Tag Archives: Colombia

Why Debates Matter in Latin America

paraguay debate

Political debates offer numerous benefits to voters, but they do not occur in many countries around the world, depriving citizens of an important opportunity to hear candidates explain their position on issues relevant to the country’s development.

Within established democracies like the United States and the United Kingdom, the “debate” about the impact of political debates is in no danger of ceasing anytime soon. Debates are often seen as key moments in political campaigns from the local to the national level — a chance for candidates to present their policy proposals directly to voters. Our country’s long history with radio and televised candidate debates has also provided us with a plethora of research on the impact debates have on voter preference. As this journalist resource on the topic demonstrates, nearly every aspect of political debates – particularly Presidential debates – has been researched, dissected, and analyzed in one form or another. Interestingly enough there is even research on the effect high definition television (HDTV) has on voters’ perceptions of candidates.

While research comes to divergent conclusions on how exactly voters are affected, the benefits of debates to democracy are clear. They force candidates to define specific policy platforms; provide voters with access to information they may not otherwise receive; and create another layer of accountability for public officials.

Throughout its 30 year history, CIPE has worked with the private sector and economic think tanks around the world to enhance the debate of public policies before, during, and after important elections. Over the past five years CIPE and its partners in Latin America and the Caribbean have sought to take advantage of increasing access to radio, television, and the Internet to counter the region’s long history of populist politics in which candidates campaigned heavily on their personality and political connections and very little on actual policy platforms.

In Colombia, Argentina, Mexico, and Paraguay, CIPE supported programs that raised demand for public policy debate during electoral seasons and, in the case of Colombia and Paraguay, actually organized Presidential debates.

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Is Colombia’s corruption a fiscal time bomb?

Construction in Bogota, Colombia. (Photo: Flickr user LaSillaVacia)

Standard and Poor’s upgraded Colombia’s foreign denominated debt rating to investment grade last week. The rating agency’s decision boosts market confidence in Colombia amid responsible macroeconomic management. Good macroeconomic management should come hand in hand with eradicating corruption practices in public and private transactions, as the ongoing corruption scandals in Bogota and across the country belie. Otherwise, the continued pilfering of public monies threatens to become a fiscal burden and an obstacle for conducting business.

S&P’s decision, expected by Colombian policymakers and long-internalized by markets as a result of the agency’s 2010 upward outlook for Colombia, reflects the relative sound macroecnomic environment of the Andean country. Credit agencies downgraded Colombia’s rating twelve years ago after the country underwent a banking and mortgage crisis. Increased insecurity and alleged inability of the government to control its territory also contributed to the downgrade. But unlike Argentina, Ecuador, and Venezuela, Colombia has had a historical responsible macroeconomic management, a solid independent Central Bank, and a credible commitment to service its obligations.

The upgrade comes despite delayed implementation of pending macroeconomic reforms. Legislation strengthening fiscal sustainability and discipline is pending approval in Colombia’s Congress. It includes an overhaul of the mining and hydrocarbons royalty management framework, which will create counter-cyclical stabilization funds, the adoption of a fiscal rule, and the adoption of stringent fiscal sustainability legislation whereby mandated government expenditures should be commensurate with income and debt capacity of the central government. S&Ps’ decision certainly boosts market confidence, serves the Colombia‘s government goal of luring investors to the country, and allows local businesses to access foreign credit in better conditions. Nevertheless, much needs to be done for business confidence to increase.

Land in Bogotá and you will understand why. Colombia’s capital city, home to 20 percent of the country’s population and the economic and financial hub of a region that contributed 14 percent to Colombia’s exports and 44.5 percent of the value of Colombian imports in 2009, has been struck by corruption in contracts for construction and adaptation of  8.5 miles of dedicated bus lanes in Calle 26 for Transmilenio, a world model bus rapid transit system.

The choking traffic road building started in late 2008 and was expected to end in mid 2010 but contractors were unable to meet deadlines and the city is paralyzed. Calle 26 is one of the main avenues connecting Bogotá with its airport, which also under renovation. The two-headed boogieman of corrupt businesspeople and public officials is to blame.

In a joint venture with other contractors, including a Mexican firm (Condux), cash-strapped Nule Group won the $170 million (COP 318.3 billion) public tender for the construction of Transmilenio’s Calle 26 dedicated bus lanes. Although the Group suspected they were not going to get the contract, their representatives approached the head of the district agency in charge of the tender –The Urban Development Institute of Bogota, IDU- to solicit awarding them the tender, which eventually occurred. One of the companies the Group used as front for competing in the tender had its registration cancelled before participating in the bid. That would have provided sufficient evidence for not granting Nule Group the contract in the first place. The Nule Group had also bribed the city’s comptroller so he would turn a blind eye to this and other red flags. From the $45.5 million (COP 85 billion) advance the group received to start the construction, equivalent to 10 percent of the value of the tender, the Group paid commissions to IDU’s chief.

The companies also use advances to finance other delayed construction projects throughout the country, particularly the concession awarded to the group by the national government for the construction of the road connecting Bogotá with the town of Girardot in the east of Colombia which will connect Colombia’s capital with the port of Buenaventura in the pacific coast. The advance from the Transmilenio contract allowed the Group to bribe IDU officials and Bogotá’s comptroller, according to testimonies by the Group’s representatives given to Colombian authorities from Miami where they now reside. Using contact advances to pay bribes appears to be a normal cost to infrastructure projects in Colombia, according to different accounts from corrupt and probe contractors. Would be investors seeking business opportunities need to make significant time investment in due diligence investigations.

Other current and former public officials participated in this corruption network. Germán Olano, a former legislator, and Senator Ivan Moreno the brother of Bogotá’s mayor Samuel Moreno, have been identified by the Nule Group as intermediaries between contractors and public officials. In exchange, they received substantial commissions. Colombia’s inspector general forced the removal of Bogotá’s comptroller and banned his participation in government positions and public procurement for twenty years for being unable to explain a rocket increase in his assets; Mr. Olano’s penalty was twelve years. Ivan and Samuel Moreno are under investigation.

Other similar corruption rings of contractors offering and paying kickbacks and public officials extorting and receiving bribes have been uncovered in the departments of Antioquia, Cundinamarca, Valle, Cauca, Risaralda, Chocó, and Atlántico. The infrastructure contracts under scrutiny in these regions of Colombia, including those of Bogotá, are almost half the budgetary additions made to the national budget to confront the effects of rain and floods that damaged infrastructure throughout the country in late 2010 and early 2011.

There are many reasons behind rampant corruption in infrastructure projects in Colombia. Some argue it all starts with political campaign financing where contractors buy off candidates. Others mention the leniency by which procurement framework is put to practice where illiquid bidders receive contracts, national and sub-national government agencies open tenders where key technical and project design details are unclear or missing, contractors and awarding agencies are able to renegotiate contract terms shortly after contract awarding, and additions that end up doubling the original price of the tender are allowed.

What is true nonetheless is that corruption can paralyze a city. It also imposes fiscal pressures to public finances at sub-national and national levels. The macroeconomic policy decisiveness that rightly differentiates Colombia from its neighbors, evidenced by S&Ps’ upward rating, should be accompanied by a similar determination to fight against corruption throughout the country when the risk of a massive waste of resources resulting from this malady is high… and evident.

Global go-to think tanks: The CIPE partners

The Think Tanks and Civil Societies Program at the University of Pennsylvania released its 2010 rankings of think tanks around the world in January. The report identifies 6,480 think tanks in the world and notes the growing impact of policy research organizations, especially “as catalysts for political and economic reform.” Many CIPE partners are included among the leading 25 think tanks from each region; we congratulate them for their performance. Here are a few examples of how think tanks have been working with CIPE to improve democratic policymaking.

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How do you get policymakers to listen?

Many economic and governance challenges cannot be solved without input from the private sector. The private sector has essential knowledge of what drives business growth. Yet all too often policymaking excludes private sector input. As a result, bureaucracy and corruption drive up operational costs and push entrepreneurs into the informal economy.

The private sector and civil society, however, can take concerted action to address such challenges and help open up the policy process. Strategies for Policy Reform, Volume 2: Engaging Entrepreneurs in Democratic Governance—from the Center for International Private Enterprise (CIPE)—explores real-world examples of successful attempts to get policymakers’ attention.

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Colombia: It’s all about the economy

Presidential and vice-presidential candidates in Colombia during presidential debate in Barranquilla organized by Fedesarrollo. (Photo Credit: El Heraldo)

Being in the US it is sometimes hard to understand the dynamics of elections abroad. For example, it would be obvious to expect that given the impact of the global financial crisis worldwide, economic issues would be at the forefront of any presidential election this year.

In Colombia, however, economic issues are yet to be debated in depth by presidential candidates ahead of the election on May 30. CIPE ‘s long standing partner, the Foundation for Higher Education and Development (Fedesarrollo) is pushing hard to have a serious discussion on much needed economic reforms among presidential candidates. This is not an easy task in a region where charisma and ideology have often been the main guiding principles for electing public officials.

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“The Private Sector’s Role in Reforming Public Procurement: The Case of Colombia”

By the end of the 1990s, the pace of anti-corruption work accelerated in various international forums such as the OECD, the WTO, and the UN. In this broader context, the anti-corruption movement also started to gain momentum in Colombia. At the time, the country faced a deep recession and high unemployment. The Colombian Confederation of Chambers of Commerce (Confecámaras) identified corruption – in both the public and private sectors – as one of the key issues to be addressed in order to improve the quality of democratic governance and economic performance.

In this Feature Service article, Ignacio Gómez and Jaime Arteaga discuss how, with assistance from CIPE, Confecámaras became the first private sector organization to undertake a dedicated anti-corruption campaign in Colombia, working with businesses and the government to reform public procurement practices.

Public procurement is one of the most corruption-prone areas, especially in emerging markets where governance and enforcement mechanisms are weak. Confecámaras highlighted the need to change this and inject more transparency in the procurement process. Its Probidad surveys raised awareness of the need for reform; the Ethical Code of Conduct elicited voluntary compliance by hundreds of businesses; integrity pacts signed by dozens of public officials demonstrated a clear commitment to transparency. Finally, Confecámaras’s active engagement in the legislative reform debate resulted in the passage of Law 1150 of 2007, Colombia’s new and improved public procurement law.

Article at a Glance

  • Corruption was long a taboo subject in Colombia.
  • The Colombian Confederation of Chambers of Commerce (Confecámaras) shed light on the extent of corruption by surveying local businesses.
  • Confecámaras focused on improving transparency in public procurement.
  • Confecámaras helped revise Colombia’s public procurement law, and created a platform for public-private dialogue on corruption.

Referendum results in Chávez’s Venezuela

Last Sunday, Venezuelans went to the voting booths for the twelfth time in the last ten years. This time they voted on whether to allow the president and other elected officials to run for reelection indefinitely. Although Venezuelans rejected a similar constitutional reform in December 2007, President Hugo Chávez managed to ask the question one more time. On February 15, 2009 he got what he wanted. With a 54% affirmative vote, Venezuelans approved the constitutional reform. Hugo Chávez thanked his people for supporting him and confirmed his participation in the 2012 presidential election.

Contrary to what happened in Nicaragua last year where violence erupted on election-day and international observers and opposition candidates challenged the results of local elections, the results of the Venezuelan referendum have not been contested by the opposition or international observers. Opposition leaders accepted the results, though they legitimately condemn the advantage that the government had during the campaign. In fact, Chávez’s government used all means possible to channel the state apparatus to win the election. For example, a few days before the referendum took place, Hugo Chávez’s government promised the construction of major public housing developments.

The normality under which the referendum took place, however, does not mean that a path is clear for Venezuela’s prosperity or its democracy. As CEDICE, a Venezuelan think-thank, put it in a statement before the election:

It is not enough for citizens to chose freely their representatives, it is also important that there is alternation of power. (…) The Constitutional reform is freezing the power pyramid so it will remain like that for many years to come.

A democracy indeed has many more attributes than just the holding of elections. Yet many leaders reduce the concept of democracy to elections, purposely, to satisfy their own ends. President Alvaro Uribe, from Colombia, immediately congratulated his neighbor for his “democratic victory”. The Colombian president is still thinking about modifying his country’s Constitution to run for office for a third term.  Advocating for the full set of attributes that encompass a democracy, and that allow a market economy to operate efficiently, is still a challenge in Latin America today.

Hugo Chávez mentioned in his victory speech on Sunday night that he will fight corruption and crime in the upcoming years. For Hugo Chávez to achieve those goals, he must do more than continue winning elections. Corruption and other maladies are fought effectively with a particular institutional system he is not willing to embrace.