidal López
Jorge Salcedo

Publication: The Brookings Institution and International Committee for the Red Cross in Colombia

Congress Should Pass Free Trade Agreements with South Korea, Colombia and Panama

Joshua Meltzer — Thu, 28 Jul 2011 13:09:00 -0400

Congress could be poised to pass three long-delayed free trade agreements, which promise to create jobs and help boost the anemic economy. South Korea, Colombia and Panama all hammered out trade deals with the U.S. during President George Bush’s second term but none was able to make it through the political gauntlet on Capitol Hill. Joshua Meltzer is optimistic about the future of these accords and explains why they need to be ratified.

Authors

Joshua Meltzer

Image Source: ï¿½ Albeiro Lopera / Reuters

Korea, Colombia, Panama: Pending Trade Accords Offer Economic and Strategic Gains for the United States

Mauricio Cárdenas and Joshua Meltzer — Wed, 27 Jul 2011 16:14:00 -0400

Editor's Note, Oct. 12, 2011: Congress has passed a trio of trade agreements negotiated during the George W. Bush administration and recently submitted by President Obama. The authors of this policy brief say the pacts with South Korea, Colombia and Panama will boost U.S. exports significantly, especially in the key automotive, agricultural and commercial services sectors.

Policy Brief #183

A trio of trade agreements now pending before Congress would benefit the United States both economically and strategically. Carefully developed accords with South Korea, Colombia and Panama will boost U.S. exports significantly, especially in the key automotive, agricultural and commercial services sectors.

Among the other benefits are:

increased U.S. competitiveness
enhancement of U.S. diplomatic and economic postures in East Asia and Latin America
new investment opportunities
better enforcement of labor regulation and
improved transparency in these trading partners’ regulatory systems.

The pacts are known as Free Trade Agreements, or FTAs. The Korean agreement (KORUS) was negotiated in 2006-2007 and revised in 2010. The Colombian agreement (COL-US, sometimes known as COL-US FTA) was signed in 2006. The agreement with Panama (PFTA, sometimes known as the Panama Trade Promotion Agreement) was signed in 2007. All have the support of the Obama administration.

RECOMMENDATIONS

The three FTAs will substantially reduce these trading partners’ tariffs on U.S. goods, opening large markets for U.S. commerce and professional services. In combination, they will increase the size of the U.S. economy by about $15 billion. Furthermore, they will help reverse a slide in U.S. market influence in two important and increasingly affluent regions of the globe.

Approval of all three agreements is in the national interest. To move forward, both Congress and the administration should take these appropriate steps:

Congress should approve the trade agreements with Korea (KORUS), Colombia (COL-US) and Panama (PFTA) without additional delays.
To maximize the trade and investment benefits of KORUS, the administration should actively engage in the KORUS working groups, such as the Professional Services Working Group.
Similarly, the U.S. Trade Representative should participate in the Joint Committee’s scheduled annual meetings, in order to maintain a highlevel focus on U.S.-Korea trade, drive further trade liberalization and enable the committee to serve as a forum for broader discussions on trade in East Asia.
The Colombia-U.S. Joint Committee should include representatives of Colombia’s Trade and Labor Ministers with their US counterparts. The presence of the Labor minister should facilitate progress under the FTA through strengthened labor standards and timely implementation of all elements of the agreed-upon action plan. This Committee and specialized working groups could increase the pace of bilateral interaction and help officials identify important areas for discussion, negotiation and agreement.
Panama has ratified the Tax Information and Exchange Agreement which entered into force on April 2011. Panama and the US should strengthen bilateral communication so that collaboration in the battle against money laundering is pushed even further with greater cooperation.

Economic Effects of the Korea Agreement

The economic benefits to the United States from KORUS are especially significant, as the agreement will provide preferential market access to the world’s 11th largest—and a fast-growing—economy. In 2010, U.S.-Korea trade was worth $88 billion, comprising U.S. exports of $39 billion and imports of $49 billion, making Korea the United States’ seventh largest trading partner. According to the independent, quasi-judicial U.S. International Trade Commission (ITC), exports resulting from KORUS will increase the U.S. gross domestic product (GDP) by up to $12 billion. This constitutes a remarkable gain in both real and percentage terms.

To the United States, KORUS offers diverse economic advantages. Most strikingly, KORUS will open Korea’s service market to U.S. exports, allowing the United States to exploit its competitive advantages in financial services, education and information and communications technologies. The agreement also will lead to increased imports from Korea, which in turn will help the United States achieve greater economic specialization. The likely effects of more specialization—and of increased Korean investment in the United States—include greater U.S. efficiency, productivity, economic growth and job growth. Meanwhile, U.S. investors will gain new opportunities in the increasingly active Asia-Pacific region.

Lately, passage of KORUS has assumed enhanced importance with the impasse in the World Trade Organization’s Doha Round. No longer can the United States reasonably anticipate that Doha will lead to improved access to the Korean market. Moreover, an FTA between Korea and the European Union (EU) that took effect July 1st confers preferential access to European exporters, undermining the competitiveness of U.S. businesses in Korea. Even before the European FTA, the United States had been losing valuable ground in Korea. Between 2000 and 2010, the United States fell from first to third in the ranking of Korea’s trading partners (reversing positions with China), as U.S. products declined from 18 to only 9 percent of Korean imports. Failure to approve the agreement can be expected to lead to a further decline. These moves will strongly assist U.S. producers of electronic equipment, metals, agricultural products, autos and other consumer goods. For example, agricultural exports are expected to rise $1.8 billion per year.

On the services front, KORUS will increase U.S. businesses’ access to Korea’s $560 billion services market. Financial services providers, the insurance industry and transportation firms stand to benefit substantially. KORUS usefully builds on the link between investment and services by improving the ability of U.S. law firms to establish offices in Korea. In addition, the agreement establishes a Professional Services Working Group that will address the interests of U.S. providers of legal, accounting and engineering services, provided that U.S. representatives engage actively in the group. KORUS also requires that regulations affecting services be developed transparently and that the business community be informed of their development and have an opportunity to provide comments, which the Korean government must answer.

On the investment front, KORUS affords a chance to strengthen a bilateral investment relationship that probably is underdeveloped. In 2009, the U.S. foreign direct investment flow to Korea was $3.4 billion, while there was a net outflow of Korean foreign direct investment to the United States of $255 million. KORUS supports market access for U.S. investors with investment protection provisions, strong intellectual property protection, dispute settlement provisions, a requirement for transparently developed and implemented investment regulations and a similar requirement for open, fair and impartial judicial proceedings. All this should markedly improve the Korean investment climate for U.S. business. It will strengthen the rule of law, reducing uncertainty and the risk of investing in Korea.

On the governance side, KORUS establishes various committees to monitor implementation of the agreement. The most significant of these is the Joint Committee that is to meet annually at the level of the U.S. Trade Representative and Korea’s Trade Minister to discuss not only implementation but also ways to expand trade further. KORUS establishes committees to oversee the goods and financial services commitments, among others, and working groups that will seek to increase cooperation between U.S. and Korean agencies responsible for regulating the automotive sector and professional services. These committees and working groups, enriched through regular interaction between U.S. and Korean trade officials, should increase levels of trust and understanding of each county’s regulatory systems and help officials identify opportunities to deepen the bilateral economic relationship.

Strategic Effects of the Korea Agreement

Congressional passage of KORUS will send an important signal to all countries in the Asia-Pacific region that the United States intends to remain economically engaged with them, rather than retreat behind a wall of trade barriers, and is prepared to lead development of the rules and norms governing trade and investment in the region. KORUS will provide an important economic complement to the strong, historically rooted U.S. military alliance with Korea. It also will signal a renewed commitment by the United States in shaping Asia’s economic architecture.

The last decade has seen declining U.S. economic significance in Asia. Just as the United States has slipped from first to third in its ranking as a trading partner of Korea, similar drops are occurring with respect to Japan, Indonesia, Malaysia and other Asia-Pacific economic powers. In all of Northeast and Southeast Asia, the United States has only one FTA in effect, an accord with the Republic of Singapore. Passage of KORUS now would be particularly timely, both as a sign of U.S. engagement with Asia and as a mechanism for ensuring robust growth in U.S.-Asia trade and investment.

To illustrate how KORUS might affect U.S. interests throughout the region, consider regulatory transparency. The KORUS transparency requirements could serve as a model for how countries can set and implement standards. They might for example, influence the unfolding Trans-Pacific Partnership negotiations, talks that could set the stage for a broader Asia-Pacific FTA. U.S. producers, investors and providers of commercial and professional services could only benefit from a regional trend toward greater transparency and the lifting of barriers that would ensue. Other KORUS provisions favorable to the United States could function as similar benchmarks in the development of U.S. relations with Asia-Pacific nations and organizations.

Effects of the Colombia Agreement

COL-US will also strengthen relations with a key regional ally and open a foreign market to a variety of U.S. products. Bilateral trade between Colombia and the United States was worth almost $28 billion in 2010. COL-US is expected to expand U.S. GDP by approximately $2.5 billion, which includes an increase in U.S. exports of $1.1 billion and an increase of imports from Colombia of $487 million.

COL-US offers four major advantages:

It redresses the current imbalance in tariffs. Ninety percent of goods from Colombia now enter the United States duty-free (under the Andean Trade Promotion and Drug Eradication Act). COL-US will eliminate 77 percent of Colombia’s tariffs immediately and the remainder over the following 10 years.
It guarantees a more stable legal framework for doing business in Colombia. This should lead to bilateral investment growth, trade stimulation and job creation.
It supports U.S. goals of helping Colombia reduce cocaine production by creating alternative economic opportunities for farmers.
It addresses the loss of U.S. competitiveness in Colombia, in the wake of Colombian FTAs with Canada and the EU as well as Latin American sub-regional FTAs.

With respect to trade in goods, U.S. chemical, rubber and plastics producers will be key beneficiaries of COL-US, with an expected annual increase in exports in this combined sector of 23 percent, to $1.9 billion, relative to a 2007 baseline according to the ITC. The motor vehicles and parts sector is expected to see an increase of more than 40 percent. In the agriculture sector, rice exports are expected to increase from a 2007 baseline of $2 million to approximately $14 million (the corresponding increases would be 20 percent for cereal grains and 11 percent for wheat).

These and other gains will result from the gradual elimination of tariffs and from provisions that reduce non-tariff barriers as well. Among the latter, the most important changes would be increased transparency and efficiency in Colombia’s customs procedures and the removal of some sanitary and phytosanitary (or plant quarantine) restrictions. With respect to trade in services, Colombia has agreed to a number of so-called "WTO-plus" commitments that will expand U.S. firms’ access to Colombia’s $166 billion services market. For instance, the current requirement that U.S. firms hire Colombian nationals will be eliminated, and many restrictions on the financial sector will be removed.

On the investment front, the potential advantages to the United States also are substantial. In 2009, the U.S. flow of foreign direct investment into Colombia was $1.2 billion, which amounted to 32 percent of that nation’s total inflows. COL-US improves the investment climate in Colombia by providing investor protections, access to international arbitration and improved transparency in the country’s legislative and regulatory processes. These provisions will reduce investment risk and uncertainty.

COL-US presents significant improvements in the transparency of Colombia’s rule-making process, including opportunities for interested parties to have their views heard. COL-US also requires that Colombia’s judicial system conform with the rule of law for enforcing bilateral commitments, such as those relating to the protection of intellectual property. In addition to access to international arbitration for investors, COL-US includes dispute settlement mechanisms that the two governments can invoke to enforce each other’s commitments. Taken as a whole, these provisions offer an important benchmark for further developments in Colombia’s business environment. The transparency requirement alone could reduce corruption dramatically.

Labor rights have been a stumbling block to congressional approval of COL-US. The labor chapter of the agreement guarantees the enforcement of existing labor regulations, the protection of core internationally recognized labor rights, and clear access to labor tribunals or courts. In addition, in April 2011, Colombia agreed to an Action Plan strengthening labor rights and the protection of those who defend them. In the few months the plan has been in effect, Colombia has made important progress in implementation. It has reestablished a separate and fully equipped Labor Ministry to help protect labor rights and monitor employer-worker relations. It has enacted legislation authorizing criminal prosecutions of employers who undermine the right to organize or bargain collectively. It has partly eliminated a protection program backlog, involving risk assessments. And, it has hired more labor inspectors and judicial police investigators.

Besides economic benefits, COL-US offers sizable strategic benefits. It would fortify relations with an important ally in the region by renewing the commitment to the joint struggle against cocaine production and trade. Under the agreement, small and medium-sized enterprises in labor-intensive Colombian industries like textiles and apparel would gain permanent access to the U.S. consumer market. With considerable investments, Colombia would be able to compete with East Asia for these higher quality jobs, swaying people away from black markets and other illicit activities.

While Congress deliberates, the clock is ticking. Colombia is also looking at other countries as potential trade and investment partners in order to build its still underdeveloped infrastructure and reduce unemployment. Complementing its FTAs with Canada, the EU, and several countries in the region, Colombia has initiated formal trade negotiations with South Korea and Turkey and is moving toward negotiations with Japan. A perhaps more telling development is China’s interest in building an inter-oceanic railroad in Colombia as an alternative to the Panama Canal: on July 11th President Juan Manuel Santos signed a bilateral investment treaty with China (and the UK) and is expected to meet Chinese President Hu Jintao in the fall.

Effects of the Panama Agreement

Although Panama’s economy is far smaller than Korea’s or even Colombia’s, the PFTA will deliver important economic and strategic benefits to the United States. Considerable gains will take place in U.S. agriculture and auto manufacturing. Moreover, the PFTA will strengthen the U.S. presence in the region, allowing for the stronger promotion of democratic institutions and market-based economies.

U.S. merchandise exports to Panama topped $2.2 billion in 2009. The PFTA’s elimination of tariffs and reduction in non-tariff barriers will cause this figure to grow. For example, rice exports are expected to increase by 145 percent, pork exports by 96 percent and beef exports by 74 percent, according to the ITC. Exports of vehicles are expected to increase by 43 percent. The PFTA also guarantees access to Panama’s $21 billion services market for U.S. firms offering portfolio management, insurance, telecommunications, computer, distribution, express delivery, energy, environmental, legal and other professional services.

Panama’s trade-to-GDP ratio in 2009 was 1.39, highlighting the preponderance of trade in Panama’s economy and the international orientation of many of its sectors. Following passage of the PFTA, Panama will eliminate more than 87 percent of tariffs on U.S. exports immediately. The remaining tariffs will be removed within 10 years for U.S. manufactured goods and 15 years for agricultural and animal products.

PFTA protections to investors—similar to protections accorded under KORUS and COL-US—are especially valuable, as Panama receives substantial investments associated with sectors that will benefit from both from the expansion of the canal and from other infrastructure projects. A fair legal framework, investor protections and a dispute settlement mechanism, all features of the PFTA, are almost certain to increase U.S. investments in Panama. Panama’s Legislature also recently approved a Tax Information Exchange Agreement with the United States and amended current laws to foster tax transparency and strengthen intellectual property rights. These are crucial steps in preventing the use of Panamanian jurisdiction as a haven for money laundering activities.

Panamanian laws and regulations prohibiting strikes or collective bargaining were a concern that initially delayed implementation of the PFTA. But, these laws have been changed, with the exception of a requirement that 40 workers (not the recommended 20) are needed to form a union; the 40-worker requirement has been kept partly because labor groups in Panama support it. The PFTA’s labor chapter protects the rights and principles outlined in the International Labor Organization’s 1998 Declaration on Fundamental Principles and Rights at Work.

Besides offering economic advantages to the United States, the PFTA is a strategic agreement. Strengthening economic links with Panama should bolster the U.S. capacity to address cocaine trafficking in the region, in light of Panama’s location as Colombia’s gateway to North America. The importance of the canal, now undergoing an expansion that will double its shipping capacity, further underscores the U.S. need to strengthen bilateral relations with Panama.

The time to act is now. Like Colombia, Panama has been negotiating with economic powerhouses other than the United States. It recently signed a trade agreement with Canada and an Association Agreement with the EU. Delaying passage of the PFTA would generate a loss of market share for a variety of sectors of the U.S. economy.

Conclusion

All three FTAs encourage trade by removing tariff and non-tariff barriers. All the agreements provide access to large services markets, foster transparency and offer significant strategic advantages to the United States. Congress should approve each of them now.

The authors would like to thank Juan Pablo Candela for his assistance with this project.

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Latin America Economic Perspectives: Shifting Gears in an Age of Heightened Expectations

Mauricio Cárdenas, Karim Foda, Camila Henao and Eduardo Levy-Yeyati — Fri, 08 Apr 2011 16:09:00 -0400

INTRODUCTION AND SUMMARY

Overheating and inflationary pressures in Latin America are rising, and many financial regulators wonder whether domestic credit is already growing excessively. On the fiscal front, the region is now facing the well-known fact that tightening during an upturn is harder than loosening during a recession. On the monetary side, the simplistic inflation targeting is being replaced by a combination of targets and ad hoc instruments. Financial stability, or bubble prevention, is the most recent addition to new set of targets. In terms of the toolkit, prudential macroeconomic rules have gained status as an instrument to deliver financial stability.

Bringing macroeconomic stability back by relying exclusively on monetary policy will be too costly. The necessary increase in interest rates will only create more upward pressures on exchange rates, fostering a never-ending destabilizing spiral. If only for this reason, fiscal unwinding is indispensable for economies to return to normalcy.

While intervention and controls have often been framed in a negative light, they are increasingly seen as a useful complement to countercyclical macroeconomic policy toolkit. Sterilized interventions have gradually become the rule, and recent years have seen a comeback of reserve requirements, not only selectively as a tax on inflows but also uniformly as a monetary policy tool to raise lending interest rates without enhancing the appeal of carry trades.

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Mauricio Cárdenas
Karim Foda
Camila Henao
Eduardo Levy-Yeyati

Colombia’s Consolidation: Everything Coming up Orchids?

Vanda Felbab-Brown — Tue, 08 Mar 2011 15:56:00 -0500

The following article is one of four reports based on Vanda Felbab-Brown's fieldwork in different parts of Colombia in January 2011. Here she gives an overview of the Santos government’s national security strategy. Read also a description of her trip to the Colombia-Venezuela border, where smuggling is rampant; her review of security in Nariño; and her walk in the comunas of Medellín.

There is a great sense of optimism in Colombia today. After significant improvements in security over the past decade, President Juan Santos embraced the public desire for social progress that took a back seat to security during Álvaro Uribe’s presidency and unveiled a package of social and economic reforms. Reducing poverty is high on his agenda, and restoration of land to those forcibly displaced by armed groups has become his signature issue. Out of the more than two million displaced, his plan is to resettle about 160,000 families over the next two years.

There are even talks about land reform in Bogota, not merely land restoration. President Santos has shaken up the Ministry of Agriculture, historically an obstacle to meaningful agricultural reform and an institution that has privileged big landlords at the expense of small farmers, thus serving as a critical impediment to making alternative livelihood efforts for Colombia’s coca farmers more effective. The Santos government has also recognized the need to increase the state’s fiscal capacity: like in many Latin American countries, land and the rich are taxed very lightly, the poor often work in informal or illegal economies, and thus the middle class bears much of the tax burden. Such a tax policy has done little to generate jobs even during times of national economic growth.

With the decline in violence, the confidence of Colombian military and law enforcement officials, many trained under U.S. Plan Colombia, has increased to the point where they are offering their expertise to other countries. In Mexico and Afghanistan they are providing counternarcotics training; in the Philippines they have offered to teach how to demobilize armed groups. (Never mind the 10,000 newly-armed belligerents, the so-called bandas criminales, that have emerged after the paramilitaries’ demobilization.) A Colombian government official recently asked me if Colombia should approach Pakistan to teach them how to do counterinsurgency (COIN).

The Santos government has recognized the still-serious security challenges in the country. A new impressive plan was unveiled to tackle urban crime, including street crime, the neglected menace of citizens across Latin America. The Ministry of Interior has committed itself to go after the persisting paramilitary networks and new bandas criminales to prevent their manipulation of the October municipal and departmental elections in Colombia. It even hired experts from a think tank, Corporación Nuevo Arco Iris, to help map the paramilitary networks. Along with journalist Claudia López, Nuevo Arco Iris helped expose the paramilitary penetration of Colombia’s political institutions several years ago. In striking contrast, President Uribe was frequently on a war footing with human rights NGOs, Colombia’s justice institutions, and other critics of his government.

Among Colombia’s NGOs, especially in Bogota, there is also a great deal of excitement about possible negotiations with the FARC, even those which might move beyond a humanitarian exchange to reach for a political settlement. The New Year statement by the FARC’s leader, Alfonso Cano, was by far the most conciliatory that has been heard from the FARC in years.

So is everything coming up orchids in Colombia (of which Colombia has approximately 3000 species, among the greatest diversity in the world)? Surprisingly, the biggest challenge may again be security. Although the government is talking about consolidation of the security gains achieved over the decade, it has come to realize that its model project for a comprehensive counterinsurgency and state-building package – in Macarena – is likely to be hard to replicate elsewhere. The concentration of resources Macarena received will be difficult to bring to other areas – be they military and police forces or economic assistance. Colombia simply does not have enough of such assets. Nor have the consolidation zones, including in Macarena, been expanding (like the proverbial “ink spot” as predicted in standard COIN theory). The Colombian government had originally hoped to have 16 more such consolidation zones, then 13; but now is going through a major review of whether to decrease the number of consolidation zones further or do more Macarenas Light. Such a reduced effort would leave a lot of spaces without adequate government presence, including in the security sphere.

Meanwhile, Colombia still has tens of thousands of bad guys running around – from the FARC to the narcos to bandas criminales. In parts of Colombia, like Nariño, security is worse than it has been in years. Unavoidably, there will have to be some hard guns-and-butter choices made. Colombian officials are already complaining about the reduction of U.S. aid, including its military component -- asking where they will get money for addressing continuing security deficiencies.

In many parts of the country, the security and state-building challenges are quite different than in Macarena. There COIN was about defeating the FARC’s in its heartland and bringing in a functioning multifaceted state (much of which is still in progress). In Montes de Maria, another area at one point selected as a Consolidation priority area, most of the local government is under indictment or in prison for ties to the paramilitaries. The issue there has not been so much to bring in the state as to rid it of capture by paramilitary thugs.

Civilian presence has often been slow to come on the heels of the military’s boots. Getting line ministries to establish an effective presence has been a major challenge. Instead, it has often been the military and police forces who are holding the bag of distributing socio-economic goodies and even venturing into socio-economic development. With a well-meaning desire to win the hearts and minds of the population and shake off memories of police corruption and abuse, rural police deployments have been given training in agronomy so that they can teach farmers how to cultivate legal crops. (Despite the good intentions, one can’t help but wonder whether that is an appropriate role for police forces.) One of the tasks for Colombia’s new national security advisor, the architect of the Macarena pilot, Sergio Jaramillo, is to ensure coordination and real delivery by the line ministries.

President Santos, with his high approval ratings, is likely to get reform laws passed through the Uribistas-dominated Congress. But the crucial test will come with the reforms implementation on the ground. That is where the Colombian state is the weakest. That is also where the bandas criminales, the FARC, and entrenched powers will put up the greatest opposition to reforms-- land redistribution, tackling crime, or bringing in a functioning justice system -- that reduce their power.

One way to think of Colombia’s tortured history is as a precarious effort to sustain a strong and developed center on the back of a neglected and exploited periphery. Every so often the periphery’s seething socio-economic problems erupt and a periphery-based militancy starts encroaching on the center. The center mobilizes, suppresses the militancy, but fails to address the root causes of the troubles and to bring a stronger, more multifaceted, and more equitable state to the periphery. Eventually, seething problems and militancy start bubbling up again and spill over onto the center. Colombia now has a chance to break this pattern. The verdict is still out whether it will succeed.

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Vanda Felbab-Brown

Latin America’s Bus Rapid Transit Boom–Lessons for U.S. Public Transportation

Tue, 08 Mar 2011 09:30:00 -0500

Event Information

March 8, 2011
9:30 AM - 11:00 AM EST

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

Bus Rapid Transit (BRT) has positioned itself as one of the most important additions to sustainable transport in the world, significantly improving urban mobility and lowering the cost of public transit. During the last ten years, 97 cities have implemented BRT corridors, many of them located in Latin America. In the region, BRT has become easy to implement, safe, environmentally friendly and efficient, and has been successfully deployed in cities like Curitiba, Bogotá, Mexico City. Often regarded as a second-best option vis-à-vis rail alternatives, the successful implementation of BRT requires concerted efforts to enhance its image, funding and planning. Valuable lessons can be extracted from Latin America’s experience with bus rapid transit, lessons that can serve as a point of departure to discuss the applicability of BRT in the United States.

On Tuesday, March 8, the Latin American Initiative at Brookings hosted a panel discussion of lessons learned from Latin America and the applicability of BRT in the United States. Panelists included Marc Elrich, councilmember of Montgomery County, Maryland; Darío Hidalgo, director of research and practice at EMBARQ, WRI Center for Sustainable Transport; Sam Zimmerman, urban transport adviser at the World Bank; and Robert Puentes, senior fellow in the Metropolitan Policy Program at Brookings. Mauricio Cárdenas, senior fellow and director of the Latin America Initiative, moderated the discussion.

After the program, panelists took audience questions.

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Latin America’s Bus Rapid Transit Boom–Lessons for U.S. Public Transportation

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Event Materials

20110308_bus_rapid_transit

Participants

Moderator

Panelists

Marc Elrich

Councilmember
Montgomery County, Maryland

Darío Hidalgo

Director of Research and Practice, EMBARQ
WRI Center for Sustainable Transport

Sam Zimmerman

Urban Transport Adviser
World Bank

Illegal Economies and Smuggling in Colombia

Vanda Felbab-Brown — Tue, 22 Feb 2011 14:30:00 -0500

The following article is one of four reports based on Vanda Felbab-Brown's fieldwork in different parts of Colombia in January 2011. Here she describes her trip to the Colombia-Venezuela border where smuggling is rampant. Read also her review of security in Nariño; her walk in the comunas of Medellín; and her overview of the Santos government’s national security strategy.

The "muchacho" on a motorcycle drove up to us and asked if we needed help. He was not offering to give us directions in case we were lost in this Venezuelan border town of San Antonio; he was inquiring whether we needed help to get anything smuggled into Colombia. Along the border with Venezuela and Colombia, several free-entry (visa-free) zones like this one between San Antonio and Villa de Rosario, Colombia, exist, and they are both the lifeline of the border communities and smuggling havens.

Because of Venezuela's anachronistic exchange rate and differential taxes and prices, Colombians from Catatumbo, a poor region plagued by unemployment, coca, and violence, prefer to shop for a myriad of household goods in Venezuela. But at the border, they face the Venezuelan border guards and potential export duties or the confiscation of their goods. Here is where the muchachos, known as las moscas (the flies), come in. They know which of the notoriously corrupt Venezuelan border guards are corrupt reliably and for a fee will let the contraband pass. Customers stop and wait with their cars or on foot in streets not far from the border, and las moscas swarm around them offering their smuggling services. They take an article across the border, share a part of the profit with the border guard, and hand the merchandise to their customers in Colombia. When for the purposes of research - we did not actually intend to smuggle anything - we told our mosca that we wanted to buy a basketball net and bring it into Colombia, he told us that the net would be too visible on his motorcycle and we needed a mosca with a car. After my local Catatumbo guide assured him that this all-too-rare gringa would not compromise his operations, he did recommend a car-equipped colleague.

Serious smuggling, of course, involves actors far more serious than the flies. There is plenty of serious illegal trafficking along the Colombian-Venezuelan border involving drugs, gasoline, and cars. Although the Triborder region where Brazil, Paraguay, and Argentina meet is more notorious as a smuggling hub of Latin America, the Colombian-Venezuelan border is perhaps even more porous and channels vast amounts of cocaine and other commodities. Colombia’s long-time armed actors – the leftist guerrillas the FARC and the ELN and the reconstituted rightist ex-paramilitary groups, such as Aguilas Negras, Organización Nueva Generación, Los Rastrojos, and other criminal gangs – fight for control of this highly lucrative traffic and of the border. Both sets of actors use Venezuelan territory for their operations.

In Catatumbo, while the FARC and the ELN have been pushed into the jungles, the ex-paramilitary groups rule the illegal economies and try to rule the life of the community as well. The Colombian government insists that these groups, which have emerged in the wake of the 2005 demobilization process of the former umbrella paramilitary group, Autodefensas Unidas de Colombia (AUC), are not paramilitary groups, but merely criminal bands without political ambitions. But in Catatumbo and elsewhere in Colombia, they display much of the same behavior as the former AUC: They impose curfews, dictate dress codes, extort legal and illegal businesses alike, and influence local elections. In Cúcuta, Catatumbo’s main city, local community organizers still fear them and allege that their connections to local police, military, and political structures are too deep for them to report Cúcuta’s frequent murders or continuing disappearances of people from around the region. Like the AUC, they fight the FARC with various degree of commitment, depending on local circumstances. And although they do not have a national agenda like the leadership of the AUC, they understand that their power grows and criminal enterprises thrive if they have a good influence on local politics.

The control exercised by such groups is less and more clandestine than it used to be. At the height of their power in the early 2000s, paramilitary groups openly patrolled in Cúcuta next to the police and the military. The nearby town of Juan Frío, the seat of the local parajefe, was notorious for punishments of those who disobeyed: people are rumored to have been quartered there with chainsaws or burned alive in ovens. Today Juan Frío is trying to reinvent itself as a Sunday vacation spot known for its fish restaurants. But when in one such local cantina I tried to engage the waiter on the topic of the new paramilitary groups, he quickly glanced around and walked away.

Those who overcome their fears and are willing to talk without attribution insist that the presence of the new paramilitary groups/criminal bands is strong, only now they often front as private security companies. Regardless of whether one calls them criminal bands or new paramilitary groups, five years after the demobilization of the old AUC, these armed actors now have as many as 10,000 combatants in Colombia and once again terrorize local communities. In the 1980s, they carried AK-47s; in the 1990s, they added formal uniforms to their AK-47s; and today, they are in civvies or don the uniforms of private security companies and have a silencer on their Luger. But their ability to coerce local communities and corrupt local authorities is still strong.

They also lord it over the moscas and another breed of local smugglers, the pimpineros, by taxing and sometimes franchising them. The pimpineros are petty smugglers of gasoline who dot the roads around Cúcuta and hawk the fuel in plastic bottles. Their smuggled gasoline sells for about half the price of official gasoline in Cúcuta and one quarter of the price in Bogotá. Actors who control gasoline smuggling in bulk and can bring it all the way from Venezuela to Bogotá can make more money than those who smuggle cocaine to Colombia’s borders while facing far less law enforcement.

Nonetheless, law enforcement against the pimpineros occasionally takes place. When Cucutá authorities tried to shut down the smuggled gasoline sales some months back, they sparked social protests and demonstrations since the gas smuggling, like other smuggling, constitutes the only livelihood of many local residents. The local authorities then changed their minds and permitted the sale of smuggled gas if the pimpineros did not smuggle more than a certain amount, joined a union, and paid a small tax. Some obeyed, others didn’t. But it was not clear whether the pimpineros liked their semi-legal status better: some complained that now they had to pay a tax both to the paramilitaries and to the local government.

One lesson of this micro example of illegal economies is that legalization is not a panacea for the complex threats and challenges illegal economies represent. As long as the state does not have firm control of the security situation and cannot enforce regulations, legal economies, like illegal ones, can be the sources of funding and political capital for dangerous non-state actors and can be pervaded by violence and corruption.

The other lesson is also a challenge for the new Colombian administration of President Juan Manuel Santos: If his government wants to expand the security gains of the previous administration of Álvaro Uribe and effectively implement the planned socio-economic reforms, Colombia’s government needs to focus on the new bandas criminales as systematically and robustly as on the FARC. Starting now is imperative: Catatumbo’s and Colombia’s armed actors are already getting ready to manipulate Colombia’s municipal elections upcoming in the fall of 2011.

Authors

Vanda Felbab-Brown