Political Risk Analysis - Crib Sheet: Tensions High Heading Into Election Season - APR 2018

Social and political tensions will remain high as Colombia heads into election season. Legislative and presidential elections will take place amidst the controversial peace deal with the Fuerzas Armadas Revolucionarias Colombianas (FARC), increased violence in rural areas and a surge of Venezuelan refugees. The nation remains divided about the integration of the FARC, who have been guaranteed political protection, legislative seats and economic benefits as part of the 2016 peace deal. Furthermore, the conflict between Colombian security forces and the Ejercito Liberacion Nacional (ELN) insurgent group reignited following the expiration of a bilateral ceasefire in January and a lack of progress in peace negotiations. Additionally, migrants fleeing Venezuela will strain Colombian social services and is likely to become another contentious issue for voters.

Petro Takes Lead In First Round Polling
Colombia - Voting Intentions For Select Presidential Candidates, %
Note: Data Are Averages From Several Polling Sources. Source: Invamer/Semana, EcoAnalitica/W Radio, Centro Nacional de Consultoria, BMI

Latest Developments

  • Polling Shows Left-Leaning Presidential Candidates Ahead: Presidential candidates on the left and centre-left have a slight advantage according to the latest polls. Gustavo Petro, the leftist former mayor of Bogota running as an independent, has a narrow lead over Sergio Fajardo, the former Medellin mayor and centre-left Coalicion Colombia candidate. Centrist German Vargas Lleras, Santos' former vice president, is several points behind. While running as an independent candidate, Vargas Lleras is likely to benefit from considerable support from Cambio Radical, of which he was a long-time member.
  • Centre-Right Voters To Decide Their Candidate On March 11: We expect centre-right candidates to gain ground after the March 11 primary between Senator Ivan Duque of the Centro Democratico (CD) and former Defence Minister Marta Lucia Ramirez of the Partido Conservador Colombiano (PCC). Duque is more likely to represent the coalition in the presidential election, with a slight edge in recent polling and support from former President Alvaro Uribe.
  • ELN Violence Hinders Peace Negotiations: Peace negotiations between the government and the ELN are hanging by a thread following a surge in violence since the January expiration of the bilateral cease fire. Santos stated in early February that it would be very difficult to resume a formal peace dialogue with the ELN in light of bombing attacks in January and an "armed strike" in February. The judiciary's subsequent issuance of arrest warrants for 21 ELN members will further complicate the situation. We believe it is unlikely that a peace deal will be reached in 2018.

Core Views

  • Peace Deal, Corruption To Define Elections: The 2016 peace deal signed by the Colombian government and the FARC insurgent group will be a major fault line in the upcoming legislative (March 11) and presidential (May 27) elections. A public referendum on the deal was narrowly defeated in October 2016 and significant public disagreement on the topic of FARC reintegration persists. In addition, allegations of corruption related to Brazilian construction company Odebrecht have extended into a wide-reaching scandal affecting all branches of government. This is likely to undermine support for establishment parties, including Santos' Partido de la U, as well as the Partido Liberal. Several candidates, including Petro and Vargas Lleras, are running as independents as corruption allegations have stained the reputations of several prominent parties.
  • Strong Congressional Mandate Unlikely: Given the fragmentation of the ruling U coalition and widespread disagreement on major issues, such as FARC reintegration, it is unlikely that any party or coalition will receive a decisive mandate following the March legislative election. The CD is ahead in February polling, though with only a 15.9% share. This, combined with uncertainty over policy direction stemming from the presidential election, has prompted us to downgrade Colombia's 'Policy Continuity' score in our Short-Term Political Risk index, bringing its overall score to 61.5 from 64.0, out of 100.
  • Violence To Continue Alongside Peace Process: Violence will remain a persistent issue for businesses operating in Colombia's rural areas, undermining investment. Criminal gangs have asserted themselves in territory formerly controlled by the FARC, attempting to increase their share of the narcotics trade. A recent surge in coca production has compounded the problem of drug-related violence, which is exacerbated by the government's delay in deploying security forces to police these areas. Related to this, in January, the government launched a military operation to combat drug trafficking in the port city of Tumaco on Colombia's southwest coast but also faces renewed attacks by the ELN in the rural north and on the Caribbean Coast.
  • ELN Negotiations Unlikely To Succeed In 2018: The resignation of the Colombian government's chief negotiator with the ELN insurgents, Juan Camilo Restrepo, in early December struck a blow to an already-challenging peace negotiation. Since the bilateral ceasefire expired in January 2018, the ELN has targeted police stations, a military base and oil pipelines. With just months remaining in Santos' term and significant uncertainty over the security policies of the next government, the conflict between the ELN and Colombian security forces is likely to persist in 2018.
  • Major Challenges Await Next Administration: The next government will face a challenging political and economic landscape. Violence in rural areas, uncertainty over the implementation of the FARC peace deal and challenging peace negotiations with the ELN will present hurdles to the next administration. Moreover, all of this comes at a time when growth is likely to be structurally lower than prior to the 2014 oil price crash.

Risks To Outlook

  • Uncertainty Undermines Peace Deal, Spikes Violence: Persistent uncertainty over the extent to which the 2016 peace deal's provisions will be enacted could erode the incentives for former FARC guerrillas to reintegrate into society, increasing the likelihood that some join criminal gangs. This could lead to a further uptick in violence as groups jostle for control of Colombia's rural areas, fuelling social tensions.
  • Venezuela Crisis Spill Over Worsens: A further downward spiral of Venezuela's economy could lead to a greater flood of Venezuelans over the Colombian border, stressing social services and becoming a national political issue. Santos announced tougher border security measures in February 2018, though a surge in illegal immigration could provide another political challenge for a government that is already stretched in light of the FARC peace process.

Key Research

  • Quick View: Resumption Of ELN Talks A Small Step Forward, January 24 2018
  • Quick View: ELN Peace Talks Hang In The Balance After Attacks, January 11 2018
  • Opposition To Peace Process To Rise On Corruption Allegations, October 4 2017
  • Quick View: ELN Ceasefire A Positive Step, But Risks Abound, September 5 2017
  • Cabinet Reshuffle Sets Stage For Challenging Final Year, July 27 2017
  • Loss Of 'Fast Track' Will Bring New Challenges To Peace Accord, May 26 2017
  • Conflict To End But Peace Implementation Incomplete, February 27 2017
  • Fiscal Challenges Await Post-Conflict Colombia, September 15 2016