ECONOMIC AND POLITICAL PRESSURES ON COLOMBIAN GOVERNMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004900020002-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 20, 2016
• Document Release Date: March 27, 2006
• Sequence Number: 2
• Publication Date: May 14, 1965
• Content Type: REPORT

kse 2006/04/13 :CIA-RDP79-00927AGG+900020002-7
14 May 1J65
ECONOMIC AND POLITICAL PRESSURES ON COLOMBIAN GOVERNMENT
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14 May 1965
ECONOMIC AND POLITICAL PRESSURES ON COLOMBIAN GOVERNMENT
A variety of economic and political pressures
threaten the survival of Colombia's National Front
government under President Guillermo Valencia, at
best an uncertain leader. The threat stems in part
from power struggles within the coalition itself and
from the increased strength of its opposition in Con-
gress. In addition, popular discontent is widespread,
and business and labor leaders are dissatisfied be-
cause government measures to combat inflation and
devise a more equitable tax system have been inade-
quate.
Last January labor demands for tax and other re-
forms were so strong that the government averted a
showdown only by establishing a commission to study
the situation and agreeing to call a special session
of Congress in late April to consider its recommenda-
tions. It is in this special session that the coali-
tion and opposition power struggles now are taking
place.
Military leaders are showing concern. They
recently pledged their support to Valencia but dropped
a thinly veiled warning that they would not
tolerate his failure to take some remedial action
soon.
Political Situation
The National Front is an
artificial coalition of the Lib-
eral and Conservative parties
--Colombia's two largest--which
was contrived in 1958 to put an
end to a decade of civil war.
Under the terms of the coalition
agreement the presidency is to
alternate every four years be-
tween a Liberal and a Conserva-
tive, and all government posi-
tions, whether elective or ap-
pointive, are to be divided
evenly between the two parties.
The coalition's major pur-
pose was to provide a mechanism
which would force the warring
Conservatives and Liberals to
cooperate in government until
1970--later extended to 1974--
and induce them to devise a sys-
tem of competing without violence
thereafter. For the most part,
the scheme has succeeded thus
far but may have outlived its
usefulness.
The general public has be-
come increasingly disillusionec
with the National Front
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particularly in the past eight
to twelve months. Shortages of
basic goods--particularly meat
and milk, at present--and the
usual pressures of inflation have
induced widespread cynicism about
the political system and its lead-
ers. The public has come to be-
lieve that nothing will change
for the better no matter who wins
the congressional elections next
March, and the presidential elec-
tions the following May.
The pernicious apathy of
the voters was demonstrated
during the congressional elec-
tions in March 1964, when a
mere 30 percent of the elec-
torate cast ballots. As a re-
sult, the followers of ex-dic-
tator Gustavo Rojas Pinilla,
organized as the National Pop-
ular Alliance (ANP) but run-
ning nominally as Conservatives,
snapped up most of the 20 seats
the National Front lost. The
front, which must have a two-
thirds majority to pass any
meaningful legislation, now
can claim only two thirds plus
two. Considering the almost
total lack of discipline in
the coalition parties, the ad-
ministration is virtually par-
alyzed.
A large number of Colombians--
possible a majority--of vary-
ing degrees of political sophis-
tication, including members of
both major political parties
as well as those on the more
radical right and on the left,
would welcome an orderly transi-
tion to a more conventional form
of self-government as soon as
possible. Some few care less
for order than for speed, and
their vociferousness and obstrep-
erousness make their numbers seem
greater than they really are.
They are dangerous, however, be-
cause they set the scene for dem-
agoguery, political radicalism,
and illegality.
Recently, a schism in the
Conservative Party has widened
as Conservative congressmen
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opposed to the presidential
candidacy of Liberal Carlos
Lleras Restrepo--the presumed
National Front candidate in
1966--joined with congressmen
of Rojas Pinilla's ANP and of
the Liberal Revolutionary Move-
ment (MRL) in an effort to elect
the officers of the present
special session. Loyal "offi-
cial" Conservatives demanded
that President Valencia consider
the defectors outside the Con-
servative fold and therefore in-
eligible for cabinet and other
appointive positions. The re-
sultant hue and cry threatened
to cause a serious crisis, and
started rumors of a pending state
of siege or a military coup.
Lleras has resigned his unoffi-
cial candidacy and this with-
drawal may permit Congress to
get to work on the tax reform
bills. President Valencia has
survived two other major politi-
cal crises since September, but
lost some of his support each
time. His losses this time, if
any, cannot yet be estimated.
Colombian economic perform-
ance has been generally poor in
the last few years; in real terms
gross domestic product grew 3.8
percent in 1963 and between 3 and
4 percent in 1964. Investment
activity has been sluggish after
growing rapidly from 1958 to 1960.
The government failed to imple-
ment an ambitious program of pub-
lic sector investment and private
investment declined, in real
terms, in 1961-1963. Incomplete
data indicate that a modest recov-
ery in investment activity oc-
curred in 1964.
A major domestic issue
presently facing the country in-
volves the threat of inflation.
The combined effects of excess
monetary liquidity, annual budg-
etary deficits, and the inability
to implement effective wage and
price controls led to a period
of severe inflation lasting from
late 1962 through mid-1964. Dur-
ing that period price levels rose
45-50 percent for most consumers.
Although budgetary deficits in
1963 and 1964 were reduced and
a policy of monetary restraint
softened inflationary pressures
in the economy, the threat of
another period of rapid price in-
creases is serious. Special rev-
enue measures (e.g., a surcharge
on income taxes) which enabled
the government to narrow the
budget gap in 1963 and 1964 are
no longer in effect and it seems
unlikely that government spend-
ing will be kept within the pro-
gramed ceiling. There is a
strong possibility therefore that
a deficit of about 500 million
pesos--one third of scheduled in-
vestment spending for the year--
will be generated in 1965.
The threat of resurgent in-
flation is also made serious by
current pressures on the country's
exchange rate system. Colombia
maintains multiple exchange rates.
In September 1964, general uneas-
iness produced a run on the over-
valued "pegged" free rate which
forced the Bank of the Republic
to cease supporting the currency
at the rate often Colombian pesos
to one US dollar. The present
free rate of exchange is about 15
pesos per dollar. The official
selling and coffee export rates
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are still maintained at over-
valued rates.
Although President Valencia
has unequivocally committed his
administration to a policy of
no devaluation, the ability of
the Bank of the Republic to
maintain the present overvalued
rates is doubtful. Speculation
and political uncertainty are
exerting continuous upward pres-
sure on the rates while, at the
same time, the Bank of the Re-
public has only 20-30 million
dollars left with which to sup-
port them. Moreover, Colombia's
international credit position
has suffered considerably and
the country may find it diffi-
cult to acquire even short-term
commercial credit with which to
buttress international reserves.
Violence and Insurgency
Colombia has a long history
of banditry, and the ethnic and
topographical make-up of the
country seems to make it fertile
ground for such lawlessness.
To this tradition of violence
a new feature has now been
added. A "National Liberation
Army" (ELN), estimated at about
500 men and women, including
urban sympathizers, has formed
around a cadre of at least
twenty-two young insurgents
trained in Cuba. A group of
fifty of these men began guer-
rilla operations in January,
and since that time Colombian
officials have attributed to
this "army" three armed assaults
against Colombian towns.
Although the attacks may
not have been of a high order
of skill and effectiveness,
they are significant in that
they are political in purpose,
and that they have so far gone
relatively unpunished.
Moreover, the
insurgents are operating in a
country which already has cer-
tain small parts of its ter-
ritory virtually closed to le-
gitimate government administra-
tion and control (the so-called
Communist enclaves, ruled by
armed, Communist-led bands).
Although quite successful
in recent years against tradi-
tional banditry, government law-
enforcement agencies have had
little, success in coping with
the new political violence.
They lack unity of command be-
tween the army, the national
police, and the Administrative
Department of Security (DAS),
all of which have counterin-
surgency responsibilities.
Morever, the country lacks a
juridical basis for adequate
punishment of insurgents. Con-
sequently the morale of the law
enforcement agencies is low.
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COLOMBIA
Communist-Dominated
Areas
change frequently as the guerrilla bands
shift their activities The boundaries
shown are, therefore, approximate,
so
loo
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Another significant factor
in the Colombian scene is the
mood of the oligarchy. Hitherto
either inured to or relatively
untouched by banditry and vio-
lence, this wealthy and polit-
ically powerful segment of the
population is now pervaded by
uneasiness sometimes bordering
on panic because of the upsurge
of kidnapings--130 cases in the
past year--for which the wealthy
are the natural targets. The
kidnap-murder of industrialist
Harold Eder in March-April
caused an emotional reaction
against the military for fail-
ing to protect citizens against
violence, but the government
was not seriously endangered by
the reaction.
Now that kidnaping has be-
come a popular form of extor-
tion for all types of outlaws,
people in both rural and urban
areas are becoming increasingly
alarmed and angry. Their anger
seems to be focused largely on
the National Front government
and the military for being un-
able to protect its citizens
against violence. Since the
people most highly concerned
about kidnaping are politically
the most powerful class, their
anger is an important factor
in gauging the political sta-
bility of the government.
The National Front under
President Valencia has survived
a series of crises and probably
will manage to survive the pres-
ent one. Valencia, who has
displayed unexpected resources
of strength on several critical
occasions in the past, may
again prove equal to the situa-
tion by forcing compromise on
the warring factions in his
own party and, through them,
on the recalcitrant elements
among the Liberals. Also, the
current special session of Con-
gress probably will pass cer-
tain measures, which although
only partly satisfactory could
serve to regenerate public con-
fidence to some degree.
vene.
If the National Front lasts
until next March, the future of
Colombia's political system
will turn on the composition
of the Congress to be elected
at that time. The National
Front must control Congress in
order to function at all, and,
if the opponents of the coali-
tion can control as little as
34 percent of the seats in ei-
ther house, they could demolish
the Front, or at least stymie
the government if they felt
such tactics would advance their
cause. Under such circumstances,
military leaders might inter-
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