Global Intelligence Update
Red Alert
July 20, 1998
Colombian Rebels Threaten Latin America's Stability and Economic Promise
In a week in which Japan, Russia and the Middle East promise to hold center
stage, we would like to turn our attention instead to an area which is
going to be a major trouble spot: Latin America. It has been only two
weeks since we focused our weekly report on the re-emergence of the
revolutionary Left in Latin America, but we are sufficiently concerned that
we think it wise to focus here again. In part this is because it is our
mission to report on events before they happen. Long-term readers know
that the Japanese and Russian crises were amply forecast by us and that we
deal extensively with the Middle East. Since these events are unfolding
pretty much as we expected, there is little for us to add. The media or
policy makers, however, have insufficiently appreciated the Latin American
situation.
* Latin America's Economic Promise
For the past few years we have been extremely bullish on Latin America for
economic reasons. We continue to be. However, countervailing politico-
military trends are emerging that force us to reevaluate our position.
This reevaluation has global significance. We have felt that Latin America
would be the emerging arena for strategic speculation. It is critical that
the global economy has such an arena. For the past century, various
geographic regions have emerged where risks and rewards were substantially
greater than in the rest of the world. These fast growth, "hot" regions
served two purposes. First, dynamic growth in these regions put pressure
on more mature economies to impose disciplines needed for competition.
Second, these hot regions served to draw high risk capital out of mature
economies, serving, in part, to cap speculative pressures there. This was
the purpose that Asia served for the past generation. As Asia moves toward
maturity, a new region must emerge. We had seen two candidates for this
role: Eastern Europe and Latin America. Because of structural difficulties
and the proximity of the stagnant German market, we turned away from
Eastern Europe and focused on Latin America. Latin America was both
emerging and close to the world's most dynamic market, the United States.
Now, however, we see this entire process threatened by politico-military
instability. We do not see this instability as of merely regional
significance. If it expands, it could deeply affect Latin America's
economic possibilities, undermining its potential as a global economic
engine and profoundly impacting the global dynamic.
* Colombian Situation Threatens Regional Stability
Colombia has become the politico-military pivot in Latin America. Its
rebels are the most powerful in Latin America. They have fought the
government to a standstill and may well hold the military edge. Their
relationship with narcotics traffickers is a model for other Latin American
revolutionary groups, as it promises generous financing and international
networking needed to mount guerrilla operations. The Colombian
revolutionaries have attempted to mount a post-Cold War insurrection, that
is, one without major external strategic support. If they prove
successful, Latin America will, we believe, enter a new and less stable
era. This will profoundly affect the prospects for economic development
regionally, with global ramifications. It is therefore important to take a
detailed look at the Colombian situation.
The Colombian military outnumbers the country's rebels by just six to one.
>From the standpoint of revolutionary warfare, this places them in an
advantageous position. The military has significantly more territory and
infrastructure to defend than the rebels, and are therefore more widely
dispersed. Moreover, because the rebels are well financed, they have been
able to acquire appropriate, sophisticated technologies needed to
coordinate complex operations. This has allowed them to wage a campaign
that has backed the government against the wall. Indeed, it has forced the
government to seek a peace treaty.
* Rebels Control the Peace Process
Last week, the National Liberation Army (ELN) and prominent members of
Colombian society concluded a meeting in Germany intended to lay the
groundwork for peace talks between the government and the rebels. There
are two schools of thought on the recent progress in the peace process: In
one, the rebels are sincere in their desire for ending the armed conflict.
In the other, that the rebels are content with their position, and are
using the peace talks to buy time so as to consolidate their hold over
areas already under their control.
In either case, what is important is that the psychological atmosphere is
focused on the rebels. The question being discussed by everyone is what
the ELN intends. This is a breakthrough position for any revolutionary
group, as it lends a psychological legitimacy to their position. Their
motives have become more important than the government's. This has defined
the dynamic of the peace talks. There were reports last week, for example,
that the United States government had asked to be permitted to send
observers to the peace talks. The rebels turned them down. The
government's views were not relevant.
Not surprisingly, given the atmosphere, the talks appear to be going well.
The rapid progress apparently being made in negotiations between the two
sides, combined with the ease with which President-elect Pastrana and the
rebels are relating, brings up another question: was there a preexisting
agreement or understanding between Pastrana and the rebels that is only now
playing itself out? The success of the meeting in Germany has raised the
specter of the rebels taking a legitimate role within the government. A
coalition government including rebel ministers is no longer out of the
question.
* A Division of Colombia Legitimizing the Drug Trade?
Even more striking is speculation that the ELN and the Revolutionary Armed
Forces of Colombia (FARC) may seek to become the legal ruling bodies in the
areas currently under their control. This scenario is an extension of a
proposal that was previously made by the ELN, in which they would
administer the municipal budgets in areas under their control. While this
proposal would immediately involve the rebels in Colombia's governance, it
would mark an acceptance of the de facto division of the country. This
would challenge Bogota's sovereignty, threaten Colombia's neighbors, and
upset the United States as it would provide territorial integrity to
narcotics operations.
While such an arrangement may bring a form of peace to Colombia, it would
ultimately end Colombia's war on drugs. As the Colombian government still
maintains some degree of control over Colombia's populous and economically
productive regions, the rebels would be left with territory, but no source
of revenue -- except drugs. With the Colombian military excluded from the
rebel-dominated regions east of the central mountains, and the rebel
political authority dependent on drug revenues for funding their
municipalities, there would be no one left fight the war on drugs. While
peaceful coexistence with the narcotics industry could help further
decrease violence in Colombia, it will win no friends with the U.S.
Furthermore, with the drug war "lost" in Colombia, Washington will be
forced to expand its interdiction efforts around Colombia, transferring
clashes with drug traffickers to Venezuela, Peru, Ecuador, Panama and
Brazil.
In effect this would legitimize the drug trade. A legitimate government
and member of the United Nations would now have entered into a formal
accord which would, in effect, protect drug growing and trafficking in a
geographically defined region. The alternative, that the rebels would
agree to attack the drug trade, would cut the financial and political
foundations out from beneath the rebels. It is simply not going to happen
no matter what is publicly stated.
* Paramilitary and Colombian Military Response Still Uncertain
Another problem with allowing the rebels to legally rule parts of Colombia
is the potential reaction of the paramilitary Self-Defense Units of
Colombia (AUC) to this arrangement. The paramilitaries have ruthlessly
attempted to exterminate rebels as well as rebel-sympathizers since the
1970s. The AUC has said that it will not disarm or demobilize until the
"last guerrilla lays down his weapon." AUC leader Carlos Castano said
recently that his organization is seeking political legitimacy as well. It
is possible that they might agree to peace if they are allowed to have
authority in their own section of Colombia, most likely in the northern
part of the country.
The U.S. and the paramilitaries are hardly alone in their potential
opposition to legalized rebel control of regions of Colombia. Opposition
exists within the Colombian government and military to any such plan, on
the grounds of sovereignty and security issues. The Colombian military has
been campaigning for increased support from the U.S. in the last few
months. General Manuel Jose Bonett has made it clear that the Colombian
military is in need of financial assistance to equip his forces. Increased
U.S. assistance might serve to tip the balance back in favor of the
government.
* History and Economics Weigh Against Peace Process
Despite the recent progress made toward a peaceful solution in Colombia,
this effort may be an exercise in futility. Peace may not be as close as
some are hoping at this point. This civil war has been going on for
decades, and even Pastrana admitted that peace might not be possible during
his administration. The problem lies in the fact that guerrilla groups
generate an enormous income from ransoms and drug trafficking. Therefore,
it is conceivable that the guerrillas may not be willing to trade in this
lucrative lifestyle for legitimate political power. In fact, with the
revenue that they receive from their activities, it would mean a step down
if they were to reenter society. In the last four years, the rebels have
constantly refused to deal with the government because of the drug-related
scandal surrounding President Ernesto Samper's administration. Now that
there is a new president without any connection to Samper, the rebels are
forced to at least make an overture for peace. In the past, the rebels
have come to the negotiating table when it served them to do so, and this
may be no different.
Whether or not the rebels are indeed committed to resolving the
longstanding conflict in Colombia, it is clear that they have the
advantage. Pastrana has agreed to demilitarization, something that has
backfired on the government in the past. The Colombian army is stretched
to its limits, despite a 6-1 numerical advantage over the rebels. The
rebels have given up very little so far in strategic terms. They have
agreed to stop kidnapping minors, the elderly and pregnant women, but will
continue to kidnap others unless another source of income becomes available
to them. They have also agreed to stop sabotaging the country's oil
pipelines for the moment. However, they have not agreed to give up any of
their territory, or to disarm, while the government is giving up ground by
demilitarizing. Clearly, the rebels have a distinct advantage over the
government.
* Colombia as a Regional Exemplar
Rebels in Mexico, Peru, and throughout the region are watching the
unfolding events. While aspects of Colombia are unique, the model will be
emulated. Venezuela is also uneasily watching events. Venezuela is the
leading exporter of oil to the United States. With historically low oil
prices threatening internal stability, the last thing Venezuela needs is
invigorated Colombian narco-guerrillas contemplating an expansion of the
Orinoco river route for their product. Finally, long-standing links
between Colombian cartels and drug trafficking in Lebanon have reportedly
created strong links between the Colombian rebels and groups like the
Hezbollah, who appear to be operating in Latin America.
It is in this context that the United States is clearly unable to formulate
a policy. U.S. Special Forces are already deployed there. If the talks
break down, it seems inevitable that U.S. forces will be drawn in. That
would be unfortunate. More unfortunate would be a peace treaty that would
either bring the rebels into the government or create a rebel state in
parts of Colombia. What U.S. policy would be in that case truly boggles
the mind. Once again the U.S. has endorsed a peace process in which
neither success nor failure would be in the U.S. interest.
Thus, U.S. policy is in trouble, Latin American prosperity is in trouble,
and Latin American stabililty is in trouble. The evolution of the
situation in Colombia is no longer a matter primarily of interest to
Colombians, but is becoming a globally significant affair. We nominate
Colombia to join Asia, Russia and the Middle East on our watch list.
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