AT THE TABLE

Colombia 2015 | DIPLOMACY | FOCUS: ACCOUNTING OF PEACE

As the peace process moves ahead, rehabilitating the affected regions will be a costly affair, just as declining commodity prices squeeze the state's coffers. However, economic assistance is critical, and all options are on the table.

The Colombian civil conflict is arguably the longest running civil war in the world. Since 2012 negotiations in Havana have played out against a backdrop of ongoing kidnappings of civilian and senior military figures. The peace process was momentarily thrown into disarray in November 2014 when General Rubén Darío Alzate was kidnapped as he canoed down a river in one of the country´s most unstable “red zones” in the Chocó region. Such incidents during a “Peace Process” have continued to raise questions about the centralization and authority of the FARC leadership, headed by a seven man FARC secretariat in Havana and led by Ivan Marquez. However, the general's consequent release in December restored hopes and brought all actors back to the table.

ECONOMIC REALITY

The issue of funding the peace process has become the equation that nobody is able to balance, and has become increasing difficult in light of the dwindling commodity boom. The treasury is looking at a deficit of $15 billion in 2015 from diminished state petrol revenues.
From the early days of President Santos' first term, when his brother Enrique Santos Calderón and former peace commissioner Frank Pearl began to conduct secret dialogs with the guerrilla chiefs, few realized what the process would cost, or what the formula to calculate would be.
One of the most recent and authoritative figures to calculate the cost of a “rural post-conflict” development program was former minister of agriculture and minister of finance, Juan Camilo Restrepo, who estimates a price tag between 8-10 billion Colombian pesos annually for at least 10 years. The ex-minister has extensive knowledge of the rural economy, cooperatives, and value crop production systems such as coffee and cocoa.
To put the scale of this funding into perspective, it is approximately equivalent to the annual revenues generated by Colombia's proposed Impuesto al Patrimonio or property tax, which has been billed as Colombia's most effective tool for wealth re-distribution. Rural development certainly warrants state investment as a recent OXFAM reports that the disparities in wealth between Colombia's rural and urban populations are among the highest in the world.

The complex issue of installing a rural development program for a post-conflict situation is one issue, but the issue of reparations for victims of conflict is more complicated. At the end of 2014 Santos estimated a cost of 54 billion Colombian pesos—equivalent to approximately 1% of national GDP. The Bank of America went a step further and estimated post-conflict costs at COP187 billion, if extended over 10 years, equivalent to almost 50% of GDP. Approximately half of this figure covers rural development programs, with the other half being reparations.

MULTILATERAL SUPPORT

In early October Santos undertook a diplomatic tour of Europe with the end purpose of establishing a common fund to help finance the Post conflict situation. France and Germany were two of the first nations to step forward, the latter offering loans of up to 75 million Euros annually to finance the process up until 2016. In mid-February German foreign minister Walter Steinmeier followed up on his pledge by visiting Colombia, offering wisdom on the process of collective historical memory and reconciliation.
In February both Sweden and Germany stepped up their financial support for the cause with a multilateral financial support package of €38 million offered through the World Bank and supported mainly by the Swedish government.

In the grand scheme of things, European nations are unlikely to ever fund more than a fraction of the peace process, however, these commitments are an important gesture, given Colombia's impending accession to the OECD, a cornerstone of Santos' re-election pledge in 2014. The support of European funds could create good will and ripen investment conditions in the sectors of agriculture and industry that are operating significantly under capacity due to security issues.