The Andes in Focus: Security, Democracy, and Economic Reform 9781685857646

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The Andes in Focus

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The Andes in Focus Security, Democracy & Economic Reform

EDITED BY

Russell Crandall Guadalupe Paz Riordan Roett

b o u l d e r l o n d o n

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Published in the United States of America in 2005 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 www.rienner.com and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 2005 by Lynne Rienner Publishers, Inc. All rights reserved Library of Congress Cataloging-in-Publication Data The Andes in focus : security, democracy, and economic reform / edited by Russell Crandall, Guadalupe Paz, and Riordan Roett. p. cm. Includes bibliographical references and index. ISBN 1-58826-331-2 (hardcover : alk. paper) — ISBN 1-58826-307-X (pbk. : alk. paper) 1. Andes Region—Politics and government. 2. Andes Region—Economic conditions. 3. United States—Relations—Andes Region. 4. Andes Region—Relations—United States. I. Crandall, Russell, 1971– II. Paz, Guadalupe, 1970– III. Roett, Riordan, 1938– F2212.A593 2005 980.04—dc22 2004024460 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. Printed and bound in the United States of America

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The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1992. 5

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Contents

Preface

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Introduction: The Pursuit of Stability in the Andes Russell Crandall

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Colombia: Staving Off Partial Collapse Julia E. Sweig and Michael M. McCarthy

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Bolivia: Democracy Under Pressure Ramiro Orias Arredondo

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Peru: The Trauma of Postdemocratic Consolidation Ramiro Orias Arredondo

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Venezuela: Revolutionary Changes Under Chávez Juan Carlos Sainz Borgo and Guadalupe Paz

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Ecuador: Democracy and Economy in Crisis Fredy Rivera Vélez and Franklin Ramírez Gallegos

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U.S. Policy in the Andes: Commitments and Commitment Traps Mark Eric Williams

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CONTENTS

From Drugs to Security: A New U.S. Policy Toward Colombia Russell Crandall

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Conclusion: The Andean Crisis in Context Riordan Roett

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List of Acronyms Selected Bibliography The Contributors Index About the Book

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Preface

The five countries that comprise the Andean region—Bolivia, Colombia, Ecuador, Peru, and Venezuela—face daunting challenges at the start of the twenty-first century. Although each of these countries confronts a unique set of political, social, and economic circumstances, one common theme stands out: throughout the Andean area at least one of the three pillars necessary for stability—national security, democracy, and economic health—is in crisis. The Andes in Focus takes this theme as a point of departure for analysis, arguing that all three pillars are so closely interrelated that when one is in crisis it is difficult to keep the others functioning, and that focus on one pillar will often subvert the others. In Chapter 1, Russell Crandall labels this challenge of keeping the three pillars in balance the “elusive trinity.” In this book, we use the elusive trinity as a conceptual framework to better understand the complexity of the politics, economics, and societal forces at work in the Andes. The book provides a sober picture of the most pressing challenges facing each of the Andean countries and the options available to confront those challenges. Several chapters also address U.S. policy in the region and the potential role of the United States in the effort to foster greater stability. Although the Andean region is considered the most troubled in Latin America, we seek to illustrate that there is room for cautious optimism. We hope that a greater understanding of the complex reality we call the elusive trinity will lead to effective policy initiatives that will promote democratic, economic, and social stability.

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*** We would like to thank all the individuals who were involved in the completion of this book. To the contributing authors we owe a debt of gratitude for their thoughtful essays and their patience during the publication process. A very special thank you goes to Akilah Jenga for her invaluable assistance in the final editing and updating process. We would also like to thank Frank Phillippi for his superb editing assistance and Charles Roberts for his excellent work translating the chapters originally written in Spanish. The anonymous reviewers of the book manuscript provided insightful comments and helpful suggestions. As always, the publishing team at Lynne Rienner Publishers—in particular Lynne Rienner, Lisa Tulchin, Shena Redmond, and Debra Topping—were a pleasure to work with. The Andes in Focus is the final volume in a series published by the SAIS Western Hemisphere/Latin American Studies Program (LASP) with the support of the William and Flora Hewlett Foundation. Previous volumes include Mexico’s Democracy at Work: Political and Economic Dynamics (2004); Latin America in a Changing Global Environment (2003); Mercosur: Regional Integration, World Markets (1999); Mexico’s Private Sector: Recent History, Future Challenges (1998); The Mexican Peso Crisis: International Perspectives (1996); The Challenge of Institutional Reform in Mexico (1995); Political and Economic Liberalization in Mexico: At a Critical Juncture? (1993); Mexico’s External Relations in the 1990s (1991); and Mexico and the United States: Managing the Relationship (1988). Most of these were also published in Spanish. As the above list illustrates, the Hewlett Foundation’s generous support spanning nearly two decades has been instrumental in making the views of leading scholars on a variety of timely topics available to a wide audience, in particular the policy and academic communities. We would like to express our deepest gratitude to the Hewlett Foundation and to the two program officers who were central in our relationship with the foundation: Clint Smith and David Lorey. —Russell Crandall, Guadalupe Paz, and Riordan Roett

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The Andes in Focus

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1 Introduction: The Pursuit of Stability in the Andes Russell Crandall

In the first years of the twenty-first century, the five countries of the Andean region—Colombia, Bolivia, Peru, Venezuela, and Ecuador—have presented a challenging context in which to effectively study and understand the politics, economics, and societal forces that are presently shaping the region. Today, the Andean area is besieged by a variety of ills: a war escalating to unprecedented levels of violence and brutality in Colombia, political polarization in Venezuela, weak democratic institutions, and social protest, to name just a few. Analysts struggle to explain a seemingly star-crossed part of the world, one where economic, social, and political reforms attempted at various times over decades have largely failed. The easiest response to the seemingly endless list of ills that plagues the region is to throw up one’s hands and declare the Andes a “basket case.”1 Yet, as this book demonstrates, despite the history of dashed hopes for millions of citizens and political and economic failures at national and regional levels, there are reasons to be optimistic about the Andean nations. Aside from Colombia, where the seemingly nihilistic nature of the war requires that country to be viewed singularly, the democratization process of the 1980s and 1990s continues to propel these states toward greater political participation and representation for all citizens. At the same time, the economic stabilization and transformation process—the hoped-for locomotive of change in Andean societies—has not fared nearly as well as the political. The security situation, both domestically and regionally, remains tenuous at best and completely lacking at worst. National security, democracy, and economic stability are the three pillars or essential conditions for a functioning modern society. They are often insep-

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arable; they frequently remain evasive for national governments and societies; and failure at one often influences another. It is difficult to keep one pillar functioning when the others are in crisis, and singular focus on one pillar will eventually subvert all three. I have labeled this quest to strengthen all three pillars of a stable society the “elusive trinity.” As the name suggests, and our study of Andean political and economic issues will reinforce, it is virtually impossible to keep these three forces in balance at the same time. The elusive trinity is not intended to be a theory of political or economic change; rather, in this book we use it as a conceptual framework to help us better grasp the manifold governmental and societal changes taking place in the Andean region. The rise of indigenous social movements in Ecuador and Bolivia and the political protests that have destabilized their respective national governments; President Hugo Chávez’s Bolivarian Revolution in Venezuela and the intense political polarization it has provoked; and the Colombian guerrillas’ attacks on democracy—these are some of the complex issues discussed in this book that constitute part of the elusive trinity in the Andean nations. Each of the three pillars of security, democracy, and economic stability is inextricably interconnected, and each encompasses a critical area of development and stability in the region.

The Democratic Paradox The 1990s were an optimistic time for students of democracy, especially those who studied Latin America. Beginning in the early 1980s and continuing through the next decade, numerous Latin American countries made the often painful and complex transition from authoritarian regimes to democratic governments. The Andes were no exception; several Andean countries (Peru in 1980, Bolivia in 1985, Ecuador in 1979) were among the pioneers of the Latin American democratization movement. Colombia and Venezuela, two countries with relatively democratic political systems, also benefited as civil society in both countries grew stronger and more vocal. Colombia’s progressive constitution of 1991 is an example of how the democratization process affected a country that was already an electoral democracy. The optimism was not due just to the democratization process sweeping over the region; it was also about the putative virtuous cycle that democracy would bring about for the economic and political realities of the respective populaces. The hope was that more representative and legitimate governmental institutions would increase confidence in the political system, promoting greater civic participation and, inevitably, political stability. Political stability would, in turn, provide the sound platform for greater economic investment, both domestic and foreign, that would foster more economic opportunities, thus reinforcing the population’s trust in the political cycle.

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This cycle is based on many assumptions about the causal relationships between a citizenry and its government. With the benefit of hindsight into what has transpired in the Andean region during the 1990s, it also seems hopelessly naive. Sadly, democracy was not the panacea for these nations’ ills. One major reason was that the quality of the region’s democracies was quite poor, with governments sometimes less desirable than the authoritarian regimes they replaced. In fact, many were woefully unable to meet even the basic needs of the population. Moreover, the governments were often democratic only in the electoral sense, with corruption and authoritarian tendencies lurking underneath. Alan García’s populist democracy in Peru (1985–1990) and Abdalá Bucaram’s tenure in Ecuador (1996–1997) are two of the more extreme examples of this phenomenon. A stronger, more lasting form of democracy would not have been able to solve all of the Andes’ problems. Nevertheless, it is clear that the democratization process did continue to empower citizens—whether as individuals, through political parties, or in social alliances—to voice their political views and demand services and resources. As one might suspect, these new individual and group demands put greater pressure on still embryonic democratic systems. For the Andes, this has been the democratic paradox. Democracy has empowered populations as never before, but this increased political activity has often damaged—and at times brought down—democratic governments. In Chapter 6, Fredy Rivera and Franklin Ramírez highlight the democratic paradox in Ecuador, describing the military-indigenous movement coup in 2000 that ousted democratically elected President Jamil Mahuad. Since the 1996 election of Abdalá Bucaram, no democratically elected president in Ecuador has finished his full term of office. In Bolivia in 2003, the increased freedom to express discontent forced Gonzalo Sánchez de Lozada, the newly elected president, to flee the presidential palace in an ambulance as a result of threats from protesting police officers—the very group sworn to protect the institutions of government. Ten months later, Sánchez de Lozada resigned amid a rash of violent protests against his government. This is not to say there is widespread sentiment to do away with democracy in the Andes. The fact that all five of the Andean countries are at least electoral democracies is a positive indication, but the deepening of political trust and institutions will require more than increased numbers of voting booths. Today, the mood in the Andes is sober, not romantic. To be sure, there is intermittent nostalgia for a mano dura, or strong hand, that would make the government seem more efficient and able to deliver. But even this preference for a strong government is often expressed within the context of electoral democracy. For example, authoritarian figures such as Alberto Fujimori in Peru and Hugo Chávez in Venezuela reached the presidency through democratic elections. Overemphasis on electoral democracy to the neglect of economic stability and public security could lead to the erosion of a fragile democratic sys-

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tem, however, which is why the Andean governments must focus on all elements of the elusive trinity, including the deepening of democratic institutions. The preference for democracy is likely to prevail in the Andes because citizens recognize that, although not perfect, the democratic route is still preferable to the alternatives. The Andes in Focus examines the state of the region’s fragile democracies and the underlying factors of political instability in each case study.

The International Economy and Economic Reform in the Andes The early twenty-first century has brought the era of financial globalization to many parts of the world, and the Andean countries are no exception. With the Cold War over, and along with it the ideological clash between capitalism and communism, there is a broadening consensus in the international financial community on the efficacy of free market principles in promoting economic growth.2 Although critics on both the right and the left are constantly challenging this consensus, it has been adopted by developing countries around the globe. Rapid advances in technology have accelerated this ideological change, permitting capitalism to reach the farthest corners of the developing world where, until recently, it had never dared enter. Perhaps the present era of globalization—and the significant increase in financial power it has brought to private agents—can be characterized as King Capital. The flow of capital today is swifter and more ruthless than at any other point in history, thanks in part to new technology that allows it to be transferred from one bank account to another—or one country to another— with a stroke on a keyboard. The advent of King Capital has forced many developing countries or emerging markets into a situation of survival of the fittest. Although in the Andean region this economic struggle might be overshadowed by civil protests, terrorism, and political corruption scandals, it exists nonetheless. Take, for example, Colombia’s and Bolivia’s continued dealings with the International Monetary Fund (IMF)—the ultimate provider of subsidized capital for capital-scarce countries—in 2002 and 2003 when the two countries were either at war (Colombia) or racked by violent civil protests (Bolivia).3 Within this new global context, developing countries are still free to disregard the demands of international financial agents, the IMF, or the U.S. Treasury; but there is a very high risk associated with such nonconformist behavior. For example, it might lead to a financial blacklisting of the country, thus preventing it from receiving adequate amounts of needed capital. This reality is compounded by an extremely cozy relationship among the aforementioned global financial “referees”—the IMF, the U.S. Treasury, and Wall Street money managers—so that offending one group can easily translate into

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even greater consequences.4 Peru’s economic isolation in the late 1980s after García placed a moratorium on debt repayments exemplifies the perils of such nonconformity. To understand the contemporary process of economic and political reform in the Andes, the region must be analyzed within this context of externally imposed fiscal and public policy constraints. The process of economic reform and liberalization in Latin America first began in Mexico. After the 1982 debt crisis debacle, the government of President Miguel de la Madrid embarked on an aggressive plan to open up Mexico’s economy to more competition and foreign capital. Until Mexico made the decision to adopt a liberal economic model, the model in Latin America since the end of World War II had been state ownership of industries, government regulation, and general suspicion of the merits of free mobility of goods and capital. Although it sparked impressive rates of economic growth, this economic philosophy also often led to severe inefficiencies and a lack of competition. It also created more opportunities for corruption from endless economic rents to be gained by government officials who determined who would gain access to lucrative concessions or contracts. During the 1990s, countries throughout the region followed Mexico’s lead, although Peru, Brazil, and Argentina implemented heterodox reform plans that failed miserably before adopting more liberal policies.5 Almost all of the countries in Latin America that adopted economic liberalization programs had the blessing of Wall Street, the U.S. Treasury, and the IMF. This consensus for market liberalization among the global financial referees came to be called the Washington Consensus.6 Compared to the economic chaos that engulfed countries throughout the region until the 1990s, the Washington Consensus effectively moved the region toward more sustainable and efficient economic policies. Its achievements should not be underestimated. The hyperinflation that had plagued Peru and Bolivia was wiped out; inefficient government telecommunications, transportation, and industrial facilities were sold to private concerns; and highly distorting trade barriers were lowered, if not eliminated.7 This depiction of success in economic stabilization does not mean the Washington Consensus was a panacea or that its application was flawless. With hindsight, it is clear the Washington Consensus did not adequately take into consideration a variety of important factors, especially the need for strong and legitimate political and economic institutions.8 Today, social protest against the Washington Consensus policies has underscored the necessity of attention to democratic institutions in order to peacefully channel popular demands and provide the public stability necessary for economic stabilization. Peru and Bolivia were in the forefront of orthodox economic liberalization in the 1980s and 1990s. Ecuador and Venezuela, on the other hand, continued to rely on petroleum as the engine for all economic growth, an increasingly anachronistic policy. No Andean country, however, remained immune

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from the forces of globalization. It was a matter of how aggressively they participated and, more important, how well they dealt with it. The record has been mixed. Bolivia’s aggressive “shock therapy” stabilization program in 1985 set the country on a path of macroeconomic reform that continues today. Bolivia’s impressive economic reform program occurred simultaneously with the democratization process. But today Bolivia represents the democratic paradox as it struggles with an almost surreal situation. On the one hand, it is more democratic and more economically stable, but on the other hand it is more politically unstable. Unlike Bolivia’s shock therapy, Colombia adopted a middle-of-the-road path in its macroeconomic policies. Colombian monetary authorities deftly steered the country’s macroeconomy during the so-called lost decade of the 1980s, during which Colombia was the only South American nation that did not experience negative gross domestic product (GDP) growth. Colombian society buckled under a variety of problems, however, that hindered its ability to promote economic reform: the pressure of drug cartel–driven violence; the distortions from an influx of U.S. dollars as revenues of the drug trade led to money laundering and a real appreciation of the country’s currency, the peso; and the two decertification decisions by the United States in 1996 and 1997 for lack of cooperation in the drug war, which hindered foreign investment. There have also been exceptions to the Washington Consensus orthodoxy in Latin America. Ecuador and Venezuela, for example, have made attempts in fits and starts but still have not implemented the drastic reforms of their neighbors. Yet even these two recalcitrant countries might not be immune from the “tractor beam” that relentlessly pulls them toward greater conformity with the international financial community. Ecuador is committed to a highly orthodox dollarization program to stem impending macroeconomic chaos. The situation in Venezuela is less certain. To date, President Hugo Chávez has maintained a populist line domestically while managing the macroeconomy—continuing oil exports, for example—in a manner consistent with liberal economics.9

The Quest for Security The tenuous political and economic situations in the Andean countries are more than enough to warrant serious concern. Unfortunately, the security situation, a particularly critical pillar of the elusive trinity, is perhaps more worrisome than the political and economic pillars. Without security it is impossible to promote sustainable political and economic reform. Of the five Andean countries, Colombia is clearly the most extreme and dire example of this reality.

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In Chapter 2, Julia Sweig and Michael McCarthy argue that the absence of security in Colombia has rendered the country’s political institutions virtually impotent. In many respects Colombia is the outlying case in our discussion of security. Unlike other countries where security concerns are related to the difficult path of democratization as well as to greater political representation, Colombia’s war is more characteristic of several civil conflicts in Africa. Just as there are “blood diamonds” and the requisite mercenaries, barbarism, and civil displacement in Sierra Leone, Colombia has its own “blood cocaine” with its own version of terror and inhumanity. In Bolivia, the politically driven civil protests by coca farmers, indigenous groups, and more recently police officers have created a security dilemma for the government. How can Bolivia foster political representation without destabilizing public security or, even worse, threatening to bring down a democratic government? In Peru, democracy was sacrificed to security against terrorism under Fujimori; yet, ironically, the resulting deinstitutionalization from this war on terror led to new public security threats as the government proved ill-equipped to address growing social demands. In Venezuela, the continued standoff between supporters and opponents of Hugo Chávez is another example of how the political process undermines the security situation and vice versa. In order to promote the regional aspects of his Bolivarian Revolution, President Chávez made political overtures to Fidel Castro and Saddam Hussein, among others. More noteworthy for Andean security directly, Chávez is rumored to have established a relationship with Colombian guerrillas, first with the National Liberation Army (Ejército de Liberación Nacional, ELN) and later the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, FARC).10 For the U.S. government, Andean security issues since the early 1980s have been synonymous with one thing: drugs. Indeed, fighting the war on drugs was the United States’ security policy for the region. This was the case even when the Shining Path terrorist group threatened to take power in Peru in the early 1990s.11 The U.S. antidrug strategy usually meant two things: eradicating the raw coca being cultivated in Bolivia and Peru and going after the cocaine traffickers and their laboratories in Colombia. The latter was known as the “kingpin strategy.” Today, that narrow focus of past decades seems almost quaint in light of the new realities of Andean security. Even though the United States succeeded in getting Bolivian and Peruvian governments to eradicate coca aggressively, these actions have only served to push coca production into areas of Colombia where guerrillas and rightist paramilitary groups traditionally have been active. This shift in the production pattern for cocaine has been a financial windfall for the armed belligerents in Colombia. For the FARC, the revenue has funded their new strategy of taking the war to Colombia’s cities.

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The shocking events of September 11, 2001, have reinforced the fact that U.S. policy in the Andean region will no longer solely be about fighting drugs. The U.S.-led global war on terror is not ignoring the Andes, and the increasing links between the guerrilla groups’ terrorist acts and their involvement in the drug trade are providing the impetus for a radical shift in U.S. policy, especially in Colombia. Reaction to the FARC’s kidnapping in February 2003 of three American citizens who had survived a plane crash in southern Colombia is most likely the tip of the iceberg for greater U.S. involvement in Colombia.12 Although the thrust of the new U.S. security policies will be focused on Colombia, there will no doubt be adjustments and new priorities in other parts of the region. Venezuela’s continued political polarization has already severely disrupted its ability to export oil to the United States, a situation of even greater concern owing to instability in the Middle East. President Chávez’s still murky relationships with guerrilla groups in Colombia and other antistatist political movements throughout the region could easily flare into an international crisis. It is not clear how the United States would deal with such a crisis. The next several years will be uncertain and often unstable ones for Andean security. They will also be a time when the United States removes the antidrug lens from its Andean security policy and enters unknown territory.

The Andes in Focus and the Elusive Trinity Democracy, economic reform, and security: this uneasy trio holds the keys to unlocking the chaotic and complex reality of the Andean region in the twentyfirst century. When taken as a whole, The Andes in Focus examines all three aspects of the Andes’ societies. This book is not intended to provide answers to all questions regarding the political, economic, and security concerns of the region but rather to provoke serious and sober discussion about the challenges faced in these areas within the framework of the elusive trinity. In order to develop policy formulas that stand a chance of solving some of the most pressing problems in the region, it is first necessary to understand the complex relationship among all three pillars of the elusive trinity.

Notes 1. Carol Wise and Manuel Pastor used this phrase to describe Argentina’s economic crisis between 1999 and 2002 in “From Poster Child to Basket Case,” Foreign Affairs 80, no. 6 (November/December 2001): 60–72. 2. For more on Latin American politics in the post–Cold War era, see Forrest Colburn, Latin America at the End of Politics (Princeton: Princeton University Press,

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2002). Also see Russell Crandall, “Revolution on Hold? Review of Latin America at the End of Politics,” SAIS Review (Winter/Spring 2002–2003): 273–277. 3. For more on the civil protests that threatened the presidency of Gonzalo Sánchez, see Associated Press, “10 Die as Troops Fire on Striking Police,” February 16, 2003. 4. For more on the relationship among Wall Street, the IMF, and the U.S. Treasury, see Jagdish Bhagwati, “The Capital Myth,” Foreign Affairs 77, no. 3 (May/June 1998): 7–12. 5. See Riordan Roett and Russell Crandall, “The Global Economic Crisis, Contagion, and Institutions: New Realities in Latin America and Asia,” International Journal of Political Science 20, no. 3 (Summer 1999): 271–283; Sebastian Edwards, Crisis to Reform in Latin America: From Despair to Hope (Oxford: Oxford University Press, 1995). 6. See John Williamson, The Progress of Policy Reform in Latin America (Washington, DC: Institute for International Economics, 1990). 7. See Edwards, Crisis to Reform, chapters 2–5. 8. Second generation reforms is the term used by policymakers and development officials to describe the new consensus surrounding the path of reform in Latin America. The term second generation is an attempt to build upon the mostly macroeconomic reforms of the initial phase or original Washington Consensus. The reason for the second generation was a realization that the importance of factors such as institutionalization, civil society, and inequality had been overlooked and now must be promoted in order to attain more sustainable and equitable patterns of growth. 9. See “Deconstructing Latin Ills,” The Economist, September 4, 1999, 25–26; “Ecuador Awaiting Rescue,” The Economist, August 7, 1999, 27–28. 10. For more on Chávez’s relationship with Colombian insurgencies, see Russell Crandall, “Insecurity in the Andes,” Strategic Review (London: International Institute for Strategic Studies, 2002), 101–112. 11. For more on U.S. policy toward Peru during the Shining Path era, see Cynthia McClintock, Revolutionary Movements in Latin America: Peru’s Shining Path and El Salvador’s FMLN (Washington, DC: United States Institute for Peace, 1998). 12. Juan Forero, “U.S. Sees Kidnapping of 3 as Shift by Colombian Rebels,” New York Times, February 17, 2003, A4.

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2 Colombia: Staving Off Partial Collapse Julia E. Sweig and Michael M. McCarthy

Within Colombia’s embattled department of Arauca, 200 miles northeast of Bogotá on the Venezuelan border, bombs are regularly planted by guerrillas and set off by remote control.* Nearby, guerrillas regularly bomb the 480mile Caño Limón-Coveñas oil pipeline jointly operated by Los Angeles– based Occidental Petroleum, Colombia’s state oil company EcoPetrol, and Spain’s Repsol Fiscal Oil Fields (Yacimientos Petrolíferos Fiscales, YPF).1 Attacks cost the Colombian state approximately $430 million annually in lost oil revenues.2 Coca bush and jungle around the pipeline create an ideal environment for the clandestine operations of the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, FARC) and the National Liberation Army (Ejército de Liberación Nacional, ELN). The United Self-Defense Forces of Colombia (Autodefensas Unidas de Colombia, AUC), new to the battle for Arauca, have actively battled both rebel groups for control of oil spoils and the coca harvest.3 West of the pipeline is Saravena, which was Colombia’s most besieged city in 2002 with seventy-six guerrilla attacks. U.S. Special Forces there train the Colombian brigade to protect the Caño Limón-Coveñas pipeline. Their presence is the first openly acknowledged step in Washington’s increasing involvement in the government’s counterinsurgency campaign.4 Arauca is a paradigm theater of operations in Colombia precisely because it is the epicenter of a licit (oil) and illicit (coca) resource war that

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Editors’ note: Chronologies of key recent events appear at the ends of Chapters 2–7.

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enriches and hence attracts all the protagonists (guerrillas, paramilitaries, the Colombian state, and the United States) in the multifaceted conflict. Whether the United States can help the Colombian government gain control of its resources constitutes a critical question in a conflict that features counterinsurgency and low-intensity conflict, coupled with a war of attrition directed against the complex political economies that fuel each side’s war machine.5 Today, Colombia is a country openly at war, a context that overwhelms and shapes the nation’s political and economic reform agenda. The madness of this drug-fueled war is the defining condition that led to the popular election of the “law and order” candidate, President Alvaro Uribe Vélez, in 2002. The war’s international reach in arms, casualties, and drugs is the principal reason why Colombia is the third largest recipient of U.S. aid in the world. In practical terms and in a historical context, the Uribe legacy will be defined by the government’s ability to legitimately assert state authority throughout the country and engender a commitment by all citizens to strengthen Colombian institutions, bolster collective social networks, and terminate reliance on illegitimate “private” methods for achieving political and economic ends. Uribe has made defeating the guerrillas and demobilizing the paramilitary his top priorities. Considering the limited government resources and sheer strength of the illegal groups, any progress toward strengthening democracy and ensuring economic growth is remarkable. Indeed, given the scope of Colombia’s security crisis, is it reasonable to expect substantial gains on the democracy and economy fronts in the short term? And if the realistic answer to this question is no, can the new government lay the foundation for sustainable state sovereignty via a sequential process of empowering the armed forces and police to provide security, establishing noncorrupt local governments with legitimate institutions, and creating a viable market for economic development? Although the composite challenge is indeed daunting, there are particular characteristics of the present Colombian government-led “democratic security” strategy that deserve scrutiny because they could undermine the country’s attempts at deepening its democratic institutions and traditions, threatening any establishment of a sustainable road map to peace. For example, if democracy and human rights are abrogated in a war zone but protected in different parts of the country, what is the net result? Does massive spraying of coca in southern Colombia, an integral part of the unified counternarcotics and counterinsurgency war that increases internal displacement, produce more than token damage to the rebels’ drug revenue and provide a sustainable strategy for preventing relocation of coca? In this chapter we examine the historical background of Colombia’s security crisis, offer a review of the war’s scope and snapshot of the illegal armed

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actors it features, analyze the fight for the spoils of the country’s legal and illegal resources fueling the conflict, and explain the Uribe government’s initiatives to extend state sovereignty and reform the economy and political culture.

Setting the Scene During the Cold War, U.S. observers revered Colombia as a showcase of democratic stability and consistent economic growth in Latin America. Colombia, it was argued, had implemented the basic tenets of the Kennedy administration’s Alliance for Progress and consolidated democracy when the National Front power-sharing pact was signed in the late 1950s by the country’s historical political parties, the Liberals and Conservatives. The pact curbed the decade-long partisan La Violencia, which started in 1948 with the assassination of left-leaning Liberal Party presidential candidate Jorge Eliécer Gaitán and took hundreds of thousands of lives. Despite this horrific civil strife and the “qualified democratic polity” that resulted, Colombia was considered to have shrewdly distanced itself from the left-leaning movements and authoritarian military juntas that dotted the continent while containing its insurgency to the rural hinterlands.6 Indeed, although far from perfect, Colombia was a beachhead of democracy in a region where instability reigned.7 By the early 1990s, the myth of a strong Colombian democracy was based on institution-building that took root during the National Front period, 1958–1986, and subsequent reforms, principally resulting from the 1991 constitution. Features indicative of Colombian democracy included two strong centrist political parties, a free press, an impressive private sector, sound fiscal management, the absence of the military from politics, and a worldrenowned class of intellectuals, authors, and artists. The 1991 constitution, written by a constituent assembly during the administration of César Gaviria, resulted from the widespread clamor for political and constitutional reform following a bloody 1990 presidential campaign in which three popular candidates were assassinated and the country was in a frenzy over narco-trafficker political violence. The new constitution provided a forum for discussing political violence and government policy toward the many guerrilla groups, and it ultimately sought to build a post–National Front democracy attuned to the challenges of cracking the exclusive nature of Colombian politics and streamlining the clientelist state bureaucracy. The constitution made important contributions toward achieving these and other goals by satisfying the citizenry’s desire for such a democratic exercise.8 Disarmament and reintegration of several small insurgencies marked notable accomplishments on the security front. Such achievements were, however, tempered by the surging growth of narco-trafficking cartels in Medellín and Cali and the hardening antistatist postures of the two largest guerrilla groups, FARC and ELN, after collapsed

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peace negotiations with Gaviria’s administration and in spite of the Soviet Union’s and world socialism’s demise. During the administration of Ernesto Samper (1994–1998), political crisis stemming from links between the Cali cartel and the president engulfed Colombia and handicapped efforts to address guerrilla groups—not to mention indelibly blemishing Colombia, creating a crisis in Bogotá-Washington relations, and quashing the euphoria produced by the 1991 constitutional process.9 After Colombian democracy bent but did not break during its battles against the Cali and Medellín cartels, the myth of the country’s strong democracy and robust economy began to unravel in the late 1990s. Even though both cartels were eventually destroyed, the number of illegal armed actors surged, the drug trafficking industry readjusted to the new realities, and the economy seriously contracted for the first time in decades. As liberalization seriously damaged bedrock sectors of the economy in agriculture and industry, riskaverse investors took their money out of the country and the economy spiraled downward; in the meantime, Colombia’s macroeconomic policy suffered from a series of unusually poor decisions by the Pastrana administration.10 Colombia was exposed as a nation vulnerable to drug trafficking, mounting guerrilla and paramilitary group activity, rampant violent crime, high levels of impunity, racial exclusion, and extreme income inequality and poverty. Complicity in all sins Colombian, from leftist intellectuals’ sympathies to armed struggle to the incipient social phenomenon of support for the paramilitary AUC, were admitted and deliberated publicly in the press, academia, and government. The Colombian preference for organizing efficient “private anti-state” avenues of justice, prosperity, and security by both sectors of the business class and leftists weakened a fragile state, distorted the growth of social movements, and exacerbated the country’s instability and was revealed to be patently untenable.11 As a result of this historically rooted improvidence (paramilitaries were only outlawed in 1989 in Colombia) as well as the remarkable opportunism of illegitimate forces and their intermingling with the drug industry, the country was near collapse. After decades of relatively complacent living, the country’s urban political elite and middle class realized that the exploding security crisis boiled down to the extremely limited sovereignty exerted by the state over a geographically complex national territory and the corollary of this neglect: armed groups appropriating decades-old grievances as their raison d’être to recruit vulnerable and disaffected sectors of the populations. Indeed, after the National Front political pact excluded the Communist Party, its members coalesced with armed peasant groups and other leftists, thus uniting ideology with armed resistance to forge a revolutionary group that decades later would shed its romantic characteristics and launch an all-out war against Colombia, causing a bona fide national crisis. Furthermore, Colombians learned that the new constitution itself, no mat-

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ter how progressive and vibrantly democratic, could not strengthen the hand of the state to conduct a war, provide public security, deliver social services, enact needed tax and land reform, and adjudicate trials swiftly and fairly. A decade after a new constitution, democracy should have been flourishing; in practice, the state confronted the most severe crisis of legitimacy since La Violencia ravaged the country and produced the nation’s only military government. With the Cali and Medellín cartels defeated and fractured into hundreds of “baby cartels,” three illegal armed groups were competing for political influence and the spoils of the country’s vast resources, legal and illegal. The state, which had never really provided fundamental institutions of legitimacy for the rural population or sufficiently funded its armed forces, was in danger of collapse. The growth of illegal armed actors to upwards of 35,000 individuals was largely a result of the flourishing cocaine trade, and it produced a security crisis that horrified Colombians and attracted Washington’s attention. It was in this context that Andrés Pastrana won the presidency in 1998 on the platform of forging a once-and-for-all settlement with the FARC by creating a demilitarized zone, or despeje, as an olive branch for peace talks. Not to be forgotten, Pastrana also strengthened ties with the United States, which resulted in the $1.3 billion Plan Colombia, essential to ensuring Colombia’s vitality. Peace talks sponsored by Pastrana and facilitated by the United Nations never moved past the initial stage of negotiations over the rules of the game to be followed by FARC inside the despeje. The talks collapsed in stalemate, in no small part due to FARC recalcitrance and deceit, inflammatory terrorist bombings and kidnappings, and the lack of a mutually agreed upon agenda.12 In the wake of this utter failure, Alvaro Uribe won a resounding first-round victory in 2002 with a hard-line platform based explicitly on a security doctrine contradictory to Pastrana’s: attacking FARC unyieldingly, increasing the size of the army as rapidly as possible, and refusing to enter into peace negotiations until a ceasefire was established and the guerrillas were seriously weakened. So it is in this particular security-driven setting that Colombian democracy finds itself at a crossroads and, moreover, in an unusual place within the Andean region. Its institutions comparatively stronger than those of its neighbors, but its security condition infinitely worse than that of any nation in the hemisphere, Colombia embodies a unique manifestation of the “democratic paradox” Russell Crandall introduced in Chapter 1. One reality is the vicious contentious politics, which is really a dirty war of great human catastrophe for stability and control of rents between the state and three armed groups and their occasional allies, the myriad narco-trafficking groups; the other Colombia is a civil, pluralistic system where demobilized guerrillas govern with the centrist and rightist parties in an advanced form of democratic politics while

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industrialists and entrepreneurs declare the economy open for business with the world.

The Scope of Colombia’s Crisis Until the late 1990s, the left-wing FARC (18,000 strong) and ELN (5,000) were sworn enemies of the right-wing AUC (14,000–16,000), but rarely faced off against each other. Today, confrontation is more common and intermittently crosses ideological alliances, with the FARC taking on the weaker ELN.13 To varying degrees, all three groups are criminal organizations: the FARC and AUC support themselves primarily through the coca and poppy industries and ancillary kidnapping, extortion, and assassination rackets; ELN specializes in kidnapping and extortion through targeting Colombia’s other major resource, oil. Since the end of the Pastrana peace process and Uribe’s inauguration, Colombia’s war has gotten worse. Civilian deaths, a significant barometer of the conflict’s severity, were approximately 4,000 in 2002 and have exceeded 30,000 since 1994. The Colombian Commission of Jurists (Comisión Colombiana de Juristas, CCJ) reported that in 2002 political violence took the life of twenty Colombians a day, twice the number in 1998.14 The Uribe administration’s hard-line policies helped diminish the number of terrorist attacks from 1,645 in 2002 to 850 in 2003, however, and lowered Colombia’s homicide rate by 20 percent.15 Attacks on civilians, meanwhile, dropped by 84 percent.16 In assessing responsibility for the deterioration of the human rights situation, the 2003 United Nations High Commission for Human Rights report for Colombia pointed to the illegal armed groups’ disregard for “fundamental rights to life” and the “significant increase in reports of [human rights] violations attributed directly to members of the [public] Security Forces.”17 According to the United States Committee for Refugees (USCR, a nongovernmental organization), in 2003 Colombia was the country with the third most internally displaced citizens in the world (over 2.73 million), ranking behind Sudan and Congo-Kinshasa.18 The conflict produced approximately 400,000 internally displaced persons in 2002, the highest number on record for a single year in recent history. Though the number of displaced persons fell by 52 percent between 2002 and 2003,19 the Constitutional Court demanded in February 2004 that the Uribe administration take immediate steps to relieve the refugee crisis and come up with a long-term program within six months.20 The government has since increased efforts to document refugees and provide welfare and health services, but much remains to be done. Colombia remained the kidnapping capital of the world in 2002, with an average of seven adults and one child abducted every day. The FARC has

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been responsible for 60 percent of abductions, including three U.S. government contractors taken as “prisoners of war” in February 2003, presidential candidate Ingrid Betancourt, and numerous other local officials. The ELN and AUC also routinely kidnap for money.21 There was, however, tangible progress in 2003 as Colombia’s kidnapping rate fell by 27 percent.22 Colombia is also one of the most dangerous places in the world to be a journalist, trade unionist, or teacher. During 2003, four journalists were killed, with three other deaths under investigation, and forty-one teachers and other public school employees were murdered.23 Approximately 3,800 leaders of the primary trade union, the United Workers Federation (Central Unitaria de Trabajadores, CUT), have been murdered since its inception in 1986. Ninety Colombian trade unionists were murdered in 2003, down from 184 in 2002, making it the most dangerous country for union activity in the world two years in a row, according to the International Confederation of Free Trade Unions annual surveys.24 Oil workers went on strike in April 2004 in response to restructuring, and President Uribe declared their action illegal as police announced that antiterrorism measures would be taken against strikers.25 Despite the daunting circumstances under which Uribe governs, he entered 2004 with an approval rating of 80 percent.26 Uribe’s hard-line democratic security plan is credited with reducing kidnappings and homicides while increasing public security for transportation and increasing economic growth by 3.5 percent in 2003, its fastest pace since 1995.27 The unprecedented popularity of Uribe has generated a sense of zeal within the Casa de Nariño (the presidential palace)—a feeling that the administration is being rewarded for its policies and deserves the opportunity to pursue its agenda beyond its current four-year mandate. Indeed, the government is actively pursuing a constitutional amendment to allow Uribe to seek reelection in 2006, a step viewed by some pundits as prudent for the nation, although others believe it to be an untoward sign for Colombian democracy.

FARC The FARC is by far the most belligerent and formidable foe of the state, with a force of 18,000 led by a twelve-person secretariat. Seventy local columns operating throughout the country and a burgeoning urban militia have access to copious financial resources—drug-related and other rackets.28 The FARC essentially views Uribe as an elected member of the right-wing paramilitary and dismisses the legitimacy of his administration and government supporters, having sanctioned the resignation, under threat of death, of every mayor in Colombia on the eve of the president’s inauguration. Since the breakdown of the Pastrana peace negotiations, the group has reoriented its strategy and embarked on a ruthless counteroffensive against civilians and vulnerable police and military outposts. The FARC has changed

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gears from its traditional fighting in rural areas to urban terrorism, in part a manifestation of its confused and frustrated post–peace talks posture, which is fixated on maintaining a prominent place in national political dialogue, no matter how perverse the means.29 In June 2004, just as national and international attention was focused on the government’s negotiations with the AUC, the FARC massacred thirty-four coca farmers it accused of supporting the paramilitaries.30 Largely a criminal enterprise that routinely commits horrendous terrorist acts, FARC leadership continues to espouse a dogmatic Marxist ideology. The FARC’s stated political intentions are indeed dubious and are more closely associated with their vested interest in maintaining a powerful state-within-astate through protracting conflict. Collusion with the drug trade and a political ideology tempered by greed and power, however, in no way diminishes the FARC’s position as a serious guerrilla force that is likely to persevere despite the drug eradication efforts and the immensely popular military strategy and moral suasion of Uribe’s democratic security.31 Though 93 percent of Colombians disapproved of the FARC in 2003,32 the group operates impervious to public opinion, isolated in the jungle, interacting mostly with business partners, third party negotiators, and its social base in particular communities historically sympathetic to its roots as a peasant-based insurgency. The FARC has been fighting since the mid-1960s and operates throughout approximately 50 percent of rural Colombia with virtual impunity. Further, the FARC is unlikely to demobilize given its formative disarmament experience in the 1980s, when government death squads, paramilitaries, and rival guerrilla groups slaughtered 3,000 members of the Unión Patriótica, the leftist political wing made up of intellectuals and trade unionists created to initiate a political front to the FARC’s overall insurgency effort.

ELN Founded by Colombian priests, intellectuals, and university students, the Cuban-inspired ELN has been seriously weakened by the AUC incursions in the northeastern part of the country and by the FARC’s efforts to achieve guerrilla hegemony. Of the 1,400 fighters who have abandoned their illegal groups since Uribe took office in August of 2002 (an impressive increase compared to statistics for previous years), ELN soldiers proportionately represent the greatest group.33 Peace negotiations between the ELN and Bogotá started during the Pastrana administration but have floundered since then. In December 2002, a divided ELN suspended exploratory discussions with the Uribe government, accusing it of neglect and an imprudent emphasis on dialogue with the right-wing AUC.34 Currently, the ELN is active in Arauca province, bombing the Caño Limón pipeline. Its recent kidnapping of foreign journalists has seriously

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undermined its credibility with the international community.35 Uribe has accused the ELN of bowing to FARC pressure and has effectively subordinated a peace process to offensive security measures.36 In a recent move that injected a ray of optimism regarding real peace negotiations, however, the ELN and the Uribe administration have accepted an offer from the Mexican government to serve as a mediator for talks between the adversaries.37

AUC Formed in 1997, the AUC is an umbrella group of right-wing self-defense forces approximately 14,000–16,000 strong and was Colombia’s fastest growing illegal armed group until it entered into peace negotiations. AUC columns target guerrillas as well as civilians, including trade unionists, teachers, and journalists. According to Human Rights Watch and the Colombian Committee of Jurists, the AUC committed nearly 80 percent of Colombia’s human rights abuses involving civilian killings in recent years. Human Rights Watch and the U.S. Department of State have documented links between the AUC and the drug trade, intelligence sharing and collaboration with the Colombian Armed Forces, as well as targeted massacres against the civilian population.38 The AUC claims common ground with Uribe’s commitment to rid the country of guerrilla violence, dating back to the president’s days as governor of Antioquia. In the early 1990s, Uribe helped create a civilian defense force known as Convivir, which was outlawed after devolving into murderous paramilitary units and later absorbed by the AUC.39 After Uribe’s election and the U.S. Department of Justice’s extradition requests for the group’s leaders on charges of drug trafficking, Carlos Castaño and Salvatore Mancuso resigned their AUC leadership posts in favor of a formal negotiation process. The AUC is undergoing an identity crisis, and its fate as a national paramilitary organization is in question. Following negotiations on July 15, 2003, the AUC announced that it would disarm by 2006, and 855 paramilitaries disarmed in Medellín that November. Former AUC leader Giovanni Marín addressed the Colombian Congress in January 2004, urging protection for paramilitaries who disarm.40 In an effort to encourage disarmament, the government has attempted to pass a controversial alternative sentencing bill to reduce punishments of the demilitarized. Perceived progress of the peace talks led demilitarization of paramilitaries to appear to be one of the most tenable government goals. Negotiations began to deteriorate, however, as factions of the AUC violated their selfimposed, unilateral ceasefire. To hardened AUC members, revelations that the AUC is nearly indistinguishable from a narco-trafficking organization and the progress in demobilizing Castaño’s branch of the AUC were viewed as inimical to the virulently antiguerrilla doctrine associated with the group’s founding.41 Many members of the AUC find the idea of prison or extradition pre-

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posterous because they assert that they established security that the government failed to provide its citizens.42 Negotiations with the AUC foundered with the disappearance of Castaño and seizure of leadership by a more hardline wing led by Mancuso. The Uribe administration has since managed to negotiate the containment of AUC leadership in a “concentration zone” in order to continue peace talks. The AUC’s transgressions against the social fabric of Colombian society and its collusion with government security forces represent an insidious threat to Colombia’s democracy and the military’s ability to monopolize the use of force in the fight against guerrillas. In the event of successful negotiations, the key to constructive demobilization of the AUC will be preventing the leadership from receiving blanket political amnesty for their most heinous massacres (which many deem crimes against humanity), prohibiting their participation in Colombian politics, and blocking demobilized members from joining the Colombian armed forces. Thus far, untoward statements from Colombia’s peace commissioner Luis Carlos Restrepo explaining that the government is exploring “alternative” forms of punishment for the AUC’s crimes of “sedition” (a crime normally reserved for political acts against the state such as a coup d’état)—that may not include jail time or the forfeiture of their vast land plots—suggest that impunity is being afforded to the leadership, despite various government claims to the contrary.43 For the process to contradict Colombia’s checkered history of reinserting armed actors into society, the government needs international assistance and heightened engagement to ensure sustainable demobilization.44 In cooperation with the Uribe administration, the Organization of American States (OAS) is now involved in the peace process as monitor of AUC compliance with the agreement reached in May 2004 to cease hostilities within the safe zone. The debate over extradition continues, with the AUC arguing for protection from extradition, and the United States insisting that no such reprieve be a part of any negotiated settlements.

The Colombian Government’s Security Initiatives Alvaro Uribe’s election was symptomatic of a fresh reality that now envelops the discourse of Colombian politics: the admission by Colombia’s elite and middle class that the country’s enormous security crisis threatens the viability of the state itself. Enthusiasm over Uribe’s election and his straight-talking realpolitik has raised domestic and international expectations for the president’s democratic security plan. Infusion of money, equipment, troops, and training from the United States has created a community of Colombia watchers from the ranks of the media, the U.S. Congress, nongovernmental orga-

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nizations, and the U.S. State Department, even amid the ongoing war in Iraq.45 Democratic security is a post–Cold War doctrine that holds the government responsible for fundamental functions of a democratic state: wielding coercive as well as public order powers related to upholding the rule of law, human rights, redistributive justice, and maintaining legitimate state sovereignty. Believing that the greatest injustice for Colombians is unequal access to physical security, President Uribe’s plan envisaging the extension of the state to recover neglected regions and protect all Colombian citizens, regardless of race and political creed, from armed groups of all persuasions molds the discourse of democratic security to a national reality fixated with expanding the coercive power of the state. “Security,” according to President Uribe, is a “public good” like any other fundamental right in that it is not dependent on any political ideology and exists “to protect the total expression of fundamental liberties and rights of all citizens.”46 In stark contrast to more liberal definitions of democratic security that argue that guaranteeing institutional rule of law validates the punitive power of the state, the expression of citizens’ rights and state policies such as the pursuit of justice, political dissent, and respect for private property depend upon the provision of legitimate state security. Indeed, Uribe has successfully adopted the discourse of democratic security by adapting his definition to a receptive Colombian public who feel physically threatened and are tepid regarding the proposition that guaranteeing rule of law legitimates security. To achieve this goal, Uribe believes he must attack the guerrillas and “use all the levers available to the state.” Uribe’s democratic security proposal is a two-tiered approach to obtaining public order: activating state security forces and enlisting citizens to play a role in saving the country. It states: “If in the first place security is the responsibility of the state, it is also a public good which results from the common effort of the citizenry.” In order for “the Colombian state to exercise total monopoly of the use of force,” Uribe recognized that he must attack the guerrillas and simultaneously reorganize the undermanned and underfunded Colombian armed forces that fight more than 35,000 illegal armed actors.47

First, the Armed Forces When Uribe entered office, the armed forces had 117,000 soldiers, of which only 52,000 were professional soldiers, the rest conscripts. Only 35,000 could be mobilized for direct combat. Counterinsurgency experts estimate that to eliminate an insurgency effectively, the armed forces need ten soldiers for every rebel. Uribe’s goal was to field an army of 100,000 professional soldiers, increase the number of police to 200,000, and eliminate the military

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draft by the year 2005. Although the funds to carry out such an overhaul do exist in Colombia, the challenge is getting them to flow. In the 1990s, this rate was between 1 to 2 percent of gross domestic product (GDP), insufficient funding for fighting a sophisticated and well-financed insurgency. In October 2002, Uribe decreed a one-time levy of 1.3 percent on wealthy individuals and enterprises with liquid assets of over $65,000, a tax that targeted affluent Colombians and generated $800 million for the armed forces. Among other programs, the new moneys were to fund the training of 35,000 new troops by the end of his four-year term. The 2003 windfall in tax revenue increased Defense Ministry spending by 1.2 percent of GDP (the average annual ratio of spending for Defense in the 1990s) and was seen as the first step toward the stated objective of raising military spending to 5.8 percent of the national budget by the end of 2003—a principal benchmark for assessing Colombia’s progress.48 Colombia’s tax base collection is extremely weak and falls disproportionately on the large tax contributors, who make up approximately 90 percent of overall revenue, or on poor Colombian consumers who pay value-added taxes (VAT). Evasion is widespread, and significant property holdings, such as rural land, remain immune to taxation altogether.49 In a critical test of Uribe’s ability to increase fiscal revenue, tax collection as a percentage of GDP increased from 10 percent to 13 percent in 2003. Nevertheless, only 740,000 Colombians out of an economically active population of 20 million pay income taxes, and Colombia continues to lag behind the United States and other democracies whose base level statistic is 20 percent of GDP.50 The Colombian government is also strengthening civilian control of the military, endeavoring to establish better synergy among the Ministry of Defense and the National Police and armed forces generals, overhauling national security strategy, and transforming its military doctrine from a limited garrison-based force to a deployable special troop force that will allow for sustained and direct combat with guerrillas. In an effort to yield immediate results and combat increased FARC attacks, Uribe ordered notoriously idle Colombian officers to leave the comforts of their outposts, proactively engage the guerrillas, and score military victories. The results have been mixed to date. By mid-2004, Uribe’s efforts led to 10,000 guerrillas and paramilitaries either captured or killed and over 3,000 disarmed and participating in rehabilitation programs. In 2003 desertion from illegal armed groups increased by 80 percent.51 Progress appears to be continuing, with 929 members of illegal armed groups killed in the first four months of 2004, constituting a 54 percent increase in comparison with the same period in 2003.52 Since Uribe took office, 80,000 people have been arrested on drug-related charges, a 52 percent increase from the same period under Pastrana.53 The remarkable progress of the Uribe administration has not, however,

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produced the predicted degree of weakening illegal armed groups. The number of illegal combatants removed through desertion, death, capture, or disarmament led the government to estimate in late 2003 that the combined strength of illegal armed groups had been reduced by one-third. As guerrilla attacks persisted and continuing recruitment was taken into consideration, the government assessed in early 2004 a net loss in FARC’s strength of 15 percent.54 The armed forces have also suffered from diminished credibility. They have an improved intelligence and communications network but are unable to launch sorties to produce results, and their competence in counterinsurgency and rescue missions is suspect. Serious setbacks continue, such as the crash of a U.S.-supplied Black Hawk helicopter that killed twenty-three Colombian elite soldiers hunting the FARC and a botched rescue effort by security forces to liberate a group of high-level FARC hostages that led to their being executed.55 The military has suffered from diminished credibility owing to a series of blunders in early 2004. Within a month, soldiers killed four informants and six police officers belonging to an elite antikidnapping unit and killed a family of five (one victim was shot from close range), and two paramilitary hunting patrols fired on one another, killing three troops. Uribe’s hard-line efforts were accused of leading to fatal excesses and errors.56

Involving the Civilian Population Uribe has initiated controversial measures to engage the Colombian civilian population in his war effort. Days after entering office, in August of 2002, Uribe decreed a “state of internal commotion,” granting him decree powers over the economic, political, and security realms until the Constitutional Court struck it down 270 days later. Most provocatively, the armed forces were given expanded authority to gather intelligence from civilians through interrogation and searches without judicial oversight. An Anti-Terror statute has since been passed, giving judiciary powers to the armed forces, granting the military near plenary power in strategically important departments of the nation. These measures are intended to target the FARC, ELN, and AUC as well as their civilian intelligence networks, whose members the government now considers combatants.57 Without a sizable armed force, the political will to expand military conscription to include those with high school diplomas, or U.S. air cover or ground reinforcements, Uribe has turned to a controversial plan: building a million-man civilian force of informants. The intent is a radical shift in Colombia’s political culture in order to unify the citizenry behind the antiguerrilla offensive.58 Press reports indicate that thousands of informants

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are already operating throughout the country, despite scant evidence of a vetting process for the new intelligence network. Uribe has high expectations for the program and attempted to dispel concerns about its efficacy: “If we have one, two, or ten [informants], sure they’d be killed. But if we have thousands or tens of thousands, then they would stand together and say, ‘They’ll have to kill us all.’”59 The president is also raising a force of 20,000 peasant soldiers through the draft to augment military capabilities in rural areas where there is little or no state presence. The peasant soldiers do not receive complete training but will serve part-time in garrisons with professional troops and serve as local eyes on the ground for 450 of Colombia’s 1,098 virtually unprotected municipalities, of which 186 currently lack police presence.60 Their ambiguous role as armed citizens, however, could present greater security problems in local communities where the rule of law is weak and vigilante justice is not uncommon. Although the government insists that efficient action and better collaboration between the state and rural populations are critical to gaining the upper hand, their approach risks widening the war without appreciable military gains. The military already faces serious professionalism problems, and so far the peasant soldiers program represents a short-term solution to an expensive, long-term challenge. Under the authorities of the “internal commotion” declaration, the government has declared Montes de María in Sucre and Bolívar departments in northern Colombia and the entire Department of Arauca “rehabilitation and consolidation zones” to augment security in Colombia’s most vulnerable civilian areas. A presidentially appointed military commander governs the zones and has detention powers and authority to curb civil liberties, restrict citizen movement to root out rebel activity, and restore law and order. The inspector general and the ombudsman of Colombia, however, released a joint report in March 2003 stridently criticizing the “zone of rehabilitation.” Not achieving the stated goal of diminishing the scale of violence and level of insecurity in which citizens live and failing to follow through on its promise of social investment were the joint report’s two main conclusions.61 Uribe’s security programs have drawn sharp criticism from former United Nations High Commissioner for Human Rights, Mary Robinson, and Colombian government ombudsman, Eduardo Cifuentes. In a country where 95 percent of crimes go unpunished, where conflict has raged for decades, and personal vengeance runs deep, human rights advocates believe the government proposals disregard basic international standards of rights and are a potentially catastrophic element inimical to bolstering security. The principal concern is that the civilian informant plan blurs the distinction between civilians and combatants laid out in international law and therefore endangers Colombians already directly targeted by the illegal armed groups. Indeed, an ELN commander in the northern department of César claimed that “the guer-

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rillas had already infiltrated police ranks and were developing a list of those participating [in the informant program] to be targeted for assassination.”62 If Cifuentes’s warning that “the system could become an instrument of personal vengeance” becomes a prophecy, the consequences for Colombia would be disastrous.63 President Uribe has not backed down in the face of such criticisms and responded with recrimination to such opponents of democratic security. “There is a lot of criticism when actions are taken to overcome the violence and a lot of silence when violence takes over everywhere in Colombia without standing up to it,” he observed.64 During the 1980s, similar experiments opened up a Pandora’s box of proxy warfare and rampant human rights abuses that tore apart the social fabric in Guatemala and El Salvador. Although Colombia already contains similar dirty war tactics, some analysts point to Peru’s successful extermination of the Shining Path insurgency—albeit at a massive human loss of more than 40,000 citizens—as a more appropriate template for analyzing Colombia’s challenge. Peru, however, had centuries-long historical experience of community organization and resistance among indigenous communities in the Andean highlands, integral ingredients in the Peruvian defense model that are absent in Colombia’s security formula. Uribe’s genuine commitment to security is unambiguous. The conflict will deepen, however, unless he successfully manages the risks of escalation. This paradoxical cycle of producing greater insecurity by ratcheting up the war to expand security is a difficult quandary, but Uribe is unyielding in his pursuit of democratic security. The payoff of the policy, Uribe hopes, will be creating an asymmetrical conflict, where the resources and manpower of Colombia’s armed forces outstrip those of the FARC, eventually forcing the guerrillas to negotiate under duress.

Urban Campaign The escalating dynamics of war in Colombian cities are introducing Colombians to a conflict traditionally restricted to Colombia’s rural areas. In October 2002, fighting between the FARC and AUC over recruiting territory in the shantytowns of “Comuna 13” in Medellín spilled into the streets of Colombia’s most violent city. President Uribe ordered an unprecedented joint police and military assault, Operación Orión, involving 3,000 men and leading to the arrest of twenty-nine FARC urban militiamen. It signaled the government’s commitment to helping the disproportionately affected urban poor. Paid civilian informants led the security forces around the gauntlet of mazes in the shantytowns. More than 200 people were detained and subsequently released, and nine civilians were killed amidst the confrontations. These casualties and wrongful detentions underscored the hazards of an urban assault and the difficulty of distinguishing between combatants and noncombatants.65 The mili-

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tary, however, did not round up any paramilitary operatives and did not pursue offensives against known AUC safe havens in Medellín, causing the assault to be viewed as one-sided.66 In addition to recruiting troops and pursuing criminal rackets in the cities, the FARC is waging war in Bogotá, with attacks on water and electrical infrastructures, and even launched mortar attacks on the presidential palace during Uribe’s inauguration. In February 2003, a FARC car-bomb devastated the elite Club El Nogal, killing thirty-two people, including six children, and wounding more than 160 others, constituting one of the most devastating acts of the recent urban campaign. The FARC has targeted the country’s political elite and middle class, whose political and financial support Uribe depends upon. Urban attacks have been few but devastating, as the FARC fleshes out its strategy to portray support for the government as only skin deep and susceptible to the test of urban terror.67 Uribe’s real ability to govern effectively hinges on whether Colombia’s elite continues to make economic sacrifices, supplementing the one-time tax payment earmarked for defense spending along with a tax for social investment in the “Invisible Colombia” (ten impoverished departments with predominantly rural-based populations).68 The vast territory encompassed by “Invisible Colombia” underscores the enormity of the challenges Uribe faces and is an example of how the government’s redaction of democratic security will prove inadequate if the emphasis on security is pursued to the exclusion of a concomitant long-term investment in democracy through the provision of social services and creation of accountable local government in rural sectors.

Colombia’s Resource War: The Battle to Eradicate Drugs and the Search for Black Gold The emergence of the cocaine trade and the discovery of oil in the 1980s have left an indelible mark on Colombia’s conflict and fundamentally changed the dynamics of the war. The four main actors—the Colombian state, FARC, ELN, and AUC—base their activities and political economies on harnessing the spoils of oil and coca. Thus, both resources play a central role in the formulation of U.S. policy toward Colombia and in the effort to eradicate drugs in the region. Coca and Cocaine, Poppy and Heroin, and the War on Drugs After extensive U.S.-sponsored eradication efforts in Bolivia and Peru in the 1990s, the Colombian industry adjusted and nimbly added coca cultivation to its previous activities of production and trafficking of cocaine, maintaining

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net Andean region coca production. According to an International Crisis Group study, the number of Colombian departments affected by illicit crops grew from a range of eight to eleven in 1998 to twenty-three in 2002.69 Colombian farmers and traffickers are indeed adept at moving and replanting the crop, and presently coca is produced throughout the country. Until Uribe’s presidency, the aerial fumigation efforts of the Colombian government and U.S. government contractors failed to reduce national coca cultivation. In an effort to outpace replanting efforts by farmers, guerrillas, and traffickers, the Uribe administration has doubled aerial spraying missions, increased the level of the active chemical glysophate, and even conducted missions in the country’s coffee-growing regions. Statistics released by the United Nations and the U.S. government reflect a sharp decline in coca cultivation during 2002 and 2003. According to Robert Charles, the State Department’s assistant secretary for international narcotics and law enforcement, Uribe’s policies reduced Colombian coca production by upward of 21 percent in 2003.70 Coca was nearly wiped out in the two southern departments of Caqueta and Putumayo, both FARC strongholds, where spraying was concentrated.71 Officials argue that eradication flights reduce coca as a source of both illegal cocaine and FARC income.72 Though the Office of National Drug Control Policy points out that total production in Colombia, Peru, and Bolivia is at the lowest level since 1986 (655 metric tons), that figure is less impressive when compared with the estimated demand in the United States (250 to 300 metric tons). Further, the Achilles heel of the “balloon effect” (squeezing coca out of one area only to have it pop up in another) is manifest regionally across the Andes (production rose in Bolivia in 2003), and even intraregionally within Colombia.73 Despite the many criticisms—ranging from the concerns of Colombian farmers and environmental groups about indiscriminate spraying and the increased toxicity level of the eradication element glysophate to hawkish U.S. analysts who believe Washington should be more involved in counterinsurgency than in the drug war—the Colombian and U.S. governments insist that spraying efforts will continue and that coca could be wiped out entirely over the next several years.74 Previously subordinate to U.S. coca eradication concerns, poppy production is now considered a growing threat since the White House Office of National Drug Control Policy disclosed that 60 percent of the U.S. heroin market is supplied by Colombian poppy. A New York Times news story reported that upward of 80 percent of the heroin that reaches American streets is produced in Colombia and increasingly along the border with Venezuela.75 This untoward development was reported after the apparent success of coca fumigations was publicized, begging the question of whether U.S. counterdrug policy has tendentiously focused on a zero-coca policy at the expense of a comprehensive approach to all illegal drugs.

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In the end, a sustainable policy will need real “carrots and sticks,” and their associated incentives and recommendations need to offer farmers concrete economic short-term and long-term benefits, such as market share for viable alternative products and legitimate state presence of the judiciary and law enforcement. Farmers continue to shift production away from legitimate crops to the more lucrative illicit crops, since they offer an immeasurable comparative economic advantage to the coffee or hearts-of-palm markets. Without a viable economic alternative to growing coca, the incentive of moral suasion for farmers to voluntarily give up their coca crops is impractical.76 Alternative development programs have been underfunded and listless to date, and voluntary manual eradication programs are considered inefficient and susceptible to mendacity. Improved border control and law enforcement are needed to penetrate the vast black market and avenues of illicit transit and commerce the traffickers and armed actors depend upon. Guerrilla activities and the drug trade have been intermingled since the mid-1990s. The FARC started by taxing coca farmers and protecting trafficker landing strips and crops in the early 1990s. Now they are directly involved in all aspects of the drug trade, from coca harvesting to processing and trafficking.77 FARC revenue from the drug trade contributes approximately half of its $900 million annual budget.78 A Colombian government report estimated that 80 percent of the AUC’s budget derived from drug trafficking.79 Although the FARC tends to operate as sovereign in its territories, controlling the coca production and contracting out trafficking, the AUC collects “rent” from wealthy landowners and narcotraffickers. In part of Colombia’s “counter land reform” in the 1980s and 1990s, drug traffickers purchased about 10 percent of Colombia’s most productive agricultural land. The AUC has continued this practice by selling land to traffickers who pay the group for security and split the profits from trafficking. AUC leaders have become primarily focused on the illicit trade rather than their antiguerrilla raison d’être.80 Because of an ideological kinship with the landowners and drug traffickers, the AUC has a comparative advantage over the FARC in access to fertile land and in “rent” from the drug trade.81 The “counter land reform” purchases also illustrate the perversion of Colombia’s legal economy. All of Colombia’s illegal actors maintain plentiful legal assets, and the monetary value of their holdings significantly affects the Colombian economy. Although economists disagree on the drug economy’s impact on Colombia’s macroeconomic stability, there is little disagreement that drug money provided a boon to the Colombian economy, helped establish fiscal stability in the 1990s, and continues to buttress the nation’s balance of accounts. The drug trade, however, has an overall negative effect because the abundance of illicit resources generates an overvalued peso that works against the interests of the legitimate export and import sector. Drug money has enriched only a small percentage of the population in an economy that is fun-

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damentally unequal.82 Beyond economics, the drug trade produces considerable punitive consequences for Colombian society and its economy, such as endemic subornation and rampant criminality and violence.83

The FARC, ELN, AUC, and Government’s Stake in Colombian Oil The second most important revenue source in Colombia is petroleum, accounting for approximately 25 percent of government revenues. Colombia is the United States’ fourth largest supplier of petroleum in the Western Hemisphere, pumping 280,000 of its 616,000-barrels-per-day production for delivery to U.S. ports. Political violence in northern oil-producing regions cut production by approximately 25 percent from 1999 to 2001, costing the state $430 million a year in lost revenues.84 Extortion by the guerrillas and paramilitaries in Arauca is widespread. The Uribe government stopped the disbursement of $40 million for the region from the National Royalties Commission after acknowledging “irregularities” in the local administration of public moneys.85 Mounting violence has made further exploration difficult, as oil companies such as Occidental Petroleum and British Petroleum (BP) are unable to guarantee safe conditions for drilling. According to the most sanguine analysts, Colombia could possess vast untapped reserves. But more guarded analyses caution that the nation could become a net oil importer if exploration continues to be inhibited by security concerns.86 The struggle in Arauca escalated in the late 1990s when the FARC and ELN quarreled over the ELN’s refusal to share its spoils from extortion and oil. Local authorities and Occidental had considered the ELN’s rent-seeking relatively benign, but when the FARC arrived it bombed the Caño LimónCoveñas pipeline repeatedly, shutting it down for months at a time. After Occidental Petroleum successfully lobbied the United States and Colombia to protect the pipeline, Colombian armed forces, U.S. Special Forces, and the AUC arrived. Although guerrilla attacks on the pipeline are since down, the homicide rate in Arauca now doubles the country’s overall rate.87 At least in the short term, U.S. Special Forces are unlikely to mitigate the overall violence of the region as both the FARC and ELN retaliate and AUC syndicates enter the fray. For its part, the Colombian state needs to extract oil from Arauca to sustain a foundering economy and prove that its security and development institutions function. Assistance from private foreign investment is simply insufficient.88 With the military spread thin, protecting the BP-operated OCENSA and Occidental-operated Caño Limón-Coveñas pipelines will be a key benchmark for judging the success of the government’s new national security strategy. Clearly, the guerrillas, the paramilitaries, and the state are all treating the battle for Arauca as crucial to winning the war of attrition against their respective enemies’ entrenched political economies.89

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To date, no one in the conflict has scored a major victory. U.S. forces have trained two counternarcotics brigades of the Colombian forces and are now training the first counterinsurgency brigade. All accounts, however, indicate that training programs have made remarkable progress in teaching human rights policy, vetting Colombian soldiers for past rights abuses, and establishing professionalism throughout the ranks. Now that all the groups have gotten wealthier and more powerful, ending the conflict is more complicated, and Colombian officials are concerned that U.S. plans for an “exit strategy” will undermine a resolution to the conflict. Regardless of U.S. assistance, however, it remains to be seen whether undermining the political economies of the illegal actors will have the advertised destructive impact. Colombia reduced its export of cocaine by 35 percent in 2003, which officials argue deprived the rebels of millions in revenue. Even without coca, however, the FARC and AUC will still engage in the lucrative racket of guerrilla activities. The decisive issue might be whether the groups’ reduced income hurts their recruitment efforts and ability to pay wages above the average of the Colombian army.90 In the case of the FARC, despite the increase in departure from the armed group’s ranks since August 2002, security analyst Alfredo Rangel believes that “the FARC continue to have a very strong core and can more than handle this level of desertion.”91 Whether coca and poppy spraying and democratic security are borne out as a comprehensive strategy for making an incision into the illegal financial streams and causing mass desertion of rebels will be among the decisive factors in the way history judges Uribe’s democratic security policy.

The Colombian Economy: Budget Tightening and Social Crisis Colombia’s citizens are yearning for an end to war, an end to narcotrafficking, freedom from fear, and economic growth that generates jobs and a decent living. No longer the top economic performer in Latin America, the country’s macroeconomic and microeconomic picture is in disarray despite the economy’s posting 3.5 percent growth in 2003. Fifty-one percent of urban and 82 percent of rural citizens live below the poverty line. After a significant economic contraction between 1999 and 2001, 50 percent of the economically active population is either unemployed or underemployed.92 Despite Uribe’s high public support, his approval ratings on the general stewardship of the economy, combating unemployment, and lowering living costs are substantially less impressive, at 48, 33, and 32 percent, respectively. If Uribe’s macroeconomic reforms do not lead to marked improvements for the microeconomic realities of the majority of Colombians, a social explosion could erupt that would severely aggravate Colombia’s crisis. Uribe is keenly aware that

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providing economic security is the vital complement to the physical security necessary to fulfill the two fundamental tenets of a holistic democratic security initiative.93 Taking advantage of Uribe’s popular mandate, the Colombian Congress by the end of 2002 had approved four macroeconomic reforms. Fundamental to increasing fiscal savings and stabilizing a public debt of $40 billion, as well as to increasing military spending by 1 percent of GDP, the tax, pension, administrative, and labor reforms marked major victories for the Uribe administration. They also paved the path for a new two-year, $2.1 billion stand-by financial package arrangement with the International Monetary Fund (IMF), and additional financing from the World Bank, the Inter-American Development Bank, and the Andean Finance Corporation; the entire package could total upward of $5 billion. To maintain good credit standing with the international financial institutions, Colombia lowered public-sector debt from 4 percent of GDP in 2002 to 2.8 percent in 2003 and is hoping to keep inflation at 5.5 percent. Without the fiscal margin for increased government investment in rural areas and social initiatives, Uribe is relying on the private sector’s ability to boost the Colombian economy and fill the void of state-led economic growth. Fueled by a 7.2 percent increase in exports, 20 percent growth in the construction sector, and 17 percent increase in private investments in 2003, the economy is expected to continue improving with a predicted 3.8 percent growth in 2004.94 Uribe’s structural reforms are geared toward long-term liberalization and trade promotion in the global economy. What distinguishes Colombia’s plight from other Andean nations is not the nature of the economic reforms but the remarkable political support behind the president. Uribe enlisted the elite in his economic reforms and, despite opposition in the Congress, passed a tax reform law closing loopholes that cost the government nearly 5 percent in lost GDP.95 Uribe failed to achieve the desired economic reforms via referendum in October 2003 because the requisite 25 percent voter turnout did not materialize. Losing the referendum has required the president to build coalitions in Congress in order to establish the spending controls critical to his stabilization policy.96 Austerity measures designed to save the government $177 million by 2006 have provoked protest, particularly from the public sector, which is expected to lose 40,000 jobs. The administration is depending on continued growth and social assistance programs to offset the discontent caused by reforms.97 In 2003, government-issued mortgage loans increased by 19 percent, and hundreds of millions of dollars in microloans to stimulate local industry are being issued by the government.98 Uribe also continues to seek an extension of the VAT to exempt items. Although the proposal was struck down by the Constitutional Court in 2002 owing to its adverse affect on the poor, the president now promises to dedicate the increased revenue exclusively to social

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programs.99 If Uribe can sustain the political support for his programs, Colombia might be able to avoid the Bolivian experience in which misconceived and ill-timed economic reforms in 2003 produced violent riots, political tumult, and massive social unrest. Other main sectors of Colombia’s export economy include coffee, trading at historically low prices, and cut flowers, a growing export product. Colombia benefits from preferred market access (no tariffs) for agricultural products in the United States under the Andean Trade Promotion and Drug Eradication Act (ATPDEA).100 This has helped transform the cut-flower industry into a $600 million national business that now accounts for 14 percent of the world export market.101 Although the ATPDEA provides a shortterm windfall to the labor market and makes Colombian products more competitive, it does not promote the diversification Colombia needs. It has not succeeded in its principal objective: weaning rural farmers off of coca production. Even though the export successes and economic reforms are creating enthusiasm on Wall Street and pleasing international financial institutions, it is unclear whether they will produce tangible economic benefits for poor Colombians or mitigate the country’s deep inequalities.102 With the hope of securing better relations and tapping prosperity through unfettered access to U.S. markets, the Uribe administration is pursuing a bilateral free trade agreement.103 Such an eventuality, however, would take time to bear fruit and could face major roadblocks in the U.S. Congress and from competing trade commitments. Unless a free trade agreement is conditioned with requirements for the state and the Colombian business elite to invest in poverty reduction schemes and rural development, the benefits of such an accord would inexorably fall to the Colombian middle and upper class to the exclusion of generating equity, strengthening the middle class, and eradicating poverty. Recent macroeconomic reforms are even less likely to have an impact on rural Colombians. Land accumulation is fundamental to Colombia’s historical economic growth and directly correlated to the power dynamics of the armed conflict. High hopes for the alternative development outlined in Plan Colombia have been dashed as crop-substitution programs have failed and been abandoned. Most of the money for new rural infrastructure projects has not even been spent. To the government’s credit, Uribe’s “Democratic Manifesto” and the National Planning Ministry’s 2003 report refer to government plans to purchase land at market prices and make it available to needy peasants, along with low interest loans and other technical assistance. Evidence of action, however, is scant. Given the concentration of land ownership and the problem of internally displaced persons, adopting an aggressive, comprehensive modern land reform would be an essential step in expanding employment so more Colombians can make an honest living, even if the jobs are not directly connected to the global economy.104

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Successfully navigating the political waters of implementing asset forfeiture laws passed under former president Ernesto Samper would represent a major accomplishment in redressing the needs of the excluded rural population through a modern land reform.105 As a positive first step, the government signed legislation in 2002 requiring individuals claiming title to seized assets to appear in court to appeal state seizures, helping to reduce the time from seizure to actual forfeiture of assets into government coffers. The government has made some significant land seizures under the law but has yet to recover vast swaths of fertile lands obtained by drug lords during the 1990s counter land reform.106 In an El Tiempo column, “Land Without Men and Men Without Land,” Juan Camilo Restrepo, former Colombian senator and minister of finance, directly connected Colombia’s rural crisis to its underexploited asset forfeiture laws and land resources. Restrepo noted that only 20 percent of Colombia’s arable land was utilized (12 million hectares lay fallow) and that the recent modification to the asset forfeiture law facilitating the process must be pursued with vigor by the Uribe government with the goal of a new land reform and economic growth as conditions for sustainable peace.107 A recent report from the Colombian controller general indicated that listless political will from the Uribe government and amateur stewardship by the administrative entity responsible for coordinating the interagency process of appraising, confiscating, and appropriating confiscated land resulted in vast tracts of arable land abandoned instead of redistributed, an anemic pace of administering the assets, an inadequate appraisal of available assets, and a missed opportunity for economic gain.108

Political Reforms Although President Uribe’s ability to balance the trade-offs among security, democracy, and economic development—what Russell Crandall calls in Chapter 1 the “elusive trinity”—is the paramount challenge for his term, he is moving on discrete political reforms that could usher in a refreshing change in political culture. In particular, Uribe is promoting a form of local democracy known as Communal Councils of Government, even governing at his own peril from the embattled department of Arauca. In the solid Latin American populist tradition, the president attends town meetings throughout the country, listening to citizen concerns and authorizing government action when prudent. The government actively pursued the October 2003 referendum that addressed “corruption and political chicanery” in addition to the economic reforms. The questions on the referendum dealt with political reforms connected to the government’s fiscal savings plan. The referendum asked citi-

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zens to reduce the number of senators and the number of deputies in the lower house and also asked whether salaries for provincial government official and state pensions should be capped for two years. The government estimated it would have saved $570 million (0.7 percent of GDP) and thus have helped meet IMF austerity measures. The defeat of the referendum makes it unlikely that such restructuring will occur because changes will be difficult to get through Congress. There also remain the nagging questions of second-generation reforms, such as electoral or party reforms. A separate political reform sanctioned by the Congress is intended to reinvigorate Colombia’s political parties and challenge them to develop as nationalbased institutions by implementing a parliamentary system of proportional representation.109 Uribe, with the support of the Conservative Party, now seeks a constitutional amendment to allow a president to serve two consecutive terms. Many believe that the progress the country has made under the Uribe administration will falter or fade if Uribe is replaced. An April 2004 poll found that 70 percent of Colombians support the amendment and that 64 percent would vote for Uribe if he is allowed to run again. Critics, however, point to the autocratic example of Fujimori, who amended the Peruvian constitution to allow him to retain power, as evidence of the antidemocratic nature of such a reform.110 Others point out that the concessions Uribe would have to provide in order to pass such an amendment would ruin his credibility as an independent, honest president. The Conservatives, for instance, gave their support only after Uribe granted demands to increase social spending.111

Conclusion The Colombian government and electorate have chosen to escalate war in the short term in order to build peace down the road. Given this choice, what can be expected for Colombia? Although the government’s national security strategy is comprehensive in its focus on bringing security to all Colombians, its plan to take the war directly to the guerrillas needs much more time before it can be said that the FARC in particular has been strategically weakened. The United States will clearly remain engaged on the ground, training new Colombian brigades. Only after the Colombian military successfully eliminates key leaders of the FARC and fields forces capable of sustained battle will it be possible to judge whether a military solution to the conflict is possible. And such a judgment remains several years off. In the meantime, without imaginative reforms to address the problems of rural development, without effective levers to induce all of the armed actors

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into serious negotiations, and without a national elite committed to fulfilling a social contract, Colombia’s tactical battlefield victories will be for naught. Uribe, or a future president, could succeed in asserting state military power for the first time in history and defeating the FARC. But if he does not implement sustainable coca eradication programs or address the root political and economic causes of Colombia’s war, the resurgence of armed groups is certainly possible. If the government focuses on strengthening state authority at the expense of upholding human rights and without regard for laying a sustainable foundation for security, justice, and prosperity for all citizens, it could easily win the war but lose the peace, leaving Colombian society ravaged in the process.

Chronology of Important Recent Events in Colombia112 1990. In the presidential campaign to succeed Virgilio Barco, candidates Luis Carlos Galán (Liberal Party), Bernardo Jaramillo (leftist Unión Patriótica), and Carlos Pizarro León-Gómez (April 19, M-19 political party) are all assassinated. In the wake of political and narco-fueled violence, César Gaviria Trujillo (Liberal Party) is elected president in August; Gaviria responds to public demand for reform by immediately establishing a constituent assembly for the writing of a new constitution. 1991. After six months of deliberations, the Constituent Assembly promulgates Colombia’s new constitution on July 4. Key components of the new constitution include its explicit prohibition of extraditing native-born Colombians, decentralization of fiscal and administrative state entities, legal establishment of citizen control over the state, and provisions for the political representation of ethnic and religious minorities. 1992. In May, after failed peace discussions with the FARC in Venezuela and Mexico, President Gaviria attacks La Uribe, Meta, the stronghold of the group’s secretariat, signaling his administration’s categorization of the guerrillas as “bandits,” not legitimate political actors. A publicly addressed “Letter of the Intellectuals,” including the signature of Nobel laureate and Colombia’s most famous citizen, Gabriel García Márquez, denounces the FARC’s use of armed struggle as inhumane and anachronistic and advocates for the pursuit of reforms through peaceful means. 1993. After declaring all-out war on the Colombian state, Pablo Escobar is finally killed at the hands of an elite antinarcotics police force. Colombia’s Cuisana oil field in Casanare, 100 miles east of Bogotá, goes on-line with reserves estimated at 1.5 billion barrels. British Petroleum signs an agreement with the Colombian government to be a joint partner for the construction of the pipeline and export of crude; guerrilla groups, in particular the ELN, target the pipeline with disruptive attacks.

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1994. In July, Liberal Party candidate Ernesto Samper wins a close presidential race with Conservative Andrés Pastrana, and two months later Samper’s administration is irrevocably tarnished by revealed ties to the Cali cartel. With a crisis-ridden administration struggling to survive, the FARC, ELN, and rightist paramilitary groups take advantage of a lame duck president and expand their armies and increase combativeness. 1996/1997. Colombia is decertified by the U.S. State Department for its insufficient support in the war against drugs. Samper is seriously undermined by the U.S. decertification, although he is absolved (by one vote) of criminal charges for ties to the drug cartels by the Colombian House of Representatives. Rightist self-defense groups from across Colombia unite under a national umbrella organization, AUC, led by Carlos Castaño. The AUC, 14,000–16,000 strong with copious resources and land holdings, represents a formidable foe to the guerrillas. 1998. In June, Conservative Party candidate Andrés Pastrana is elected president by a slim margin over Liberal Party candidate Horacio Serpa. Pastrana immediately seeks to reestablish good bilateral relations with the United States and, unexpectedly, meets with FARC commander Manuel Marulanda Vélez. Pastrana grants the FARC and ELN political legitimacy, paving the way for peace negotiations; the United States holds secret meetings with the FARC in Costa Rica. 1999. The government and the FARC announce the start of peace negotiations after the guerrilla group is granted a Switzerland-sized demilitarized zone where talks will be held. Colombia’s economy contracts 5 percent in the first quarter of the year, indicative of a serious economic decline across Latin America. 2000. President Clinton launches a $1.3 billion, two-year antinarcotics emergency aid deal with the Pastrana administration known as Plan Colombia. Approximately 75 percent of the funds are earmarked for military and police training on behalf of counternarcotics operations. European donors feel left out of the process and contribute scant funds to Colombia, arguing that Plan Colombia is an irresponsible strategy for helping solve the decades-old conflict. 2001. Peace talks between the FARC and the government appear stalled, as the guerrilla group continues to perpetrate terrorist acts and cultivate coca, the leaf used for cocaine. For its part, the Pastrana administration appears helpless, as FARC recalcitrance, criticism from the United States for entering negotiations, and mismanagement and internal disagreement over the negotiations conspire against progress in peace talks. 2002. In February peace talks break down after the FARC kidnaps a prominent Colombian senator who supported the peace talks. With only months remaining in his administration, Pastrana is powerless to mount a fundamental change in policy, despite widespread Colombian support for

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changing course vis-à-vis the FARC. In this context, Alvaro Uribe Vélez, demanding a hard-line approach to dealing with the FARC, wins a resounding victory in the first round of presidential elections. 2003. With expanded authorities granted for the U.S. military to engage in counterterror and counterinsurgency training, President Uribe outlines his “Democratic Security” strategy, featuring an effort to bolster the Colombian armed forces, eradicate coca through stepped-up fumigation efforts, and establish a “law and order” approach to fighting the guerrillas. Uribe initiates a controversial peace negotiation with the AUC and lashes out at human rights agencies for doing the work of “terrorists” in their reporting on the conflict. Terrorist attacks, kidnappings, homicide rates, and coca cultivation drop. 2004. Uribe, with approval ratings around 80 percent, seeks a constitutional amendment to allow him to serve two consecutive terms as president. AUC leadership enters a “concentration zone” from which peace talks are held. Plan Patriota is enacted, deploying 15,000 troops to the FARC’s heartland.

Notes 1. Javier Baena (Associated Press), “Rebels Sabotage Oil Pipeline in Colombia: US Green Berets in Area,” February 6, 2003. 2. All dollar figures are in U.S. dollars unless otherwise noted. 3. “Violencia en Arauca, un desafío para la política de seguridad del Gobierno,” El Tiempo, July 13, 2003, www.eltiempo.com. 4. Linda Robinson, “Warrior Class: Why Special Forces Are America’s Tool of Choice in Colombia and Around the Globe,” US News and World Report, February 10, 2003, 34–40, 42, 44, 46. 5. Some analysts, such as Nazih Richani, view Colombia’s protracted conflict as a “resource war.” In his work Systems of Violence, Richani argues that the political economies of insurgencies and armed factors are the fulcrums of protracted conflicts such as Colombia’s. Nazih Richani, Systems of Violence: The Political Economy of War and Peace in Colombia (Albany: State University of New York Press, 2002). 6. Jonathan Hartlyn, The Politics of Coalition Rule in Colombia (Cambridge: Cambridge University Press, 1988), 2. 7. Venezuela would also have to be considered a part of this beachhead of stable modern democracies. The main difference between the two countries, however, is that Venezuela eliminated its insurgency through a successful military strategy and political reinsertion campaign. 8. For a detailed study of the 1991 Colombian constitution and its results, see Ana María Bejarano, “The Constitution of 1991: An Institutional Evaluation Seven Years Later,” in Violence in Colombia 1990–2000: Waging War and Negotiating Peace, edited by Charles Bergquist, Ricardo Peñaranda, and Gonzalo Sánchez G., 53–74 (Wilmington, DE: Scholarly Resources, 2001). 9. Marc Chernick, “Negotiating Peace amid Multiple Forms of Violence: The Protracted Search for a Settlement to Armed Conflicts in Colombia,” in Comparative

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Peace Processes in Latin America, edited by Cynthia J. Arnson, 159–199 (Washington, DC: Woodrow Wilson Center Press, 1999). 10. Mauricio Reina, “Drug Trafficking and the National Economy,” in Violence in Colombia, 1990–2000: Waging War and Negotiating Peace, edited by Charles Bergquist, Ricardo Peñaranda, and Gonzalo Sánchez G., 75–94 (Wilmington, DE: Scholarly Resources, 2001). 11. Rodrigo Uprimny Yepes, “Violence, Power, and Collective Action: A Comparison Between Bolivia and Colombia,” in Violence in Colombia 1990–2000: Waging War and Negotiating Peace, edited by Charles Bergquist, Ricardo Peñaranda, and Gonzalo Sánchez G., 39–52 (Wilmington, DE: Scholarly Resources, 2001). 12. Three members of the Irish Republican Army (IRA) were arrested leaving Bogotá with fake passports and were alleged to have worked with the FARC in the despeje on improving their urban bombing tactics. 13. As of July 2004, the ELN was again involved in peace talks with the Uribe administration and third party assistance of the Mexican government. 14. Gustavo Gallón Giraldo, “Esta guerra no se gana a bala” (Bogotá: Comisión Colombiana de Juristas, 2002), 1. Available online at www.ciponline.org/colombia/ 0212ccj.pdf. 15. Russell Crandall and Akilah Jenga, “New Complications in the Andes,” 2003–2004 Strategic Survey (London: International Institute for Strategic Studies, 2004), 84–99. 16. BBC, “UN Official Says Rights Situation ‘Still Critical’; Colombian Officials React,” BBC Monitoring International Reports, March 13, 2004. Available online at www.monitor.bbc.co.uk. 17. United Nations, Report of the United Nations High Commission for Human Rights on the Human Rights Situation in Colombia, advanced edited version (Geneva, Switzerland: United Nations High Commission for Human Rights, 2003), 5–6. 18. U.S. Committee for Refugees (USCR), World Refugee Survey 2004 (Washington, DC: USCR, 2004). 19. BBC, “UN Official Says Rights Situation ‘Still Critical.’” 20. Alexandra Farfan (United Press International), “Analysis: Colombia’s Refugee Crisis,” February 25, 2004. 21. Reuters, “Killings, Abductions Fall in Colombia,” June 30, 2004. It only costs $7 to hire a sicario (assassin) for private justice. 22. Crandall and Jenga, “New Complications in the Andes,” 85. 23. The Committee to Protect Journalists, “Attacks on the Press 2003: Colombia,” March 10, 2004, www.cpj.org; Federación Colombiana de Educadores (FECODE), “Informe sobre la situación de derechos humanos: Continúan los asesinatos y desplazamientos forzados de docentes” (Bogotá: FECODE, 2004), www.fecode .edu.co. 24. International Confederation of Free Trade Unions, “Global Survey Charts the Spread of Anti-union Repression,” June 9, 2004, www.icftu.org; Frances Williams, “Colombia Tops Danger List for Trade Unionists,” Financial Times, June 10, 2003, 6. 25. Maria Engqvist, “Stand by Oil Strikers,” Morning Star Online, May 5, 2003, www.morningstaronline.co.uk. 26. Crandall and Jenga, “New Complications in the Andes,” 86. A January 2004 Gallup poll showed Uribe’s popularity increasing from 70 percent to 80 percent. Between 72 and 82 percent of Colombians approved of his policies on guerrillas, paramilitaries, drugs, and corruption. Seventy-nine percent believed the government to be respectful of human rights, and 80 percent approved of military performance. Ninety-

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three percent of Colombians stated that they disapproved of the FARC, and 82 percent disapproved of the AUC. 27. Rainbow Nelson, “Upbeat Country Says, ‘Let the Good Times Roll’: Colombia Is Enjoying a Rare yet Sustained Bout of Optimism,” Lloyd’s List International, February 25, 2004, 12. 28. Numbers vary for the armed groups’ aggregate income. The U.S. Department of State estimates income from narcotics alone to be over $300 million; Bruce Bagley, professor of international relations at the University of Miami, believes the total FARC budget is approximately $900 million. See Marc Grossman, “U.S. Assistance to Colombia and the Andean Region,” Testimony Before the House Appropriations Committee’s Subcommittee on Foreign Operations, April 10, 2002, www.state .gov/p/0250pf.htm; and Bruce M. Bagley, “Drug Trafficking, Political Violence and US Policy in Colombia in the 1990s,” www.mamacoca.org/bagley_drugs_and _violence_en.html. 29. Scott Wilson, “A Worsening War in Colombia,” Washington Post, February 1, 2003, A16. 30. BBC, “FARC Admits Coca Farmers Massacre,” BBC, June 18, 2004, http://news.bbc.co.uk. 31. Joaquín Villalobos, “Por qué las FARC están perdiendo la guerra,” Semana, July 6, 2003. 32. Crandall and Jenga, “New Complications in the Andes,” 86. 33. Toby Muse, “Uribe’s Anti-rebel Policies Start to Bear Fruit,” Financial Times, June 23, 2003, 7. 34. The ELN has long sought the formation of a constituent assembly to draw attention to the country’s social issues as a prerequisite for a peace process. It has also voiced an interest in establishing a rebel safe haven while the group disarms, a demand unlikely to be met by the government. 35. Rachel Van Dongen, “U.S. Journalists Face New Risks Covering Colombia,” The Christian Science Monitor, January 28, 2003, 7. 36. “El ELN dice que excluyó al Ejecutivo de sus gestiones para darles una salida negociada al conflicto armado,” El Tiempo, January 13, 2003. “Polémica por decreto del Gobierno que extiende indulto a paramilitares,” El Tiempo, January 28, 2003, www.eltiempo.com. 37. “Colombia Week Briefs,” June 28, 2004, www.colombiaweek.org. 38. Human Rights Watch, “Human Rights Watch World Report 2003: Americas— Colombia” (New York: Human Rights Watch, 2003); U.S. Department of State, Country Report on Human Rights Practices—2002 (Washington, DC: U.S. Department of State, 2003). 39. Human Rights Watch, The “Sixth Division”: Military-Paramilitary Ties and U.S. Policy in Colombia (New York: Human Rights Watch, 2001). 40. Crandall and Jenga, “New Complications in the Andes,” 86. 41. Steve Salisbury, “Colombia War Takes ‘Right’ Turn,” Washington Times, January 28, 2003, A16; Scott Wilson, “Colombian Fighters’ Drug Trade Is Detailed,” Washington Post, June 26, 2003, A1. 42. Andy Webb-Vidal, “Uribe’s Paramilitary Talks Paralysed: Colombian President’s Hardening Stance Has Raised Fears over Peace Process,” Financial Times, May 4, 2004, 10. 43. Associated Press, “Colombian Peace Commissioner Says Top Paramilitary Leaders Who Disarm Won’t Go to Jail,” July 20, 2003. 44. “Definidos primeros temas para agenda de negociación con las paramilitares,” El Tiempo, January 18, 2003. The October 2001 killings of three Panamanian Indians,

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allegedly by paramilitaries patrolling the Darien jungle border region and the recent Organization of American States (OAS) report regarding shipments of black market arms from Nicaragua to the AUC indicate the difficulties of negotiations with the group. See Phil Stewart (Reuters), “Colombia Probes Border Massacre, Eyeing Peace Talks,” January 28, 2002; “OAS Presents Report on Investigation of Diversion of Nicaraguan Arms to the United Self-Defense Forces of Colombia” (OAS press release, January 20, 2003). 45. As part of a congressional fiscal year 2003 supplemental aid disbursement to members of the Coalition of the Willing—nations that supported the U.S. war on Iraq at the UN or militarily—of which Colombia was a member, the Uribe government received $104 million dollars. See Center for International Policy, www.ciponline.org /colombia. 46. Alvaro Uribe Vélez, “La Colombia que Quiero: Manifiesto Democrático, 100 Puntos,” Bogotá, Presidencia de la República de Colombia, www.presidencia.gov.co /documentos/. 47. Unofficial document obtained by authors. Quotations from draft of “Republic of Colombia, National Security Strategy.” 48. J. Curt Struble, “U.S. Policy in the Western Hemisphere,” Testimony of Acting Assistant Secretary of State, Bureau of Western Hemispheric Affairs, Department of State, Before the Subcommittee on the Western Hemisphere, Committee on International Relations, U.S. House of Representatives, February 27, 2003. Hearing on “Overview of U.S. Policy Towards the Western Hemisphere” (Washington, DC: Federal Document Clearinghouse Congressional Testimony, 2003). 49. Statistics corroborated by personal interviews with U.S. Embassy and World Bank Colombia country team, July 21, 2003. 50. Crandall and Jenga, “New Complications in the Andes,” 87. 51. Ibid., 85. 52. “Colombian President Rejects Peace Talks, Urges Army to Crush Rebels,” BBC Monitoring International Reports, May 9, 2004. 53. “80,000 Held in Drug Raids,” Irish News, May 14, 2004. 54. “Colombia: FARC Guerrillas Hit Back Hard,” Latin American Weekly Report, March 2, 2004. 55. Jason Webb (Reuters), “Colombian Rebels Kill 10 Hostages as Rescue Fails,” May 6, 2003. 56. “Colombia: Uribe Defends Military After Civilians Killed,” LatinNews Daily, April 13, 2004, www.latinnews.com; Juan Forero, “World Briefing Americas: Colombia: Troops Kill 5 Civilians,” New York Times, April 13, 2004, A6; Juan Forero, “World Briefing Americas: Colombia: Soldiers Open Fire on Each Other,” New York Times, April 14, 2004, A8. 57. “Colombia: Human Rights Seriously Undermined as Judicial Powers to the Military Come One Step Closer” (Amnesty International press release, May 20, 2003). 58. “Colombia’s Conflicts: More Order and Less Law,” The Economist, November 9, 2002, 37–38. 59. Francis Robles, “Colombian Leader Installs Citizen Spies,” Miami Herald, August 9, 2002, 14A. Although Colombia has had civilian informant networks and similar government-sponsored rural defense forces before, the significance of Uribe’s initiative is the public relations dimension and the hubris associated with the campaign. 60. Jason Hagen, “Uribe’s People: Civilians and the Colombian Conflict,” Georgetown Journal of International Affairs (Winter/Spring 2003): 68. 61. Proyecto apoyo defensorial en las zonas de rehabilitación y consolidación (Bogotá: Oficina de Defensoría del Pueblo y Procurador General, 2003). The report

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also detailed how the zones of rehabilitation and internal commotion declaration are in contravention of tenets of international humanitarian law. It also reported that according to National Police statistics, no member of the AUC, which is active in the region, was captured by security forces from September 2002 to February 2003. 62. T. Christian Miller, “Tipping the Scales in a War,” Los Angeles Times, October 31, 2002, A1. 63. “Campesinos Armados,” Semana, August 30, 2002, http://semana.terra.com.co. 64. “ONU advierte riesgos por medidas de excepción,” El Espectador, October 2, 2002, www.elespectador.com. 65. “Se reanuda operación de retoma de Comuna 13 de Medellín; jornada de ayer dejó 10 muertos,” El Tiempo, October 17, 2002. 66. “Cuestionan que operativos en la Comuna 13 no muestran resultados contra paramilitares,” El Tiempo, October 17, 2002. 67. See Scott Wilson, “Bombing Brings War to Colombia’s Elite,” Washington Post, February 9, 2003, A20; and Juan Forero, “Blast at Social Club Struck at Colombia’s Elite,” New York Times, February 9, 2003, 13. 68. “La Colombia Invisible,” El Tiempo, May 12, 2003. 69. International Crisis Group, “Colombia: Will Uribe’s Honeymoon Last?” Latin America Briefing, Bogotá and Brussels, December 19, 2002, www.crisisweb.org (accessed June 2004). 70. Robert B. Charles, “Status Report on Plan Colombia,” House Committee on Government Reforms, U.S. Congress, June 17, 2004 (Washington, DC: Federal Document Clearinghouse Congressional Testimony, 2004). 71. Paul E. Simons, “U.S. Narcotics Control Initiatives in Colombia,” Senate Drug Caucus, U.S. Congress, June 3, 2003, www.ciponline.org. 72. Karen DeYoung, “US: Coca Cultivation Drops in Colombia,” Washington Post, February 28, 2003, A19; John P. Walters, Director of National Drug Control Strategy, “Drug Treatment Proposals,” Hearing on “Overview of U.S. Policy Toward the Western Hemisphere,” U.S. House of Representatives Subcommittee on Criminal Justice, Drug Policy, and Human Resources, Committee on International Relations, February 27, 2003 (Washington, DC: Federal Document Clearinghouse Congressional Testimony, 2003). 73. Adam Isacson, Memorandum: The State Department’s Data on Drug-Crop Cultivation (Washington, DC: Center for International Policy, 2004); Juan Forero, “Hide-and-Seek Among the Coca Leaves,” New York Times, June 9, 2004, A4. 74. Lisa Haugaard’s Blunt Instrument: The United States’ Punitive Fumigation Program in Colombia (Washington, DC: Latin American Working Group, 2002) presented a good synthesis of the myriad criticisms of the spraying program’s effects. 75. Juan Forero with Tim Weiner, “Latin American Poppy Fields Undermine U.S. Drug Battle,” New York Times, June 8, 2003, 1. 76. Council on Foreign Relations, Andes 2020: A New Strategy for the Challenges of Colombia and the Region (New York: Council on Foreign Relations, 2004). 77. The United States has petitioned the first extradition of the FARC for alleged drug trafficking on the basis of the Drug Enforcement Administration’s discovery of a FARC stamp on shipments of cocaine leaving Colombia. 78. For different estimates, see Bagley, “Drug Trafficking, Political Violence and US Policy in Colombia in the 1990s”; and Walters, “Drug Treatment Proposals.” Though some factions of the ELN have been rumored to be involved in the drug trade, their take is insignificant in comparison to that of the FARC or AUC. 79. Scott Wilson, “Colombian Fighters’ Drug Trade Is Detailed,” Washington Post, June 26, 2003, A1. 80. Ibid.

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81. For a detailed discussion of these points, see Teresa Whitfield, “Colombia: The Paramilitaries” (unpublished paper, November 15, 2002), 11–12; and Alejandro Reyes and Camilo Echandía Castilla, “El conflicto armado en Colombia: De las condiciones objetivas al accionar estratégico de los actores,” OASIS 99 (Bogotá: Universidad Externado de Colombia, 2000): 350–364. 82. Reina, “Drug Trafficking and the National Economy.” 83. Although analysts disagree on the extent to which the drug trade affects Colombia’s economy, most agree that its “positive effects” are confined to short-term fiscal solvency. Roberto Steiner and Alejandro Corchuelo, “Economic and Institutional Repercussions of the Drug Trade in Colombia,” Universidad de los Andes, December 1999, www.mamacoca.org/index_003_en.htm. See also Ricardo Rocha García, “La economía Colombiana tras 25 años de narcotráfico,” United Nations Drug Control Program, 2002, www.odccp.org/colombia/study_summary_2000-12-31_1.html. 84. “Colombia Country Analysis Brief,” U.S. Department of Energy, Energy Information Administration, March 2002, www.eia.doe.gov/emeu/cabs/colombia /html. 85. Dan Molinski, “Colombia Admits that Oil Money Sometimes Ends Up with Rebels,” Dow Jones Newswires, February 4, 2003. 86. EcoPetrol, the Colombian state oil company, operates as a partner with Occidental and BP but depends on the multinationals for the technology and expertise to drill for more oil. 87. T. Christian Miller, “Blood Spills to Keep Oil Wealth Flowing,” Los Angeles Times, September 15, 2002, A1; Miller, “The Crackdown on Rebels and Paramilitary Fighters Has Only Intensified the Conflict,” Los Angeles Times, May 20, 2003, A3. 88. Occidental has increased its social spending in Colombia from $2 to $3 million, and BP, which operates Colombia’s 500-mile-long Oleoducto Central, SA (OCENSA) oil pipeline in the Department of Casanare, has invested over $3 billion in Colombia, spending about $40 million on different social programs over the past decade. Social spending through grants and local development programs, however, is subject to corruption and the extensive bribery system the guerrillas control in the oilproducing regions. 89. By political economy we refer, for example, to the intersection of the ELN’s political project of opposing Occidental Petroleum’s exploitation of Colombian national resources and its economic enterprise of deriving revenue from the petroleum sector through extortion and other means. 90. Scott Wilson, “U.S. Seeks to Avoid Deeper Role in Colombia,” Washington Post, March 9, 2003, A16. 91. Toby Muse, “Uribe’s Anti-rebel Policies Start to Bear Fruit,” Financial Times, June 23, 2003, 7. 92. Bases del Plan Nacional de Desarrollo: Hacia un Estado Comunitario (Bogotá: Departamento Nacional de Planeación, Presidencia de la República, 2002), 154–155. “Colombia—Unemployment,” EFE, January 30, 2003. 93. Semana, November 11–18, 2002, 34. 94. Oxford Analytical Daily Briefing, “Colombia: Economic Continuity,” May 20, 2003, www.oxan.com; Nelson, “Upbeat Country Says ‘Let the Good Times Roll,’” 12. 95. Nelson, “Upbeat Country Says ‘Let the Good Times Roll.’” 96. Crandall and Jenga, “New Complications in the Andes.” 97. Kate Joynes, “Workers Protest Against Colombian Government’s Austerity Measures,” World Markets Analysis, February 27, 2004. 98. “Government to Issue US$186mn in Micro Loans,” Business News Americas, March 11, 2004, www.bnamericas.com.

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99. Nick Ashwell, “Colombia’s Uribe Announces Another VAT Extension Attempt,” World Markets Analysis, March 19, 2004. 100. The ATPDEA is a renewed and amended version of the Andean Trade Preference Act (ATPA)—it was enacted in August 2002. 101. T. Christian Miller, “Everything’s Coming Up Roses for Colombia’s Flower Industry,” Los Angeles Times, February 14, 2003, A3. 102. U.S. Trade Representative (USTR), First Report to the Congress on the Operation of the Andean Trade Preference Act as Amended (Washington, DC: USTR, 2003). 103. U.S. Trade Representative (USTR), Peru and Ecuador to Join with Colombia in May 18–19 Launch of FTA Negotiations with the United States (Washington, DC: USTR, 2004). 104. Uribe Vélez, “La Colombia que Quiero”; Bases del Plan Nacional de Desarrollo, 154–160. 105. Juan Camilo Restrepo, “Tierras sin hombres y hombres sin tierras,” El Tiempo, January 15, 2003, http://eltiempo.terra.com.co. 106. Walters, “Overview of U.S. Policy Toward the Western Hemisphere.” 107. Restrepo, “Tierras sin hombres y hombres sin tierras.” 108. “Narcobienes, crece el caos,” El Tiempo, June 27, 2003, http://eltiempo.terra .com.co. 109. International Crisis Group, “Colombia: Will Uribe’s Honeymoon Last?” December 19, 2002, www.icg.org; “Resumen Acto Legislativo,” Bogotá, Presidencia de la República (Documentos 2002–2003), www.presidencia.gov.co/discursos /referendo.htm; Struble, “U.S. Policy in the Western Hemisphere.” 110. Gary Marx, “Colombian Leader Campaigns to Scrap 1-Term Limit,” Chicago Tribune, April 30, 2004, 5. 111. “Colombia’s President: Double or Quits,” The Economist, April 29, 2004, 38; Juan Forero, “A Second Term? Colombians Deeply Split,” New York Times, April 26, 2004, A4. 112. Charles Bergquist, Ricardo Peñaranda, and Gonzalo Sánchez G., eds., Violence in Colombia, 1990–2000: Waging War and Negotiating Peace (Wilmington, DE: Scholarly Resources, 2001).

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3 Bolivia: Democracy Under Pressure Ramiro Orias Arredondo

The biggest surprise in Bolivia’s contemporary electoral history was the second-place showing by Evo Morales, leader of the coca growers, in the July 2002 national elections.1 That year marked twenty years of uninterrupted democracy. Morales’s success was an indication of the dissatisfaction of popular sectors that would topple President Gonzalo Sánchez de Lozada in October 2003, constituting the greatest crisis in Bolivian democratic history. In this chapter I analyze the factors that have thrown the Bolivian consensusbuilding model of democratic stability into a state of crisis: the recent emergence of radical indigenous groups, demands of coca growers, dissatisfaction with free-market economic policies, and disillusionment with traditional political parties. These factors have changed the nature of social protest in Bolivia and created a vicious cycle in which economically and socially frustrated sectors impede the very reforms necessary for their satisfaction. After the end of military rule in 1982, Bolivia’s political stability was based on a broad political consensus that created conditions for governability and fostered a set of institutional and economic reforms that transformed Bolivian society. Bolivia today is a very different country from the Bolivia of the early 1980s. Then it was a paradigm for political instability and trade union struggles common in Latin America, plagued by hyperinflation, weak institutions, and the effects of drug trafficking. Bolivian democratic institutions survived the instability of the 1980s, and the country became economically stable and open to foreign investment and made important strides in fighting drugs. Bolivia was perceived as an ever more reliable and secure nation, even

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though two-thirds of the population continued to live in poverty and marginality. Today, the social protest movements channeling the frustrated expectations and unmet needs of large segments of society have weakened these gains. These social fissures set off conflicts at the beginning of the twentyfirst century, but their causes stretch farther back. The notable electoral performance of Evo Morales’s radical left movement, Movement Toward Socialism (Movimiento Al Socialismo, MAS), was no accident. It was the political expression of resistance to and rejection of a political system that has become increasingly traditional and exclusionary, a political system that proved incapable of greater economic integration of the poorest and most marginalized social groups. Of particular concern is the lack of political and institutional channels for resolving social demands, creating a situation in which those needs are finding expression through conflict and pressure. These conflicts impede Bolivia’s insertion into the international economy, which in turn impedes the country’s ability to finance social reform. The radical left option is internationally isolated and stigmatized for being associated with coca production, particularly now that antiterrorism efforts constitute the dominant frame of reference for international relations. For Bolivia, the challenge of security depends on consolidating domestic stability and projecting this internationally. Today, the points of consensus reached by the political system in the past no longer suffice, and the need for a new and broad national consensus is increasingly clear.

The Points of Consensus and the Reforms In the more than two decades of democratic government since 1982, elected administrations have won consensus through political pacts and have implemented, through governing coalitions, “reforms to lay the basis for representative democracy, the market economy, and multiculturalism.”2 The progress toward reform, however, came only as a result of long and difficult negotiations marked by points of political consensus and continuous social conflicts. The first major consensus resulted from the shared desire by Bolivia’s political and social groups to return to democracy. This consensus led the armed forces to step down from government in October 1982. The Congress, elected in 1980 but interrupted by the military coup led by General Luis García Meza, was convened, and Hernán Siles Zuazo, leader of the Democratic and Popular Union party (Unidad Democrática y Popular, UDP), was elected president. The first steps in the democratic transition, however, did not articulate a political and social consensus to address the acute economic crisis or the hyperinflation afflicting Bolivia at that time.3 As a result, the opposition

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parties did not back the government in the National Congress, where Siles did not have a majority. The unions, frustrated when their demands were not met, hounded him with a series of national strikes and work stoppages that resulted in a continuing social mobilization in Bolivia. Siles was so weakened politically that he stepped down with one year remaining in his term and called for early national elections. The second major consensus emerged in 1985 in support of economic reform, when Congress elected Víctor Paz Estenssoro, head of the Nationalist Revolutionary Movement (Movimiento Nacionalista Revolucionario, MNR), president.4 Although Paz Estenssoro finished second in the national elections, he emerged as the consensus president after the leading candidate, General Hugo Banzer of the Nationalist Democratic Action party (Acción Democrática Nacionalista, ADN), failed to obtain the necessary majority to win the presidential contest.5 With an economic crisis at hand, the two leading parties, ADN and MNR, agreed on a Pact for Democracy, which established a framework of legitimacy and governability within which to embark on a course of economic reform. The New Economic Policy—a set of reforms geared to the free market, trade liberalization, and the downsizing of the state has sustained Bolivia’s economic stability to this day. It was during this consensus period that the foundation of Bolivia’s counternarcotics policy was established under the framework of Law 1008, which was enacted in 1988. This law, the Regime Governing Coca and Controlled Substances, was designed to regulate antidrug programs and the coca-eradication effort; it has remained the state’s antinarcotics policy without substantial modification. Some second-generation reforms were adopted during the administration of Jaime Paz Zamora, whose 1989 election was made possible by the Patriotic Accord (Acuerdo Patriótico) negotiated between the ADN and the Movement of the Revolutionary Left (Movimiento de Izquierda Revolucionaria, MIR). On the political front, a meeting of leaders of all the parties with representation in Congress led to an agreement on constitutional reform and to the establishment of an impartial Independent Electoral Court entrusted with the administration of the Civil Registry, traditionally used to adjudicate electoral fraud. On the economic front, a set of laws was enacted to reform privatization, investment, and the tax code. Other state reforms, such as the Integrated System of Financial Administration and Governmental Control (Sistema Integrado de Administración Financiera y Control Gubernamentales, SAFCO), sought to ensure transparency in the management of public property. The issue of indigenous rights was also put on the public agenda. A third major consensus centered around the concept of Bolivian multiculturalism and was articulated within the Governability Pact among the Civic Solidarity Union (Unidad Cívica Solidaridad, UCS), the Free Bolivia Movement (Movimiento Bolivia Libre, MBL), and President Gonzalo Sánchez de Lozada’s MNR during his first administration (1993–1997).

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Emphasis upon indigenous rights was due in part to the election of Aymara Indian Víctor Hugo Cárdenas as vice-president. Key among a series of measures were the creation of the Territories of Communal Origin (Territorios Comunitarios de Origen, TCOs), a collective property right for indigenous peoples; the incorporation of the principle of bilingual intercultural education in the education reform; and acknowledgment of mechanisms of community justice. New political and economic reforms came with laws on constitutional reform, popular participation, administrative decentralization, pension system reform, and capitalization of the main public enterprises. General Hugo Banzer was elected president for the 1997–2002 term. He formed a broad coalition under the name Commitment for Bolivia (Compromiso por Bolivia), bringing together the ADN, MIR, UCS, New Republican Force (Nueva Fuerza Republicana, NFR), and Conscience of the Fatherland (Conciencia de la Tierra Patria, CONDEPA). This coalition eroded over time, but Banzer succeeded in passing new laws on the Constitutional Court, the Judicial Council, and the Office of the Ombudsman, in addition to reforms concerning political parties, the electoral code, and civil service. Initiatives were begun to modernize the judiciary and to professionalize key areas of the civil service by creating career positions. The foundations were laid for a new constitutional reform aimed at increasing citizen participation, and a wideranging National Dialogue was initiated with sectors of civil society and local governments. One of the results of the National Dialogue was the Bolivian Poverty Reduction Strategy, which gave priority to rural and indigenous sectors. The Banzer administration also undertook Plan Dignity (Plan Dignidad), an ambitious effort that reduced the illicit coca crop by about 95 percent. Finally, during Banzer’s administration Bolivia’s certified natural gas reserves grew exponentially, resulting in large development projects. In August 2001, just one year before concluding his term, President Banzer stepped down as a result of his battle with cancer and was succeeded by Vice President Jorge Quiroga. Quiroga became a transition president, whose goal was continuity with Banzer’s policies and management of social unrest. Peasant and indigenous communities staged repeated and violent mobilizations and roadblocks, demanding land, coca crops, water, and social improvements. Meanwhile, the government sought to address such issues through initiatives to provide basic indigenous health insurance, to grant titles for community lands registered as TCOs, and to create a National Consultative Council of Indigenous Peoples and a Ministry of Peasant and Indigenous Peoples Affairs. Throughout these twenty years of democracy in Bolivia, certain patterns have emerged concerning the conduct of the political system: governing pacts and coalitions, consensus-based programs, recognition of Bolivia’s plural and multicultural society, and reforms to lay the groundwork for representative

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democracy and a market economy. This process has not been easy; each government initiative has clashed with several different, and in some cases permanent, movements resisting these changes. Some movements have raised regional demands, whereas others focus on trade union grievances. The peasant and indigenous mobilizations have intensified, and the protests of the coca growers are a constant. Throughout Bolivia’s democratic history, social pressures have forced the government to impose a state of siege at some point during each administration to contain such protests.

Democracy and Political Stability In Bolivia, the structures for the rule of law have been strengthened since 1982. The branches of government are based on democratic rules with regular and free elections supervised by an independent entity. There is plural representation in the legislature, the institutional framework for the administration of justice has been modernized, and the executive branch is organized around consensus-based programs and pacts to ensure governability. The ongoing development of this model is the best indicator of its stability. If political stability is “the permanence and adhesion to the rules regarding the establishment and functioning of the political system,” then Bolivia has attained an enormous degree of certainty in its political system.6 This model of stability will stay in place as long as the main actors adapt their conduct to these rules. Accordingly, one must distinguish the concept of political stability from that of social mobilization, which refers to the protests of social groups who demand attention to certain sector demands. Political stability and social mobilization have the ability to co-exist, but concern arises when social pressure on the political institutions overrides them, weakening and fracturing the system. Despite noteworthy reforms, Bolivian democracy exists under the shadow of certain forces that weaken its stability and permanence. Political stability and the institutional order have been subject recently to pressures from diverse internal factors, several of them interconnected, that have to do with (1) disenchantment with the traditional political system, (2) the emergence of the radical indigenous movement, (3) the demands of the coca growers’ movement, and (4) social protests against the free-market economic reforms.

Disillusionment with the Traditional Political System Bolivia’s various social movements share disillusionment with the traditional political system and consider it to be corrupt and tied to interests not valued by the majority of Bolivian society. These sectors do not feel represented by

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the political parties and are extremely skeptical of their approaches and their ability to improve the country. Such sentiment has led to a resurgent neopopulism, clearly expressed in the 2002 elections. Antiliberal promises include a review of the agreements for the capitalization of public enterprises, which has made investors and international financial institutions uneasy. These protest movements have proposed a thorough overhaul of the political system by way of a national constitutional assembly. The crisis of the Bolivian political system, however, is much more complex than the shortterm factors affecting it and must be understood in historical perspective. According to the thesis set forth by Samuel Huntington in 1968, “the stability of a modernizing political system depends on the strength of its political parties.”7 In other words, the more institutionalized a country’s political parties are, the greater its political stability; and inversely, where social mobilization happens more quickly than the development of the political institutions, the result is greater instability. Huntington himself raised questions about the Bolivian case, asking: “Why, unlike the Mexican Revolution, did [the Bolivian Revolution] not also produce long-term results in terms of political stability?” Put differently, why after the national revolution of 1952 did the MNR split and collapse, whereas the Institutional Revolutionary Party (Partido Revolucionario Institucional, PRI) in Mexico perpetuated itself in power? Huntington explained that, in part, “organized social forces such as the peasants and the workers . . . had greater influence with the dominant political party in Bolivia than they did in Mexico.”8 Lacking this unifying element, the national revolution weakened when its leaders extended their mandate and military governments filled the power vacuum. With the return to democracy in 1982, there was a resurgence of protests and activism. In the face of hyperinflation, however, Bolivian society was willing to assume the costs of economic reforms. In this context, the trade union and social protest movements went into a major crisis, as their actions lacked legitimacy and social support. At this juncture, the political parties took a central role in the political process and, through a series of pacts, were able to make the country governable and stable. The key to the reforms in the first twenty years of Bolivian democracy was the decline of its social actors, and in particular of the trade union movement, which had played a major role in the country’s history since the 1950s. The profound socioeconomic crisis of the 1980s made possible the relative stability experienced since 1985, but the political parties have since undergone a critical change in the public’s estimation.9 Their decline has given new impetus to social activists, ushering in a period of campaigns and mobilizations. As a result, the foundations of political stability are no longer limited to pacts and coalitions among political parties. Today, the process of negotiation and consensus-building must necessarily include the new social actors.

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The Emergence of the Radical Indigenous Movement In April 2000, the Union Confederation of Rural Workers of Bolivia (Confederación Sindical Unica de Trabajadores Campesinos de Bolivia, CSUTCB), led by Luis Felipe Quispe, blocked the country’s main highways and brought five of the nine departments to a standstill. The protest was part of a campaign calling for legal changes in land tenure and ownership, repeal of water legislation unfavorable to indigenous interests, and the amendment of a series of provisions governing the use and exploitation of natural resources.10 The group also sought an ethnicity-based discourse, reestablishment of the Aymara State of Tahuantinsuyo, and replacement of the tricolor national flag with the native Whipala. These demands symbolized a rejection of the state with a concomitant demand that the state solve the nation’s problems.11 The rise of the indigenous movement reflects Bolivia’s regional diversity and economic divide. Seventy percent of the population is divided among three dozen indigenous groups, including the Aymara, Quechua, and Guaraní communities. An overwhelming majority of indigenous Bolivians live in poverty, 40 percent cannot meet their dietary needs, and 20 percent of indigenous children die before their first birthday.12 The mobilization of these groups has translated into two clear mandates of political representation. The first was the personal success of Evo Morales (MAS) and Luis Felipe Quispe (Pachakutik Indigenous Movement, Movimiento Indígena Pachakutik, MIP), whose votes together accounted for 27 percent of all votes cast in 2002. Second was the new composition of the National Congress, where fifty-two out of 157 legislators are associated with or have a cultural identification with indigenous groups. In a paradox of democratization, however, greater enfranchisement has led to greater disillusionment with the political system. Bolivia’s top indigenous leaders are members of Congress yet they also lead street protests against the government. As Arend Lijphart argued, it is more difficult for plural societies to maintain political stability when they face problems arising from profound divisions in their population and a lack of a unifying consensus.13 Thus, in order to allow for negotiation in policymaking and to reduce political fragmentation, Bolivian democracy must be able to represent and channel those diverse interests through certain mechanisms of democracy.14 This cannot be accomplished, however, with weak institutions. According to Samuel Huntington, political stability depends on having “institutions with the demonstrated capability to absorb into the system new social forces and the rising levels of participation produced by modernization.”15 Indeed, one of the greatest challenges facing Bolivian democracy is that of integrating indigenous groups into the country’s political and economic life.

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The Demands of the Coca Growers’ Movement The past few years have also seen the demands of the coca growers’ movement become more strident. Bolivia remains the third largest coca producer in South America, and the United States has sent $1.3 billion in antinarcotics assistance since 1993.16 Plan Dignity, initiated during the Banzer administration, reduced surplus coca crop by over 90 percent: from 43,000 hectares in 1997 to 2,600 hectares by the end of 2000.17 The program is estimated to have cost the Bolivian economy $500 million, a greater financial impact than any government reform.18 As a result, tensions mounted in the coca-growing region known as the Chapare to the point of violence against eradication task forces. Armed confrontations with officials ensued as coca growers put up roadblocks along the country’s main highway, demanding the right to replant. Successful aerial fumigation efforts in Colombia have led to an increase in Bolivian coca production, the so-called balloon effect that Julia Sweig and Michael McCarthy refer to in Chapter 2. The Bolivian government has responded with increased eradication efforts; these efforts have outpaced programs intended to assist farmers whose crops have been destroyed or whose earnings have decreased due to the switch to licit crops.19 Spurred by this economic hardship and encouraged by the rise of radical indigenous protests, coca growers have continued to instigate mass mobilizations. Although negotiations with the government have frequently caused them to set aside their pressure tactics, in many cases the structural roots of these conflicts persist. The coca growers’ key demand, a pause in eradication efforts, is not acceptable to the government, which argues that an inventory must first be taken of the existing coca and controls implemented to prevent planting of new coca. There is little room for compromise because the total eradication of illegal coca has been written into Bolivian law and is included in international commitments made by the government. It is also a condition if Bolivian export products to the United States are to be exempted from tariffs under the Andean Trade Preference Act (ATPA).20 Reaching an agreement with coca growers also faces obstacles because Evo Morales has based his leadership upon advocacy for this sector, and therefore any concession accepting current policy poses a major political risk to him. At the same time, the coca growers’ failure to budge from their traditional demands undercuts any possibility that Morales might emerge as a social leader of the other groups that voted for him. The coca growers’ movement faces discredit owing to the international association among growing coca, drug trafficking, and terrorism. Peruvian drug-trafficking organizations have begun to operate in Bolivian territory as a transit country.21 Crime has penetrated certain segments of law enforcement through an illicit partnership between Peruvian criminals and Bolivian police, which included setting off a car bomb at the police command in Santa Cruz in

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December 2001. It is believed that ransom from the kidnapping of businessman Samuel Doria Medina helped finance the Peruvian guerrilla group Túpac Amaru Revolutionary Movement (Movimiento Revolucionario Túpac Amaru, MRTA) in their takeover of the Japanese ambassador’s residence in Lima in December 1996, where the Bolivian ambassador and others were held for over four months. In another incident, an MRTA leader reportedly was in contact with the subversive group Túpac Katari, which was associated with peasant mobilizations in 2000 that blocked the highways of the Bolivian altiplano for a month when the coca producers of the Chapare interrupted traffic along the highway to Santa Cruz.22 Although Bolivia has seen some guerrilla operations such as the Túpac Katari Guerrilla Army (Ejército Guerrillero Túpac Katari), the Commando Néstor Paz Zamora, and the Zárate Willca Liberation Army (Ejército de Liberación Zárate Willca), they were quickly brought under control and dismantled. Today the concern is the presence of insurgent groups in the Chapare, given the renewed outbreak of violence there.23 In a report presented to the U.S. Senate, the director of operations of the Southern Command, General Galen Jackman, noted that the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, FARC) have worked with illegal armed groups in Bolivia.24 The Bolivian government denied this assertion because its official position is that the FARC has no direct operations in Bolivia. But it did not dismiss the threat of a local narco-guerrilla movement and expressed concern over a displacement effect as a result of Colombian policies.25 This scenario suggests there may be a possible retrenchment of militarism and violence in coca-producing areas, where peasants are pressuring for a pause or suspension in the eradication of this crop. In addition to providing financial support for coca eradication, the United States has made this task a condition for support in most areas of development assistance for the Andean countries. Vocalizing the U.S. position on coca production, Ambassador Manuel Rocha appealed to Bolivians not to vote for Evo Morales in the 2002 elections and even threatened sanctions should Morales win, a move that sparked an anti-imperialist spirit that ultimately expressed itself in a larger vote for Morales.26

Opposition to Free-Market Economic Reforms Bolivia began the process of economic change and state reform in 1985. The economy was liberalized, the publicly owned mining sector streamlined, and state banks liquidated. Most strategic industries and public services that remained in state hands were transferred to the private sector, a measure that a large majority of the population viewed as a major sacrifice. Bolivia has

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since regained macroeconomic stability and moderate growth—the inflation rate is among the lowest in the Americas, the fiscal deficit has been adjusted, foreign investment has increased, and exports have once again gained ground. These measures, however, have not been sufficient to generate employment or improve income distribution.27 This has led to disappointment and frustration for many Bolivians who have not felt the benefits of the freemarket economic reforms. The model is undergoing a phase of economic fatigue and political attrition that, despite the gains, aggravated major sectors of the population. Results of the 1985, 1989, 1993, and 1997 elections favored the parties that backed the economic reforms, creating large legislative majorities that promoted them. This electoral mandate was watered down in the 2002 elections, making it barely possible to form the government with the necessary simple majority in Congress.28 Today, the prospects for a new generation of economic reforms seem increasingly slim in the face of significant radical opposition challenging those reforms. Rejection of the proposed Free Trade Area of the Americas (FTAA) among certain sectors is an important element of opposition to reform. This ambitious hemispheric trade integration project, promoted by the United States, would create a free trade area for the entire hemisphere by January 2005. This would mean almost unrestricted opening of national markets and lifting of all types of protectionist measures. The FTAA, however, is instilling fears in sectors traditionally protected by the state. As a result of social fatigue in the face of the free-market reforms, there has been an increasing perception that opening markets and foreign investment has a social cost in the form of greater unemployment. Evo Morales has characterized the agreement as “an instrument to legalize the colonization of the Americas.”29 Morales participated in the protests against the FTAA organized by the Confederation of Indigenous Nationalities of Ecuador (Confederación de Nacionalidades Indígenas del Ecuador, CONAIE) in Quito in 2002.30 At the meeting of ministers of the Cairns Group in Santa Cruz that same year, Bolivian trade union and university organizations, along with the Social Ministries office of the Catholic Church, organized a march against unemployment and the FTAA.31 Shortly thereafter, when visiting Fidel Castro, Evo Morales urged the presidents of Venezuela, Ecuador, and Brazil to reject the FTAA, asserting that it is just the latest effort by the United States to dominate the region.32 In the face of official support for trade liberalization, an opposition movement has emerged, consisting of over 100 social, trade union, youth, cultural, environmental, nongovernmental, and human rights organizations. Opposition to exportation of natural gas has unified the discourse of social protest in Bolivia. In fact, gas has come to be characterized as “a catalyst for all of the grievances.”33 Bolivia holds the second largest natural gas reserves in South America, with 55 trillion cubic feet, of which only 5 percent

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is needed to satisfy domestic demand over the next several decades. The International Monetary Fund (IMF) estimated that a proposed $6 million gas pipeline could have added an average of 1 percent to annual gross domestic product (GDP) and generated $300 million in annual reserves. This money could, among other things, help compensate farmers economically damaged by anticoca policies, which was one of the original impetuses of the project. The pipeline project met stern resistance from indigenous groups, and many Bolivians objected to the proposition of its passing through territory Bolivia lost to Chile in the War of the Pacific (1879–1883), in which it lost its coastline and adjoining nitrate fields. Anti-American sentiment also fueled criticism of the gas’s final destination: California.

The Emergent Nature of Social Protest Various perceptions of traditional nationalism have come together: antiimperialism in the face of energy cooperation with the United States; antiChilean sentiment when considering Chile as a possible outlet to the sea for a gas pipeline; and resentment against transnational companies interested in Bolivia’s gas reserves. Exportation of gas has become a focal point of protest, bringing together a wide array of formerly isolated social groups with divergent interests. Such opposition threatens a crucial opportunity for Bolivia, given the economic, diplomatic, and geostrategic importance of energy resources in today’s world. For many years, Bolivia has experienced a constant state of social agitation, so conflicts are nothing new to the nation’s politics. What is of serious concern is that protests have become more violent and pursue more radical changes. These movements have come together in a common search for structural changes in the system. As sociologist Roberto Laserna argued, “Bolivian politics has never lacked protests and mobilizations, but they were generally led mainly by sectors who raised specific issues and grievances, rarely did they express themselves violently or directly as a result of the failure or uselessness of institutional mechanisms for negotiating.”34 Today these pressures have become more radical, calling into question not only public policies but also the legitimacy of the institutional order, weakening the stability of Bolivian democracy. Social protest found violent expression in the April 2000 so-called Water War in the city of Cochabamba. A massive grassroots mobilization rose up in opposition to plans to privatize the water utility and to increase rates for drinking water. The episode culminated in the rescision of the concession after the government ordered a state of siege and deployed military forces to put down the chaos in Cochabamba. In February 2003, the Bolivian government’s attempt, under IMF pressure, to reduce the fiscal deficit from 8.6 to 5.5 per-

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cent by freezing public sector pay and implementing a 2.5 percent income tax increase led to protests in La Paz and a violent confrontation between the police and army that left twenty-seven dead and over 100 wounded. Again, the government rescinded the fiscal measures. President Gonzalo Sánchez de Lozada’s cabinet resigned en masse to allow for restructuring.35 Government coca eradication and economic policies, particularly the proposed gas pipeline, provoked indigenous-led antigovernment protests in September 2003, and violent clashes resulted in the death of at least eighty protestors. Protests and instability raged for a month until, on October 17, 2003, Sánchez de Lozada resigned only fourteen months into his presidency. In his letter to Congress, he characterized his resignation as a terrible precedent for Bolivia’s democracy. He later warned that civil war could arise between the more indigenous Andean region and the more prosperous Santa Cruz area hosting those of Spanish descent. The episode constituted the worst crisis in Bolivia’s twenty-one years of continuous democracy. The rise of new social actors calling the economic model into question and seeking more state involvement in response to market forces and “transnationalization” suggests a new type of social protest that is more widely dispersed and complex. Before the crisis of the trade union movement that began in 1985 as a result of the economic reforms and the closing of the biggest state mines, the Bolivian Labor Confederation (Central Obrera Boliviana, COB)—the central labor organization that represents all the unions nationwide—articulated and channeled social demands to the state. Now the central government, further debilitated following Sánchez de Lozada’s resignation, must act on several fronts and negotiate sector by sector, dividing its capacity to manage the conflicts. One challenge for Bolivian democracy is to create the dialogue and consensus around the new reforms, not only within the political system but also with the social groups that are hardest hit. At the same time, it must promote social programs that cushion the impact of those measures.

Taking Stock and Prospects for the Future Politically independent Vice President Carlos Mesa was sworn in as president during an emergency congressional session hours after President Sánchez de Lozada resigned. Mesa’s original cabinet consisted mostly of little-known economists and intellectuals, and the fresh political blood gave it some legitimacy but little political weight. Mesa initially stated that he would serve merely as an interim president, but he commenced 2004 by announcing his intention to finish Sánchez de Lozada’s term, which ends in 2007. The new president stated that he would attempt to repair Bolivia’s primary problem: the breakdown of the relationship between government and society.36

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Although social protest movements claimed to give Mesa a chance to right the wrongs of the Sánchez de Lozada administration, by mid-January patience appeared to have run out. On January 16, 2004, indigenous groups resumed their protests and roadblocks demanding reform of indigenous policies. Demonstrators in Cochabamba and La Paz demanded delivery of $2.3 million that international donors had provided in earthquake assistance in 1998, which Hugo Banzer reportedly spent on a presidential plane, and the COB called a nationwide strike.37 Within the first half of 2004, President Mesa faced often violent protests from unions; coca growers; indigenous groups; bus, cab, and taxi drivers; teachers; university students; pensioners; the blind; and the landless.38 Meanwhile, the government lacked the resources to address such concerns. By late 2003, months of instability had begun to take their toll. In October, Bolivia’s long-term standing credit rating was lowered by Standard and Poor’s from B to B-, six notches below investment grade, which changed the outlook on the rating from stable to negative. Faced with a budget gap of $100 million, Mesa asked for sacrifices from Bolivians by way of patience and higher taxes. Such a tactic had not worked for Sánchez de Lozada.39 In addition to social mobilizations, President Mesa also faced increased terrorism concerns. Bolivian authorities arrested sixteen Islamic terror suspects near Santa Cruz on December 2, 2003, based on a tip from French intelligence sources. Later that month, several suspected terrorists from the National Liberation Army (Ejército de Liberación Nacional, ELN), an indigenous left-wing group backed by coca growers, were arrested, though some were subsequently released due to Morales’s threats to destabilize the government. Special Prosecutor René Arzabe announced in April 2004 that he had become convinced that terrorism existed in Bolivia and was growing— Arzabe cited evidence of recent arms seizures and reports of connections between local coca growers and foreign groups such as ELN and MRTA.40 Although Morales denounced such claims as part of a U.S. plot to justify military intervention in Bolivia, and indigenous leader Luis Felipe Quispe denied the existence of indigenous rebel groups, the prospects for social stability remain uncertain. Authorities discovered the existence of an armed rebel group near La Paz known as the Secret Indigenous Revolutionary Committee Juan Cosme Apaza (Comité Clandestino Revolucionario Indígena Juan Cosme Apaza). The group was formed in early 2004 and urged representatives of the fifty-six indigenous nations to affiliate themselves with the Popular Liberation Army, whose aim was the refounding of Bolivia as a collective society with autonomy for indigenous nations.41 Bolivian domestic protestors also increasingly adopted terrorist tactics. A disgruntled former worker of the state mining corporation became a suicide bomber and blew himself up on March 30, 2004, on the premises of Congress in protest of his pension. With him he killed the chief for the Congressional

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Security Unit and one of its agents, as well as wounding the national director of intelligence and nine others.42 Other dismissed miners threatened to follow in his footsteps if the government did not meet their pension demands.43 Ten leaders of the Landless Movement (Movimiento Sin Tierra, MST) occupied the offices of the National Institute for Agrarian Reform and threatened to detonate it if the government failed to comply with its demands.44 Rumors of impending destabilization by coup plotters ran wild as the Mesa administration attempted to address these various threats. Evo Morales and MAS accused rivals MIR, NFR, the minister of defense, the deputy defense minister, and the government minister of coup-plotting backed by the U.S. Embassy.45 The head of police charged that officers were involved in the coup plots and the MBL claimed that a coup plan was underway to prevent the passage of a new hydrocarbons law as well as the impeachment of Sánchez de Lozada.46 In April 2004, Mesa cancelled a trip to Argentina at the last minute because he claimed that a coup was being plotted by some “fascist” military elements led by Sánchez de Lozada, who in turn was under the direction of the United States. Morales also implicated former presidents Jaime Paz Zamora and Jorge Quiroga, both of whom have been critical of his tactics and have questioned his potential to govern.47 The government has adopted the official position that the NFR is conspiring to overthrow Mesa; meanwhile NFR leader Manfred Reyes Villa has accused Mesa of conspiring to discredit the NFR on the grounds that Mesa is incapable of governing.48 Coup rumors flew at a particularly inopportune time, as a constitutional crisis involving the armed forces began. The military high command ordered troops nationwide to barracks confinement in protest of a constitutional tribunal ruling allowing officers to be on trial in a civilian court after a military court found them not guilty of crimes alleged to have occurred during the February and October 2003 mass mobilizations.49 The crisis was resolved when Congress passed a law making U.S. and Bolivian servicemen immune to prosecution in Bolivian courts. Deputies of the MNR and other conservative parties claimed they were afraid the Bolivian military would refuse to restore order if civilian prosecutions were allowed.50 Although solving the immediate crisis, Bolivian constitutional, congressional, and judicial institutions were weakened by their apparent malleability. The resolution to the military crisis sparked another possibly destabilizing conflict when Felipe Quispe resigned from his congressional seat in June in order to dedicate himself to the “revolutionary struggle” until the Aymara are “liberated.” Quispe stated that he could not remain in a Congress that approved International Criminal Court immunity to U.S. servicemen and where members are “compromised by corruption” or have been “stained with indigenous blood.”51 Amid this array of factors, Mesa has desperately attempted to hold his administration together. Among other conciliatory moves, he signed agreements with universities after they shut down in protest, made pension arrange-

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ments with retired miners to avoid further suicide bombings, and forged a settlement with the Landless Movement after numerous land seizures and bomb threats.52 Yet as one international observer stated, “People who have nothing to lose are learning that they can force concessions from the government by threatening violence. This is very dangerous.”53 With a fiscal deficit of 8 percent of GDP, Mesa simply cannot afford, financially or politically, to continue conceding to social protests. In an April 18, 2004, speech to the Army Military College, President Mesa warned that continuing social pressure would lead to disaster and urged Bolivians to be reasonable and to stop “asking for more all the time.”54 Economic analysts posit that gas exportation is the only long-term solution to Bolivia’s budget deficit and feasible opportunity for growth.55 In the short term, the survival of the Mesa administration was dependent on the success of the July 18, 2004, referendum on gas exportation.56 Although the vote was far from decisive, Mesa was able to use the results to claim a mandate for moving forward on the gas issue. Without the ability to export gas, Mesa would be unable to finance social spending and would be ineligible for IMF funds.57 The gas issue, however, remained controversial and had caused the resignation of sixteen ministers from October 2003 to mid-2004.58 The five questions on the referendum concerned (1) repealing the hydrocarbons law enacted under Sánchez de Lozada; (2) recovering ownership of hydrocarbons at the well head; (3) recovering privatized shares of the state oil company, Bolivian Fiscal Oil Fields (Yacimientos Petrolíferos Fiscales Bolivianos, YPFB); (4) using gas as a strategic resource to obtain access to the Pacific Ocean; and (5) making gas exports conditional upon promotion of domestic industrialization, an increase in taxes and royalties from 18 to 50 percent, and the dedication of revenues principally to education, health, road construction, and job creation.59 Segments of the population, however, were angry that the referendum did not include a question on whether the sector should be nationalized, and some threatened to boycott the referendum on this basis. A May 2004 poll indicated that 83 percent of Bolivians wanted gas nationalization.60 Mesa insisted, however, that nationalization was impossible because, in addition to the possibility of such a measure leading to an economic blockade and to decreased foreign investment, a sum between $4 and $6 billion would be required to compensate companies, not to mention another $4 billion or so needed to develop fields.61 After hundreds of years of broken promises about the wealth that exports would deliver, the Bolivian populace remained skeptical about the necessity of exporting gas.62 Despite the daily conflicts Mesa faces, he retains an approval rating of over 70 percent.63 The president has used his personal popularity to appeal to the “silent majority” of Bolivians to “support democracy by not joining the strikes and the marches.”64 His calls appear to have resounded in the ears of a contingent of Bolivians. A new middle-class movement, We Are Bolivian

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We Want Peace (Somos Bolivianos Queremos Paz), has formed in response, yet mobilization of this group in both March and May 2004 failed to reap much support.65 Mesa has succeeded in bringing Evo Morales into dialogue with the government and has managed to reach points of consensus with Congress.66 The president has promised a constitutional assembly that would focus on social inclusion and the participation of indigenous groups. He has stated, “Bolivia is at the brink of a catastrophe but there are democratic ways to solve the crisis.”67Although President Mesa has demonstrated remarkable resilience, it remains to be seen whether his referendum and constitutional assembly will be able to renew the social pact and establish a consensus between government and society.

Conclusion In Bolivia, the three pillars for a stable society that in Chapter 1 Russell Crandall calls the “elusive trinity”—economic stability, democracy, and national security—are under pressure. Bolivia’s dramatic poverty is a factor with a profound impact on the population’s expectations for democracy. Nearly 59 percent of the population lives in poverty, and 25 percent in extreme poverty. This is the main social challenge that needs to be addressed. The problem of poverty, however, is amplified by an ongoing, though understandable, political and economic skepticism. Bolivia is experiencing a vicious circle in which reforms opposed by groups dissatisfied with the economic and political system must be enacted if the system is to improve. Bolivia’s “pacted” democracy, based on political agreements among traditional parties, has been discredited by cases of corruption, abuses of authority, exclusionary practices, and the lack of capacity to channel social demands. Although Bolivian democracy is attempting to deepen democratic institutions and incorporate new forms of citizen participation, these efforts to consolidate democracy are under major pressure from antisystem groups that call into question the constituted order. Whether a constitutional assembly will serve the purpose of forging a consensus between social sectors and the government or merely threaten the stability of democratic rule remains unclear. Bolivia has successfully halted the serious problem of hyperinflation and stabilized its macroeconomy, but there has not been a transition to a sustained pace of growth in production, employment, and incomes. Government reforms have meant reducing activities, which have not always been replaced by private actors. Thus, it is not surprising that widespread opposition has emerged to new and more sweeping reforms. This situation has been propitious for the emergence of new political and social actors who can put pressure on the system.

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Drug-trafficking and terrorism must be addressed to ensure Bolivian security as well as good relations with the United States. At the same time, these concerns are in conflict with the coca growers. Initiatives to promote more openness internationally, such as the FTAA and energy integration with the United States, have paradoxically become factors of internal conflict and social protest. Closer international cooperation and economic interdependence will create closer political ties and strengthen confidence, peace, and regional security. Bolivia’s social mobilizations in opposition to such progression threaten its international position. A country going against global trends, promoting actions that alter the stability of the region or that directly affect the interests of the dominant powers would expose Bolivia to foreign meddling in its internal affairs as well as sacrifice opportunities for the stability and growth necessary to address the underlying discontent of social sectors. In today’s world, those countries that do not internationalize and participate positively in the process of globalization will be marginalized and isolated from the main flows of trade, finance, and technology, perpetuating underdevelopment and poverty. Bolivia, therefore, should move toward a new national consensus in order to ensure that representative democracy is more participatory, the market economy more equitable, and its multiculturalism one that recognizes human rights as part of social development. The threats weighing on democracy in Bolivia are, in effect, symptoms of a crisis in Bolivia’s democratic system. That is, Bolivia is a democracy with crises, a democracy in conflict, a democracy under pressure. Democracy is not just a defenseless or static system. To the extent that the system itself has the capacity to develop and renew its institutions, open up new places for participation, and increase its capacity for conflict resolution, Bolivia will be able to become a more secure and stable democracy.

Chronology of Important Recent Events in Bolivia 1989. After presidential elections in which no candidate obtains the required absolute majority, the National Congress elects Jaime Paz Zamora from the MIR, with a government of national unity with Hugo Banzer Suárez’s Nationalist Democratic Action Party. 1992. The government announces the privatization of sixty-six public enterprises. The leaders of the main political parties sign the Accords for the Modernization of the State and the Strengthening of Democracy in which they agree on the main political, electoral, and judicial reforms. 1993. After national elections in which, once again, no candidate obtains the required absolute majority, the National Congress elects as president Gonzalo Sánchez de Lozada, who under the Governability Pact alliance furthers the transfer of the largest state enterprises to the private sector.

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1997. Following national elections, the Commitment for Bolivia coalition— formed by ADN, MIR, UCS, CONDEPA, and NFR—elects Hugo Banzer Suárez as president. Banzer implements judicial reforms, intensifies the eradication of coca crops, and witnesses the largest increase in natural gas reserves. 2000. Bolivia begins to experience intense social conflicts in the rural, indigenous, coca, and urban sectors; these conflicts are marked by violent confrontations. 2001. After a long battle with cancer, General Hugo Banzer resigns from the presidency and Vice President Jorge Quiroga succeeds him. Quiroga promotes the institutionalization of public service careers and passes the Law of Constitutional Reform that creates new opportunities for social and civic political participation. 2002. Gonzalo Sánchez de Lozada obtains a slim majority in national elections over Evo Morales (MAS), the leader of the coca growers, and Congress elects Sánchez de Lozada president. He forms a coalition under the rubric of Government of National Responsibility with MIR’s Jaime Paz Zamora. 2003. On February 12 and 13, Bolivia’s democracy suffers an important crisis following the government’s attempt to pass an income tax law, when police and social riots break out and a military repression leaves twentyseven dead and more than 100 wounded. The government rescinds the fiscal measures. On October 17, Sánchez de Lozada is forced from office by protests. He is replaced by Vice President Carlos Mesa. 2004. Mesa faces continued protests by various sectors of society. Mesa holds a referendum on July 18—the results support President Mesa’s plans for gas exportation. Mesa also announces that a constituent assembly will be held in 2005.

Notes The author would like to thank Akilah Jenga for her assistance with this chapter. 1. The Movement Toward Socialism (MAS) led by Evo Morales came in second with 581,163 votes, or 20.94 percent, and the Nationalist Revolutionary Movement (MNR) of President Gonzalo Sánchez de Lozada obtained 624,126 votes, or 22.46 percent. The New Republican Force (NFR), a neopopulist party led by former Army captain Manfred Reyes Villa, came in a close third, with 20.91 percent. 2. See Salvador Romero Ballivián, Reformas, conflictos y consensos (La Paz: FHS/Fundemos, 1999). 3. In 1985, Bolivia’s gross domestic product (GDP) declined 1.7 percent, and inflation reached 11,749 percent. National Statistics Institute of Bolivia (Instituto Nacional de Estadística, INE), www.ine.gov.bo. 4. Víctor Paz Estenssoro, at the head of his party, the MNR, and with the support of miners and peasants, was a leader of the national revolution of 1952. In his first

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administration, he nationalized the mines, pursued land reform, and instituted universal suffrage. 5. This is pursuant to Article 90 of the Constitution of Bolivia, which provides: “If, in the general elections no candidate for President of the Republic wins the absolute majority of valid votes, the Congress shall choose from among the two [at that time it was among the three] candidates with the highest vote totals.” During these twenty years of democracy no party has obtained an absolute majority in the national vote; so all the presidents have been elected by recourse to this parliamentary system. 6. Jorge Lazarte, “Entre dos mundos: La cultura política y democrática en Bolivia” (paper presented at the international conference Las Instituciones en las Nuevas Democracias: La Cuestión Republicana, Buenos Aires, April 13–14, 2000). 7. Samuel Huntington, Political Order in Changing Societies (New Haven: Yale University Press, 1968), 408. 8. Ibid., 326ff. 9. See Enrique Ibáñez Rojo, ¿Democracia Neoliberal en Bolivia? Sindicalismo, crisis social y estabilidad política (Madrid: Universidad Complutense, 1993). 10. Recently, the Landless Movement has grown and participated in several efforts to take over private lands and forest reserves, which ended in armed confrontations and deaths. 11. Gonzalo Rojas Ortuste, “La sociedad bloqueada,” Revista Umbrales, no. 7, Postgrado en Ciencias del Desarrollo (CIDES), Universidad Mayor de San Andrés (UMSA), La Paz, Bolivia, July 2000. 12. Russell Crandall and Akilah Jenga, “New Complications in the Andes,” 2003–2004 Strategic Survey (London: International Institute for Strategic Studies, 2004), 84–99. 13. See Arend Lijphart, Democracia en las sociedades plurales (Mexico City: Editorial Prisma, 1988). 14. See Arend Lijphart, Las democracias contemporáneas (Barcelona: Editorial Ariel, 1987). 15. Huntington, Political Order, 398. 16. Crandall and Jenga, “New Complications in the Andes,” 91. 17. See Sergio Medinacelli and Jebner Zambrana, Coca-Cocaína: Más allá de las cifras (La Paz: Honorable Cámara de Diputados, 2000). 18. With the shutdown of the state mines, more than 20,000 miners were left jobless and expelled to the coca production areas. Today, with the eradication programs, these same families are losing their source of income. Therefore, the issue of coca cannot be understood outside of the context of the state reforms and economic liberalization policies. 19. Crandall and Jenga, “New Complications in the Andes.” 20. “Una pausa en la erradicación pondrá en riesgo el ATPA,” La Razón, October 11, 2002, A16. 21. “FELC incautó droga peruana destinada a mercado europeo,” Ultima Hora (La Paz), December 19, 2000, 3. 22. “Líder del MRTA pasó por Bolivia,” Presencia (La Paz), September 11, 2000. 23. “Investigan presencia de grupos subversivos en el Chapare,” El Diario, September 15, 2002, I-9. 24. “Las FARC operan en Bolivia, Perú y Paraguay,” El Diario, September 19, 2002, I-1. 25. “Gobierno reconoce amenaza de narcoguerrilla en el Chapare,” El Diario, October 14, 2002, I-1.

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26. “EEUU cortará ayuda si se elige a Evo Morales,” El Deber (Santa Cruz), June 27, 2002, A-14. 27. According to the study La Capitalización cinco años después, realidades y desafíos by the Fundación Milenio, the capitalization of the public enterprises has wiped out 10,000 stable jobs since the late 1990s. “Inversión extranjera genera más desempleo en Bolivia,” El Diario, November 3, 2002, 1–10. 28. The MNR, MIR, and UCS, of the governing coalition, account for 42.2 percent of the votes cast and have eighty-three of the 157 seats, or 52.7 percent, of the National Congress. 29. “Morales habló con gente de Lula sobre el ALCA,” La Razón, October 6, 2002, A-38. 30. “Indígenas ecuatorianos marchan contra el ALCA,” La Razón, October 29, 2002, A-24. 31. The Cairns Group is a coalition of seventeen agricultural exporting countries who account for one-third of the world’s agricultural exports. The group has succeeded in keeping agriculture on the multilateral trade agenda since its formation in 1986. For more on the Cairns Group, see www.cairnsgroup.org. “Hoy es la marcha contra el desempleo,” La Razón, October 28, 2002, A-38. 32. “Líder cocalero boliviano en Cuba, habla contra el ALCA,” El Comercio, November 26, 2002. 33. Crandall and Jenga, “New Complications in the Andes,” 92. 34. Roberto Laserna, “Conflictos Sociales y Políticos en Bolivia,” in Anuario Social y Político de América Latina y el Caribe–2001 (Caracas: FLACSO/Nueva Sociedad, Year 4, 2001), 1. 35. Crandall and Jenga, “New Complications in the Andes.” 36. Ibid. 37. Ibid. 38. “Bolivia Readies New Hydrocarbon Law,” Platt’s Oilgram News, April 7, 2004; “Bolivia: Coca Growers Block Highway,” LatinNews Daily, April 17, 2004; “Bolivia: Mounting Pressures on President Mesa’s Government,” BBC Monitoring International Reports, April 9, 2004; “Bolivian Unions over Whether to Join Strike over Gas Exports to Argentina,” BBC International Monitoring Reports, April 11, 2004; Kate Joynes, “Thousands Protest in Bolivia Against Argentine Gas Export Decision,” World Markets Analysis, April 16, 2004; “Bolivia: Demonstration Prompts Jitters,” LatinNews Daily, April 16, 2004; “Bolivians Call for Ouster of New President,” New York Times, April 23, 2004, A4. 39. Crandall and Jenga, “New Complications in the Andes.” 40. “Suicide Bomber and Terrorism Jitters,” Andean Group Report–LatinNews, April 6, 2004. 41. “Bolivia: Government Detects Armed Rebel Group,” LatinNews Daily, April 18, 2004; “New Armed Group,” World Markets Analysis, April 9, 2004. 42. “Suicide Bomber and Terrorism Jitters.” 43. Kate Joynes, “Bolivian Government Concedes to Pension Demands After More Dismissed Miners Threaten to Blow Themselves Up,” World Markets Analysis, April 26, 2004. 44. “Bolivian Landless Threaten to Blow Up Government Office Unless Demands Met,” BBC Monitoring International Reports, April 24, 2004. 45. “Bolivia: MIR Starts Investigation into Coup Rumors,” BBC Monitoring International Reports, April 16, 2004; “Bolivia: Morales’ MAS Accuses Rivals of Undermining Mesa,” LatinNews Daily, April 19, 2004; “Bolivia’s Evo Morales Alleges Two Ministers Planning Coup,” BBC Monitoring International Reports, April 19, 2004;

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“Bolivia: Police Head Implies Officers Involved amid More Coup-Plot Rumors,” BBC Monitoring International Reports, April 20, 2004. 46. “Bolivia: Police Head Implies Officers Involved.” 47. Stephen Temple, “Indigenous Leader Denounces ‘Fascist US-Backed Plot’ Against Bolivian Government,” World Markets Analysis, April 21, 2004. 48. “Bolivia: NFR Leader Says President, Others Conspired Against ExPresident,” BBC Monitoring Americas, June 13, 2004. 49. “Bolivia: Armed Forces Upset by Attempts to Try Servicemen in Civilian Courts,” BBC Monitoring International Reports, April 14, 2004; “Bolivian Troops Confined to Barracks Following Ruling on February Violence,” BBC Monitoring International Reports, May 9, 2004; “Bolivian Top Brass Issues Dire Warning over Murder Trial Ruling,” Morning Star, May 10, 2004; Franz Chávez, “Bolivia: Military Protests Decision on Four Accused in Killings,” IPS—Inter Press Service, May 10, 2004. 50. Martin Arostegui (United Press International), “Uproar in Bolivia over US Immunity Law,” May 17, 2004. 51. “Bolivia: Quispe Quits Seat to ‘Liberate’ the Aymara,” Latin American Weekly Report, June 8, 2004. 52. Martin Arostegui (United Press International), “Bolivia Braces for a New Wave of Strikes,” April 30, 2004. 53. Ibid. 54. “Bolivia: Protests to Continue Despite President’s Economic Collapse,” BBC Monitoring International Reports, April 21, 2004. 55. Tyler Bridges, “Possible Labor Strike the Latest Political Crisis for Bolivian President,” Miami Herald, May 3, 2004, 12A. 56. “Bolivian President Calls Gas Referendum for 18 July,” BBC Monitoring International Reports, April 14, 2004. 57. “Mesa Administration Confirms Agreement with the IMF,” La Razón, June 14, 2004. 58. “Bolivian Hydrocarbons Minister Reportedly Resigns; Cabinet Reshuffle Expected,” BBC Monitoring International Reports, April 13, 2004; Xinhua General News Service, “Bolivian Cabinet Resigns,” April 14, 2004. 59. Juliette Kerr, “Bolivia Announces Details of Gas Referendum,” World Markets Analysis, May 21, 2004; “Bolivia: President Mesa Presents Five Questions for 18 July Gas Referendum,” BBC Monitoring International Reports, May 21, 2004. 60. “Bolivia: Opinion Poll Shows 83 Per Cent of Population Want Gas Nationalization,” BBC Monitoring International Reports, May 21, 2004. 61. “Bolivia Will Not Renationalise Oil Sector,” Latin American News Digest, June 7, 2004. 62. Bridges, “Possible Labor Strike.” 63. Tyler Bridges, “Call for National Strike in Bolivia Garners Only Minor Support,” Miami Herald, May 4, 2004, 10A. 64. Arostegui, “Bolivia Braces for a New Wave of Strikes.” 65. Kate Joynes, “Unions Fail to Rally Sufficient Support for Bolivia’s Latest National Strike,” World Markets Analysis, May 4, 2004; “The Difficulty of Governing Bolivia,” The Economist, May 8, 2004. 66. Joynes, “Strikes and Protests Promise to Batter Bolivia Again,” World Markets Analysis, April 19, 2004. 67. Xinhua General News Service, “Bolivian President Stresses Democratic Ways to Solve Dispute,” May 22, 2004.

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4 Peru: The Trauma of Postdemocratic Consolidation Ramiro Orias Arredondo

Peruvian democracy has swung like a pendulum, from the recovery of democracy in the early 1980s to an authoritarian regime in the 1990s, returning to the process of democracy-building at the beginning of the 2000s. During this time, certain trends in the Peruvian political system sharpened: weakening of the state, discrediting of political parties, social protests rejecting economic reforms, regional pressures demanding greater decentralization of power, and terrorist activities associated with drug trafficking. Today, Peru faces a dual challenge. It must complete its democratic transition, restoring its institutions and dismantling the institutional architecture of the authoritarian regime of Alberto Fujimori while simultaneously addressing new social and regional demands as they emerge. Efforts to consolidate democracy are under significant pressure from groups that violently question the constituted order and its ability to address long-standing issues of poverty and unemployment. In this chapter I analyze Peru’s transition to democracy, the factors that allowed Fujimori to construct an authoritarian regime, the legacy left behind by that regime, and Peru’s hopes for a democratic future. The nearly two-and-a-half decades of electoral democracy in Peru’s recent history highlight both the necessity and difficulty of achieving democratic institutionalization, economic stability, and national security—what Russell Crandall calls the elusive trinity—as well as the danger and unsustainability of sacrificing elements of this trinity for the sake of others.

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Transition to Democracy Peru’s democratic transition was accompanied by economic crisis, discredit of political parties, and the emergence of guerrilla insurgencies that would terrorize the country for decades. The broken promises and dashed hopes of this rocky transition diminished faith not only in leaders and parties but in the model itself, facilitating the rise of authoritarianism. The dominant characteristics of Peruvian politics since independence have been economic crisis, political instability, and authoritarian intervention. Peru’s oldest and most established political party, the American Popular Revolutionary Alliance (Alianza Popular Revolucionaria Americana, APRA), was founded in 1924 by Víctor Raúl Haya de la Torre. The radical, though decidedly noncommunist, party won its first presidential election in 1962, but Haya de la Torre was prevented from assuming office when the military intervened, owing to distrust rooted in APRA’s insurgent battles against the military in the 1930s when the party was banned. New elections were held in 1963, and moderate reformer Fernando Belaúnde Terry of Popular Action (Acción Popular, AP) won. Five years later, however, economic crisis combined with fear of rising social tensions in the countryside prompted military intervention once again. President Belaúnde was deposed in 1968 by a left-wing military junta led by General Juan Velasco Alvarado in what the military termed the Peruvian Revolution. The constitution was suspended and all political parties outlawed as the military government implemented its reform agenda. All U.S.-owned oil operations were seized, key industries were nationalized, and agrarian reform eliminated Peru’s landed oligarchy. Economic mismanagement produced an inflationary spiral, which led to the 1975 removal of Velasco by General Francisco Morales Bermúdez. Morales proclaimed “Phase II” of the revolution in which Velasco’s reforms were to be consolidated, yet in reality radical reforms were phased out as more leftist members of government were removed and austerity measures implemented in an effort to address the failing economy. Morales initiated Peru’s democratic transition with a new constitution and presidential elections in 1980, which restored President Belaúnde. With the military regimes gone, it was up to President Belaúnde to guide Peru through the democratic transition. In his inaugural speech, Belaúnde cast Peru’s democratic transition in terms of the economic recovery that democracy and civil liberties would eventually bring.1 His government, however, was plagued by natural disasters, the rise of armed terrorist groups, and mounting drug trafficking, all of which aggravated economic problems. His administration’s credibility eroded as political confrontations broke out within his own Popular Action party. In the 1985 elections, Alan García, the new, young leader of APRA, scored an overwhelming victory, with a nationalist and populist campaign that

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responded to the frustrated expectations of Peruvians suffering from the economic crisis. Transfer of power to García marked the first time in forty years that the government had been handed from one democratically elected regime to another. Following in Belaúnde’s footsteps, García raised high expectations for economic recovery accompanying democratization. After the polls closed on election day, he proclaimed, “Now the Peruvian people will change governments, change the economy, change the politics, and consolidate democracy.”2 García’s popular support was short lived as the crisis worsened. His populist policies included devaluation, wage hikes, food subsidies, and protectionism, all of which widened the deficit. When external debt rose to more than $14 billion, the government said it would limit payments on the debt to 10 percent of export earnings and even declared a moratorium on paying private external debt. This led the International Monetary Fund (IMF) and other international agencies to declare Peru ineligible for further loans, isolating Peru from international financial sources more than at any time in its history; consequently, the economic problems only got worse. By the end of his term in 1990, Alan García had left behind a very unstable country. Gross domestic product (GDP) had fallen 28 percent, and the purchasing power of salaries had declined by 60 percent. The fiscal deficit was more than twice government revenues. Annual inflation exceeded 7,000 percent, and the external debt grew to $20 billion. More than 70 percent of the economically active population was unemployed or underemployed.3 At the same time, the political situation was marked by social mobilizations, politicization of the institutions, corruption at all levels of the state, the discrediting of political parties, a more aggressive guerrilla insurgency, and uncontrollable drug trafficking (by then, Peru had become the largest producer of coca leaf in the world). Guerrilla insurgencies became more aggressive during the 1980s, fueled by the political and economic crisis. Neither Belaúnde nor García was able to control Peru’s destabilization, and the resultant poverty and loss of faith in the credibility of the government further fueled insurgency. The Shining Path (Sendero Luminoso), which was founded in the 1960s as a Maoist response to inequality, had gone underground by the late 1970s and in 1980 initiated a ruthless guerrilla war with the aim of destroying the Peruvian government and the society upon which it was founded. The smaller Túpac Amaru Revolutionary Movement (Movimiento Revolucionario Túpac Amaru, MRTA) was a pro-Castro group composed of guerrillas from the 1960s and dissident factions of APRA and the United Left. MRTA fancied itself as a Robin Hood–like organization combating U.S. neocolonialism, and it catapulted onto the Peruvian political scene in 1984 when it assaulted the U.S. embassy in Lima.4 The Shining Path proved the more destructive and lasting of the two groups. Based in Ayacucho, the Shining Path operated in the countryside among peasant communities. It executed its enemies and potential rivals,

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assassinated journalists, and attacked the foundations of the Peruvian government by killing officials; destroying social, political, and government organizations; taking over towns; and destroying infrastructure such as bridges and mines. MRTA, on the other hand, was an urban, middle-class group without a significant social base. MRTA took hostages for ransom and publicity, invaded the Lima offices of foreign news agencies in order to transmit its manifesto, bombed U.S. targets in Lima, robbed banks, and kidnapped business executives.5 Even though MRTA was not as threatening, its attacks did add to the destabilization of the Peruvian state and economy. The Belaúnde administration responded by stationing 5,000 troops in Ayacucho, but the violence only escalated as sporadic guerrilla raids transformed into massacres. Soldiers were instructed to kill Shining Path sympathizers, and the soldiers’ brutality toward peasants discouraged cooperation at best and bred sympathizers and expanded the Shining Path’s ranks at worst.6 Increasing violence rendered democracy essentially irrelevant for vast sectors of the population, and the chaos of terrorism ensued amid prolonged states of national emergency in which constitutional guarantees were suspended. A January 1985 article described Belaúnde’s efforts: “Alternately outraged and apparently aggrieved by the guerrilla assaults, he has become increasingly unable to recognize that he cannot end the war by presidential decree.”7 García proved no better at combating terrorism, merely throwing funds at mismanaged development projects and increasing callous military repression that left peasants trapped between forces intent on exterminating each others’ sympathizers.8 By 1989, the Shining Path had carried out 121,455 attacks; an average of six people were dying every day as a result of political violence.9 The guerrilla insurgency exacerbated the economic crisis of the 1980s; the material cost of the destruction amounted to a third of all investment between 1980 and 1989, in addition to instigating capital flight and preventing further investment.10

Fujimorismo: Economic Adjustment, Antiterrorism, and Authoritarianism The 1990 elections were focused on the country’s prolonged economic crisis. The two leading contenders were political outsiders: Mario Vargas Llosa, whose proposals were based on liberal orthodoxy and economic shock therapy, and Alberto Fujimori, who offered more moderate and gradual measures. Fujimori’s more populist platform attempted to appeal to the poor and excluded sectors located in the informal economy with the campaign slogan “a Peruvian like you” (un peruano como tú). As one analyst wrote, “The spectacle of a former university rector, of Japanese descent, bonding with the highland peasants of Peru is, at once, both bizarre and paradoxical.”11 Yet indige-

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nous and mestizo Peruvians were attracted to Fujimori’s darker complexion, imperfect Spanish, and apparent concern for those outside the traditional political system and national economy. In the second round of voting, Fujimori’s approach won out and he was elected. The Fujimori government’s first priority was to reestablish economic stability. With pragmatism, he sought to reinsert Peru into the international financial circuits. He renegotiated the payment of Peru’s foreign debt and applied a surprisingly harsh economic adjustment program. The economic measures, including many he had criticized in his campaign, were based on economic liberalization, opening up trade, and eliminating government subsidies. The crisis in which Peruvians found themselves kept them from revolting against the austerity measures, popularly referred to as “fujishock.” They were willing to risk their votes on an unknown and willing to stand by the president as he took a risk in the initiation of a stridently neoliberal economic program.12 Fujimori also cushioned the effect of austerity measures through targeted emergency social programs.13 The elimination of price controls and state subsidies had the immediate effect of raising prices, but within a few months inflation fell, proving the new policy direction to be effective. Liberalization attracted capital, and increased investment led to economic stabilization and growth.14 Relations warmed with Japan, and Japanese development assistance increased significantly. Fujimori also pushed for improved relations with the United States, which increased its aid, aimed mainly at fighting drug trafficking and terrorism, linked to evidence that the Shining Path was deeply involved in drug trafficking in the Upper Huallaga valley.15 Fujimori based his program of political stability on fighting terrorists and drug traffickers, as he sought to afford citizens greater security. Yet his efforts were not matched in the courts or the Congress, who were increasingly critical of Fujimori on human rights and law enforcement issues. In early 1992, Fujimori carried out an autogolpe or “self-coup” with military backing, under the pretext of reorganizing the branches of government. In fact, it was tantamount to a purge of the judiciary and the suspension of the Congress. This action by Fujimori was condemned internationally. But the Peruvian government soon saw its international image rebound when it captured MRTA leader Víctor Polay and top Shining Path leader Abimael Guzmán, dealing a harsh blow to the guerrillas. Hundreds of MRTA guerrillas surrendered in 1992 under a government amnesty program.16 Fujimori encouraged peasant cooperation by reducing the human rights abuses of the military. Whereas soldiers had previously killed suspected guerrilla sympathizers, they increasingly detained them for processing and refrained from retributive measures in the communities where the Shining Path was active.17 The reduction in human rights abuses inflicted on peasant communities, however, were by and large replaced by abuses inflicted on detainees. Fujimori’s antiterrorism decrees established hooded military tribunals, very broad definitions of terrorism,

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harsh sentences, and criminalization of “provoking anxiety” or “apologizing for terrorism.”18 In addition to more authoritarian laws, abuses such as torture of guerrillas and execution upon surrender were committed by the military outside of the rule of law. Human rights observers spoke out against abuses, but the population at large was relieved by the success of the campaign and the decreased repression of peasant communities. These developments ushered in two hallmarks of the Fujimori regime: repression of the insurgents and an alliance with the military, fast becoming his main base of political power. In November 1992, he called elections for a constitutional assembly, which went on to adopt a new constitution that allowed immediate reelection of the president, enshrined free-market reforms, and allowed the death penalty for crimes of terrorism. The effectiveness of the Fujimori government made the president popular, irrespective of his consolidation of power and dictatorial demeanor. Fujimori’s approval rating rose from 53 to 81 percent in 1992 after he shut down Congress.19 Thus, in 1995, Fujimori defeated former UN Secretary-General Javier Pérez de Cuéllar as voters acknowledged Fujimori’s work to consolidate economic growth and restore political order.20

Breakdown and Legacy of the Fujimori Regime Alberto Fujimori’s second presidential term faced very different expectations from the Peruvian population than his first stint in office. As Carol Graham warned in a January 1995 article, “Fujimori’s authoritarian manner is far better suited to the economic reforms he has already imposed than to the next stage of structural reforms, which require major institutional change, as of the health and education sectors.”21 Without the state of crisis with which Fujimori entered the presidency, his continued authoritarianism was viewed as unnecessary by the Peruvian populace, and when he failed to provide improvement for the poor, his dictatorial ways failed to be justifiable on the basis of enhanced efficacy.22 The legitimacy of Fujimori’s consolidation of power was predicated upon his ability to portray himself as channeling the will of the masses. He traveled to outlying areas of the country to appear accessible, made frequent television appearances in order to relate to the people directly, and visited sites of public works projects. Government achievements were attributed not to a region’s congressional representation, a particular political party, or any institutions of national government, but to Fujimori himself.23 The Peruvian economy grew by 13.1 percent in 1994, breaking a Latin American record, and by 7.2 percent in 1995. Although government projects cushioned economic hardship, there was no perceptible increase in employment, and over half the population continued to live in poverty.24 Economic frustration eroded his credibility as

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the embodiment of the masses’ interests, and the absence of alternative channels increased the desire for more democratic government. Congressman Carlos Chipoc stated in May 1996, “The country gave Fujimori an award for stopping terrorism and controlling hyperinflation and that prize was reelection. But now the people want much more. They want real jobs. They want education for their children. And more than anything they want a future that is not dependent on just one single man.”25 External factors, such as devastating weather from El Niño and the international financial crisis, provoked a particularly sharp recession in 1998 and 1999. Economic growth dropped almost seven percentage points, from 7.2 percent in 1997 to 0.7 percent in 1998, which hurt employment, and incomes had a corresponding negative political impact. Public memory began to soften its image of the previous administration as the economy slumped, and nostalgia for Alan García’s policies grew with the notion that, as one woman stated, “He may have been a crook, but at least we could eat meat.”26 Fujimori’s violations of the rule of law were increasingly viewed as actions taken in his personal interest, especially once the national security threat decreased and information about government abuses spread. The December 1996 capture of hostages at the Japanese embassy in Lima by MRTA, declared dismantled by Fujimori in 1992, drew attention to the persistence of terrorism’s root causes. Although the insurgents lacked popular support, analysts proclaimed that Peru would not overcome terrorism until it alleviated the social and economic problems behind rejection of the constituted order.27 Security forces stormed the embassy in April 1997 and ended the four-month crisis, killing all fourteen MRTA guerrillas and saving seventy-one of the seventy-two hostages. At first there was applause for the victory, but when reports leaked that the mostly unarmed guerrillas were caught playing a game of soccer and executed despite attempts to surrender, Fujimori’s popularity began to plummet.28 Toward the end of the hostage crisis, former government intelligence agent Leonor La Rosa publicly accused the government of torturing her for allegedly leaking information to the press. Following this revelation, reports of other human rights abuses and political scandals began to be uncovered with increasing frequency. Furthermore, criticism mounted against the already unpopular 1995 blanket amnesty of members of Fujimori’s first administration that Congress passed in the middle of the night along with a law barring its judicial review.29 Fujimori also persuaded Congress in 1996 to approve a legal interpretation that deemed the current term his first under the new constitution, therefore making him eligible to run in the 2000 elections.30 The president then undertook a repressive campaign in 1997 to eliminate impediments to his reelection. He harassed journalists, tapped their phones, and—when the harassment was reported on television—stripped station owner Baruch Ivcher, a businessman of Israeli origin, of his Peruvian citizen-

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ship and confiscated his communications holdings by court order. Three judges of the Constitutional Court were fired when they came out against Fujimori’s reelection. By July 1997, the president faced the largest antigovernment march since he took office, when 20,000 demonstrators protested human rights abuses. By the close of the year, his popularity had fallen to 17.5 percent from 67 percent at the end of the hostage crisis.31 In June 1999, Peru decided to withdraw from the jurisdiction of the InterAmerican Court of Human Rights, to avoid a court ruling that ordered a new trial, in civilian courts, for four Chileans convicted of terrorism by the military courts. These actions, along with the unchecked and unmonitored work of the intelligence agencies, increasingly projected the image of an authoritarian Peru where human rights were not respected and where democratic order was weakened and subordinated to the military. Despite the environment of economic uncertainty and the political wear and tear of ten years of concentrating power in the executive, President Fujimori was able to manipulate election laws to run for reelection in 2000, further discrediting him. In addition to the taint of scandal plaguing Fujimori as he entered the 2000 elections, he came to face a challenger who eroded Fujimori’s political base by using the president’s own campaign tactics. Alejandro Toledo, leader of the political movement Perú Posible (PP), referred to himself as “El Cholo,” in reference to his membership in the large class of mestizo or indigenous Peruvians whose families had migrated from the Andean highlands to the cities across the country in the preceding thirty years. Just as Fujimori had undercut Mario Vargas Llosa with his ability to say he would govern as “a Peruvian like you,” Toledo capitalized upon his even greater similarity to the masses by donning the same indigenous symbols and clothing Fujimori toted in 1990 and by offering to be the first Peruvian leader in 500 years who “looks like they do.” Toledo’s rags-to-riches life story charmed the nation, and his experiences as a World Bank economist and Harvard visiting scholar gave faith in his ability to achieve what Fujimori had failed to do: create jobs to replace insufficient and demeaning handouts while strengthening democratic institutions.32 Fujimori employed the power and resources of the government to attempt to bolster his support through tactics such as manipulation of access to media outlets, but as this became apparent the president lost even more of his already damaged credibility. In April 2000, Fujimori won 49.8 percent of the vote in the highly contested elections, followed by Alejandro Toledo with 40.2 percent. Glitches in the voting process on election day, as well as inconsistencies in the reports of voting machines, increased the perception that the elections were rigged. In a second round, Fujimori obtained 51.2 percent of the vote, but Toledo had refused to participate and instead denounced the election process as fraudulent. The Organization of American States (OAS) intervened, saying that not all the guarantees necessary for a fair election had been

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in place, and sponsored a “dialogue for democratization” between the government and the opposition. On July 28, 2000, President Fujimori assumed the presidency for his third term before the Peruvian Congress. The only heads of state to participate in the ceremony were from Ecuador and Bolivia, countries with strategic relationships to Peru. Other countries of the region sent lower-ranking officials, indicating the international rejection of his questionable reelection. His inauguration was marked by riots, which left six dead and 172 arrested.33 Just as calm appeared to be returning to Peru, a video was broadcast on September 14, 2000, in which presidential security adviser and National Intelligence Service (Servicio de Inteligencia Nacional, SIN) director Vladimiro Montesinos was seen bribing an opposition member of Congress. Two days after the scandal broke out, Fujimori announced that he would deactivate the SIN, resign in July 2001, and call new elections. An investigation by anticorruption judge Saúl Peña Farfán showed that, from the autogolpe of 1992 until September 2000, the armed forces illegally diverted 223,397,500 soles to Montesinos’s SIN. Investigators alleged that these funds were used for corruption, boosting the SIN’s budget 263 percent, under the pretext of the emergency situation due to the insurgency and drug trafficking. Montesinos allegedly used the money to strengthen the Fujimori regime and to benefit himself and others in acts of corruption involving judges and magistrates from the judicial branch, the Public Ministry, media owners, members of Congress, and military officers.34 On November 13, 2000, President Fujimori traveled to Brunei and then to Japan, where he stayed and announced he was resigning immediately. The Peruvian Congress appointed Valentín Paniagua, viewed as a conciliator, as interim president to guide the transition to a new democratic government.35 This process concluded July 28, 2001, with the inauguration of President Alejandro Toledo. He won the second round of the general elections against ex-president Alan García in an election campaign marked by mutual mudslinging and overzealous promises of employment and economic recovery. This turbulent transition, involving the erosion of political legitimacy and the progressive breakdown of political stability, showed that the 2000 elections were not free and fair and revealed a weakening of the democratic institutional framework, dating back to 1992 when President Fujimori intervened in the legislature and the judiciary.36 In the wake of authoritarianism remained a democracy with weakened institutions. James M. Faison wrote in June 2001, “Peru’s democratic future looks bleak. A corrupt military, an enervated constitution, an impotent judiciary, and a fractious Congress are all that remain of whatever legacy Fujimori hoped to leave behind.”37 The Fujimori regime bequeathed to the next administration a populace even more cynical toward government, having stripped away the institutions necessary for effective and representative democratic governance.

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Rebuilding Democracy: Gains and Challenges Alejandro Toledo’s zealous fight for democracy against Fujimori led many to believe he would be a president strong enough to restore democracy, stability, and employment. Toledo, however, quickly proved to be, in the words of one analyst, “appallingly organized, unable to govern, directionless.”38 A weak president and a government that had been deinstitutionalized to consolidate power in the executive proved to be a disastrous combination. His inability to govern aside, Toledo aptly articulated the legitimacy crisis within which Peruvian democracy was engulfed. In a September 2002 speech to the OAS, Toledo warned of a “trend toward disenchantment with democracy” among “less-favored segments of society . . . when the basic needs of sectors of the population cannot find institutional channels to deal with their demands.”39 Toledo’s administration attempted to fulfill its mandate to alleviate poverty while seeking to restore the rule of law and replacing the architecture of the Fujimori regime with representative democratic institutions.

The Judicial Branch and the Rule of Law Peru’s Truth and Reconciliation Commission collected evidence from over 16,000 people in 530 remote areas of the country and exhumed mass graves and burial sites. The commission delivered its report to Toledo in August 2003, and its chair, Salomon Lerner, stated, “The story that is told here talks about us, about what we were and what we must stop being.”40 The report concluded that 69,280 people disappeared or were killed between 1980 and 2000. Of these, the report stated that three out of four were Quechua speakers, 69 percent had only a primary education, 79 percent were in rural areas, and 40 percent were in Ayacucho, one of the three most impoverished departments in Peru. The commission held the Shining Path responsible for 54 percent of the victims, MRTA responsible for 1.5 percent, and the government responsible for the remainder of the victims.41 Although the commission was considered by human rights organizations and foreign governments to be among the best of similar endeavors, many Peruvians were left dissatisfied. Indigenous Peruvians were disillusioned as a result of the 35,000 people left unidentified and the 2,000 mass graves left untouched due to time and resource constraints.42 Former military commanders, on the other hand, accused the commission of favoring the rebels because of its conclusion that the armed forces were responsible for “generalized and systematic violations of human rights” and the evidence it provided prosecutors against 120 former commanders.43 Prosecution of crimes uncovered by the Truth and Reconciliation Commission, like those of corruption, arms dealing, and drug trafficking exposed by Fujimori’s fall, has been hampered by weak judicial institutions. Toledo

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ignored the anticorruption report and plan drafted by Paniagua’s interim government, and of the 1,400 ministers, legislators, judges, and other officials the Toledo administration has charged, only thirty-three have been convicted and 1,100 remain free. Chief Prosecutor Luis Vargas Valdivia has won crucial convictions, such as those of Congressman Ernesto Gamarra, Supreme Court Justice Alejandro Rodríguez, former attorney general Blanca Nélida Colán, and former armed forces chief General José Villanueva. The government has recovered $150 million placed in foreign banks by Montesinos and his allies, and in April 2004 Montesinos, after over one year, broke his silence and pleaded guilty to charges of corruption and embezzlement, though continuing to maintain his innocence on charges of arms trafficking to the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, FARC) and authorizing death squads.44 Hundreds of prosecutions, however, are left up to seventeen lawyers with a $1.1 million annual budget; meanwhile, powerful politicians and media owners with ties to Montesinos remain free and able to subvert the special investigators. Cases that are brought to trial stall within the weak Peruvian criminal justice system. Journalist Gustavo Gorriti stated, “The judicial system was not prepared to investigate a criminal enterprise like Montesinos. It is a system built to judge chicken thieves or fraud cases.”45

Economic Gains and Social Protest Frustration with Toledo’s inability to bring justice to offenders of the past regime was exacerbated by the failure of his own administration to deliver on its promises of just distribution of wealth. Toledo, like each of his democratically elected predecessors, campaigned upon providing economic benefits to the country. In an effort to compete with García’s populism, Toledo promised one million new jobs, salary increases for teachers and police officers, increased pensions, and a variety of public works projects. While campaigning, he proclaimed, “They call me a populist. But I am an Indian rebel with a cause.”46 Toledo proved to be neither populist nor rebel, instead implementing orthodox economic policies, and within his first week in office faced criticisms owing to the contradictions between his campaign promises and policies.47 The Toledo administration inherited a social crisis caused by four years of economic stagnation and recession that left 53 percent of Peruvians unemployed or underemployed, 48 percent in poverty, and 15 percent in extreme poverty.48 Economic growth returned in 2002 as the economy expanded by 4.9 percent, driven by the mining sector, private investment in the Camisea natural gas project, and a boost to agriculture and textiles provided by the Andean Trade Promotion and Drug Eradication Act (ATPDEA). In 2003, the economy grew by 4 percent, with annual inflation at its lowest in decades: 1.5 percent.

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Growth, however, remained concentrated in the mining and export sectors, and unemployment in 2003 rose to its highest level since 1993 as 20,000 jobs were lost.49 Macroeconomic growth continued its trend, growing 4.6 percent in the first quarter of 2004, but unemployment and inequality continued to rise, and the ranks of the poor swelled to encompass 54 percent of the population, with 23 percent of Peruvians living in extreme poverty.50 Toledo, like Fujimori before him, failed to translate macroeconomic stabilization and growth into benefits for the majority of Peruvians. As Toledo failed to follow through on his campaign promises, the social protest groups he once led in opposition to Fujimori took to the streets again to voice their frustration and feelings of betrayal. In June 2002, workers in public transport and the industrial and commercial sectors staged a strike in Arequipa to oppose the privatization of two power companies in southern Peru.51A series of protests began in the streets of Arequipa and spread to nearby districts, leading to six days of violent disturbances that resulted in two persons killed, dozens wounded, and considerable property damage. In response to the violence, the government declared a state of emergency in the department of Arequipa for thirty days and entrusted the armed forces with control of internal order in support of the National Police. The rights to personal liberty and personal security, inviolability of the domicile, and freedom of assembly and movement were suspended in that region, in keeping with constitutional provisions for emergencies. In the face of the popular pressure and the rapid spread of social unrest to other regions of the country, the government was forced to abandon plans for privatization.52 The incidents in Arequipa, which at first might have appeared isolated, became the symbol for an increasingly organized nationwide action, especially by regional groups and trade unions that attacked the privatizations and economic policies of the Toledo administration. Soon after, the extensive Amazonian forest of eastern and northeastern Peru became the scene of regional struggles against the central government. Throughout that region, the population was calling for an end to the eradication of coca, especially fumigation using chemical defoliants. In response to pressure from the peasants, the government suspended the eradication of illegal coca plantations and promised to come up with a negotiated solution in fifteen days. This move was criticized in the United States, and the Peruvian ambassador to the United States, Allan Wagner, had to clarify that “the program to eliminate illegal coca crops had not been canceled, but that it had been suspended to initiate a new program, based on the financing of illicit crops.”53 In addition, other groups in each valley were raising specific demands, including the chestnut gatherers of Puerto Maldonado and the coffee and rice growers of the central valley. Those living in the northern jungle were calling for a greater share of the revenue from oil taxes. The so-called mahogany war broke out on June 26, 2002, in the department of Madre de Dios, leaving one

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dead, twenty-three wounded, and public buildings burned. Peasants and woodsmen tried to stop the granting of some 50,000 hectares of forest for logging for a forty-year concession, on the condition that it be adequately managed and that a reforestation program be adopted and overseen by the authorities. After two days, the government regained control of Puerto Maldonado, the capital of Madre de Dios, with the support of 600 agents from the antiriot police sent in from Lima, and promised to discuss implementation of the new forestry law and the concessions process with the peasant representatives. The next month, the agricultural producers of the San Martín region protested in Tarapoto, in connection with rice production. Demanding a financial rescue package in which their debt to the private banks would be forgiven, they blocked highways, impeded vehicular traffic, shut down the local airport, and sacked the local tax collection office and a state bank in Tarapoto. The protests were subdued by the police and left more than 100 wounded and about sixty detained. The Ministry of Agriculture reached an agreement to purchase 9,000 tons of rice, and the government later increased this to a ceiling 11,500 tons.54 Toledo was forced to call his second state of emergency in May 2003, when teachers protesting in Arequipa were joined by farmers, health care workers, judiciary workers, and union members throughout Peru.55 Thousands continued to protest into June in defiance of the state of emergency, until the government reached a salary agreement with teachers.56 All these episodes had something in common: Vast segments of the population perceived that the market had not solved their problems and sought greater state intervention. According to one observer, “The people are calling indirectly for consensus-based planning, a state that promotes economic activity and redistributes resources based on criteria of equity and decentralization, and regulation, over and above the neoliberal schemes.”57

Representative Institutions and Channeling Social Demands Protesters continued to take to the streets, as there remained a lack of institutional channels for their demands. During the 1990s, traditional political parties, already discredited by the ineptitude of the Belaúnde and García administrations, had weakened further under Fujimori’s authoritarianism. Following the collapse of the Fujimori regime, a period of profound crisis and transformation for the political party system in Peru ensued, leading to a proliferation of local parties and independent movements.58 Fujimori contributed to that turbulence, since he justified his model by blaming Peru’s problems on how the traditional parties had managed public affairs. The disillusionment was aggravated by the final acts of corruption and political espionage discovered at the end of Fujimori’s presidency. The videotapes of Vladimiro Montesinos with images of politicians from various sectors receiving bribes further discredited the political parties.

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Breakdown of the party system weakened the ability of the legislative branch to be an effective means of political representation. Broad-based national movements, such as Toledo’s Perú Posible, lacked a cohesive political ideology and, therefore, became essentially many independent voices once in government. The plurality of parties and movements in Congress made governance difficult, weakening the ability of political parties and the legislature to effectively channel the demands of the population. President Toledo attempted to devolve power from the executive branch in order to rebuild effective representative democracy. In November 2001, he began discussions with various sectors of Peruvian society in order to form a consensus on policy over the next twenty years. On July 22, 2002, representatives of government, political parties, and civil society signed the National Governability Pact (Acuerdo Nacional de Gobernabilidad), which established twenty-nine policy goals in the areas of democracy and the rule of law, equity and social justice, economic competitiveness, and the institutional framework of public ethics. Former prime minister Roberto Dañino, who oversaw the creation of the agreement, stated, “The accord signifies the restoration of a culture of dialogue.”59 This dialogue, however, officially broke down when opposition parties National Unity (Unidad Nacional) and Peruvian Aprista Party (Partido Aprista Peruano, PAP) pulled out of the agreement in February 2004 in an attempt to remove Toledo.60 The election of Toledo, as perhaps the election of Fujimori, illustrated the profound political vacuum or anomie of the state.61 It reflected the persistence of yawning ethnic and social gaps between “a predominantly criollo state and an Andeanized society in which mestizos, cholos, and the indigenous are calling for their full inclusion.”62 The principal national movements, and increasingly the national government itself, were mistrusted, as they proved incapable of responding to the demands of diverse cultural, geographical, and social interests. This led to greater public demand for attention to regional and local issues.63 The regional demands of the seemingly continuous protests encouraged the Toledo administration to decentralize power by instituting a political structure based in the northern, central, southern, and eastern regions, with relative administrative and economic autonomy from the central government. Twenty-one new regional representatives took office on January 2, 2003. Although intended to contribute to an easing of tensions, the decentralization also resulted in a more fragile central government with less power in the regions and a weakened capacity to react to federalist-type movements. As one observer warned, “some regions hostile to the Executive, exacerbating a localist discourse of confrontation and demanding resources from the central government, may give way to a situation marked by instability and mismanaged government that has a detrimental effect on democratic governability.”64

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Instead of effectively channeling regional demands, regional governments decentralized the problems plaguing national government. Inefficiency and corruption continued to be the defining characteristics of government, as nearly 89 percent of the local budgets were consumed by the regional bureaucracy.65 Deficiencies in decentralization were most starkly evidenced on April 26, 2004, in the town of Ilave, when Mayor Cirilo Robles was dragged from his house and beaten to death as a result of accusations of corruption. Aymara populations rose up against six other towns in the region, and troops sent in to reinforce local police came under attack.66 Protests sparked by the killing of Mayor Robles spread across Peru, as miners struck and coca growers marched on Lima, marking the third national uprising of President Toledo’s term.67 When Toledo’s efforts to channel demands through representative institutions failed, the central government became further discredited by scandals and apparent inability to govern. In February 2003, five congressional deputies left Toledo’s PP, and in June his cabinet walked out amid paralyzing strikes that caused the president to declare that Peru had reached the breaking point.68 Toledo fired his prime minister after she went public with allegations that a member of the PP was spreading rumors that she was a lesbian, and Carlos Ferrero became Peru’s fourth prime minister in thirty months.69 Corruption and nepotism scandals led to the resignation of several cabinet members, including that of Vice President Raúl Diez Canseco in January 2004. Toledo reshuffled his cabinet repeatedly in attempts to regain legitimacy and to stave off calls for an early election.70 Nevertheless, in May 2004, Interior Minister Fernando Rospigliosi, who had resigned after the 2002 Arequipa riots and was later reinstated, was censured by Congress and forced to resign after the unrest in Ilave. Then in June Toledo lost his sixth minister in six months owing to a scandal involving underage prostitutes in a hotel run by the agriculture minister’s son.71 Despite Toledo’s maneuverings, critics continue to assert that the president, not the cabinet, is the problem. Broken promises and lack of direction have made Toledo so unpopular that in December 2003 sales of a Toledo piñata skyrocketed, and by June 2004 his approval rating had sunk to a dismal 6 percent.72 Congress voted, on June 3, 2004, to increase the number of votes necessary to remove the president from sixty-one to eighty, indicating both the real possibility of sixty-one legislators voting to remove Toledo as well as the desire for their president to finish his term for the sake of stability.73 In an unsuccessful effort to boost his popularity, Toledo has undertaken more popular economic policies. The administration supported removing PetroPerú from the privatization process, did not grant a five-year extension to Telefónica de Perú’s main contracts, and approved a new royalty tax on the mining sector.74 Toledo’s more populist economic policies, however, have not stemmed the flow of protests or popular calls for his resignation.

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Security Threats: Drug Trafficking and Terrorism Evidence of renewed insurgent activity, along with this scenario of growing social protest and political agitation, is increasingly worrisome. In the first months of 2002, sources from the Directorate Against Terrorism (Dirección Contra el Terrorismo, DIRCOTE) reported that the Shining Path was reorganizing front groups, and terrorist militants of the Shining Path and the MRTA, now free after having served their sentences for criminal convictions, are infiltrating protests, blocking highways, and organizing marches of university students. The antiterrorist police trapped two alleged terrorists who had plans to attack the U.S. Embassy and two other sites that represent U.S. interests. DIRCOTE spokespersons indicated the terrorists had been proselytizing in the area. Fernando Rospigliosi, then interior minister, announced the reestablishment of five counterinsurgency bases—two in Huallaga, two in the central jungle, and one in Ayacucho—as a preventive measure. Rospigliosi stated that the government’s goal was to end the remnants of terrorism, adding that some police and anti-drug posts will reopen where there is already a presence of insurgents and drug traffickers.75 A few days after this announcement, on March 21, 2002, a car bomb exploded in Santiago de Surco, across the street from the U.S. Embassy, killing nine people. The attack took place three days before President George W. Bush’s visit to Peru. DIRCOTE later discovered and destroyed six Shining Path camps in the jungle in the department of Ayacucho.76 In March 2003, several local mayors went into hiding after receiving death threats from the Shining Path.77 Government authorities made their most significant capture since 1992 when they detained rebel commander Jaime Zúñiga Córdova in November 2003. Zúñiga was thought to have orchestrated a series of terrorist activities, including the day-long kidnapping of seventy-one employees of an Argentine company constructing a gas pipeline.78 In April 2004, the Shining Path gave the government a sixtyday deadline to meet demands for a political solution, yet did not specify their demands or the impending consequences.79 The government accused the Shining Path of infiltrating a violent protest in Ayacucho in July 2004, but little else has been heard from the group since. The resurgent Shining Path is a much different organization than its previous incarnation. It is less ideological and increasingly linked to narcotrafficking. Instead of kidnapping and killing community members, insurgents buy produce from farmers with the revenue from charging drug traffickers to move coca paste through rebel-controlled territory of the Apurimac and Upper Huallaga valleys.80 Despite pressure from the United States since 2002 to step up eradication efforts due to increased coca cultivation, the Peruvian government has refrained from implementing eradication programs in the areas where the Shining Path has been active.81 One commander of a counternarcotics police outpost stated, “Practically everybody who lives in this valley is

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involved in coca. We do what we can, but carrying out a raid is difficult when the people rise against you.”82 Although the government refrains from forced coca eradication in areas with a Shining Path presence, it is the profits from this very coca that fuel the group’s attacks and give it the possibility of waging a war with vastly greater resources than it wielded in the 1980s and 1990s. There is also fear that the Shining Path could carve out a “liberated zone” as the FARC has done in Colombia. Farmers have reorganized into local selfdefense groups, but arming these groups poses risks because most of their members are coca growers who may support the terrorists if the government attempts eradication.83 Although the Shining Path is not the threat it once was, it retains the ability to win the hearts and minds of impoverished Peruvians, particularly now that it has foregone targeting civilians. Antipoverty activist Gastón Garatea stated, “The Shining Path could reemerge. The government hasn’t won the ideological battle. It has only jailed people, and the prisons are great breeding grounds for terrorists.”84 The poverty and deprivation that made Ayacucho conducive to insurgents in the 1980s continue to plague the region.85 The economic hardship and disillusion with government that fuels street protests and local outbursts of violence has the potential of turning far more antisystemic and of propelling Peru once again into civil war.

Conclusion: Prospects for a Democratic Future Peru currently faces a democracy crisis. Transition to democracy under President Belaúnde was painted as a transition that would bring economic recovery, and successive governments have all pledged to channel the demands of popular sectors and provide them with economic benefits, yet all have failed. Peru went down the road of authoritarianism, then returned to government under the rule of law, and now is suffering from the decomposition of the political party system. Peru’s political system has been discredited by corruption, abuse of authority, political exclusion, and inability to channel social demands. Peruvian democracy is undergoing democratic reconstruction, which requires dismantling the architecture left by the authoritarian regime. Weakened political institutions, resistance to more sweeping economic reforms, social protests, and regional movements calling for more power, as well as the reappearance of terrorism and drug trafficking, are all internal factors bringing pressure to bear on Peruvian democracy and threatening its security. Ultimately, democracy has failed to translate macroeconomic growth into benefits for the majority of Peruvians. In Peru, poverty affects 54 percent of the population; 32 percent live in extreme poverty. This is the main social challenge that needs to be addressed. The challenges of democratic recon-

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struction in Peru include the development of institutions and the deficits in political representation, social tolerance, and cultural pluralism, as well as participation in the decisionmaking and conduct of public affairs. One of the main challenges facing democratic reconstruction in Peru is to strengthen the political parties and make them credible once again. The possibility for new outbreaks of violence and popular protest in various southern regions, the highlands, and the Peruvian Amazon persists, as regional groups already have proven capable of raising demands and having them met outside the structure of democratic institutions. The dichotomies presented by Fujimori—as well as past dictatorships— of effectiveness versus democracy, and security versus liberty, threaten to mold the democratic debate and pull Peru back down the path of authoritarianism. A poll conducted in late April 2004 showed that 20 percent of Peruvians would vote for Fujimori as president.86 Political analyst Nelson Manrique attributed this phenomenon to the government’s “failure to build a serious alternative” to the Fujimori regime.87 García, whose presidency was marked by corruption, terrorism, massacres of civilians, and the political and economic crisis that enabled the rise of Fujimori, is currently the most popular prospect for the 2006 elections. Peru’s tendency toward leaders with blatant disregard for the rule of law is indicative of a trend across Latin America in favor of efficacy over democracy. A United Nations report released in April 2004 showed that 56 percent of Latin Americans valued economic progress above democracy.88 Larry Birns, director of the Council on Hemispheric Affairs, stated, “Democracy today is broad, but it is not deep. It’s broad in that leadership talks about it, it’s a buzzword. But the danger is that the more they talk about it the more skeptical the population becomes because they see a great deal of rhetoric but the standard of living of the impoverished hasn’t improved.”89 Peru faces the danger that its citizens will reject democracy in favor of antisystemic methods, as they did in Ilave. Nonetheless, Peru has made an important step away from authoritarianism and remains democratic despite the current legitimacy crisis of democracy. Though politicians face formidable challenges of institution-building, they retain the opportunity to make democracy relevant to the majority of Peruvians.

Chronology of Important Recent Events in Peru 1990. Alberto Fujimori, candidate for the “Cambio 90” movement, wins the presidential elections. 1991. The Chamber of Deputies approves the annulment of political immunity for former president Alan García, in order to prosecute him for corruption charges.

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1992. The World Bank approves a credit of $900 million to refinance the external debt. President Fujimori adopts authoritarian measures and dissolves Congress, intervenes in the judicial branch, and suspends constitutional guarantees in the name of national security and the fight against terrorism. Former president Alan García is granted political asylum in the Colombian Embassy in Lima. Abimael Guzmán, leader of the Shining Path, is captured and sentenced to life in prison. 1993. The International Monetary Fund restores Peru’s credit eligibility and approves a loan of $1.4 billion to finance structural reforms. Approved by popular vote, a new constitution takes effect, increasing presidential powers and paving the way for Fujimori’s reelection. 1995. Military confrontations on the border with Ecuador break out for a period of five weeks, until a cease-fire agreement is signed. Fujimori wins a second presidential term in the first round of the elections, against former UN Secretary-General Javier Pérez de Cuéllar. 1998. Peru and Ecuador sign the Definitive Peace, Commerce, and Border Integration Agreement, ending all bilateral territorial disputes. 1999. Peru and Chile sign the execution act of the pending agreements established in the peace treaty of 1929. 2000. Fujimori wins a third consecutive presidential term in elections with international observers. Incriminating videos of presidential adviser Vladimiro Montesinos are discovered, revealing multiple incidents of corruption and embezzlement in Fujimori’s government. As a result, Fujimori announces new elections. During a visit to Japan, Fujimori announces his resignation. Congress replaces him with Valentín Paniagua, who calls for new elections. 2001. Alejandro Toledo, of Perú Posible, wins in the second round of the elections against APRA’s Alan García and becomes Peru’s new president. 2002. A civil strike in the city of Arequipa protesting the privatization of electric utility companies turns violent, resulting in the cancellation of the privatizations. A resurgent Shining Path increases activities and establishes links with the narco-traffickers. 2003. The Truth and Reconciliation Commission delivers its report, declaring 69,280 disappeared or killed in political violence from 1980 to 2000 and holding the Shining Path, MRTA, and the armed forces responsible for deaths and human rights violations. Decentralization results in the election of twenty-one regional mayors. Nationwide protests again cause Toledo to declare a state of emergency. 2004. Montesinos pleads guilty to charges of corruption and embezzlement. Vice President Raúl Diez Canseco resigns amid a corruption scandal. The mayor of Ilave is lynched by crowds owing to corruption, sparking a series of protests across the nation. Toledo’s approval rating drops to 6 percent by June.

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Notes 1. Charles A. Krause, “Peru Inaugurates Its 102nd President, Ending 12-Year Military Dictatorship,” Washington Post, July 29, 1980, A9. 2. Marguerite Johnson, “Stirring Hope; ‘Alan Presidente’ Electrifies,” Time, April 29, 1985, 56. 3. National Institute of Statistics and Information (Instituto Nacional de Estadística e Informática, INEI), Lima, Peru, www.inei.gob.pe. 4. Calvin Sims, “On the Trail of Peru’s Maoist Rebels,” New York Times, August 8, 1996, A12; Hobart A. Spalding, “Peru on the Brink,” Monthly Review 43, no. 8 (January 1992): 29–43; Philip Bennet, “Pol Pot in Peru: ‘Shining Path’ to a Dark Future,” The New Republic 192, no. 4 (January 28, 1985): 16–18. 5. Spalding, “Peru on the Brink.” 6. Ibid.; Bennet, “Pol Pot.” 7. Bennet, “Pol Pot,” 17. 8. See Gustavo Gorriti, “The Fox and the Hedgehog: The Long March of Mario Vargas Llosa,” The New Republic 202, no. 7 (February 12, 1990): 20–23. 9. Spalding, “Peru on the Brink”; Guy D. Garcia, “Lurching Toward Anarchy,” Time, March 27, 1989, 54. 10. Spalding, “Peru on the Brink.” 11. Bruce H. Kay, “‘Fujipopulism’ and the Liberal State in Peru, 1990–1995,” Journal of Interamerican Studies and World Affairs 38, no. 4 (Winter 1996): 56. 12. Discussion of the risk-taking behavior of the Peruvian populace in crisis can be found in Kurt Weyland, The Politics of Market Reform in Fragile Democracies: Argentina, Brazil, Peru, and Venezuela (Princeton: Princeton University Press, 2002). 13. See Carlos I. Degregori, “Perú: Crisis del régimen constitucional en un contexto de ajuste neoliberal y violencia política,” in Democracia y reestructuración económica en América Latina, edited by Pilar Gaitán, Ricardo Peñaranda, and Eduardo Pizarro, 208–224 (Bogotá: IEPRI/CEREC, 1996). 14. “Peru Risk: Macroeconomic Risk,” Economist Intelligence Unit—Risk Wire, June 22, 2004. 15. See Raúl Gonzáles, “El Alto Huallaga y Sendero Luminoso,” in Las condiciones de la violencia en Perú y Bolivia, edited by Godofredo Sandoval (La Paz: Ariel, 1990). 16. James Brooke, “The Rebels and the Cause: 12 Years of Peru’s Turmoil,” New York Times, December 19, 1996, A12. 17. Sims, “On the Trail of Peru’s Maoist Rebels.” 18. M. James Faison, “Democracy Derailed? Fujimori’s Legacy in Peru,” Harvard International Review 23, no. 2 (Summer 2001): 9–10. 19. Clifford Krauss, “Human Rights in Peru; How to Save Democracy: Throw Liberty Away,” New York Times, November 12, 1999, section 4, 4. 20. In 1994, Peru attained a world record in economic growth, at 13 percent, and experienced a boom in foreign direct investment. 21. Carol Graham, “Democracy and Economic Reform: Can They Co-Exist in Peru?” Brookings Review 13, no. 1 (Winter 1995): 42–45. 22. Calvin Sims, “Peru’s President Loses Some Luster,” New York Times, May 19, 1996, section 1, 6. 23. Patricia Oliart, “‘A President Like You’: Fujimori’s Popular Appeal,” NACLA Report on the Americas 30, no. 1 (July/August 1996): 19–20. 24. Inter-Press Service, “Peru: Economy Growing but Poverty Reigns in Countryside,” August 6, 1998. 25. Sims, “Peru’s President Loses Some Luster,” 6.

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26. Diana Jean Schemo, “Peru’s Stark Poverty Dulls Fujimori’s Gleam,” New York Times, June 10, 1997, A12. 27. Calvin Sims, “Peru’s Old Problem,” New York Times, April 27, 1997, section 1, 12. 28. Jo-Marie Burt, “Unsettled Accounts: Militarization and Memory in Postwar Peru,” NACLA Report on the Americas 32, no. 2 (September/October 1998): 35–40; Stephanie Boyd, “Peru on the Edge?” Canadian Dimension 31, no. 6 (November/December 1997): 33–34. 29. Boyd, “Peru on the Edge?”; Schemo, “Peru’s Stark Poverty.” 30. Calvin Sims, “15 Years of Fujimori? Peru Faces Its Future,” New York Times, December 8, 1996, section 1, 27. 31. Sims, “15 Years of Fujimori?”; Boyd, “Peru on the Edge?”; Calvin Sims, “Peru’s Congress Is Assailed over Its Removal of Judges,” New York Times, May 31, 1997, section 1, 4; Calvin Sims, “As Peru’s Leader Cracks Down, Opposition Grows,” New York Times, July 21, 1997, A3. 32. Howard LaFranchi, “Cholo Challenger Heats Up the Race in the Peru Election,” Christian Science Monitor, April 5, 2000, 8; Anthony Faiola, “Peruvian Candidate Reflects New Indian Pride; U.S.-Educated Toledo Stresses Native Background,” Washington Post, March 31, 2000, A1; Clifford Krauss, “A Peru ‘Phenomenon’: Rags to Presidential Bid,” New York Times, April 5, 2000, A3; Clifford Krauss, “Peru’s Upstart: ‘Chemistry with the People,’” New York Times, April 14, 2000, A3. 33. James Brooke, “Peru’s President Calls an Election and Will Not Run,” New York Times, September 17, 2000, section 1, 1. 34. See Andean Commission of Jurists, Informe anual sobre Democracia en los países de la Región Andina (Lima: Andean Commission of Jurists, 2001). 35. “Un Perú degradado económica y moralmente recibe Paniagua,” La Razón (La Paz), November 22, 2000, E-2, E-3. 36. See Andean Commission of Jurists, Perú 2000: Un triunfo sin democracia (Lima: Andean Commission of Jurists, 2000). 37. Faison, “Democracy Derailed?” 10. 38. Martin Pickering (United Press International), “Analysis: From García to García?” August 1, 2002. 39. “Peru’s President Warns of Dangers to Democracy in Latin America,” AP Worldstream, September 16, 2002. 40. Vanessa Baird, “Raising the Dead: The Shocking Report of Peru’s Truth Commission,” New Internationalist, no. 361 (October 2003): 8. 41. Ibid.; “The Shining Path Revisited,” The Economist, September 6, 2003, 34. 42. Juan Forero, “Truth Commission Leaves Many Indians in Peru Unsatisfied,” New York Times, August 31, 2003, section 1, 12. 43. Juan Forero, “Ex-Generals and Others Protest Peru Report on Rebel Conflict,” New York Times, September 8, 2003, A4. 44. Juan Forero, “Peruvians Fight Graft One Case at a Time,” New York Times, April 5, 2004, A6; “Peru: Montesinos Finally Admits Guilt,” LatinNews Daily, April 20, 2004. 45. Forero, “Peruvians Fight Graft,” A6. 46. Clifford Krauss, “In a Campaign Replay, a Peruvian Is Wooing Indians,” New York Times, March 25, 2001, section 1, 12. 47. Abraham Lama (Inter-Press Service), “Politics—Peru: President Toledo’s ‘Honeymoon’ Abruptly Ends,” August 4, 2001. 48. Ibid.; “Peru Risk: Macroeconomic Risk,” Economist Intelligence Unit—Risk Wire, June 22, 2004, http://riskwire.eiu.com.

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49. “Peru Risk.” 50. Ibid.; “Market Alert—Political Impasse in Peru,” Emerging Markets Daily News, May 19, 2004; “The Fall and Fall of Toledo,” Latin American Weekly Report, November 25, 2003. 51. “Se adjudican generadoras,” El Comercio (Lima), June 15, 2002. 52. Russell Crandall and Akilah Jenga, “New Complications in the Andes,” 2003–2004 Strategic Survey (London: International Institute for Strategic Studies, 2004), 84–99; Craig Mero, “Peru’s Toledo Completes First Year,” AP Worldstream, July 25, 2002; Juan Forero, “Peruvians Riot over Planned Sale of 2 Regional Power Plants,” New York Times, June 18, 2002, A3. 53. Abraham Lama, “Perú: La rebelión de las regiones,” Tierramérica (Lima), July 7, 2002, www.tierramerica.net. 54. Ibid. 55. “Holy Toledo—Peru’s President Pelted with Garbage,” Agence France Presse, August 15, 2003; “Peruvian Crowd Throws Water Bottles at President Toledo,” AP Worldstream, August 15, 2003. 56. “Peru: Agreement with Teachers Reached After President Alejandro Toledo Responds to Protests with State of Emergency,” Noti-Sur South American Political and Economic Affairs, June 6, 2003. 57. Javier Diez Canseco, “¿Qué reclama el Perú: Más, o menos Estado?” La República (Lima), August 5, 2002, www.larepublica.com.pe. 58. Antero Flores-Araoz, “Crisis de los Partidos Políticos: Caso Perú,” in Crisis de los Partidos Políticos en la Región Andina: Lecciones de la Historia (La Paz: ILDIS/FUNDEMOS/FUNDAPAC, 2001). 59. “Peru Leaders Sign 20-Year Political Pact,” AP Worldstream, July 23, 2002. 60. “Peru: Toledo Faces Tough Challenges to His Leadership,” LatinNews Daily, February 4, 2004. 61. See Cecilia Anicama, Perú 2000: Un triunfo sin democracia (Lima: Andean Commission of Jurists, 2000). 62. Degregori, “Perú: Crisis del régimen constitucional,” 212. 63. “Peru: Political Forces,” Economist Intelligence Unit, June 8, 2004, www.eiu.com. 64. Lama, “Perú: La rebelión de las regiones.” 65. Latin American News Service, “Peru: Bureaucracy Consumes 88% of Local Governments’ Budget,” June 24, 2004. 66. Drew Benson, “Unrest Challenges Peru’s Central Government,” AP Worldstream, May 17, 2004; “Peru: Emergency Pondered as Ilave Simmers On,” Latin American Weekly Report, June 1, 2004. 67. “Peru’s Coca Growers, Miners, Indians Protest Toledo Policies,” Agence France Presse, April 29, 2004; “Peru: Ilave Indians Threaten to Launch Fresh Protests,” LatinNews Daily, June 16, 2004. 68. Crandall and Jenga, “New Complications in the Andes,” 96. 69. Ibid.; “Fourth Prime Minister Appointed in 30 Months,” The Independent (London), December 16, 2003, 13. 70. “Peru: Cabinet Contortions,” Economist Intelligence Unit, February 18, 2004. 71. “Country Watchlist: Peru,” Economist Intelligence Unit, May 10, 2004; Juan Forero, “Peru: Minister Quits in Brothel Scandal,” New York Times, June 9, 2004, A11. 72. Crandall and Jenga, “New Complications in the Andes,” 97; “Peru: Cabinet Contortions”; “S&P Upgrades Peru Sovereign Debt as Public Finances Strengthened,” WMRC Daily Analysis, June 9, 2004.

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73. “Can Toledo Survive?” Andean Group Report–LatinNews, June 8, 2004; “Peru: Congress Increases Votes Required to Remove Toledo,” LatinNews Daily, June 4, 2004. 74. “Peru’s Congress Approves New Tax on Booming Mining Sector,” AP Worldstream, June 3, 2004; “Peru’s Investment Sector Sees Investment Threat,” Wall Street Journal, June 11, 2004, A7; Kate Joynes, “Peruvian Congress Rejects Privatisation of PetroPerú,” World Markets Analysis, May 28, 2004. 75. “Se reinstalan bases anti subversivas,” El Comercio (Lima), March 3, 2002, www.elcomercioperu.com.pe. 76. “Nuevos operativos contra el terrorismo,” El Comercio (Lima), September 30, 2002. 77. Joseph Contreras, “Turning the Clock Back to Chaos?” Newsweek, March 18, 2002, 60. 78. Scott Wilson, “Andean Leaders Under Siege; Popular Discontent Threatens Fragile Democracies,” Washington Post, June 21, 2003, A12; Kate Joynes, “Shining Path Terror Group Gives Peruvian Government 60-Day Deadline to Avoid Armed Struggle Resurgence,” World Markets Reports, April 19, 2004. 79. Joynes, “Shining Path.” 80. Contreras, “Turning the Clock.” 81. Crandall and Jenga, “New Complications in the Andes.” 82. Contreras, “Turning the Clock,” 60. 83. Crandall and Jenga, “New Complications in the Andes.” 84. Tyler Bridges, “Peruvian Region’s Path to Prosperity Littered with Pitfalls,” Houston Chronicle, June 13, 2004, A26. 85. Baird, “Raising the Dead.” 86. “Peru Politics: Former President Fujimori More Popular than Toledo,” Economist Intelligence Unit, May 19, 2004, www.eiu.com. 87. “Ex-Peruvian President Fujimori, Exiled in Japan, Leads Presidential Poll in Peru,” Agence France Presse, April 23, 2004. 88. United Nations, La democracia en América Latina: Hacia una democracia de ciudadanas y ciudadanos (New York: UNDP, 2004). 89. Juan Forero, “Latin America Graft and Poverty Trying Patience with Democracy,” New York Times, June 24, 2004, A1.

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5 Venezuela: Revolutionary Changes Under Chávez Juan Carlos Sainz Borgo and Guadalupe Paz

Since the 1998 election of President Hugo Chávez, Venezuela’s political and economic landscape has been transformed. The traditional two-party political system has been replaced by a loose system composed of Chávez supporters—chavistas—and anti-Chávez activists. In the six years since his democratic election, Chávez’s reform plan—the so-called Bolivarian Revolution— has virtually become a constitutional dictatorship, and the gradual erosion of democratic checks and balances has become deeply worrisome. On the economic side, Venezuela continues to be a victim of economic mismanagement and overdependence on oil revenues. Venezuela’s poor—Chávez’s strongest supporters—have not been lifted out of poverty; quite the contrary, yet they continue to view Chávez as their best alternative. Independent of individual views on the merits of Chávez’s political platform and tactics, it is abundantly clear that Venezuela is in a state of deep political, economic, and social crisis, a situation that could well outlive Chávez’s tenure and could, in fact, become his legacy. The profound polarization of Venezuelan society has led to widespread political and social unrest, at times accompanied by violence, bringing to light the fragility of the country’s stability. Indeed, all three pillars of stability that Russell Crandall calls the elusive trinity—democracy, economic stability, and security—are in an increasingly precarious state in Venezuela. In this chapter we examine the origins, evolution, and implications of Chávez’s Bolivarian Revolution, including the failed anti-Chávez coup in April 2002, the opposition’s intermittent general strikes, and the struggle for a recall referendum. The central question today is whether a stable political,

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economic, and social landscape is within reach in Venezuela’s near future. The answer is far from clear, and it is thus of critical importance that Venezuelans come together under one common goal: to prevent the elusive trinity from becoming the impossible trinity.

Venezuelan Democracy in the Pre-Chávez Era Modern Venezuelan democracy took hold following the overthrow of dictator General Marcos Pérez Jiménez (1951–1958). The Pérez Jiménez dictatorship seized power after the trienio, a three-year span between dictatorships in which the political party Democratic Action (Acción Democrática, AD) monopolized power and implemented relatively radical reforms. More cautious about political inclusion and moderation upon returning to democracy, Venezuelan parties paid particular attention to power sharing and stability. Although the type of democracy that developed in Venezuela—derogatorily dubbed by Chávez during the 1998 presidential election as “Democracia Punto Fijista”—was often considered quite desirable compared to the political situations of Venezuela’s neighbors, many Venezuelans were ultimately dissatisfied with it. The name given to this period comes from the Punto Fijo Pact signed in 1958, at the end of the dictatorship, by the leaders of the three main political parties of that time: Rómulo Betancourt of the social democratic party (AD), Rafael Caldera of the Social Christian Party (Partido Socialcristiano Comité de Organización Política Electoral Independiente, COPEI), and Jóvito Villalba of the populist Democratic Republican Union party (Unión Republicana Democrática, URD). The pact was a political stabilization agreement with two main goals. The first was to respect election results and to formulate a basic program for the new government; the second, to exclude the Communist Party, which had close links with Fidel Castro at the beginning of the Cuban revolution. For the first time in Venezuelan history, power was handed over from one civilian government to another, alternating between AD and COPEI. The new constitution, approved in 1961, was based on consensus, and it defined the country’s political structure as well as its social and economic principles. Until the arrival of Hugo Chávez, the 1961 constitution was considered the longest lasting, most respected, and most legitimate charter in the country’s history. The first period of democratic construction took place from 1959 to 1974. Presidents Rómulo Betancourt (1959–1964), Raúl Leoni (1964–1969), and Rafael Caldera (1969–1974) based their democratization efforts on improving education, building public infrastructure, and fighting against guerrilla insurgencies that supported the Cuban communist movement. The change in

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domestic policy was dramatic, even compared to the reputedly efficient Pérez Jiménez dictatorship. The post–World War II hike in oil prices financed the reforms of these early administrations and allowed parties to solidify political and economic power. The apparent stability and progress of Venezuela’s early democratic governments, however, concealed oil-dependent clientelistic structures that facilitated the development of weak institutions. The election of Carlos Andrés Pérez in 1973 constituted an important shift in Venezuela’s political trajectory. During the 1970s, oil prices quadrupled and foreign loans were easily accessible, exacerbating the wastefulness and corruption of the state-dependent, oil-rentist economy. In accordance with the nationalistic and protectionist political rhetoric of the time, President Pérez (1974–1979) nationalized the country’s principal industries, including oil and mining. Although oil revenues quickly increased the public budget, new wealth generated corruption within the administration and the new stateowned enterprises. The Pérez administration ended under the cloud of a congressional investigation that found him guilty of presidential misconduct. Overall, oil industry wealth reached a great percentage of the population, elevating living standards and earning the country the sobriquet “Saudi Venezuela.” Luis Herrera Campíns was elected president in 1978 on an anticorruption platform. His administration (1979–1984), however, was plagued by corruption. Although the country’s gross domestic product (GDP) was one of the highest in the continent and oil wealth allowed for private sector growth and social programs, the idea of a great “Saudi Venezuela” died during the Herrera administration. What replaced it was the notion of a rich country robbed by its politicians, and this perception intensified during the post–oil boom era as Venezuelans faulted corruption for the ensuing fiscal crunch. Perhaps as a result of increased public disenchantment with Venezuela’s political class, a steady decline in voter participation began after the 1978 general election. Between 1958 and 1978 voter participation had consistently exceeded 90 percent, yet by 2000 it had declined to 56 percent.1 Jaime Lusinchi from the social democratic party (AD) was Venezuela’s next president. With the federal and local governments controlled by AD, the Lusinchi administration (1984–1989) reversed previous efforts to liberalize the economy by increasing the state’s control of public administration and the economy. His presidency ended with a serious budgetary crisis and a large current account deficit, forcing the next government to implement draconian economic measures. Carlos Andrés Pérez was elected president a second time in 1988. Not only did Pérez face a difficult economic situation, but he also faced exceedingly high expectations upon assuming office. Although his electoral campaign had been based on the promise of aggressive neoliberal economic and political reforms, his political party support and much of his popular backing

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came from a yearning for the good economic times of his first administration. The 1970s had made it seem that modernization was a smooth, easy process, and Venezuelans were not accustomed to austerity measures and the shortages that followed the boom.

The First Package of Neoliberal Political and Economic Reforms Upon taking office in 1989, President Pérez appointed a group of young technocrats trained in the United States and Europe who were politically inexperienced and had no party affiliations. The first neoliberal reform package was El Gran Viraje, The Great Turnaround, more commonly known as “the package.” Pérez’s reforms constituted the first, and thus far last, coherent attempt to implement neoliberal reforms in order to address the exhaustion of the oilrent model and its consequent economic crisis. Soon after the first economic measures took effect, and their results—such as a sharp spike in gasoline prices—were felt by the general population, Venezuelans took to the streets of Caracas in protest. Hundreds were killed and wounded during these protests, prompting the government to temporarily suspend constitutional guarantees. This 1989 event came to be known as El Caracazo. At this juncture, dissatisfaction with the Pérez administration was deep and widespread. One of the members of his cabinet stated the following: “Not only did Pérez adopt an economic reform program that the population did not expect and did not like and to which his own party was opposed, he also gave prominent roles to individuals well known for their associations with the policies that his administration was trying to dismantle. . . . In fact, after Congress, the cabinet was the most important source of distortions and delays in the execution of the reforms.”2 It was in this context that, in February 1992, a group of elite paratroopers led by Hugo Chávez rose against the government. Although the Chávez movement had important military support in four cities, loyal troops who sought to preserve Venezuelan democracy quickly defeated the conspirators. The military phase of this uprising was a success for the government, but the political fallout was significant. President Pérez approved the broadcasting of an edited recording of a message by Chávez in order to call off remaining insurgents; instead, Defense Minister Fernando Ochoa Antich allowed Chávez to appear live in a nationally broadcast program. Dressed impeccably in uniform and projecting a calm image, Chávez delivered a short speech, first emphasizing the importance of Bolivarian values, then stating: “Unfortunately, for now, the objectives we sought were not achieved in the capital city. That is, we in Caracas could not take control of power. You, there in the interior, did a great job. But it is time now to avoid further bloodshed; it is time to reflect. We will have new situations. The country definitely has to embark on the road to a better destiny.”3 In those brief moments, Chávez’s speech had

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a greater destabilizing effect on Venezuelan democracy than did all the shots fired the previous night. On the same day, Congress called an emergency session to consider temporary suspension of constitutional guarantees. At the beginning of the session, former President Rafael Caldera, in his role as senator for life (a constitutional privilege he had been granted), delivered a message that shocked the entire nation. He condemned the attempt to overthrow the government but said that the rebels’ motivations were strongly justified by the country’s situation. Caldera stated that austerity measures that further impoverished Venezuelans were a sacrifice that no one had the right to impose on the population in the name of democracy and demanded that President Pérez rectify his economic policy. As one of the founding fathers of Venezuelan democracy, Caldera’s statement had a profound political impact. It legitimized the insurgent group and in turn undermined the constitution. The stage was then set for another round of political turmoil: a second coup attempt in November 1992, the prosecution of President Pérez in March 1993, his removal from office the following May, and the electoral victory of President Caldera in the next elections, less than a year later.

Caldera’s Return to the Presidency In March 1993 the Supreme Court agreed to review a petition to try President Carlos Andrés Pérez on embezzlement charges. Two months later, he was impeached and replaced by an interim president, Senator Ramón J. Velásquez. During his short period in office, Velásquez made substantial progress on the reform agenda, having won congressional approval for the completion of the economic and political reform initiatives under way. Among his accomplishments were the introduction of the value-added tax and the creation of the Intergovernmental Fund for Decentralization (Fondo Intergubernamental para la Descentralización, FIDES). Most important, Velásquez helped restore confidence in the country after a traumatic year. The traditional political parties, however, did not recover. Venezuelans blamed AD and COPEI for the economic decline. The belief that Venezuela was an incredibly wealthy country meant that the reality of the 70 to 80 percent poverty rate was explainable only by government mismanagement and uneven distribution of oil revenues.4 The face of the Venezuelan population had also undergone significant changes since democratization. Between 1958 and the end of the 1980s, the population nearly tripled and was increasingly urbanized and better educated. The oil-driven modernization of the Venezuelan populace changed the nature of the country’s civil society in such a way that many were excluded by the rigid, clientelistic structures of the political parties.5

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The presidential election in December 1993 was peaceful and orderly. In this race President Caldera turned away from the discredited COPEI, which he had cofounded, and formed a coalition of small parties representing views across the political spectrum, a coalition derisively dubbed el chiripero—the cockroach nest. Running on an anti–status quo, anticorruption platform, Caldera won a second term in office, exactly twenty years after completing his first presidential term, and defeated the two major parties that had governed Venezuela for the preceding thirty-five years. Caldera’s administration slowed down the political and economic reform process. Ultimately, however, he was unable to replace the exhausted oil-rentist model with a viable economic strategy. By the end of his administration, with the banking system in crisis, oil prices falling sharply, and inflation skyrocketing, the main political parties had become further divided.

Hugo Chávez and the Bolivarian Revolution Some scholars have described Hugo Chávez as “a Cromwellian-style soldier who aims to reconstruct his country on entirely new lines.”6 Others have labeled him a nineteenth-century caudillo.7 Chávez also embodies a mythical soldier who rises above injustices and poverty and confronts a neoliberal ruling class that has consistently betrayed the people. Reality, of course, is much more complex.

Chávez’s Rise to Power The 1961 constitution banned military participation in every aspect of political life, even voting. It asserted that “the armed forces are a non-deliberative and apolitical institution,” an understandable definition considering that Venezuela was subject to military rule during the vast majority of the first six decades of the twentieth century. After the 1970s riots, the government launched a program to integrate the armed forces and civil society. New academic institutions were created within the armed forces, and school curricula were updated and modernized. Simultaneously, left-wing guerrilla leaders began to lay down their arms and integrate into society, finding work at universities and secondary schools. As a result, some of the ideals of the defeated guerrilla leaders slowly infiltrated the military educational institutions, just at the time when Hugo Chávez was emerging as a young, idealistic, and ambitious lieutenant. By 1977, at the age of twenty-three and with only two years of experience as a lieutenant, Chávez formed his own armed group, the Army for the Liberation of the People of Venezuela (Ejército de Liberación del Pueblo de Venezuela, ELPV), which convened to talk about revolution and discuss

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launching a movement from within the army.8 In the early 1980s, Chávez, along with two fellow military officers who taught at the academy, founded the Bolivarian Revolutionary Movement–200 (Movimiento Bolivariano Revolucionario–200, MBR-200), named in honor of the 200th birthday of Andean liberator Simón Bolívar. As described by Richard Gott, an important chapter in Chávez’s epic history was written during that period: “On 17 December 1982, the revolutionary officers swore an oath underneath the great tree at Saman de Guere, near Maracay, repeating the words of the pledge that Simón Bolívar had made in Rome in 1805, when he swore to devote his life to the liberation of Venezuela from the Spanish yoke.”9 At the time, Venezuela’s situation was critical: the country’s democratic institutions were being seriously undermined, and a severe fiscal and economic crisis made the situation worse. The activities of the MBR-200 were carefully monitored by different intelligence units of the armed forces and the political police (Directorate of Intelligence and Prevention Services; Dirección de los Servicios de Inteligencia y Prevención, DISIP). Although reports on Chávez’s involvement in the MBR-200 were regularly sent to the authorities, he and his fellow officers continued receiving promotions within the army. Surprisingly, at the end of the Lusinchi administration in 1988, Chávez was assigned to the presidential palace as an aide to the National Security Council. The Caracazo riots took everyone by surprise, including the armed forces and members of MBR-200. Although they had discussed the possibility of a popular uprising many times before, the young MBR-200 officers were completely unprepared when it actually happened.10 The Caracazo riots were a spontaneous, disorganized response to the administration’s economic adjustment plan, in which both the opposition and members of Pérez’s own AD party participated. A group of leading democratic figures known as the “Notables” went as far as calling for the president’s resignation. Hundreds of civilians were killed or wounded in a confrontation with inexperienced soldiers and officers dispatched to stop the riots and looting in the streets of Caracas. The army was strongly criticized—from within and without—for its role in the tragedy. At the same time the military earned new respect from the general population for its efforts in restoring peace and order, and Defense Minister Italo del Valle Alliegro gained widespread popularity. After the Caracazo, Chávez was sent to the Army Staff College, and he enrolled at the Simón Bolívar University to obtain a master’s degree in political science. Despite the extraordinarily tense political climate, less than two years after the Caracazo all MBR-200 leaders received promotions enabling them to command combat troops. Chávez and other close associates were posted to Venezuela’s most important combat units, giving MBR-200 and its commanders the capability to lead an organized uprising. The military officers who posed the greatest danger to democracy were assigned to the most powerful combat regiments around the same time. At the very least, it is clear that

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the MBR-200 leadership was very well protected by the highest ranks and by Defense Minister General Fernando Ochoa Antich. And, sure enough, on February 4, 1992, Chávez led the powerful and respected paratrooper unit he commanded in a coup d’état. The uprising failed within hours, but it ultimately earned Chávez a place in Venezuela’s contemporary history. Soon after the failed coup, the defense minister granted amnesty to most of the conspirators who had been arrested. Many were reinstated or retired with a pension on the grounds that it was “for the well-being of the institution.” Chávez, however, remained in custody. Nine months later, on November 27, 1992, a second uprising was launched, this time with fighter jets bombing the presidential palace and other strategic locations. The coup attempt was over within hours. Hundreds of rebel soldiers were arrested while others were granted political asylum by Peruvian president Alberto Fujimori. Their plan to rescue Chávez from jail failed, and a prerecorded videotape in which Chávez called for a general uprising was broadcast to no avail. The general population never supported an uprising and ignored his plea to stay away from the polls as a protest measure during the subsequent regional elections. Chávez would have to wait until the following presidential elections to become an active political player. President Caldera ordered Chávez’s release from prison in 1994. The Bolivarian movement entered a new stage in which the goal was to win the presidency through democratic elections—as journalist Serge Kovaleski stated, “relying on ballots rather than bullets.”11 The MBR-200 adopted a new, nonrevolutionary name: the Fifth Republic Movement (Movimiento Quinta República, MVR). Although rumors abounded that Chávez wished to base his campaign on a revolutionary platform, the MVR’s political message avoided any mention of a revolution. The 1998 presidential campaign was so complex it confounded most observers. The four principal candidates could not have been more different from one another. They were Irene Sáez, a former Miss Universe; Enrique Salas Romer, former governor of the big industrial state of Carabobo; Luis Alfaro Ucero, AD’s traditional leader; and coup leader Hugo Chávez. Just four months before the election, Irene Sáez was leading in the polls, and Hugo Chávez was trailing far behind in last place. Sáez’s only political experience was as mayor of the municipality of Chacao, one of the wealthiest districts in the Caracas area. Sáez’s political support came initially from the Social Christian party and a number of small political groups, mostly concentrated in Caracas. In contrast, Chávez campaigned throughout the country, rapidly gaining support. Chávez offered radical political change, primarily through the promise of a constituent assembly. Chávez’s populist campaign appealed to the poorest of the Venezuelan population, concentrated in the informal economy and excluded from the clientelist union networks of AD and COPEI. Chávez

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identified himself with the common people, blaming the country’s crisis on the corruption and exclusionary methods of oligarchical elites. He promised to raise them out of poverty by improving the distribution of oil profits. His fiery rhetoric articulated the insecurities and anger of the impoverished masses, yet raised concerns of authoritarianism among critics as he proclaimed he would “fry the heads” of AD and COPEI and made declarations that all who opposed a constituent assembly would be imprisoned.12 The other candidates attempted to demonize Chávez and denounced his apparent support for Fidel Castro, but Chávez denied the charges and derided them as dirty campaign tactics. Capitalizing on increasing support at the polls, Chávez began criticizing the process of decentralization and the traditional leaders of Venezuelan democracy who supported it, using the term “Democracia Punto Fijista.” Threatened by Chávez’s rising popularity, the regional party leaders shifted their support from AD’s candidate Luis Alfaro and COPEI’s candidate Irene Sáez to former governor Enrique Salas Romer. Simultaneously, Chávez and various groups launched a media campaign against Salas Romer and his neoliberal stance. In a clear rejection of past leadership by the electorate, Hugo Chávez won a decisive victory with 56.20 percent of the valid votes, with an overall voter turnout of 63.46 percent. Salas Romer, with the support of the majority of the state leaders, obtained 40 percent of the votes. Irene Sáez had a mere 2.82 percent after leading at the start of the campaign with as much as 60 percent support.13 The 1998 election was a watershed event in Venezuelan politics, as traditional electoral patterns, especially the tendency to maintain a political equilibrium between the executive and the Congress, were broken. Chávez’s party obtained a majority in the legislative branch, setting the stage for his Bolivarian Revolution.

A Revolution from Within the Presidential Palace On January 23, 1958, General Marcos Pérez Jiménez fled the country, and, since then, every newly elected national Congress has been inaugurated on January 23 in commemoration of the birth of Venezuelan democracy. The new president is granted power in the following days during a session of both houses of Congress, which is attended by Supreme Court judges, state governors, the diplomatic corps, and many other special guests. In his inaugural ceremony, Chávez refused to receive the presidential sash from his predecessor Rafael Caldera, making a dramatic break with a long-standing tradition. As he took his oath of office, he swore that he would replace the moribund constitution with a proper one for the Venezuelan people. No one could hide their surprise at his unexpected conduct. In the official presidential speech, over two hours long, Chávez spoke about the Bolivarian Revolution for the

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first time and announced that he would call for a referendum to select a constituent assembly and draft a new constitution. The purpose of the Bolivarian Revolution, according to Chávez, was to create a participatory democracy that “gradually eliminates the savage system of income distribution that exists in Venezuela, that progressively eliminates the great difference that exists between a minority that has everything and a huge majority that has virtually nothing but hope.”14 Chávez’s Bolivarian doctrine is based on three pillars: the people, the government, and the armed forces. In almost every speech he explains this trilogy and stresses the virtues of participatory democracy over representative democracy. The doctrine undermines political parties and places greater importance on what the 1999 Bolivarian Constitution calls “electoral groups.” Chávez’s Bolivarian doctrine is in fact a classic authoritarian doctrine: the president controls the government and the armed forces and considers himself the best representative of the people because he is one of them. The 1999 constitution, popularly known as the Bolivarian Constitution, was drafted by a constituent assembly dominated by Chávez supporters. It was published by the thousands and distributed to the public. The little blue book, similar to Mao’s red book or Qadhafi’s green book, is displayed by Chávez in practically every public speech he offers, using it as a symbol of a new regime in Venezuela. Throughout Venezuelan history, constitutions have been used as a means of legitimizing power, and the country has had twentyfive written constitutions, the most of any Latin American country.15 Despite overwhelming approval by referendum on December 15, 1999, voter turnout (46 percent) was the lowest since Venezuela’s first free elections in 1958, and according to news sources, polls showed that fewer than 2 percent of the voters had read the constitution. In essence, this made the referendum a plebiscite on the Chávez administration.16 Several of the new constitution’s provisions were controversial, especially changing the country’s name to the Bolivarian Republic of Venezuela and extending the presidential term from five years to six with the possibility of a one-term succession. The traditional division of power among the executive, legislative, and judicial branches was eliminated. The constitution greatly enhanced presidential powers. The president can freely select and dismiss cabinet members and enjoys complete control over foreign policy. The former constitution required congressional approval of all presidential travel abroad, whereas the new constitution allows the president to travel without congressional approval for all trips not exceeding five days. The president also has wide decree powers. Institutionally, executive domination over the other branches of government poses a central problem. The new constitution dissolved the traditional bicameral system of a Chamber of Deputies and a Senate and replaced it with a unicameral National Assembly. Although the 1999 constitution reaffirms

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Venezuela’s status as a federation, the provinces are financially dependent on the central government, particularly for oil revenue. With a National Assembly that fails to provide proper regional representation to the states and is easier to manipulate than a bicameral system, provincial governments are at the mercy of the executive. The new constitution also called for a renewed judiciary. To this end, the Supreme Court was abolished and replaced with a new Supreme Tribunal of Justice (Tribunal Supremo de Justicia, TSJ), and more than half of the country’s judges were removed by the end of 2000. One particularly troubling element has been the elimination of the requirement of parliamentary approval for high-ranking military promotions, in effect giving the president full control over the armed forces. The military was also given greater authority in terms of maintaining internal order, and the armed forces were granted “active participation in national development.”17 The new constitution, furthermore, eliminated a clause in the 1961 constitution defining the role of the armed forces as apolitical.18 The combination of expanded military powers and complete executive discretion has been a matter of great concern to critics. The 1999 Bolivarian Constitution included some positive provisions, such as updating several legal and administrative procedures regarding human rights, international law, and other important areas, but the end result was a political system lacking the checks and balances that characterize traditional Western democracy. Although the constitution has made democracy in Venezuela more participatory in nature, the structural, implementation, and partisanship problems have “eroded the legitimacy of state institutions, undermined the separation of powers and reduced confidence in the rule of law since Mr. Chávez came to power.”19 Chávez led the executive branch for two years under the new constitution until elections were finally held in July 2000. A landslide reelection granted Chávez another six years in the presidency with the possibility of a second consecutive term. Chávez defeated former army comrade Francisco Arias Cárdenas with 60 percent of the votes against 37.5 percent.20 A majority of the members elected to the new unicameral National Assembly—ninety-two out of 165—belonged to Chávez’s Fifth Republic Movement.21 This election marked the end of the transitional period during which Chávez established the foundation for his Bolivarian regime.

Democracy the Chávez Way Democracy the Chávez way is unique. Although Chávez’s characteristic inflammatory and confrontational language served him well during his electoral campaign in 1998, it has increasingly deepened political polarization and earned him a reputation for “hyperpresidentialism.”22 Making extensive use of television and radio stations, Chávez regularly broadcasts presidential

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speeches that can last for hours, sometimes using offensive language against specific individuals and institutions. But the concerns regarding democracy under Chávez extend far beyond his populist tactics and his use of the media—including clear efforts to limit freedom of the press—to dominate political discourse. In Chávez’s model of participatory democracy, every decision must be discussed before a citizen assembly. The constitution states that individuals may participate in the political process through the citizen assembly, whose resolutions are incorporated into the administration’s decisionmaking process. The opposition does not easily find a voice in this process of participation, however. In fact, Chávez has made very clear his intention to remove all opposition forces from the political arena in Venezuela, arguing that institutions, organizations, and individuals in positions of leadership who do not support the revolution are part of the corrupt system that the revolution seeks to replace. One notorious example was Chávez’s decision to hold a December 2000 referendum aimed at purging Venezuela’s labor union leaders on the grounds that they allegedly belonged to the old oligarchy. Some 200 union leaders were voted to be replaced with a single workers’ federation to be called the Bolivarian Labor Force. The referendum’s legality was immediately questioned by the umbrella Venezuelan Workers’ Confederation (Confederación de Trabajadores de Venezuela, CTV), the International Labour Organization (ILO), and other institutions around the world.23 Bolivarian labor unions professed to be the true representatives of the Venezuelan workers’ interests but never obtained general public support. Another example of democracy the Chávez way was the creation of community networks called Bolivarian Circles. These circles function as organized lobbying groups to seek financial support from the government for community projects and to promote cultural and sports activities. Some Bolivarian Circles have essentially evolved into paramilitary forces that harass opposition parties, other opposition political organizations, and the independent media. As an observer stated, “To a Venezuelan elite that has fallen precipitously from its place of political privilege since Chávez’s election . . . the circles smack of Cuban-style revolutionary defense committees, designed to ensure fealty to the president’s populist agenda.”24 In a press release dated December 12, 2002, the Inter-American Commission on Human Rights (IACHR) expressed strong concern about the erosion of the rule of law in Venezuela, stating: [This erosion] has seriously compromised the effective exercise of human rights . . . [and is] marked by violence, intolerance, and general lack of faith in government institutions. The Commission is concerned over the appearance of armed civilian groups engaging in political violence and the fact that

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they act with impunity. Some of these groups even appear to receive protection from certain authorities. The violence has escalated with the continuing activities of vigilante groups—in what appear to be social cleansing operations in several states of the interior.25

With regard to increasing attacks on the media and journalists, the IACHR stated the following: “Reported incidents include the murder of a journalist; physical assaults, including wounding by firearm; threats; and the seizure, looting, and destruction of media facilities. . . . The Commission notes that this situation not only intimidates reporters, who are afraid to identify themselves as journalists for fear of reprisal, but also compromises Venezuelan society’s right to information.”26 This situation has brought the tension between chavistas and the rest of the population to dangerously high levels. According to a 2003 national poll, Chávez’s popularity had fallen from 90 percent at the start of his presidential term to just over 30 percent.27 The middle class, who initially supported Chávez, became increasingly disenchanted with his administration, as was evident by the numerous public protests. Even more serious for the longer term has been the erosion of Venezuela’s main political parties, which has left the opposition without effective institutional means to participate in the political process. Organizations such as the Roman Catholic Church in Venezuela, the Venezuelan Federation of Chambers and Associations of Commerce and Production (Federación de Cámaras y Asociaciones de Comercio y Producción de Venezuela, FEDECAMARAS), and the CTV abandoned their previous neutrality in order to fill the vacuum left by AD and COPEI and contest Chávez’s policies.28

Economic Reform and Decline Under Chávez Chávez’s economic policies were at first incoherent and lacked any concrete plan. Initially, low oil prices impelled Chávez to implement surprisingly orthodox economic measures, such as adopting an austerity program and reinstituting a value-added tax that Caldera had eliminated in 1994, arguing it was socially regressive. Yet at the same time, true to his criticism of neoliberal economic reforms, Chávez reversed some of Caldera’s market-oriented policies, including the partial privatization of the country’s pension system.29 Although he criticized Caldera for emergency aid programs that failed to provide the foundations for self-sustainability, once the price of oil began to rise Chávez promptly ended austerity measures and spent the majority of added revenues on short-term stimulus measures instead of long-term investment.30 Deinstitutionalization has contributed to the inefficient allocation of funds because of the extent to which projects depend on the personal attention of the president.31 In favoring loyal military friends above experts, Chávez’s

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use of unqualified public servants has often led to inefficient or unfeasible projects. As stated by Kurt Weyland, Like other personalistic leaders, Chávez has preferred loyalists over experienced, well-trained experts when making government appointments. He has filled many top posts with trusted confidants—often military friends who have limited experience in public service. . . . By systematically placing loyalty ahead of competence and “revolutionary” fervor ahead of experience, the president has further weakened the state’s limited technical expertise and bureaucratic organization. . . . The Venezuelan state has entered an advanced stage of decomposition.32

An important case in point is the state-run oil company, Petroleum of Venezuela (Petróleos de Venezuela, PDVSA). Over the years, PDVSA had earned a reputation as “one of the most efficient state-run oil companies in the world, with operating costs competitive with those of publicly traded major international firms.”33 When Chávez assumed the presidency, he named a new board of directors, and nearly 300 PDVSA professionals left the company on early retirement. Three PDVSA boards followed in as many years, and Chávez broke with the tradition of selecting directors based on merit, sparking protests within the company.34 A major strike organized by PDVSA workers in December 2002, which lasted two months, resulted in the loss of nearly half the company’s workers. According to Luis Vielma, former managing director of production at PDVSA, of the strike participants who were fired 70 percent were executives, 55 percent were highly skilled professional and technical personnel, and 22 percent were other employees.35 Since the strike ended, PDVSA has struggled to return to normal levels of production, exports, and refining operations. According to official PDVSA figures, by the start of 2004 oil production had been restored to 3.3 million barrels per day and exports of crude oil had jumped back to normal levels.36 The figures are controversial, however— opposition leaders contend that production at the end of 2003 was only about 2.6 million barrels per day.37 Although some argue that PDVSA’s loss of 18,000 workers since Chávez came to power will enhance productivity and efficiency (it was long argued that PDVSA was overstaffed at the middle-management level and excessively bureaucratic), inadequate staffing and excessive use of oil revenues for direct financial support of local communities—at the expense of much needed investment—could prove damaging in the long run. It is likely that more outside capital will be needed to meet production demand, yet the current political and economic uncertainty under Chávez only increases foreign investment risk. Venezuela’s macroeconomic performance declined in the first years of the Chávez administration. GDP dropped by 20 percent in the 1998–2003

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period. Real per capita income declined 27 percent, unemployment rose from 14 to 18 percent, inflation increased to over 30 percent, and over one million people sank from poverty to extreme poverty by the close of 2003.38 The economy contracted by 8.9 percent in 2002 and 9.2 percent in 2003, but recovery began toward the end of 2003 and in the first three months of 2004 GDP expanded by 29.8 percent from the first quarter of the year.39 High inflation nonetheless continued despite draconian foreign exchange controls imposed in January 2003. The imposed currency controls were an effort by Chávez to tighten his grip on economic policy after the strike of late 2002 and early 2003. But the measure struck a blow to investor confidence, as companies such as the National Telephone Company of Venezuela (Compañía Anónima Nacional de Teléfonos de Venezuela, CANTV), the biggest telecommunications company in the country, were forced to pay all dividends in local currency.40 The Financial Times/London Stock Exchange (FTSE) Group dropped Venezuela from its All-World Index as a result of the currency controls. As the cochairman of the FTSE Americas Regional Committee, Peter Leahy, stated, “These exchange controls make Venezuela effectively uninvestible.”41 According to the Economist Intelligence Unit, Venezuela scores low on every investment risk factor: • Operational risk is high. • The security environment has deteriorated as the political conflict has deepened. • Political stability is questionable with current lack of trust in politicians and political institutions. • Legal and regulatory risk is high. • Double-digit inflation and volatile growth prospects fuel macroeconomic risk. • Exchange controls imposed in early 2003 are likely to remain in place. • Failure to undertake structural fiscal reform foretells of frequent and ad hoc changes in the tax regime. • The labor market is and will remain unattractive. • Financial markets will be severely distorted. • Mostly adequate physical infrastructure will suffer from poor maintenance and underinvestment.42 Not only is the current economic situation worrisome, but political polarization will surely deepen if the country’s economic performance continues to decline. The Venezuelan economy is projected to grow between 5 and 8 percent in 2004 owing to increased oil revenues, and the government has prom-

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ised employment growth, salary increases, and reactivation of productive capacity.43 Forecasts, however, point toward a drop in oil prices in 2005, at which point the unsustainability of Chávez’s economic program will be more widely felt.44

Foreign Policy Under Chávez From the start of his administration, Chávez made a dramatic break with traditional Venezuelan foreign policy values. From the end of World War II until the arrival of democracy in 1958, dictators generally chose to project an anticommunist image abroad while accepting Venezuela’s minor role in world affairs. After 1958, the country’s leaders relied on oil to establish closer relations with the Third World. Their goal was to overcome the obstacles that arose from being in a region dominated by dictatorships and influenced by a communist regime in Cuba while attempting to consolidate democracy within Venezuela. Once democracy took hold in Venezuela, the country began to promote democratic values in the region. After heated discussions in the Organization of American States (OAS) in the 1960s on the proposed exclusion of Cuba, President Carlos Andrés Pérez participated in the creation of the Latin American Economic System (Sistema Económico Latinoamericano, SELA) in 1975, an association of some thirty Latin American countries formed to promote economic cooperation and development in the region. Through SELA, with its headquarters in Caracas, the Venezuelan government began providing economic and political support to Fidel Castro’s government, particularly during Pérez’s second presidential term. Castro was warmly received when he attended Pérez’s inauguration in 1989 as a special guest. This demonstration of solidarity with Cuba, in which Spanish president Felipe González and U.S. president Jimmy Carter participated, was part of an international effort to further integrate Cuba into the inter-American system. Castro was also invited as a special guest to the Chávez inauguration in 1999, but the relationship Chávez has established with the Cuban government has been drastically different. Chávez has stated repeatedly that Cuba’s political economic model offers an interesting alternative to neoliberalism. During an official visit to Cuba in November 1999, Chávez stated that Venezuela is heading “toward the same sea as the Cuban people . . . a sea of happiness, true social justice and peace.”45 As head of state, Chávez has traveled to Cuba more than ten times in four years and has signed two cooperation agreements meant to help Cuba meet its oil needs on favorable terms in exchange for technical assistance and medical services.46 The United States has long been wary of Chávez’s close ties with Castro, a concern that was exacerbated by the January 2004 announcement that Cuba and Venezuela had formed a strategic alliance against U.S. intervention in Latin America.47

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One of the aims of the Chávez administration has been to diversify Venezuelan trade. Forty-six percent of Venezuela’s exports go to the United States, and 30 percent of total imports come from the U.S. market.48 The business elite favor a strong economic relationship with the United States because PDVSA has significant investments there as well as strategic alliances with North American corporations and because U.S. banks play a vital role as depositaries for Venezuelan private funds and as lenders to investors. But in an effort to reduce Venezuela’s dependence on the U.S. market, Chávez has set forth an aggressive policy to develop new markets, especially with China and other countries in Asia. As a founding member of the Organization of Petroleum Exporting Countries (OPEC), Venezuela has been a player in the global arena for more than forty years. Relations with other OPEC countries had generally been limited to commercial affairs, but Chávez has sought a new international role visà-vis the Middle East. Soon after taking office, he visited the other OPEC member countries in an effort to lift Venezuela’s profile within the organization. During this trip, Chávez called for the Second Summit of OPEC heads of state to be held in Venezuela in September 2000. The summit was an ideal forum for Venezuela to pledge its support for the international price of oil and establish closer relations with fellow OPEC countries. President Chávez was the first leader to break the international embargo against Saddam Hussein’s Iraq and to visit Libya’s Muammar Qaddafi. These actions, in addition to Chávez’s subsequent critical stance on the U.S. wars in Afghanistan and Iraq, have contributed to the deterioration of Venezuelan-U.S. relations. Venezuela’s relations with neighboring Colombia have also declined in recent years. Colombia’s internal guerrilla problem spilled over its borders into Venezuela in the 1990s when dozens of Venezuelan soldiers and farmers were kidnapped and killed by guerrilla groups. The attacks on Venezuelans have decreased since Chávez began to hold public dialogues with Colombian guerrillas, recognizing the belligerents as international actors and simultaneously infuriating the Colombian government. Other measures taken by the Chávez administration have drastically increased tension between the two countries, such as Venezuela’s decision to close its borders to trucks traveling from Colombia, as well as recent evidence that Venezuela has provided aid to the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, FARC). Overall, despite Chávez’s active role in Venezuela’s foreign policy (between 1999 and 2002 he visited fifty-two different countries, spending 214 days traveling, or seven months out of his first forty-eight in office) and despite the fact that he was invited to chair several important international forums, such as the G-77 and the G-15, the country has suffered significant foreign policy setbacks. In the past, Venezuela played an important role in the region, promoting peace and democracy in Central America and beyond and

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supporting regional integration as well as free trade for more than forty years. The Chávez administration has succeeded in distancing Venezuela from many of its neighbors and traditional allies, in effect largely isolating the country within the region.

The Most Agitated Year in Venezuelan History For Venezuela, the year 2002 was one of great controversy and agitation. From the most spectacular popular protest in the country’s recent history to an aborted coup that briefly ousted President Chávez, the events that unfolded in 2002 brought the world’s attention to Venezuela, as well as tragedy and hardship to many of its citizens. With the economy in shambles and poverty rising rapidly, the year started with widespread public discontent. Political tensions increased uncertainty in the economic sectors, resulting in a sharp decrease in non-oil investment and high levels of capital flight.49 Such difficult economic and political conditions fueled opposition to Chávez’s extensive use of decree powers (granted by the National Assembly) to approve dozens of laws to advance his Bolivarian Revolution. One such example is a controversial land reform law (Ley de Tierras), passed in December 2001, calling for the transfer of idle land to landless peasants through the new National Land Institute (Instituto Nacional de Tierras, INTI). In addition to generating conflict with landowners, the goals of reversing the decline in agriculture, diversifying the economy, and repopulating rural areas have been hampered by limited access to credit and technology.50 President Chávez’s National Education Project also met strong opposition. Intended to strengthen national identity and solidarity through the educational system, the law allows the Ministry of Education to oversee the national school system and curriculum, including private schools. Many educators objected, claiming that “education in Venezuela is beginning to be used as an instrument of indoctrination to advance the president’s personal political and ideological project.”51 In protest to Chávez’s numerous decrees, the opposition, led by the CTV and FEDECAMARAS, organized a national strike in the spring of 2002. The general strike underscored President Chávez’s increasing isolation and culminated in an aborted coup attempt after an unauthorized march to the presidential palace erupted in violence and resulted in the deaths of seventeen antiChávez protestors. On the night of April 11, 2002, rumors abounded that a coup was imminent. Around midnight, the supreme command of the armed forces broadcast a message by General Lucas Rincón stating that President Chávez’s resignation had been requested and he had agreed to step down. Although the 1999

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constitution called for the vice president to step in, every member of Chávez’s administration had vanished. On April 12, the president of FEDECAMARAS, Pedro Carmona, immediately closed Congress and the Supreme Court and threw out the Bolivarian Constitution. He ordered break-ins of the houses of Chávez supporters and conducted persecutions that resulted in the deaths of twenty to thirty people.52 Carmona appointed an interim cabinet that excluded labor leaders and appeared to many as representative of an oligarchical elite. The next morning, as the country waited for the new interim cabinet to be sworn in, rising opposition to the measures announced by Carmona led to the decision to call the National Assembly to a special session. Within hours, however, troops loyal to Chávez took the presidential palace, and Diosdado Cabello, Chávez’s vice president, assumed office following constitutional procedures and with the blessing of the National Assembly. Early the next morning, with thousands of supporters cheering, Chávez returned to the presidential palace and resumed his presidency. He addressed the country in a dramatic speech in which he apologized for his behavior, in particular toward the media, and announced a national policy of reconciliation and dialogue, a policy that has never come to fruition. Many questions about the events that took place in April 2002 remain unanswered. The role of the United States was particularly controversial. The chavistas criticize the stance taken by the U.S. government, claiming that: The State Department was fully aware of every detail pertaining to the conspiracy against [Venezuela’s] democratic institutions and constitutional order, and much more. The public statements of high-ranking U.S. government officials, made systematically and without any consideration whatsoever during the months of January, February, and March, and published in every newspaper and broadcast by CNN, were intended to stimulate and to widen the conspiracy.53

In the aftermath of the April 2002 coup, Venezuela remained deeply polarized. The Chávez government failed to take the necessary steps to diffuse the conflict and impose the rule of law, and it continued to promote a political role for active-duty members of the Venezuelan military. It did not take long for Chávez to revert to his hyperpresidentialist practices. During his weekly broadcast, Aló Presidente, he resumed his verbal attacks on the news media, often employing intimidating language. Many local journalists received serious threats, and some were subject to violent physical attacks. Meanwhile, the economy continued to decline, imposing costly consequences on the general population, especially the poor and the middle class. The deteriorating political and economic situation once again inspired the opposition to push for Chávez’s removal. In December 2002, the CTV, FEDECAMARAS, educational workers, and PDVSA managers joined together in calling an indefinite general strike. Television and radio stations

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suspended their normal programming filled with government propaganda to show their support. Popular participation was unprecedented: shopping centers and food franchises closed in support of the strike, cutting commercial activity by 60 percent during the Christmas high shopping season. Millions of demonstrators filled the streets for the duration of the two-month strike. In the first few weeks, government repression was heavy.54 The most difficult challenge for the government was that the strike brought Venezuela’s oil industry to a virtual halt. PDVSA’s managers protested Chávez’s restructuring initiatives within the state-owned enterprise, including the appointment of his political cronies to the board of PDVSA. The company’s tanker fleet was also on strike, effectively blocking the flow of oil and the country’s main source of revenue. As a result, President Chávez ordered the dismissal of 18,000 PDVSA managers, technicians, and workers. As political tensions escalated and threatened to erupt into uncontrolled violence, OAS secretary-general César Gaviria made a plea for international support. On December 16, 2002, the Permanent Council of the OAS approved the resolution: “Support for the Democratic Institutional Structure in Venezuela and the Facilitation Efforts of the OAS Secretary General.”55 The resolution was well-received by the anti-Chávez groups because it recognized the opposition alliance—called the Democratic Coordinator (Coordinadora Democrática, CD)—as a legitimate actor in the political negotiations and urged the government to organize elections and to respect the Inter-American Democratic Charter. But the resolution had no real impact on the strike, and as the economy continued to deteriorate and Chávez’s removal failed to materialize, the strike became increasingly difficult to justify. The general strike finally ended on February 3, 2003, but not before severely crippling the Venezuelan economy. The government and the opposition signed an agreement to renounce the violence and strong rhetoric that had characterized the conflict. Shortly thereafter, however, Chávez ordered the arrest of strike leaders Carlos Fernández, the president of FEDECAMARAS, and Carlos Ortega, the head of CTV, on charges of sedition, treason, and economic destruction. Chávez’s crackdown on the opposition sparked criticism from the international community, in particular from the OAS and the so-called Group of Friends (including Brazil, Chile, Mexico, Portugal, Spain, and the United States) that was recently formed to provide mediation support. When Spain, the United States, and the OAS’s Gaviria (a former president of Colombia) denounced the Venezuelan government’s strong-arm tactics, Chávez warned them not to meddle in Venezuela’s internal affairs. When the Spanish Embassy and the Colombian Consulate in Caracas were subsequently bombed, and the U.S. Consulate received a bomb threat, the Venezuelan government condemned the attacks, but Chávez maintained his firm stance on letting no outside parties interfere with the country’s domestic issues.

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The Struggle for an Electoral Solution Following the failure of the April 2002 coup and the national strikes in late 2002 and early 2003, the opposition attempted a third time to oust President Chávez, this time through the ballot box. The Bolivarian Constitution allowed a recall referendum to be held halfway through Chávez’s term if the requisite 2.4 million voters petitioned for a referendum. The opposition was frustrated, however, by a series of delays as Chávez and his supporters attempted to stall the process. Had the referendum been held after August 19, 2004, and won by the opposition, the vice president would have carried out the remainder of the term instead of holding new elections. To oust Chávez, the opposition needed to garner more than 3.75 million votes, the number of votes with which he was elected in 2000. Disputes between the National Electoral Council (Consejo Nacional Electoral, CNE), which has a three-to-two pro-government majority, and the opposition led to increased polarization, political violence, and institutional crisis.56 In response to the CNE’s early 2004 decision that approximately 1.5 million signatures would need verification due to technical irregularities, the opposition implemented the Guarimba Plan, blocking traffic and burning trash on major streets.57 The damage in Caracas alone during the first week reached $1 million.58 Army units were sent to reinforce the National Guard as police in opposition-controlled areas refused to intervene when armed bands attacked the National Guard.59 Protestors painted the country with the number 350, referring to the final article of the Bolivarian Constitution, which states, “The people of Venezuela . . . will ignore any regimen, legislation, or authority that violates the democratic values, principles or guarantees or undermines human rights,” added to the constitution in part to justify Chávez’s own rebellion in the 1992 coup attempt.60 As the process of gathering and validating signatures continued, the opposition began to fragment as certain sectors became increasingly disloyal. The opposition group Democratic Bloc (Bloque Democrático, BD) criticized the CD leadership in February 2004 and called for mass insurrection to replace Chávez with a civil-military junta.61 Retired General Felipe Rodríguez formed civilian cells, called “Freedom Commandos,” across the nation in preparation for the overthrow of Chávez. AD split with the CD in April, accusing other parties of wanting to destabilize Venezuela in order to provoke a coup.62 Former president Carlos Andrés Pérez, from exile in the Dominican Republic, asserted that “Chávez is power-mad because he controls all three state authorities” and stated, “We are ready to oust Chávez and we are becoming ever more convinced that this should happen by using force.”63 Dispute over petition signatures sparked an institutional crisis within the Venezuelan supreme court. The predominantly anti-Chávez Electoral Chamber of the TSJ ruled on March 15, 2004, against the CNE’s signature rejec-

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tions and ordered the referendum to continue immediately. The Constitutional Chamber, with majority support of the government, overturned the Electoral Chamber’s ruling and disputed its jurisdiction by claiming the referendum was a constitutional, not electoral, matter.64 The CNE charged the Electoral Chamber with favoritism, but the charge was thrown out by the Substantiation Jury of the TSJ, and Judge Iván Rincón labeled the accusation offensive and indicative of disrespect for the entire TSJ.65 National Assembly deputy William Lara referred to the Electoral Chamber’s ruling as a “coup attempt,”66 and Attorney General Marisol Plaza warned that Electoral Chamber magistrates could face dismissal as well as criminal charges if they continued to order the CNE to comply with its ruling.67 As Venezuelan political institutions faced a mounting crisis, pro-Chávez legislators pushed through a law increasing the number of judges in the TSJ from twenty to thirty-two, giving Chávez the opportunity to increase his support in the court. Opposition deputy Julio Borges labeled the law “a coup d’etat against justice, which breaks every rule and ignores the Constitution.”68 Chávez’s certain domination of the Supreme Court, as well as the apparent malleability of government institutions generally, raised concerns about the possibility of a fair referendum. The CNE ruled on June 3, 2004, that the opposition had collected enough signatures and set the referendum date for August 15, only four days before the point at which a successful referendum would result in Vice President José Vicente Rangel assuming the presidency. The CNE stated that it would use controversial touch screen voting machines and digital voter identification technology whose reliability and security were questionable, the opposition argued.69 In the months leading up to the August 2004 referendum, Chávez assumed an increasingly embattled position, making accusations of international conspiracy. Pro-Chávez legislators accused the United States of distributing over $80,000 to seventeen opposition groups in 2003 through the National Endowment for Democracy (NED).70 MVR National Assembly deputy Nicolás Maduro stated, “At this particular stage, Venezuela is struggling to defend its sovereignty against the Bush administration interference with the Venezuelan state, which seeks to end the country’s peaceful and democratic transition process.”71 Chávez, however, pragmatically maintained normal trade relations with the United States. International conspiracy accusations reached their zenith in May 2004 when 132 supposed paramilitaries, seventy-seven of whom were Colombian, were arrested near Caracas.72 Although the government claimed the paramilitaries were attempting a destabilization campaign orchestrated by the Bush administration in collusion with Venezuelan elites, the opposition found the appearance of paramilitaries on an estate 700 kilometers from Colombia and armed with only one 9mm pistol suspicious and accused the Chávez administration of fabricating the crisis.73

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Chávez, meanwhile, threatened the United States with a hundred-year war if it invaded Venezuela.74 The government used the paramilitary captures and threat of international conspiracy to crack down on domestic opposition. Among other incidents, a house belonging to Carlos Andrés Pérez was searched, National Guard colonel Orlando Castro was arrested for providing aid to the paramilitaries, AD deputy Rafael Marín’s house was ransacked in violation of his parliamentary immunity, and officials raided police headquarters in the Caracas suburb of El Hatillo.75 Perhaps most controversially, the president announced a plan to create “people’s militias” in an effort to combat U.S. imperialists whom he claimed planned to invade and take over oil reserves. Chávez said that his “revolutionary” government would begin military training of civilians and that “each and every Venezuelan man and woman must consider themselves a soldier,” though details of the militarization were never made clear.76 Prior to the August 2004 referendum, along with attempting to suppress and discredit the opposition, Chávez pursued rigorous expansion of social programs in an effort to boost his popularity. Since his election in 1998, the plight of the poor has deteriorated, despite his promises to alleviate poverty. Chávez has used increased oil revenues to finance his social programs, with PDVSA directly administering many projects. Chávez also announced a minimum wage increase of 20 percent effective May 1, 2004, and another 10 percent increase effective August 1.77 Vice President Rangel, along with other government supporters, contended that campaigns to combat poverty were beginning to be felt by the poor, who were the most likely to vote for Chávez in a referendum.78 The referendum was held as scheduled on August 15, 2004, and over 600 international observers, primarily from the Carter Center and the OAS, were spread across the country’s polling stations. Marked by extensive delays due to problems with the voter identification system and a historically high turnout of 70 percent (9.8 million of the 14 million registered voters participated in the referendum), the announced results gave Chávez the victory with 59 percent of the vote (the number of anti-Chávez votes did, however, surpass the number of votes Chávez received in the 2000 presidential election).79 Allegations of fraud surfaced immediately after the preliminary results were released, but the Carter Center and the OAS stated on August 16 that their results coincided with those released by the CNE. In an effort to assuage tensions, the Carter Center and the OAS proposed an audit at 150 polling stations selected at random; the audit results, published on August 21, confirmed that “the official results reflect the will of the Venezuelan electorate as expressed on Aug. 15, 2004.”80 Both organizations called for all players to respect the results of the presidential recall referendum, while at the same time urging President Chávez to foster national dialogue and reconciliation with the opposition.81

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Although the CD boycotted the audit and the fraud allegations continued after its results were released, some factions of the opposition alliance, among them FEDECAMARAS, have emphasized the need for reconciliation and their desire to initiate dialogue with the government. It remains unclear what path the opposition will choose to take now that Chávez’s presidential mandate, which extends until 2006, has been reaffirmed.

Conclusion Chávez’s victory in the August 15, 2004, recall referendum can be attributed to a number of factors. Having successfully discredited the traditional political party system, Chávez capitalized on social class divisions to build a constituency composed primarily of the poor and disenfranchised, a strategy that gave him an advantage just by sheer numbers (at least two-thirds of the population is classified as poor).82 Venezuelans who continue to support Chávez are predominantly the poorest of the nation; despite having only become poorer since his election, they view him as the only man capable of redeeming the country and lifting them out of poverty. This class-driven strategy allowed Chávez to benefit from the voter registration campaign that took place prior to the referendum—between November 2003 (when the signature-gathering efforts of the opposition, required for the referendum to take place, began) and July 2004, the number of registered voters grew from 12.3 to 14 million.83 Likewise, the government’s expansion of social programs targeting the poor created a sense of inclusion among the marginalized that engendered increased support for Chávez, although the success of these programs in reducing poverty remains controversial. To be sure, Chávez also benefited greatly from the opposition’s failure to provide a clear plan for a post-Chávez government and to convince voters that an opposition victory would not mean a return to the old system that Chávez has incessantly criticized throughout his tenure. Unable to reach an agreement among its more than thirty groups and political parties, the CD chose to postpone the selection of a presidential candidate until after the referendum, and, lacking charismatic leadership, the opposition failed to effectively convey a policy platform of national unity and reconciliation.84 Although the political environment in Venezuela is likely to remain sharply polarized, Chávez’s referendum victory and the reassurance of reputable international observers that the official results were fair may open the door for dialogue between the government and the opposition. It is clear that both sides will need to adopt a more conciliatory stance in order to attain greater political stability, but the question is whether they are able and willing to do so. Chávez faces divisions within his own political group: those who favor a more radical “revolutionary” course and those who favor a more prag-

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matic course of negotiation and reconciliation. Which group will prevail remains uncertain. Also in question is whether the CD will regroup under a unified voice or disintegrate. The larger questions of institutional erosion in Venezuela and the gradual breakdown of democratic checks and balances are deeply troubling. Chávez’s Bolivarian Revolution has increased executive powers, and Chávez’s goal is to remain in power as long as possible—perhaps even until 2021. The failed coup of April 2002 was a popular response against the methods employed by the Chávez government, yet shortly after resuming the presidency Chávez reverted to the practices that led to the coup in the first place. Although the results of the August 2004 referendum enhanced Chávez’s democratic legitimacy, the electoral process was marred by unnecessary delays and questionable tactics employed by the government. Overall, during the Chávez administration corruption has soared, violence has become more endemic, and the executive has assumed greater control of the economy and the political process. On the economic side, long-term forecasts are gloomy despite recent recovery. Domingo Maza Zavala, a Central Bank director, issued a statement that the upbeat official statistics for 2004 masked the true state of the economy because recent growth could only be considered recovery of lost ground. He argued that the economy has not even recovered to its 2001 level.85 Chávez’s Bolivarian Revolution has done nothing to revolutionize Venezuelan macroeconomic management, as evident in continued dependence on oil revenues to avoid budget deficits and his administration’s use of currency devaluation to decrease the public debt while disregarding high inflation.86 Prior to the August 2004 referendum, Chávez’s economic policy was clearly geared toward boosting his popularity. Windfall oil revenues allowed for a significant increase in social expenditures—just in the first half of 2004 public spending rose by 82 percent in nominal terms (nominal revenue increased by 91 percent during the same period).87 Overall, however, Chávez continues to lack a coherent economic plan, and his use of PDVSA revenues to fund his often haphazard and inefficient social programs threatens to severely damage long-term prospects. Even if oil prices remain high through the remainder of the Chávez administration, continued oil-rentism and economic profligacy will have a devastating impact in the long run. The international community could play an important role in helping Venezuela find a solution to the country’s current political and economic challenges. Although Venezuela’s relations with the United States have deteriorated under Chávez, the August 2004 referendum could prove to be a turning point in the bilateral relationship. The role of U.S. observers in reaffirming Chávez’s mandate gives ground for Chávez to be less critical of the United States while at the same time making it more difficult for the United States to question Chávez’s democratic legitimacy. Just the fact that Venezuela is an

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important supplier of oil to the United States is an incentive for improved relations. Venezuela is in urgent need of a peaceful path toward growth and stability that will further its potential to become a modern country in the twentyfirst century. While the economic and societal issues that led to the downfall of the Punto Fijo system remain to be addressed, and the oil-rentism and weak institutions that led to the remarkable rise of a leader such as Hugo Chávez persist, the Bolivarian Revolution has most certainly left its indelible mark on the Venezuelan political landscape. Alas, the elusive trinity of political stability, economic health, and domestic security has remained ever more elusive under Chávez.

Chronology of Important Recent Events in Venezuela 1989. Carlos Andrés Pérez becomes president for a second term and institutes a harsh austerity program. El Caracazo occurs when hundreds are killed in suppression of protests sparked by the president’s orthodox adjustment measures. 1992. Hugo Chávez Frías leads a February coup attempt and garners popular support despite his defeat. In November, another coup attempt is staged but lacks support. 1993. Carlos Andrés Pérez is impeached and replaced by interim president Ramón J. Velásquez. 1994. Rafael Caldera assumes the presidency for a second term, this time with a coalition of small parties, having abandoned COPEI. 1999. Populist Hugo Chávez, having been pardoned under Caldera, becomes president. A constituent assembly is elected and the Bolivarian Constitution is implemented, allowing for a six-year presidential term and the ability to serve two consecutive terms. 2000. Chávez wins the presidential election under the new constitution. 2002. Chávez’s attempts to exert control over the state-run oil company PDVSA spark strikes and protests, leading to a short coup in April. Chávez is restored to office in forty-eight hours. The opposition attempts to oust Chávez through national strikes. 2003. In February, national strikes end as the economy is crippled and Chávez retains power. 2004. The opposition successfully petitions for a recall referendum, but Chávez stalls the process. Finally, on June 3, the CNE sets the date for the referendum for August 15. Chávez takes on an increasingly hostile relationship with the United States. Amid accusations by the opposition of widespread fraud, Chávez declares victory in the referendum with 59 per-

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cent of the votes. Observers from the Carter Center and the OAS confirm the official results.

Notes 1. National Electoral Council (Consejo Nacional Electoral), Estadísticas Electorales, Cuadros Comparativos, “Población General, Población Electoral, Votos Válidos, Votos Nulos, Participación, Abstención (1958–2000),” www.cne.gov.ve /estadisticas.asp (accessed June 2004). 2. Moisés Naím, as expressed in his book, Paper Tigers and Minotaurs: The Politics of Venezuela’s Economic Reforms (Washington, DC: Carnegie Endowment, 1993), 48–49. 3. Quoted in ibid., 101. 4. Kurt Weyland, “Will Chávez Lose His Luster?” Foreign Affairs 80, no. 6 (November/December 2001): 77; Georgie Anne Geyer, “Poor Rich Venezuela: Miracle in Reverse,” The Washington Quarterly 22, no. 2 (Spring 1999): 114. 5. Jennifer L. McCoy, “Chávez and the End of ‘Partyarchy’ in Venezuela,” Journal of Democracy 10, no. 3 (July 1999): 75. 6. Richard Gott, In the Shadow of the Liberator: Hugo Chávez and the Transformation of Venezuela (London: Verso, 2000), 4. 7. Carlos Blanco, Revolución y desilusión: La Venezuela de Hugo Chávez (Madrid: Libros de la Catarata, 2002). 8. Agustín Blanco Muñoz, Habla El Comandante (Caracas: Universidad Central de Venezuela, 1998). 9. Gott, In the Shadow, 40. 10. Ibid.; Blanco Muñoz, Habla El Comandante. 11. Serge F. Kovaleski, “Former Coup Leader Leads Race for President of Venezuela,” Washington Post, September 20, 1998, A27. 12. Margarita López-Maya and Luis E. Lander, “A Military Populist Takes Venezuela,” NACLA Report on the Americas 32, no. 5 (March/April 1999): 13–14. 13. National Electoral Council, “Elecciones Presidenciales, Cuadro Comparativo, 1958–2000,” www.cne.gov.ve/estadisticas.asp (accessed June 2004). 14. Jennifer L. McCoy and Laura Neuman, “Defining the ‘Bolivarian Revolution’: Hugo Chávez’s Venezuela,” Current History 100, no. 643 (February 2001): 80–85. 15. Miriam Kornblith, “The Politics of Constitution-Making: Constitutions and Democracy in Venezuela,” Journal of Latin American Studies 23, no. 1 (February 1991): 62. 16. Serge F. Kovaleski, “Venezuelan Voters Make President More Powerful,” Washington Post, December 16, 1999, A30. 17. Fred Rosen and Jo-Marie Burt, “Hugo Chavez Venezuela’s Redeemer?” NACLA Report on the Americas 33, no. 6 (May/June 2000): 17. 18. Maxwell A. Cameron, “Venezuela’s Hugo Chávez: Savior or Threat to Democracy?” Latin American Research Review 36, no. 3 (2001): 257. 19. Economist Intelligence Unit, Venezuela Country Profile 2002 (London: Economist Intelligence Unit, 2002), 9. 20. National Electoral Council, “Elecciones 30 de Julio de 2000—Presidente de la República—Total Votos a Nivel Nacional y por Entidad,” www.cne.gov.ve /estadisticas.asp (accessed June 2004).

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21. National Electoral Council, “Elecciones 30 de Julio de 2000—Diputados a la Asamblea Nacional,” www.cne.gov.ve/estadisticas.asp (accessed June 2004). 22. Economist Intelligence Unit, Venezuela Country Profile 2002, 6. 23. Larry Rohter, “Venezuelan Voters Approve Removal of Labor Leaders,” New York Times, December 5, 2000, A14; Andy Webb-Vidal, “Voters Ignore Chávez Drive to Purge Unions,” Financial Times, December 5, 2000, 8. 24. Scott Wilson, “Venezuela’s ‘Bolivarian Circles’ Get a Direct Line to President; Populist Program Only Builds Loyalty to Chávez, Critics Say,” Washington Post, December 4, 2001, A20. 25. Inter-American Commission on Human Rights, “Inter-American Commission on Human Rights Urges OAS Member States to Take Immediate Action to Halt Erosion of Rule of Law in Venezuela” (press release, Inter-American Commission on Human Rights, Organization of American States, Washington, DC, December 12, 2002), www.oas.org (accessed June 2004). 26. Ibid. 27. Datanálisis, “Opinión Pública: Demanda de cambio del Presidente,” national poll, Datanálisis, September 2003, www.datanalisis.com (accessed June 2004). 28. Steve Ellner, “Polarized Politics in Chávez’s Venezuela,” NACLA Report on the Americas 33, no. 6 (May/June 2000): 29–33. 29. Weyland, “Will Chávez Lose His Luster?” 74. 30. Ibid. 31. See Ellner, “Polarized Politics.” 32. Weyland, “Will Chávez Lose His Luster?” 81. 33. Sam Fletcher, “Leader Says Former PDVSA Workers Still Hope to Win Battle,” Oil and Gas Journal, May 19, 2003, 36. 34. Ibid. 35. Ibid. 36. Petróleos de Venezuela, “Petróleo” and “Comercio y Suministro,” in Petróleo y Gas section of official website, www.pdvsa.com (accessed June 2004). 37. Bob Williams, “PDVSA’s Credibility Push Bumps Up Against Lingering Concerns over More Political Unrest,” Oil and Gas Journal, December 22, 2003, 22. 38. “Recall in Venezuela,” Washington Post, June 13, 2004, B6; see also Akilah Jenga and Russell Crandall, “Breakdown of the Bolivarian Revolution: The Deterioration of the Chávez Regime and Its Implications for Venezuelan Democracy” (Berlin: Ibero-Amerikanisches Institut, forthcoming). 39. Claire Innes, “First-Quarter Growth Surges in Venezuela on Back of Buoyant Oil Revenues,” World Markets Analysis, May 19, 2004. 40. Lauren Foster, “Foreign Investors Steer Clear as Gloom Deepens over Venezuela,” Financial Times, May 12, 2003, 19. 41. Ibid. 42. Economist Intelligence Unit, “Venezuela RiskWire: Overview,” Economist Intelligence Unit, riskwire.eiu.com (accessed July 2004). 43. “Venezuela Highlights of Radio Nacional de Venezuela News 2200 GMT 22 Apr 04,” BBC Monitoring International Reports, April 23, 2004. 44. Economist Intelligence Unit, “Venezuela: Country Report,” Economist Intelligence Unit, July 2004. 45. Bart Jones, “Top Church Leader Warns of Authoritarian Rule in Venezuela,” Associated Press Worldstream, International News, November 28, 1999. 46. World Watch—The Americas, “Venezuela, Cuba Drop Barter Agreement,” Wall Street Journal, September 25, 2001, 12.

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47. Russell Crandall and Akilah Jenga, “New Complications in the Andes,” 2003–2004 Strategic Survey (London: International Institute for Strategic Studies, 2004), 84–99. 48. National Statistics Institute, Comercio Exterior, www.ine.gov.ve (accessed June 2004). 49. Economist Intelligence Unit, Venezuela Country Profile 2002, 27. 50. Ibid., 29. 51. Jaime Manzo, president of the Venezuelan Teachers’ Federation, which represents twenty-seven unions with more than 100,000 members, as quoted in Larry Rohter, “Venezuela Leader Broadens Focus on Reshaping Schools,” New York Times, May 7, 2001, A4. 52. Steve Ellner and Fred Rosen, “The Remarkable Fall and Rise of Hugo Chávez,” NACLA Report on the Americas 36, no. 1 (July/August 2002): 10–11. 53. Guillermo García Ponce, El Golpe de Estado del 11 de Abril, 2nd ed. (Caracas: Comando Político de la Revolución, 2002), 12. 54. “When Push Comes to Shove: Once Again, Oil Workers Are Joining a General Strike. Will the Army Follow?” The Economist, December 5, 2002, 37. 55. Organization of American States, “Support for the Democratic Institutional Structure in Venezuela and the Facilitation Efforts of the OAS Secretary General,” Resolution 833 (1348/02) (Washington, DC: Permanent Council, Organization of American States, 2002). 56. “Venezuela: Highlights of Radio Nacional de Venezuela 2200 GMT 23 Feb 04,” BBC Monitoring International Reports, February 24, 2004. 57. “Venezuelan Lawmakers Accuse US of Funding Opposition,” The Oil Daily, February 26, 2004. 58. Steve Ellner, “Chávez Escapes Recall; but the Venezuelan Opposition Escalates Its Tactics,” In These Times, April 12, 2004, 8. 59. Ibid.; Humberto Márquez, “Venezuela: Violence Racks Middle Class Sectors,” Inter-Press Service, March 1, 2004. 60. Márquez, “Venezuela: Violence Racks Middle Class Sectors.” 61. Stephen Temple, “Radical Opposition Proposes Civil-Military Alliance to Overthrow Venezuelan President,” World Markets Analysis, February 27, 2004. 62.“Venezuela: Opposition Splits,” LatinNews Daily, April 20, 2004. 63. ANSA English Media Service, “Venezuela: Former President Threatens Chávez,” May 7, 2004. 64.“Venezuela: Highlights of Radio Nacional de Venezuela 2200 GMT 24 Mar 04,” BBC Monitoring International Reports, March 25, 2004; Brian Ellsworth, “Legal War over Chávez Recall Creates Cultural Divide in Venezuela,” Sun-Sentinel, March 28, 2004. 65. Xinua General News Service, “Venezuelan Supreme Court Dismisses Favoritism Charge,” March 26, 2004. 66. “Venezuela: Highlights of Radio Nacional de Venezuela News 2200 GMT 12 Apr 04,” BBC Monitoring International Reports, April 13, 2004. 67. “Venezuela: Highlights of Radio Nacional de Venezuela News 2200 GMT 13 Apr 04,” BBC Monitoring International Reports, April 14, 2004; “Venezuela: Highlights of Radio Nacional de Venezuela News 2200 GMT 20 Apr 04,” BBCMonitoring International Reports, April 21, 2004. 68. “Venezuelan Lawmakers Pass Controversial Supreme Court Reform,” AFX European Focus, April 30, 2004.

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69. Juan Forero and John Schwartz, “Venezuelan Recall Is in Dispute Even Before the Vote,” New York Times, June 11, 2004, A3. 70. “Venezuelan Lawmakers Accuse US of Funding Opposition.” 71. “Venezuela: Highlights of Radio Nacional de Venezuela News 2200 GMT 23 Feb 04,” BBC Monitoring International Reports, February 24, 2004. 72. Associated Press, “Venezuelan President Says His Greatest Rival Is George W. Bush,” June 12, 2004. 73. Andy Webb-Vidal, “Chávez Rivals Dismiss Capture of ‘Mercenaries,’” Financial Times, May 11, 2004, 9. 74. Carlos Coello (United Press International), “Analysis: A Cow Between Bush and Chávez,” May 17, 2004. 75. “Former Venezuelan President’s House Raided in Probe of ‘Paramilitaries,’” BBC Monitoring International Reports, May 11, 2004; “Venezuelan Police Raid Opposition Deputy’s Home,” BBC Monitoring International Reports, May 11, 2004. 76. Stephen Temple, “Venezuelan Administration’s Militia Plan Comes Under Fire,” World Markets Analysis, May 18, 2004; Johann Starchevich (Agence France Presse), “Chávez to Set up ‘People’s Militia’ as Opponents Push for Recall,” May 17, 2004. 77. “Venezuela: Chávez Ups Minimum Wage by 20 Per Cent with 10 Per Cent More Later,” BBC Monitoring International Reports, May 1, 2004. 78. Carol J. Williams, “Venezuela’s President Stymieing Recall Attempt,” Los Angeles Times, April 25, 2004, A19. 79. “Venezuela Country Report,” Economist Intelligence Unit, September 2004, 13–15, www.eiu.com. 80. Carter Center, “Executive Summary of Comprehensive Report, 2004 Venezuela Elections,” Atlanta, Georgia, September 30, 2004, 3. 81. For more information on the Carter Center and OAS findings on the Venezuela presidential recall referendum, see ibid. and OAS Permanent Council, “Resultados del Referéndum Revocatorio Presidencial Celebrado en Venezuela el 15 de Agosto de 2004,” Resolution 869 (1436/04) (Washington, DC: Permanent Council, Organization of American States, 2004). 82. “Venezuela Country Report,” September 2004, 13. 83. Ibid., 14. 84. Ibid. 85. “Economy Recovering, but Storing Up Problems,” Andean Group Report– LatinNews, May 4, 2004. 86. Innes, “First-Quarter Growth Surges.” 87. “Venezuela Country Report,” September 2004, 19.

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6 Ecuador: Democracy and Economy in Crisis Fredy Rivera Vélez and Franklin Ramírez Gallegos

If up to the early 1990s Ecuador had enjoyed an image of being an “island of peace” amid the sea of turmoil engulfing its neighbors Peru and Colombia, that image has been shattered in the first years of the new century. The intense problems of democratic fragility, social exclusion, and citizen insecurity have undermined the capacities of state agencies to respond. Contributing to the tension is the emergence of a new national security agenda based on Ecuador’s involvement in the U.S.-led regional security strategy to fight drug trafficking and terrorism. Ecuador’s new reality is complex. The fragility of public institutions is clear; there is little consensus or coordination among the main political actors to move the political agenda forward. The democratic order that has been in place since 1979 is in a precarious state. Furthermore, the programs of structural adjustment and export promotion in place since the early 1980s have not overcome economic stagnation. To the contrary, their social cost in terms of mounting social inequality, persistent poverty, and structural unemployment has been high. In sum, Ecuador faces a difficult reality in the early twentyfirst century, one that clearly illustrates the concept of the elusive trinity proposed in this book’s introduction. Ecuador’s complex dynamic of political instability and socioeconomic crisis has been accompanied by strong political conflict between a reformist group and an antireform coalition. The reformers are composed of right-ofcenter parties, chambers of commerce and industry leaders, and technocrats, all followers of the so-called Washington Consensus during the 1990s that promoted largely free-market oriented economic strategies. The antireformist coalition is led by the indigenous movement and is supported by public121

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sector trade unions, civil organizations, and leftist parties. This recent political juncture can be characterized as a long period of transition in which power has not been exercised on the basis of the active consent and articulation of solid alliances around a given program. Thus, one of the urgent challenges of Ecuadorian political leaders is to produce a basic platform based on consensusbuilding and democratic coalitions that would allow the country to emerge from the conflicts of an entire decade, so that public institutions can function effectively. The rise to power of Lucio Gutiérrez in 2003 in an alliance with Pachakutik, the political organization formed around the indigenous movement, had the possibility of being a watershed event. In his first three months in government, and contrary to expectations, President Gutiérrez implemented the same reformist agenda he had criticized during his political campaign, causing the breakdown of his governing coalition. In the face of intense political polarization, shoring up the economic model of dollarization, put in place in 2000, and the national and regional security agenda poses huge challenges to social stability, the prospects for integration into the regional economic agenda, and the very future of the government alliance. In this chapter we explore the complex political dynamics that have perpetuated Ecuador’s socioeconomic crisis, the fragility of the country’s public institutions, and the uncertainty in taking on a new security agenda in the region. The political management of the neoliberal reform agenda implemented during the 1990s is the main context in which these processes have emerged.

Historical Background To understand Ecuador’s political-economic dynamics since the mid-1990s, we must briefly review the characteristics of the model of state developmentalism. This paradigm centers on governmental policies that make the state the chief promoter of economic and social development. In Ecuador, as in other parts of Latin America, the model was implemented in the 1960s and 1970s, and it later declined under the democratic transition and the debt crisis of the early 1980s.

The Rise of Ecuadorian Developmentalism In the 1960s, a new economic model emerged that, for the first time in Ecuador’s history, offered an alternative to the traditional land-based, agricultural export economy, in addition to partially dismantling the power bases of the highlands and the coast. Two elements presaged this transformation. First, from 1948 to 1952, the Liberal government of Galo Plaza took the initial steps

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of Ecuadorian economic development with the design of a modern state, aimed at more social integration and national planning. And second, the appearance of a new political movement known as velasquismo meant the end of the status quo in which the elites of the highlands and the coast had concentrated power. Velasquismo, a populist movement that lasted from the 1930s until the early 1970s, was headed by José María Velasco Ibarra, five-time president of Ecuador. The movement was characterized by his relationship with a growing number of formerly excluded social actors (especially in urban sectors) and by his changing relationships with liberals, conservatives, and socialists.1 Velasquismo also started the integration into political society of what some have called the “urban sub-proletariat”2 or, more simply, “a politics of the masses.”3 The new economic model was based on state development programs that intervened in strategic sectors of the national economy. The model aimed to change the power structure of the highland landowning elites through land reform and to offset their influence and that of the agro-exporting oligarchy of the coast through industrialization policies that sought to generate a modern middle class. Industrialization was seen as a means for improving Ecuador’s relative position in international markets, and the strategy of import-substitution via industrialization gradually gave way to an implicit consensus for social modernization shared by businessmen, workers, and politicians, and “strictly speaking, it came to constitute the first state policy in [Ecuador’s] independent history.”4 These transformations were led by the business sector, new professionals, and intellectuals. They fostered the introduction of technical expertise in the management of government programs and of stronger public planning instruments. The nationalist line of the reformist contingent of the military later added support for the new model. The military governments of 1963–1966 and 1972–1976 placed major emphasis on social reform and on policies designed to achieve nationwide industrialization. Accordingly, even though the reformist policies did not spread economic wealth to all levels of society (thus sowing the seeds of social exclusion), a capitalist development model with direct state participation was consolidated in the mid-1960s.5 The trends toward socioeconomic modernization were not accompanied by corresponding political changes. Although the state gradually replaced the oligarchical mechanisms of political management, the democratization process was weakened because the executive branch continued to bolster its authoritarian ties with society, and the traditional power groups maintained enough maneuvering room to control the process of modernization. Thus the 1960s ushered in a long period of political instability, marked by a series of acting presidents named by assemblies of notables, a series of military coups in 1963, 1970 (Velasco’s autogolpe or self-coup), and 1972; and a return to democracy in 1979.

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Oil, Dictatorship, and Developmentalism In the 1970s, encouraged by the oil boom, the military reformists who sought to deepen the statist developmental model prevailed. The search for greater state autonomy from the traditional elites and more open demands of excluded social groups could be seen with the resumption of land reform policies and the expansion of social policies.6 Oil provoked an important change in the structural relations of state and society. The economic surplus produced by oil exports financed increased government expenditures, up 12 percent annually, and more public investment, which saw 8.4 percent annual growth. The state-owned enterprises grew significantly, as did the public sector as a whole. The government’s share of domestic product climbed from 9.5 percent in 1965 to 22.5 percent in 1980. Similarly, public-sector employment as a percentage of total employment grew from 2.8 percent in 1965 to 8.1 percent in 1980. Moreover, the state’s appropriation of approximately 80 percent of export revenues made it a preponderant economic actor.7 The patterns of economic growth were enhanced through incentives and subsidies to strategic industries, abundant and cheap credit to the private sector, protection from foreign competition, and a controlled exchange rate. The traditional agricultural exporters and landowners, affected by those reforms, generated strong opposition to the regime. They not only succeeded in limiting the scope of the reforms but also gained access to decisionmakers in order to reorient the reform agenda. As a result, the military government’s development strategy failed in truly transforming the economy and society. Although by 1974 Ecuador’s industrial sector had expanded significantly and gross domestic product (GDP) had grown at more than 7 percent, this economic growth did not benefit all sectors and generated a compelling protectionist logic. As concluded by Catherine Conaghan, the industrialization process not only failed in integrating the excluded sectors but also sponsored the growth of an industrial sector that had low productivity but was extremely expensive in terms of absorbing foreign exchange.8 Despite the expansion of the public education and health systems, Ecuador continued to be one of the most unequal countries in Latin America. So the “nationalist and revolutionary” military government in place from 1972 to 1976 fell short in terms of building a more inclusionary model of modernization.

The Democratic Transition With a new military government in place in 1976, Ecuador embarked on a period of democratic transition amid marked differences on how to manage the process. The elites and traditional political parties pressured for a businessoriented formula, whereas the military triumvirate proposed appointing repre-

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sentatives from the various political parties and from the main social and business organizations to draw up a new constitution and rewrite electoral procedures and political party laws. The government formula prevailed, but at the cost of alienating the country’s corporate elites from the new democratic regime.9 The new constitution was ratified in 1979. It sought to strengthen the presidential system, it centralized public policy planning, and it endorsed a model of development focused on state intervention in strategic areas such as oil, telecommunications, and public services. Important new political rights were established, including affording the (mostly indigenous) illiterate the right to vote, as well as the right to new services such as education, health, and housing. The 1979 constitution also called for important political reforms. It dissolved the senate and, in an effort to establish a more inclusive method of representation, a system of national deputies was introduced. The granting of constitutional review powers to the new legislature was a novel development. The Congress now also had greater powers to amend executive proposals, and its principal functions included control, oversight, legislation, and constitutional interpretation.10 Under the new constitution, the party system was strengthened and modernized. It included a law requiring political parties to define an ideology, a program, and a national organizational structure and to have a minimum number of members representing at least 5 percent of the votes cast. This allowed the political parties to assume a leading role in politics, and the political system came to revolve around them.

The Decline of Developmentalism The slate of Jaime Roldós and Oswaldo Hurtado triumphed in the 1979 elections and ushered in a new democratic period. The new leaders continued to pursue the developmentalist agenda, but they emphasized rural and urbanmarginal grassroots organizing, encouraged communal property, and expanded participation in public decisionmaking. The political opposition from the right and more conservative factions of the president’s party in Congress, however, blocked the new government’s agenda. This began a pattern of persistent clashes between the main branches of government. Roldós died in 1981 in an airplane crash, the facts of which have not been clarified to this day. Hurtado then assumed the presidency, just as the oil boom ended and the foreign debt crisis began. Accordingly, the new president reoriented his agenda toward a stabilization program aimed at cutting public spending, controlling inflation, and improving the balance of payments. This government turnabout exacerbated the opposition by the business associations and the right-wing parties and even set in motion mobilizing efforts among the poor. The regime’s legitimacy nose-dived.

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The government sought to adopt policies to redistribute wealth, but the business associations prevailed in obtaining a series of measures favorable to their interests, such as the “sucretization” of the private external debt, whereby private debtors were allowed to pay in domestic currency—sucres at the time—their outstanding obligations originally acquired in dollars in international lending institutions.11 This and the other measures adopted by the government did not alleviate the sharp conflict between the economic groups, the social groups, and the executive, and Hurtado’s term ended with a major social and economic crisis. It became clear that the developmentalist project, begun three decades earlier, had run its course.

Instability and Vulnerability of the New Model Like many of its Latin American neighbors, Ecuador struggled during the 1980s with a host of economic and social problems. During this time, a variety of political and economic experiments was attempted in Ecuador. Both left- and right-wing parties and presidents promised political reform and a return to economic growth, but few delivered. In sum, when taking stock of the 1980s, one finds poor results in terms of economic growth and a very high degree of vulnerability vis-à-vis the international economy. Growth of GDP remained close to 3 percent, lower than the population growth rate, so per capita income in 1994, measured in constant dollars, was less than it had been in 1981.12 Domestic investment continued to be limited, and foreign investment was practically stagnant: in the period from 1983 to 1992, the rates of investment—evaluated in 1975 sucres—averaged 14.8 percent of GDP, significantly lower than the 21.5 percent average for the period from 1965 to 1982, whereas foreign investment was almost always less than 1 percent of GDP. Moreover, although the volume of exports increased, export revenues declined owing to deteriorating prices in the world market—especially for cacao, coffee, and oil. It is estimated that the terms of trade fell 36 percent from 1980 to 1993.13 Even though in the 1970s there were gains in economic development, real wages, and quality and expansion of state services, trends in these areas in the 1980s were regressive. The devaluation of the currency and persistent inflation had devastating impacts on personal income as poverty increased in the course of the decade, and people saw expectations for better days dashed.

Adjustment, Social Conflict, and Democratic Fragility in the 1990s The 1990s were marked by the continuation of structural reforms in a context of social conflict and fragile democratic institutions. Only one of the administrations elected completed its term. The rest were removed or driven out by

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various circumstances. In addition, major cases of corruption were uncovered. This political instability represented an attack on the viability of the reformist agenda, for as the decade drew to a close there was a clear increase in social inequality, poverty, and exclusion in the Ecuadorian population.14 Sixto Durán Ballén triumphed in the 1992 elections over his Social Christian opponent Jaime Nebot. Durán created—just for the elections—the Party of Republican Unity (Partido de Unidad Republicana), made up of right-wing groups from the highlands and some Social Christian Party (Partido Social Cristiano, PSC) dissidents from the coast. His ideological orientation was represented by the vice president, Alberto Dahik, a prestigious neoliberal economist. Once again, the vote had a clear regional component. Durán triumphed in the highlands and his adversary won on the coast; the right was divided along regional lines, despite the government’s attempt to neutralize this difference by incorporating Dahik. The effect was counterproductive because the PSC saw in Dahik a potential competitor and not a bridge to the government. The country’s political-regional divide was so profound that it cut across program and ideological affinities. Durán quickly adopted a package of economic measures that included a 35 percent devaluation of the real exchange rate, the gradual reduction of bank reserve requirements, a hike in energy prices, a price increase for oil derivatives (especially gasoline), austerity in public spending, and the establishment of a special 2 percent tax on business assets.15 This agenda was part of the letter of intent negotiated with the International Monetary Fund (IMF) to pave the way for the renegotiation of Ecuador’s external debt, which came to nearly $13 billion.16 During the first six months of his term, Durán proposed Ecuador’s withdrawal from the Organization of Petroleum Exporting Countries (OPEC), liberalized the sale of foreign exchange brought in by exporters, and submitted to the legislature the Law on Modernization, which was to give impetus to the process of privatizing state enterprises.17 The government thus made explicit its objectives to place the country on the path of neoliberal modernization, but with those measures it limited its room for political maneuver and dealt a blow to its social legitimacy. Despite its ideological affinity with the strong parties in Congress, the administration was never able to organize a solid majority. The parliamentary conflicts with the PSC began to undermine the entire political system.18 The social response came more quickly. The Confederation of Indigenous Nationalities of Ecuador (Confederación de Nacionalidades Indígenas del Ecuador, CONAIE) and the trade unions called a national strike that led to an intense wave of mobilizations. CONAIE articulated the protest against the administration with a campaign commemorating 500 years of indigenous and popular resistance to oppression and colonization, arguing that “the struggle by indigenous communities will not stop because colonization has not ended.”19 The power of the indigenous movement had shifted the political landscape. In the face of a weakened trade union movement, CONAIE appeared

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to be strong and had its own political project. “Henceforth it was to bear the responsibility of advocating, stating its opinions, and positioning itself, and at times even taking on conflicts that had not been generated or set in motion by its own dynamics,” Luis Macas, president of CONAIE, stated.20 The main points of contention with the government were over guaranteeing and expanding social security (especially for the peasantry), rejecting the privatizations, and opposing the increased costs of basic resources, such as natural gas, gasoline, and electricity. In this process CONAIE found firmer and closer allies with public-sector unions, leftist parties, environmentalists, urban movements, and Christian associations, and it built a political axis that would challenge the application of the neoliberal model. The sharpest confrontation with the government came in 1994 over a regressive agrarian law that would end the reform process begun in the mid1970s. During a large-scale mobilization in the Ecuadorian highlands, nine provinces were completely paralyzed and 40,000 indigenous people demonstrated in Riobamba, the provincial capital. The protests forced the president to embark on a process of negotiations, with the Catholic Church acting as mediator. By then, the indigenous movement played a key role in the process, and no political actor could avoid addressing its agenda to some degree. Despite the protests, the first results of the government’s economic policies were positive. Up until 1994, inflation was reduced to 25.4 percent, the fiscal balance had a surplus of 1.2 percent of GDP, and Ecuador attained a strong external position, as the foreign exchange reserves were in excess of $1.7 billion. Even economic growth appeared to recover.21 Nevertheless, by the mid-1990s, Ecuador remained mired in a protracted economic slump, suggesting the country’s economic problems had become systemic. The next ten years have largely reinforced this notion.

Democratic Illegitimacy, Presidential Overthrows, and Dollarization From 1997 to 2000, five administrations followed in quick succession, including one indigenous-military junta. Two presidents were overthrown and fled the country to avoid trials on corruption charges. In the wake of the political turmoil came Ecuador’s deepest socioeconomic crisis in fifty years. Its denouement was a hasty change in the economic model based on dollarization of the economy, with uneven and highly criticized results.

The First Presidential Overthrow In 1996, Abdalá Bucaram, a populist leader from Guayaquil, was elected president. He won with a combination of specific political alliances, networks in

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his party (the Ecuadorian Roldosist Party [Partido Roldosista Ecuatoriano, PRE]), his charisma, and his ability to polarize the electorate with a campaign based on pitting the “oligarchs of always” against “the poor masses.” Those elections were the first in which the New Country Pachakutik Movement of Plurinational Unity (Movimiento de Unidad Plurinacional Pachakutik Nuevo País, MUPP) participated, a political movement that came to provide electoral representation for the indigenous movement and all other social sectors associated with resistance to the neoliberal reforms.22 The coming to power of the Roldosistas (PRE) was received with great uncertainty by political and economic actors inside and outside the country. Was Bucaram going to transform his populist rhetoric into the central element of his government program? The mystery ended when the government’s proposed economic policy was unveiled. The plan included a wide-ranging set of economic reforms, at the core of which was the establishment of a monetary system featuring Argentine-style convertibility—tying the currency to the U.S. dollar.23 It also included a series of measures that furthered Durán’s policies, centered on cutting fiscal subsidies and increasing prices, an aggressive program of privatizations, reform of the social security system, and changes in the oil sector. Although that plan eased the concerns of private business and the international financial agencies, Bucaram opened up two fronts of political contention: first, with the traditional economic power groups who stood to lose money in the privatization process; second, with consolidated indigenous and social organizations that opposed the reforms. Under these pressures, the regime suffered important setbacks. Its authoritarian style made few political friends, especially when it tried to deal a blow to the finances of groups close to the PSC, and it was evident that there were problems of corruption in government offices accompanied by inefficiency in the ministries. All this isolated Bucaram in less than six months. By early 1997, practically all sectors opposed the government, which clearly lacked the political context to push the reforms forward. Some of Bucaram’s allies were abandoning the legislative majority, and calls for his removal from office proliferated. On February 3, 1997, former presidents of the republic, presidential candidates, and leaders of most of the country’s political and social forces held an unprecedented meeting during which they decided to seek an acceptable form of constitutional succession.24 Citizen mobilizations throughout the country, concomitant with a renewed offensive by the indigenous movement, made clear the country’s unanimous rejection of the president. On February 5, 6, and 7, an estimated three million people mobilized in a historic protest by indigenous peoples, students, trade unions, and thousands of citizens with no organizational point of reference. Some compared these developments with the impeachment of Fernando Collor de Mello in Brazil a few years earlier. Finally, just six months after his election, Bucaram was removed by Congress, and the former

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president went into exile in Panama to avoid prosecution. Bowing to the real balance of power, the elected vice president ceded succession of the interim presidency to the speaker of the Congress, Fabián Alarcón. The armed forces played a key role in these events. At the moments of greatest crisis, they made fundamental decisions: they would not repress the mobilizations, and they would withdraw their support for Bucaram while refusing to assume direct control of the state, which meant respecting the decision of the National Congress. Thus their role of safeguarding the country’s institutions extended to defining how the conflict would be resolved.25

Interim Government and the National Constituent Assembly Fabián Alarcón embodied many of the characteristics of the “old political class.” He did not represent any special interests and was seen as a neutral solution to the crisis. With little legislative support for his presidency, he made no effort to give any direction whatsoever to national politics. The relative calm during his regime came only because the main political forces were busy making arrangements for early elections in 1998. The economy’s weak performance was largely associated with Alarcón’s unwillingness to maintain an austere fiscal policy and to ensure orderly economic management. In 1997, inflation reached 30.7 percent, there was a downward trend in international reserves and an increase in the net domestic debt of the public sector, and the fiscal deficit reached 2.4 percent of GDP.26 The most significant event during Alarcón’s interim government was the convening—as a result of the citizen demands that led to Bucaram’s downfall—of a national constituent assembly to amend the constitution. Two main factions surfaced in the assembly. A center-right alliance, which revolved around the PSC, sought to resolve the problems of the existing constitution, especially the obstacles to privatizing the strategic sectors. This alliance sought to increase presidential powers through reforms that would limit the powers of the other branches of government, particularly the Congress. The indigenous movement, along with practically all the social organizations, opposed this approach and proposed instead the expansion of citizen rights. The 1998 constitution incorporated aspects of each of the opposing proposals, legitimizing the reformist agenda while at the same time addressing the indigenous and social concerns. Ecuador’s new constitution thus institutionalized a “neoliberalism with a social face” that did not resolve the political conflicts, and furthermore embodied a series of paradoxes.27 Once again, the political class missed the opportunity to lay the groundwork for a long-term pact or a national consensus. The alliance that led the assembly—the PSC and the Popular Democracy party (Democracia Popular, DP)—continued moderate political programs and presented itself as the winning coalition that could break the stalemate

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between the two political camps and implement a modern neoliberal program.28 Those were the conditions in which Jamil Mahuad, of the DP, secured his victory in the 1998 elections.

Dollarization and the Second Presidential Overthrow In August 1998, Jamil Mahuad was sworn in as president. His first months in government were devoted to negotiating the border boundary with Peru, whereas solving the basic problems—especially the budget deficit—continued to be put off. The proposed solutions actually relied on accounting subterfuges, expanding credit by printing more money, and taking on greater indebtedness. The result was a deteriorating balance of payments, a volatile exchange rate, and high interest rates.29 In early 1999, Mahuad, who had gained popularity for resolving the Peru border dispute, began to show direction in his economic policy. With the backing of the IMF, the government focused on two fundamental economic problems: the systemic fragility of the financial sector and the government’s weak budget position. But that focus implied liberal government aid to banks with financial problems.30 There was little concern that the net domestic credit to the financial system—which required the Central Bank to print more money and the Ministry of Finance to issue more commercial paper—was expanded in unprecedented fashion. As of August 1999, the resources channeled to the banks totaled over $1.4 billion. The bank rescues are estimated to have cost the country the equivalent of 24 percent of GDP.31 The government’s bank rescue plan in effect made it possible for the newly created Deposit Guarantee Agency (Agencia de Garantía de Depósitos, AGD) to manage the banks that went into bankruptcy owing to their improper use of citizens’ deposits. Thus the AGD became a public mechanism of “illegal” bank management. The scam was based on issuing credit with no financial backing whatsoever to companies that belonged to the same economic groups that owned the banks, maintaining delinquent portfolios, and using other illegal management procedures. The lax rules, along with the incapacity and complicity of the financial regulators, compounded the crisis and engulfed an ever-growing number of institutions.32 In March 1999, the crisis reached a climax. Mahuad decreed a bank holiday and froze bank deposits, but only one-fifth was returned to the depositors.33 The Central Bank continued its policy of issuing large sums of money to forestall a collapse of the financial system.34 The state apparatus thus became the central player in the recovery of the bankrupt financial sectors, which required processing a new set of reforms aimed at revitalizing the sector. The national government assumed that the general reduction in economic activity, the standstill in investment, and the partial or total shutdown of companies resulting in a sharp rise in unemployment could be handled as lesser evils. As it had throughout the adjustment process, the government gave pri-

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ority to stabilizing the banking sector over stimulating economic growth. If the 1980s was the “lost” decade for most of Latin America, the economic malaise carried over to the 1990s in Ecuador, with the economy averaging an annual growth rate of zero percent for the decade as a whole. The country’s enormous vulnerability and its weak productive capacity are illustrated by the fact that per capita economic output in 1999 fell to levels similar to those of twenty-three years earlier.35 Against this backdrop, the Ecuadorian government announced the suspension of payment of its $50 million Brady bond debt, a grave decision at a time when the IMF continued postponement of the signing of its letter of intent with Ecuador and the government resorted to the ceaseless printing of money.36 These decisions resulted in the total lack of confidence on the part of economic actors, accelerated the conditions for a devastating devaluation, and led to the complete loss of political support for the government. Months later, one of the few bankers to go on trial, Fernando Aspiazu, said that the $3.1 million that he had donated to the president’s election campaign had been improperly used by government officials, revealing the motives for the government to prop up the banks. Mahuad “was a hostage of the financiers of his campaign . . . and they were at the helm until the last day of his term.”37 These events revealed how the political institutions had been manipulated and corrupted to allow the elites to pillage the financial resources of a majority of the citizens. It became a system of highly organized “oligarchic-mafioso” agreements that forced the state and the population as a whole to assume the costs of the recurrent crises.38 The contradiction is clear. Although the budget for the social sector was cut and the government was focused on diminishing the fiscal deficit, the systematic support for the private sector had the perverse effect of increasing the government deficit, contrary to neoclassical economic postulates. Thus, in Ecuador, the imbalance of the private sector and its resource requirements explains the deficit and indebtedness of the public sector and, therefore, the need to continue adopting fiscal adjustment measures. This process is known as a “bail-out.”39 The political parties have had limited participation in defining public policies. Their marginalization, seen in their exclusion when cabinets were formed, contributed to the subordinate role of the Congress in government affairs. Thus the political parties were left only with the option of playing the role of permanent opposition. In this perverse relationship where the president controls reforms, one finds the explanation, in part, for the scant legitimacy of the reformist agendas.

January 21, 2000: Indians, Armed Forces, and Democracy January 2000 began with an out-of-control economic situation and the total undoing of Mahuad’s legitimacy. Dollarization emerged more as a political

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lifesaver for Mahuad than as a technical resolution to the crisis. A few days before announcing dollarization, the president himself characterized the measure as “a leap into the void.”40 But the indigenous movement and other social activists had already announced a new uprising. So, without any planning and against the advice of many Central Bank officers and experts, Mahuad adopted the measure. The dollarization of the economy had the political effect of coalescing the business and financial sectors and uniting the center-right and right-wing parties around the presidential proposal.41 What was not achieved during the Christian Democratic government through consensus-building did happen as an unintentional consequence of the sudden decision to dollarize the economy: finding a mechanism to keep Mahuad in power. Although dollarization succeeded in improving Mahuad’s image, the indigenous protest led to the convoking of the so-called People’s Parliaments in each province of the country. Simultaneously, the indigenous leadership held meetings with the high military command in which they proposed the dissolution of the government. The indigenous forces marched to Quito and by the evening of Thursday, January 20, 2000, some 9,000 people had surrounded the Congress and the Supreme Court. The following morning, army troops entered the National Congress. The overthrow of the president was completed that night when the powerful elites withdrew their support for Mahuad and the armed forces supervised his departure. A triumvirate composed of Colonel Lucio Gutiérrez, CONAIE president Antonio Vargas, and Guayaquil judge Carlos Solórzano overthrew Mahuad and assumed power for several hours. After a series of events that to this day are not entirely clear, the military high command turned power over to Vice President Gustavo Noboa. What most surprised the citizens of Ecuador about the coup of January 2000 was the sudden participation of the armed forces. The rapprochement between the army (but not the other branches of the armed forces) and the social movements, especially the indigenous sector and leftist parties, had been evolving, however, since the mid-1990s. Antireformist sentiment and the strong presence of the military in rural development brought them closer to the indigenous movement, laying the groundwork for what later would be a coordination between indigenous movements and mid-level army officers.42 Both groups shared a rejection of neoliberal policies, a sense of defending and rescuing all that is considered traditionally Ecuadorian, a certain level of support for the statist developmentalism of the 1970s, and repudiation of the deteriorating living conditions of the middle and lower classes. Added to this was an ethical component that condemned the political system for its corrupt practices. These allies encouraged other sectors of the population to approve the insurrectionists. The fall of Mahuad involved a different kind of political coup than those of the 1960s and 1970s. The latter were the initiative of military leaders who

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often worked with civilian political forces behind the scenes, but as a scholar in Ecuador noted, the more recent coups “appeared as a response to the popular cry expressed in crowded mobilizations and in the context of the total isolation of the president in question. . . . Bucaram was deposed amidst a mass protest. The pressure of the organized indigenous movement was crucial in the case of Mahuad.”43 The events of January 2000 sent alarming messages to supporters of democracy in Ecuador and abroad. The social movements, a powerful democratizing force throughout the 1990s, had become involved in a coup adventure with the armed forces. Their strategy of building popular support appeared to vanish in favor of an alliance with military actors who, although enjoying a high level of legitimacy, did not represent a democratic political force.44 The coup leaders upheld democracy in Ecuador not because it had been institutionalized or because broad sectors of the population had defended it, but because dictatorships are frowned upon in the contemporary international system.45 Thus in the final moments of the coup, a split within the armed forces ended when the high command overruled the colonels who headed up the revolt. The precarious future of Ecuadorian democracy lay in the hands of the military as the ultimate arbiters of any conflict between the branches of government or any institutional vacuum that might arise.46 Indeed, Gustavo Noboa’s swearing-in ceremony took place before military authorities and not before the National Congress, in a telling image of the uncertain institutional context of Ecuadorian democracy at the start of the twenty-first century.

A Brief Assessment of Dollarization With no party in Congress, renewed popular protests, and only sporadic support from the PSC and the DP, the Noboa administration sought to stabilize the economy in the short term through dollarization and the promotion of foreign investment in the oil sector. On all other issues, Noboa failed to develop any program to speak of, and his weak political position undercut proposals for privatization and left him cornered as he waited for the next president to be elected and take office. Although at the end of Noboa’s term networks of corruption were found once again in the Ministry of Finance and the customs sector, the economic scenario began to improve as the first effects of dollarization were felt. The rise in oil prices beginning in mid-1999 was a contributing factor. Another important factor was the steady flow of remittances sent home by Ecuadorian workers who had emigrated to industrialized countries, mainly Spain, the United States, and Italy. Remittances are the second leading source of foreign exchange for Ecuador after oil exports—it is estimated that the amount sent home by Ecuadorian migrants approaches $1.5 billion a year.47 Another boon was the 2001 start of construction of a new pipeline to carry heavy crude oil;

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the financing of this pipeline became the single largest foreign investment in Ecuador since the 1970s.48 The exchange rate at which dollarization was adopted, moreover, made possible very favorable relative prices for exports in 2000, when the real exchange rate reached undervalued levels unprecedented in recent decades. Dollarization, however, has its down side. The imbalance in relative prices when dollarization was instituted, the capacity of the oligopolies and other economic actors to raise prices, and reduced government subsidies resulted in high inflation despite the government’s decision to stop printing money. Inflation reached 91 percent in 2000, then dropped to 22.4 percent in 2001, and remained above 10 percent in 2002. The persistence and magnitude of inflation have not only eliminated the temporary advantages in the real exchange rate enjoyed by the export sector in the months following dollarization but have turned the situation around, with a serious impact on Ecuador’s international competitiveness. The real exchange rate index dropped from 207 in January 2000 to 90.5 in October 2002, the lowest level in ten years.49 The progressive loss of competitiveness for local production thus appears to be the Achilles’ heel of dollarization. The balance of trade deteriorated, swinging from a surplus of $1.5 billion in 2000 to a deficit of $447 million in 2001.50 Ultimately, exports have not been stimulated by dollarization, and the main non-oil exports are beset by serious problems. Furthermore, the oil sector, once the anchor of the recovery, began experiencing difficulties stemming from limited reserves, their low quality, the changing demand of the international system, and the limited share of the surplus earmarked for the state. With dollarization, the Ecuadorian economy’s considerable dependency on oil revenues poses risks of illiquidity, deflation, and recession. With limits on issuing money nationally, exports have become the main source of supplying currency, even for local transactions. So dollarization prevents responding to the diminished competitiveness of local producers with instruments such as devaluation, a mechanism that is available to the neighboring economies. Moreover, dollarization did not equalize local interest rates with international rates, nor did it guarantee access to the international financial markets. The productive base of the national market, as it was throughout the past decade, will continue to be dismantled as Ecuador’s main trading partners gain advantages.51 The trends in the population’s living conditions are also mixed. From May 2000 to December 2001, poverty declined to approximately 46 percent (from 65 percent in 1999), and open unemployment fell to 8 percent (from 17 percent in 1999). Per capita income declined by 9 percent in 1999 (compared to a decline of 1 percent in 1998); in 2000 there was a slight recovery of under 1 percent, and it was not until 2001 that the recovery accelerated, with a 3.7 percent increase for that year and an estimated increase of 1.6 percent in 2002, when wages regained almost all of their initial value. In 2002, however, a

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deceleration in the recovery process became evident, giving way to a new scenario with characteristics different from those of the precrisis era. Open unemployment rose to 10 percent, and the levels of poverty and indigence began to level out, while the recovery in real wages continued until reaching 1998 levels. In 2003, Ecuador experienced 3.5 percent average growth of GDP, yet unemployment reached its highest level of 12.1 percent in April 2004.52 It is important to note that this overall outlook is not uniform; rather, it differs from one region and city to the next.53 In sum, Ecuador’s future is still uncertain. The country’s recovery is tied to massive emigration abroad, which has alleviated the oversupply of labor, helped wages recover, and brought an inflow of foreign exchange. With rather modest levels of economic growth, the capacity to improve the living conditions of the population will depend on what the state does in the way of redistributive social policies. The current scenario seems unfavorable, especially as the new administration for 2003–2007 appears to be relying on market mechanisms to distribute the fruits of growth, a method that at least in Ecuador has proven to be insufficient in redistributing wealth and attaining equality.

Lucio Gutiérrez’s Rise to Power and the Indigenous Movement The surprising victory of Colonel Lucio Gutiérrez in the first round of the 2002 elections, in an alliance with Pachakutik and with just 20.64 percent of the eligible votes cast, reflected more than anything the country’s profound political segmentation. The forty-five-year-old former military officer had launched his campaign with only 7 percent support in the polls.54 This victory was notable for a novice politician, who rose up from the lower middle class and ran a campaign with little money and without the support of the major political parties. With his national and international recognition stemming only from having participated in the indigenous-military uprising of 2000 (after which he was sent to military prison for six months), Gutiérrez was elected president over banana magnate Alvaro Noboa—whose platform centered on turning Ecuador into a free trade zone—in large part owing to the split in the center-left and the fragmentation of the votes, especially in the coastal region.55 After spending time in a military prison, Gutiérrez founded his own political movement, the Patriotic Society Party of January 21 (Partido Sociedad Patriótica 21 de enero, PSP).56 From the outset, he ran his campaign with the collaboration of family members and old Army comrades. This patrimonial management style, coupled with his lack of ideological definition and of ties to the leftist forces, made his relationship with other progressive organizations and the indigenous movement courteous but distant.

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Gutiérrez presented only a vaguely defined platform during his electoral campaign. He rejected the traditional party system with its neoliberal policies, and he advocated an end to dollarization.57 He supported the anticorruption effort, poverty reduction, increased public investment in health and education, and the depoliticization of the justice system. He promoted what he termed the five “securities”—social security, citizen security, juridical security, environmental security, and food security—and supported increasing competitiveness to create more employment.58 The key points of his international platform were defending national sovereignty, seeking Ecuador’s withdrawal from involvement in the Colombian conflict, and insulating Ecuador from what he saw as the dangers of a Free Trade Area of the Americas (FTAA). The alliance between the PSP and the indigenous movement came about only after tense negotiations and as a result of the failure of the center-left to establish a broad political front and its decision instead to field its own candidate. The alliance was a culmination of the movement’s intense political activity throughout the 1990s and ultimately triumphed, not only by getting Gutiérrez elected president for the 2003–2007 term but also by doubling the number of Pachakutik deputies in the National Congress.59 Nonetheless, the coalition’s victory was unexpected, and the challenges of governing made evident the coalition’s still undefined agenda. Thus the transition from an electoral campaign alliance to a governing alliance posed great uncertainties. President Gutiérrez moved quickly to assuage any doubts or fears that arose in various political and international circles during his campaign. He traveled to the United States, met with officials from the IMF and other lending and security institutions, and presented himself as the “best possible ally” of the U.S. government. He appointed Mauricio Pozo, an orthodox neoliberal economist very much identified with the banking and industrial groups of the highlands, to be minister of economy and finance, and he organized a cabinet with only a limited number of ministers from Pachakutik. The formation of Gutiérrez’s cabinet left the indigenous movement with a clearly secondary role, immediately upsetting the stability of his alliance. He chose persons close to his military circle and from the banking sector for some of the most important ministries, such as economy, interior (government), and social welfare, and he appointed Nina Pacari, a long-time leader of the indigenous movement and a member of Pachakutik, as foreign minister. From the outset, the institutional structure of the coalition government appeared ill defined. Contradictions in foreign policy also damaged the cohesiveness of Gutiérrez’s governing alliance. His policies have ranged from close alignment with the United States—the “best ally” rhetoric—in its antidrug policy and Ecuador’s involvement in Plan Colombia (explained later in this chapter), to opposition to the war in Iraq by sending the foreign minister to the summit of the Non-Aligned Movement (NAM) member countries held in Malaysia in

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February 2003, where Ecuador spoke out for a peaceful, negotiated, and multilateral solution to the Iraqi problem. Those splits and programmatic differences with the United States have not been resolved. Gutiérrez’s November 2003 agreement allowing the United States to construct three $250,000 “logistical sites” to aid victims of natural disasters angered indigenous groups and leftist sectors who want U.S. troops removed from Ecuador altogether. Gutiérrez’s about-face on economic policy drove the nail into his coalition’s coffin. He dropped opposition to dollarization and implemented an IMF-supported austerity package much like those he had campaigned against. Much of the president’s newfound fiscal austerity is due to the reality that Ecuador’s financial situation gives him little wiggle room.60 In Gutiérrez’s own words: “When I came to power I found deep economic crisis, arrears of more than $700m. And I had to pay them straight away, because most were salaries . . . and I couldn’t wait for more time. So I had to change strategy, temporarily.”61 As of early 2004, he faced a budget deficit of 6 percent of GDP, and repayment of an external debt of $11.37 billion consumed 42 percent of the annual budget.62 For the social bases of the movement, for large sectors of the population, and for the centrist parties, this agenda meant it was no longer possible to put together a “post-Washington Consensus agenda”— consisting of significant reform of public institutions in order to promote social welfare—to address the excluded sectors’ enormous “social debt.” Gutiérrez’s reforms have restored Ecuador’s credibility after its 1999 default. In 2003, the Gutiérrez administration reached a stand-by agreement with the IMF of $205 million; only $84 million was received, however, owing to failure to meet the requirement of privatizing the electricity and telecommunications sectors. The government continued to seek a further agreement in 2004 as it made efforts to reform the energy sector, improve financial controls, and pass reforms to increase transparency.63 The Inter-American Development Bank (IDB) granted in May 2004 $682 million in loans to be used for projects over the course of the following two years that strengthen competitiveness and productivity and that promote social development.64 Attempts at reining in spending sparked massive protests, particularly among public-sector union workers. Gutiérrez’s popularity sank in 2003, and in September of that year CONAIE, feeling betrayed, withdrew its support. The move resulted in the resignation of two cabinet members and desertion of several congressional members in the governing coalition. The defections pitted Gutiérrez against a strong center-left opposition, and with his own party holding only six seats, he was forced to forge an alliance with the Social Christian Party, associated with the very economic elite he had campaigned against. Gutiérrez lost much of his support as his administration became wracked with corruption scandals after his virulent anticorruption platform. In late November 2003, a newspaper reported that former governor César Fernández,

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charged with cocaine trafficking in October, had contributed $30,000 to Gutiérrez’s campaign. Soon after the president denied ever having met Fernández, a picture of the two together was published. The constitution requires the removal of any public official elected with drug money, and an investigation began. The scandal caused Gutiérrez’s approval rating to drop to 15 percent, and five of his cabinet members resigned on November 24, 2003.65 In late May 2004, he was forced to fire Welfare Minister Patricio Acosta, one of his closest confidants, when Acosta was placed on a U.S. list of foreign officials suspected of corruption.66 Around the same time, Congress decided to consider the impeachment of Finance Minister Pozo for allegations brought by Pachakutik of raiding the social security fund to finance the fiscal deficit.67 Gutiérrez has attempted, unsuccessfully, to pacify his defectors. During his State of the Nation address, marking the end of his first year in office on January 17, 2004, Gutiérrez stated that he swore before God to correct his mistakes.68 A few months later, by means of executive decree, he made “the eradication of poverty and the implementation of a process of consensus a primary objective and state policy” and set his secretary-general and the economy and government ministers to this as yet undefined task.69 Nevertheless, CONAIE persists in demanding Gutiérrez’s resignation, staging demonstrations and strikes, and blocking highways. The National Amazonic Confederation of Ecuador (Confederación Nacional Amazónica de Ecuador, COFENAE), the second largest indigenous organization, withdrew its support from Gutiérrez because of his failure to deliver $24 million for agreed-upon projects, the amount of money diverted to paying the foreign debt, and the militarization of the Sarayku indigenous community’s territory for the protection of oil fields.70 COFENAE has stated that although it has withdrawn support for the president, it will not endorse an indigenous uprising.71 Gutiérrez insists that “Ecuador will not see a repeat of the unrest in Bolivia,” yet indigenous groups have removed two democratically elected presidents since 1996 primarily due to their economic policies. There are few indications that they would not, in one way or another, do so again if Gutiérrez continues along his reformist path without significant social sector gains.

Security: New Scenarios and Tensions in the Government In the context of a country facing significant institutional and social challenges, the fight against drug trafficking, the increased national security problems associated with the handling of Ecuador’s northern border, and the high levels of urban violence have become the main headaches for Ecuador’s local authorities, government, and society in recent years. In addition, Ecuador’s

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steadily increasing involvement in Plan Colombia and a fluctuating bilateral relationship with the United States create an uncertain situation for the country in the medium term. The U.S. approach to drug trafficking has over the years been inspired by a regional perspective that seeks to bring about cooperation from Andean countries relative to the U.S. security agenda. Initially, the fight against drug trafficking fell exclusively under the jurisdiction of the police forces and the judicial systems, as established in the 1989 Andean Initiative launched by President George H.W. Bush. This initiative was a five-year plan with a budget of $2.2 billion to dismantle drug trafficking organizations, isolate the main regions where coca was cultivated, destroy the laboratories used for processing drugs, and block the deliveries of chemical inputs for drug production, mostly through assistance and economic aid to Bolivia, Peru, and Colombia.72 The plan also included legal reforms and heavier criminal sanctions for the crime of drug trafficking in the Andean countries. In the present day, however, the fight against drugs has become increasingly complex, as the need to establish bilateral implementation mechanisms with the United States has resulted in the fragmentation of antidrug policy implementation in each country.73 For Ecuador and the other Andean countries, participating in Plan Colombia has brought forth a series of foreign policy challenges posed by U.S. national security interests in the region. Plan Colombia consists largely of U.S. economic assistance aimed at antinarcotics efforts in Colombia and the Andean region. Nearly 75 percent of the plan’s funds are earmarked for military and police operations, not only in Colombia but also in neighboring nations, including Ecuador. Under this plan, $180 million in aid goes to countries neighboring Colombia, and an additional approximately $277 million— managed directly by the U.S. Department of State—is aimed at improving the regional air control system set up by the U.S. Southern Command and composed of so-called forward operating locations (FOLs)—namely, the Manta air base in Ecuador and those in the Caribbean islands of Aruba and Curazao—and intelligence programs.74 The central challenges faced by the Andean countries stem from the fact that the policies pushed forward by U.S. security interests often involve a reactive and immediate response, with results that may not be desirable for the Andean countries from the standpoint of democracy, society, or democratic institutions. For Ecuador, fighting drug trafficking has various dimensions: • The presence of clandestine networks involved in the trade in precursor chemicals, weapons, munitions, and explosives for the various armed actors in Colombia • Changes in the administration of justice in relation to drug trafficking, which has provoked tensions and distortions in the legislative arena • The strengthening of certain police agencies, such as the Intervention and Rescue Group (Grupo de Intervención y Rescate, GIR), the Spe-

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cial Operations Group (Grupo de Operaciones Especiales, GOE), and the Special Mobile Antinarcotics Group (Grupo Especial Móvil Antinarcóticos, GEMA), and their interdiction capacities in different areas of society, with a marked trend toward the militarization of these police agencies Money-laundering, which has not been possible to quantify with any certainty, especially because Ecuador has a dollarized economy and a financial system that is deregulated and marked by corruption The increased involvement of the Ecuadorian armed forces in the fight against drug trafficking, extending to matters beyond strictly fighting drugs, such as confronting violence coming from Colombia and the actions carried out by guerrilla, criminal, and paramilitary groups in Ecuadorian territory The challenges of fully enforcing and implementing the human rights system in the border regions affected by Plan Colombia Ecuador’s participation in Plan Colombia and the political actions unleashed by the agreement on the use of the Manta air base as an FOL by U.S. military and intelligence personnel The lack of accountability and transparency of the Ecuadorian institutions dealing with drug trafficking and security The fruitless efforts to halt corruption in both the government and private sectors that in one way or another are related to drug trafficking, especially in the judiciary

For these and other reasons, the armed forces and several government agencies are increasingly involved in the fight against drugs under the rubric of national security. As the Colombian government has stepped up its offensive against insurgents, the violence has increasingly spilled across the border, creating “hot spots” in northern Ecuador. Coca eradication is outpacing replanting in Colombia, prompting increased cultivation in Ecuador. Though it is difficult to gauge the degree of the so-called balloon effect (forcing coca out of one area only to have it appear in another), a 2003 presidential decree admitted that Ecuador had become a center for drug trafficking and money laundering.75 As a result, Ecuador is channeling more of its financial and military resources toward that end. This has led to a major national debate about the pertinence of committing such substantial domestic resources to the antidrug effort, as well as to strong criticism by various political and social sectors about the consequences of Ecuador’s involvement in Plan Colombia and the delays in the delivery of promised U.S. funds for the program. Many critics see the use of the Manta air base as involving Ecuador in the U.S. antidrug effort too directly. In addition to monitoring crops and information regarding the operations of drug trafficking networks, it is a center of operations that borders the theater where the “anti-narcoguerrilla” war is being waged. Resources allocated by the State Department’s Bureau for Inter-

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national Narcotics and Law Enforcement Affairs to Ecuador came to $12 million in 2000, $22 million in 2001, $25 million in 2002, and $37 million in 2003.76 These figures are a general indicator of Ecuador’s more cooperative involvement in the drug war. The information, air intelligence, and logistical support that the Manta base provides makes Ecuador responsible for actions deployed from there. Ecuador’s involvement has resulted in a series of political mobilizations aimed at canceling the agreement allowing use of the Manta base, and there is mounting concern over the issue. Some political parties, social movements, and organized sectors of society call into question Ecuador’s role in Plan Colombia because of potential negative effects for the population in the northern border areas, including mounting crime and threats to personal rights and public safety. These critics also question the performance of state institutions in the fight against drugs—the armed forces, the Ministry of Foreign Affairs, the National Police, and the executive branch generally. Given the complexity of drug trafficking, there is little ability to coordinate policies, plans, and actions among the various institutions. As a result, there is a trend toward militarizing all antidrug efforts, rather than resorting to public policy in the areas of health, prevention, border development, migration, and human security. This also raises questions about the initiatives of the Ministry of Foreign Affairs in Ecuador’s bilateral policy with the United States. First, Ecuador’s foreign policy is weak and vulnerable and has seen many moments of instability in the face of the pressures brought to bear by the antidrug agenda. In the academic community there is a perception that drug trafficking cannot be addressed through foreign policy or through the Ecuadorian authorities because it is a global problem, one that requires global policies rather than simply proposing an approach consistent with the practices of the U.S. State Department’s antidrug strategy focused on interdiction, control, and limited development aid. Many critics argue that such a strategy to combat drug trafficking cannot be effective because it assumes the Ecuadorian state has capacities it in fact lacks, in addition to affecting personal liberties and the everyday life of its citizens. In sum, critics contend that the militarization of current antidrug policy exacerbates the situation both politically and socially. In an attempt to rebuff allegations of involvement in Colombia’s drug war and amid much criticism, in January 2004 the government announced that it would launch Plan Ecuador in order to counter the repercussions of Plan Colombia.77

Conclusions In recent decades, Ecuador has undergone a prolonged but steady process of de-institutionalization of the government’s redistributive and regulatory functions. In addition, it has had to bear the cumulative effects of many economic

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and political mistakes that have brought about a decline in living conditions, social integration, and well-being of the majority of its citizens. Given that background, in the early years of the twenty-first century the Ecuadorian economy appears incapable of resolving the broad range of economic problems it faces, from unemployment to foreign debt, that need to be addressed in order to attain adequate levels of human development in more competitive and volatile international markets. Indeed, the application of the neoliberal model and the process of dollarization in the special case of Ecuador, as analyzed above, cannot alone ensure stability and growth. The political system, in turn, has not been stabilized by a democraticallysanctioned institutional framework. It has been altered regularly by political actors—interest groups, corporate entities, and others—with political pressure, financial strength, and negotiating skills. The political system has mostly been effective in sustaining and benefiting the interests of specific economic groups—protecting the banking elites to the detriment of the medium and small depositors during the country’s financial bankruptcy in 1999 is just one example. The deterioration of political rights occurring at this time is thus an intrinsic aspect of the decisionmaking processes within the political system. The lack of government autonomy from certain dominant classes and groups suggests that the scant yield of the country’s economic policy cannot be explained solely in relation to macroeconomic instability; rather, now that sufficient time has elapsed since implementation of the first cycle of structural reforms, to understand it one must also look to the political obstacles that were apparently exacerbated in the course of the reforms. The regional, economic, and ethnic divisions among the politically active classes and the intense social conflict among the power groups have further weakened the state when it comes to coordinating national policies with a basic consensus. Hence the discontinuity in the reformist agenda, which has contributed to weakness in the framework of democracy, as expressed in uncertain rules of the political game. What is clear is that Ecuador continues to lack the political and economic institutions needed to put an end to the seemingly endless rounds of political instability, economic setbacks, and public apathy.

Chronology of Important Recent Events in Ecuador 1990. During the administration of Rodrigo Borja Cevallos, an indigenous mobilization and takeover of the city of Quito takes place. The Labor Code is amended to curtail the activities of the trade union federations. 1992. Structural reforms of the state begin to be implemented. In the span of several years, the legal framework to reduce the size of the state appara-

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tus is adopted and several reforms take shape through the Law on Modernization of the State, the Law on Institutions of the National Financial System, and the Law on Reorganizing Public Finances. 1995. Military conflict between Ecuador and Peru breaks out. 1997. The administration of Abdalá Bucaram is deposed; the president goes into exile in Panama, accused of numerous crimes of corruption. An interim government takes over under the leadership of Fabián Alarcón Rivera. 1998. Ecuador and Peru sign bilateral peace accords during Jamil Mahuad’s administration. Ecuador suffers a national financial crisis, and the government issues an executive decree on the “mobilization of capital” (freezing it). The AGD is established. 1999. The government declares a bank holiday, and the country suffers a financial collapse. Banks are closed, resulting in an “organized robbery” of the depositors by the financial institutions. The first efforts to privatize the telephone companies fail. One of the periods of greatest corruption begins. Mahuad issues an executive decree adopting the dollar as the national currency. 2000. An indigenous-military movement results in the overthrow of the Mahuad administration. Vice President Gustavo Noboa becomes president. Alejandro Peñafiel, president of the Banco de Préstamos S.A., is detained. He and Fernando Aspiazu, former president of the Banco del Progreso—since shut down—are the only private bankers deprived of their liberty because of the bank frauds. 2002. The coalition of military officers and indigenous forces that forced Mahuad to step down elects Colonel Lucio Gutiérrez as president of Ecuador. There are numerous mobilizations by social and indigenous groups against the FTAA. 2003. In January-February, the government signs an agreement with the International Monetary Fund. Lucio Gutiérrez, the new president, declares Ecuador’s alignment with U.S. policy. In September, CONAIE withdraws its support from Gutiérrez’s governing coalition, and Gutiérrez forges an alliance with the Social Christian Party. In November, Gutiérrez’s administration is wracked with corruption scandals. 2004. In January, the government announces it will launch Plan Ecuador to counter the repercussions of Plan Colombia. Indigenous groups continue to stage road blockades, strikes, and protests, demanding Gutiérrez’s resignation.

Notes 1. For more on velasquismo, see Agustín Cueva, Las democracias restringidas de

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América Latina: Elementos para una reflexión crítica (Quito: Planeta, 1989); Felipe Burbano de Lara, “A modo de introducción: El impertinente populismo,” in El fantasma del populismo: Aproximación a un tema (siempre) actual, edited by Felipe Burbano de Lara (Quito: ILDIS/FLACSO/Nueva Sociedad, 1998), 9–25; Carlos de la Torre, “Populismo, cultura política y vida cotidiana en Ecuador,” in El fantasma del populismo: Approximación a una tema (siempre) actual, edited by Felipe Burbano de Lara (Quito: ILDIS/FLACSO/Nueva Sociedad, 1998), 135. 2. Cueva, Las democracias restringidas, 112. 3. De la Torre, “Populismo,” 134–135. 4. Alfredo Mancero, “Transición a la democracia ecuatoriana,” in La ruta de la gobernabilidad, by Corporación de Estudios para el Desarrollo (CORDES) (Quito: CORDES, 1999), 327. 5. During that decade, GDP increased at an average annual rate of 9 percent. 6. César Montúfar, La reconstrucción neoliberal: Febres Cordero o la estatización del neoliberalismo en el Ecuador, 1984–1988 (Quito: Abya Yala, Universidad Andina Simón Bolívar, 2000). 7. Ibid. 8. Catherine Conaghan, Restructuring Domination: Industrialists and the State in Ecuador (Pittsburgh: University of Pittsburgh Press, 1988), 112–119. 9. Agustín Cueva, El proceso de dominación política en el Ecuador (Quito: Planeta Letraviva, 1988). 10. Montúfar, La reconstrucción neoliberal. 11. The Central Bank assumed responsibility for the total credit amount and for the exchange rate risk as stipulated in the measure. See Alberto Acosta, “El entorno mágico de las expectativas,” Ecuador Debate, no. 24 (Centro Andino de Acción Popular, Quito) (December 1991). 12. Carlos Larrea, “Ajuste estructural, distribución del ingreso y empleo en el Ecuador,” Economía y Humanismo 2, no. 2 (Instituto de Investigaciones Económicas, Pontificia Universidad Católica del Ecuador, Quito) (1997): 35–86. 13. Ibid. 14. In 1990, household per capita income of the richest decile was 19.7 times greater than that of the poorest decile; in 2000 it was 41.2 times greater. Poverty and economic exclusion increased in tandem with wealth concentration in the late 1990s. See Ecuador’s Integrated System of Social Indicators (Sistema Integrado de Indicadores Sociales del Ecuador, SIISE 3.0) figures, for 1999, 2000, and 2001, Quito, www.siise.gov.ec. 15. Augusto Barrera, Acción colectiva y crisis política: El movimiento indígena ecuatoriano en los noventa (Quito: CLACSO/CIUDAD/ABYA YALA, 2001). 16. All dollar amounts are in U.S. dollars unless otherwise noted. Raymond Colitt, “Survey of Latin American Finance,” Financial Times, April 11, 1994, 3. 17. Gary Kleiman, “Ecuador’s Tentative Recovery,” Journal of Commerce, February 5, 1993, 6A. 18. Barrera, Acción colectiva. 19. Luis Macas, president of CONAIE, October 12, 1992, as quoted in ibid., 34. 20. Ibid. 21. María Claridad Araujo, “Crisis y políticas de ajuste,” in La ruta de la gobernabilidad, by Corporación de Estudios para el Desarrollo (CORDES) (Quito: CORDES, 1999), 388–389 . 22. The MUPP supported, in a conflictive alliance with the Democratic Left and the Socialist Party, the presidential candidacy of a white-mestizo journalist; the alliance obtained nearly 18 percent of the votes and came in third place. The MUPP

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also succeeded in obtaining eight legislative seats on its own as well as a good number of local electoral posts. 23. Such a monetary policy would be one that “indissolubly ties, through legal means, the monetary supply with the availability of the currency in the international monetary reserves, establishing the corresponding parity (usually one-to-one) between the new currency and the U.S. currency; a bimonetary system would, in conclusion, be established in the country.” Marco Romero, “Coyuntura nacional: Se profundiza la recesión y la incertidumbre,” Ecuador Debate, no. 47 (Quito) (August 1999), 12. 24. Barrera, Acción colectiva, 226–230. 25. Fredy Rivera, “Fantasmas castrenses y democracia minimalista en Ecuador contemporáneo,” in Las Fuerzas Armadas en la región andina, by Comisión Andina de Juristas (Lima: Embassy of Finland, 2001). 26. Araujo, “Crisis y políticas de ajuste.” 27. For example, although the constitution increased the means for social participation, it limited the means for political participation, and even though it expanded economic and social rights, it reduced the state’s resources needed to guarantee them. See Alejandro Moreano, Julio César Trujillo, Zonia Palan, Augusto Barrera, Fernando Buendía, Gina Chávez, and Manuel Martínez, La nueva constitución: Escenarios, actores, derechos (Quito: CIUDAD, 1998). 28. The PSC-DP rapprochement was evident in the following areas: (1) the DP’s move from the center left to the right; (2) moderation of the political discourse and the oligarchic image of the PSC; and (3) a fortunate complementarity in regional, social, and thematic aspects between the two parties in areas such as privatization, openness, reduction of the state’s role, governability, technocratic rationale, and economic liberalization. These elements strengthened the continuity of the neoliberal agenda. See Barrera, Acción colectiva. 29. Abelardo Pachano, “Experiencia y ejecución de la dolarización en el Ecuador,” in Los desafíos de la dolarización para el Ecuador, by Corporación de Estudios para el Desarrollo (CORDES) (Quito: CORDES/CAF, 2002), 167–201. 30. It is worth noting that other governments since the early 1990s had followed similar policies: in 1996, for example, the government spent billions of sucres to try to save the Banco Continental, whose owners fled in exile to Miami. See Romero, “Coyuntura nacional.” 31. See ibid. 32. Franklin Ramírez Gallegos, “Equateur: La crise de l’Etat et du model neoliberal de développement,” Problèmes d’Amérique Latine (Paris) 36 (January–March 2000): 77–88. 33. Manuel Salgado, ¿Guerra sucia en Ecuador? Los documentos secretos de Manta (Quito: Ediciones La Tierra, 2000). 34. Meanwhile, in the National Congress, the PSC—Mahuad’s legislative partner—succeeded in eliminating the AGD’s right to intervene in the assets and companies linked to bankers and blocked the granting of immunity to the control authorities to try those bankers who broke the law. See Revista Vistazo 779 (February 2000). 35. SIISE, 1999, www.siise.gov.ec. 36. Brady bonds are a financial instrument created in the late 1980s during an attempt to resolve the Latin American debt crisis. According to the Revista Gestión, no. 67 (January 2000), the annual growth rate of money printing in 2000 was 152 percent, higher than that of November 1999 (143 percent) despite the fact that the authorities had promised the IMF to keep it lower than 110 percent. 37. Patricia Estupiñán, “El juicio de la historia,” Revista Vistazo 779 (February 2000), www.vistazo.com.

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38. Ramírez Gallegos, “Equateur,” 79. 39. René Ramírez, “Desarrollo, desigualdad y exclusión: Los problemas nutricionales en el Ecuador, 1999–2000,” in Versiones y aversiones del desarrollo, edited by Franklin Ramírez Gallegos (Quito: CIUDAD, 2002). 40. Larry Rohter, “Dollar May Buy a Reprieve in Ecuador,” New York Times, January 16, 2000, 6. 41. Just two days after announcing the dollarization measure, Mahuad’s image improved; in addition, the PSC, the PRE, and the DP government coalition announced its legislative support for the proposal, making it politically viable. See Revista Gestión, no. 67 (January 2000) and Revista Vistazo 779 (February 2000). 42. In the period from 1992 to 1996, joint agreements were reached in certain executive committees of strategic public enterprises, in which the military has a strong presence, in opposition to the privatization projects pushed forward by the government of Durán. See Franklin Ramírez Gallegos, “¿Hegemonías emergentes? Golpismo, política y resignificación democrática: Un contrapunto ecuatoriano-venezolano,” in Las Fuerzas Armadas en la región andina, Comisión Andina de Juristas (Lima: Embassy of Finland, 2001). 43. Bertha García, “El 21 de enero de la democracia ecuatoriana: El asalto al poder” (mimeo, Pontificia Universidad Católica del Ecuador, Quito, 2000), 2. 44. Several polls indicated that at the national level the armed forces and the church are the only two groups within the Ecuadorian leadership elites that enjoy high prestige. See José Sánchez Parga, “Fuerzas Armadas, opinión pública y sociedad civil,” in Fuerzas Armadas, Desarrollo y Democracia, edited by José Sánchez Parga and others (Quito: CELA/ILDIS, 1996). 45. General Mendoza confirmed that he withdrew his support of the uprising after speaking with various U.S. officials, including the head of the U.S. Southern Command and the assistant secretary for Western Hemisphere affairs of the Department of State. They all explained the isolation Ecuador would find itself in should the triumvirate prevail. See Revista Vistazo 779 (February 2000). 46. Successive military participation in the removal of officials in high political office (1996, 1997, 2000)—in the face of weak civil control mechanisms—made it clear that they rely on a series of pressure mechanisms that were institutionalized in the heat of the political turbulence since the mid-1990s and that point to keeping incumbent governments under constant pressure. See García, “El 21 de enero,” 3. 47. Central Bank of Ecuador, “Información Estadística Mensual,” 2001 issues. 48. Carlos Larrea, “Pobreza, dolarización y crisis en el Ecuador,” Informe de avance de investigación (Quito: CLACSO/IEE, November 2002). 49. Ibid. 50. Revista Gestión, no. 100 (October 2002). 51. Ibid. 52. Xinhua General News Service, “IDB to Grant 682 Million Dollars in Loans to Ecuador,” May 6, 2004; “Ecuador: April Unemployment Rises to 12.1 pct.,” Forbes, www.forbes.com/personalfinance/funds/newswire/2004/06/03/rtr1394203.html (accessed June 2004). 53. Larrea, “Pobreza.” 54. In the end, he won over the multimillionaire banana planter Alvaro Noboa (17.4 percent), the independent socialist León Roldós (15.4 percent), ex-president Rodrigo Borja (13.9 percent), the Social Christian Xavier Neira (12.1 percent), and the populist Adolfo Bucaram (11.9 percent), brother of ex-president Abdalá Bucaram. 55. There were four candidates from the coastal region of Guayaquil: Noboa, Roldós, Neira, and Bucaram, of whom at least three had populist and/or antiparty plat-

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forms like Gutiérrez’s. For more on Gutiérrez, see Marc Saint-Upery, “Ecuador: El coronel tiene quien le escuche,” Revista Nueva Sociedad (Caracas), no. 182 (November/December 2002). 56. The post–January 21 sanctions were not severe: no indigenous leader was apprehended, and the military officials who were detained benefited from a general amnesty. 57. Russell Crandall and Akilah Jenga, “New Complications in the Andes,” 2003–2004 Strategic Survey (London: International Institute of Strategic Studies, 2004), 84–99. 58. The possible sources to finance his proposal were fighting corruption (it was estimated that $2 billion were lost to corruption), recovery of the money taken by bankers ($5 billion), reducing tax evasion (which reached $1.7 billion), an increase in oil production through private investment, raising taxes to the rich, and an “adequate renegotiation of the external debt” with international lenders. “Los planes presidenciales,” El Universo (Guayaquil), April 10, 2002, 3. 59. Since 1996, when Pachakutik (MUPP) won six congressional seats for the first time, its presence steadily advanced in the highlands and Amazon regions. In the twenty-seven municipalities that it controlled in 2003, the MUPP practiced participatory, multicultural democracy that earned it national and international recognition. The indigenous population of Ecuador has thus succeeded in combining its social struggle with institutional practices as a fundamental part of its political strategy. 60. Crandall and Jenga, “New Complications in the Andes.” 61. Elliot Gotkine, “Ecuador’s Economic Hopes,” BBC News, January 21, 2004. 62. Crandall and Jenga, “New Complications in the Andes”; “Ecuador’s Foreign Debt Reaches 11.37bn US Dollars,” BBC Monitoring International Reports, May 6, 2004. 63. “Ecuador: IMF Delegation Begins Work,” LatinNews Daily, May 18, 2004; Kate Joynes, “IMF Team Assesses Ecuador’s Structural Reform,” World Markets Analysis, May 18, 2004; Juliette Kerr, “President and Ministers Discuss Ecuadorian Electricity Reform,” World Markets Analysis, May 18, 2004. 64. Xinhua General News Service, “IDB to Grant 682 Million Dollars in Loans to Ecuador,” May 6, 2004. 65. Crandall and Jenga, “New Complications in the Andes.” 66. Monte Hayes, “Ecuador Indians Protest Against President as OAS General Assembly Opens,” San Diego Tribune, June 7, 2004. 67. “Ecuador: Decision Time for Pozo,” LatinNews Daily, May 25, 2004. 68. Crandall and Jenga, “New Complications in the Andes.” 69. “Ecuadorian President Makes Eradication of Poverty a Priority,” BBC Monitoring International Reports, May 9, 2004. 70. “Ecuador: Amazonian Peoples Break with Gutiérrez,” Latin American Weekly Report, May 11, 2004; “Ecuador: COFENAE Pulls Support from Gutiérrez,” LatinNews Daily, May 11, 2004; “Ecuador: Amazon Indians’ Leader Refuses to Support Indigenous Uprising,” BBC Monitoring International Reports, May 12, 2004. 71. “Ecuador: Amazon Indians’ Leader Refuses.” 72. Coletta Youngers and Peter Zirnite, “Their Own Worst Enemy: Washington’s War on Drugs in Latin America,” in Democracies Under Fire: Drugs and Power in Latin America, edited by Martin Jelsma and Theo Roncken (Montevideo: Transnational Institute, Ediciones Brecha, and Acción Andina, 1998), 60. 73. Adrián Bonilla, “Alcances de la autonomía y la hegemonía en la política exterior ecuatoriana,” in Orfeo en el infierno: Una agenda de política exterior ecuatoriana

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(Quito: FLACSO-Ecuador, Corporación Andina de Fomento, and Academia Diplomática del Ministerio de Relaciones Exteriores, 2002). 74. An FOL is a base or airport that is part of an agreement whereby permission is given for its use by U.S. aircraft on antidrug missions to detect and monitor drug crops. These facilities are operated by the host countries, and they house members of the U.S. military forces, the Drug Enforcement Administration (DEA), the Coast Guard, and customs staff to support and coordinate the communications and intelligence of these flights. See Adam Isacson, La Asistencia Estadounidense a la Seguridad en los Países de la Región Andina, 2000–2001 (Bogotá: Centro de Estudios Internacionales, Universidad de los Andes, 2001). 75. Crandall and Jenga, “New Complications in the Andes.” 76. Note that $20 million should be added to the amount for 2001, from a supplementary fund for Plan Colombia. Bureau for International Narcotics and Law Enforcement Affairs, “International Narcotics and Law Enforcement Budget Justification, Fiscal Year 2003,” U.S. Department of State, Washington, DC, May 2002. 77. Crandall and Jenga, “New Complications in the Andes.”

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7 U.S. Policy in the Andes: Commitments and Commitment Traps Mark Eric Williams

As a presidential candidate, George W. Bush spoke of making Latin America “fundamental” to his foreign policy, not an afterthought. Upon assuming office, President Bush took steps to translate this theme into reality. In a break with tradition, he chose Mexico over Canada as the first country to receive a presidential visit and then honored Mexican president Vicente Fox with his administration’s first state dinner. Bush also addressed the Organization of American States (OAS), a forum U.S. presidents seldom embrace, and at the 2001 Summit of the Americas in Quebec he painted a vision of hemispheric free trade and vowed steady progress toward this goal. Yet what was billed as a new era in U.S.–Latin American relations remains strikingly familiar. Indeed, the basic U.S. policy objectives in Latin America today—security and stability, expanded liberal trade, and promoting democracy—vary little from those of the preceding three administrations. In the 1980s, the Reagan administration stressed security/stability, democracy, and trade (to some extent) in Central America and the Caribbean. From the late 1980s through the 1990s, the Bush and Clinton administrations pursued these same goals in Mexico, Haiti, Peru, Guatemala, and beyond. Each administration, of course, did more than simply replicate its predecessor’s policies. In the 1980s, Washington emphasized security over trade and democracy, but in the 1990s it reversed these priorities. From the Enterprise for the Americas Initiative, to the North American Free Trade Agreement, to establishing a framework for a Free Trade Area of the Americas (FTAA), expanding trade assumed increasing prominence on the U.S. policy agenda. That said, there has been little deviation from Washington’s traditional triad of objectives: security, trade, and democracy.

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In this chapter I make three short arguments and several longer ones. First, the continuity of U.S. interests rests on the enduring concerns stressed by a “realist” perspective of international relations and the heightened relevance of “liberal institutionalist” concerns. In general, realist policy prescriptions emphasize security, stability, and the unilateral use of power to achieve state interests. By contrast, liberal institutionalist prescriptions stress promoting democracy, liberal trade, and the institutional infrastructure needed to foster and sustain robust democratic governments, economic prosperity, and multilateral cooperation. Just as international anarchy triggers the security and self-help aspects of U.S. policy concerns, greater international integration and Latin America’s recent economic and political transitions stimulate Washington’s democratic, liberal, and multilateral thrust. Second, despite the continuity of U.S. interests in Latin America, since the mid-1980s we have witnessed considerable change in the underlying threats to those interests. Today, narco-trafficking, terrorism, internal conflicts, economic crises, and ineffective governments threaten security and stability more than external subversion. Similarly, the failure of Latin America’s market reforms to promote wider prosperity threatens liberal trade arrangements more than economic nationalism. Popular frustrations over corruption, poor economic performance, and weak institutions threaten democracy more than competing political ideologies. A third argument is perhaps counterintuitive. Notwithstanding the priority attached to expanding trade arrangements, Washington should not focus its policy efforts exclusively upon Argentina, Brazil, Chile, and Mexico—major trading partners whose support is needed to craft the FTAA. Rather, it should devote much greater attention, energy, and resources to the Andean states— Bolivia, Colombia, Ecuador, Peru, and Venezuela. In the short term at least, the Andean states matter to the United States more than achieving a hemispheric free trade area. The reasons are straightforward. The benefits promised by hemispheric liberal trade can be realized fully only in the long term and after protracted multilateral negotiations. By contrast, the “new” threats to U.S. interests are immediate, and many are concentrated in Andean states. This is not to say that trade is unimportant but rather that there are other more pressing issues. Thus, in the near term, a failure to formalize an FTAA poses fewer risks and imposes fewer costs on the United States than a failure to protect its interests in the Andes. In terms of larger issues, there are three principal challenges to U.S. policy objectives in this critical region. One is Washington’s tendency to conform to a preferred policy philosophy or engage in preferred policy tactics at the expense of broader policy goals. For example, the U.S. preference against “nation-building” initiatives may stymie efforts to achieve peace in failing states like Colombia. A second challenge is to minimize the costs of policy offsetting, that is, situations where two policies’ underlying logic—and hence

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the net effect of their implementation—conflicts, such that both incur efficiency costs and neither achieves full success. The third challenge is to avoid the pitfalls inherent in conflating the wars against drugs and global terrorism; chief among these is a potential commitment trap of long-term, increasingly costly obligations in the region. The importance of realist and liberal institutionalist concerns to U.S. policy interests, and the changing nature of threats to those interests, require little elaboration. Consequently, I devote this chapter primarily to explaining the compelling significance Andean countries hold for the United States and analyzing the major challenges the current U.S. administration must surmount to achieve its policy goals toward the Andean states.

Yes, the Andean States Matter to the United States Since the 1980s, Andean countries have experienced both advances and reversals in democratic governance, political stability, economic performance, and drug trafficking. Democratic transitions, coups or attempted coups, indigenous mobilizations, insurgencies, and party breakdowns and party resurrections peppered the political landscape. On the economic front, neoliberal market experiments appeared and populism reappeared. Some national economies waxed, some waned, some did both. The region’s drug economy changed as well. At Washington’s behest and with U.S. aid, Bolivia and Peru launched crop eradication programs to reduce coca production. In turn, more production shifted to Colombia, deepening that country’s slide into political, guerrilla, and drug-related violence. Throughout this period, stopping narcotics grew as a priority in Washington’s policy agenda toward the Andean states. To be sure, it did not completely displace other U.S. interests concerning democracy, security, and trade in the region. It did, however, assume such prominence that almost all U.S. policies were generally constructed in ways that addressed the problems of drug trafficking. In the process, government agencies with different agendas—Agriculture, Commerce, State, Treasury, the Agency for International Development, the Central Intelligence Agency, and the Drug Enforcement Administration—were all to some degree enlisted in a broad, antinarcotics campaign. Because Washington’s concerns over the drug war impeded a more sustained focus on other U.S. interests in the region, it is worth examining exactly why the Andean states matter. The United States has important national interests at stake in the Andean region, beginning with its energy needs. U.S. oil imports from Colombia, Ecuador, and Venezuela exceed those from the entire Middle East but are threatened by political and economic turmoil. Across the region democracies are under stress and economic progress has stalled while political instability,

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violence, and drug trafficking have spiked. In most countries, the institutional infrastructure needed for effective democratic governance has eroded. Political parties in Peru, Venezuela, and Bolivia are in disrepair, and the presidency of Ecuador remains fragile. Colombia’s democratic institutions are routinely exposed to guerrilla, paramilitary, and drug-related intimidation, and its besieged government is now the third largest recipient of U.S. aid in the world after Israel and Egypt. Finally, in all five countries, legislatures and justice systems are weak, underfunded, and too often ineffective. Even more alarming than this current political snapshot are the region’s political and economic trends. In the late 1990s, poverty, economic inequality, ineffective institutions, corruption, and political violence have undermined public faith in democracy. Since 1996, popular support for democracy has grown increasingly volatile, and the protection of civil liberties—hardly robust to begin with—dipped appreciably in Venezuela (see Table 7.1). During the same time span, economic growth indicators in most countries have, on balance, declined more than they have risen, and unemployment and inequality figures remained distressingly high (see Table 7.2).

Table 7.1

Andean Countries: Support for Democracy and Protection of Civil Liberties

Percentage who believe democracy is preferable to any other form of governmenta 1996 Bolivia Colombia Ecuador Peru Venezuela

64 60 52 53 62

1997

1998

2000

2001

66 69 41 60 64

55 55 57 63 60

62 50 54 64 61

54 36 40 62 57

Andean countries and civil libertiesb 1996 Bolivia Colombia Ecuador Peru Venezuela Totals

3 4 4 3 3 17

1997

1998

1999

2000

3 4 3 4 3 17

3 4 3 4 3 17

3 4 3 4 4 18

3 4 3 3 5 18

Sources: On faith in democracy, Latinobarómetro, www.latinobarometro.org; on civil liberties, Freedom House, www.freedomhouse.org. Notes: a. Excludes respondents who answered “it doesn’t matter” and “don’t know.” b. Scale: free = 1–2.5; partly free = 3–5.5; not free = 5.5–7.

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155 Table 7.2

Andean States and Selected Macroeconomic and Inequality Indicators 1996

1997

1998

1999

2000

2001

0.4 –4.1 –9.5 0.9 –5.8

1.8 2.7 2.8 3.0 4.0

0.0 1.5 5.0 –0.5 2.8

Gross Domestic Product per Capita (based on 1995 prices) Bolivia 2.0 2.4 2.8 –1.9 Colombia 0.1 1.5 –1.3 –5.8 Ecuador 0.2 1.8 –0.9 –11.2 Peru 0.7 4.9 –2.2 –0.8 Venezuela –2.5 5.2 –1.3 –7.7

–0.4 0.9 0.9 1.3 2.0

–2.2 –0.3 3.1 –3.1 0.9

Urban Unemployment Bolivia 3.8 Colombia 11.2 Ecuador 10.4 Peru 8.0 Venezuela 11.8

4.4 12.4 9.3 9.2 11.4

6.1 15.3 11.5 8.5 11.3

8.0 19.4 14.4 9.2 14.9

7.6 17.2 14.1 8.5 14.0

na 18.5 10.9 9.5 13.9

Inflation Bolivia Colombia Ecuador Peru Venezuela

6.7 17.7 30.6 6.5 37.6

4.4 16.7 43.4 6.0 29.9

3.1 9.2 60.7 3.7 20.0

3.4 8.8 91.0 3.7 13.4

1.1 7.8 24.6 0.1 12.7

Gross Domestic Product (based on 1995 prices) Bolivia 4.5 4.9 0.1 Colombia 2.1 3.4 0.5 Ecuador 1.8 4.2 1.0 Peru 2.5 6.8 –0.5 Venezuela –0.4 7.4 0.7

7.9 21.6 25.6 11.8 103.2

Income Distribution by Quintile (1997) Quintile 1 (poorest) Decile 1 Bolivia Colombia Ecuador Peru Venezuela

1.6 1.4 2.3 na 1.8

Decile 2 3.1 2.9 3.5 na 3.2

Quintile 5 (richest)

Quintile 2 Quintile 3 Quintile 4 9.0 8.6 11.2 na 9.7

13.6 13.0 15.1 na 14.4

20.5 19.3 21.6 na 21.4

Decile 9 Decile 10 15.3 15.2 14.4 na 16.8

37.0 39.5 31.9 na 32.8

Source: Statistical Yearbook for Latin America and the Caribbean (Santiago, Chile: ECLAC, 2001). Note: na = not available.

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Each country confronts a distinct set of challenges, yet all share some common dilemmas. Among these are controlling illicit drug production and trafficking (see Table 7.3), maintaining effective political parties and institutions, addressing poverty and inequality, and curtailing political violence and corruption.

Table 7.3 Country

Coca Leaf Production in Hectares, 1991–2000 1991

1993

1995

1997

1999

2000

Bolivia 47,900 Colombia 37,500 Peru 120,800

47,200 39,700 108,800

48,600 50,900 115,300

45,800 79,500 68,800

21,800 122,500 38,700

14,600 136,200 34,100

Source: International Narcotics Control Strategy Report (Washington, DC: U.S. Department of State Bureau for International Narcotics and Law Enforcement Affairs, 1991, 2002).

In Bolivia—once a major coca producer—eradication programs sliced coca cultivation 70 percent between 1996 and 2000.1 As eradication efforts in Colombia have been successful in the past few years, Bolivia has had to step up its own eradication efforts in order to combat the balloon effect. The burden this placed on small farmers, who received scant benefit from crop substitution programs, sparked intense social unrest and resistance among poor, indigenous Bolivians to U.S.-sponsored eradication efforts. This backlash helped propel Evo Morales to a surprising second place finish in Bolivia’s 2002 presidential election. A supporter of traditional coca cultivation, free market opponent, and member of the Movement Toward Socialism party, Morales failed to capture the presidency. He did, however, win a seat in the legislature, and his party holds the second largest bloc in Congress. These developments provide opponents of free trade and coca eradication programs legitimate political clout. Morales’s vow to change Bolivia’s drug and economic policies “peacefully in the parliament” constitutes a direct challenge to key elements of U.S. policies.2 What is more, the indigenous-led violent protests that forced Gonzalo Sánchez de Lozada’s resignation in October 2003 suggest that one cannot ignore Morales’s views—or those of his supporters—on these issues without consequences. On the broader political front, Bolivia’s competitive elections in 2002 did transfer power successfully. But the major political parties themselves function more as personal vehicles for politicians than as expressions of aggregate social interests.3 Thus many Bolivians see direct action and protests as a more effective means of political participation than partisan electoral campaigns. This is certainly what drove the events of October 2003. On the economic front, many Bolivarians also are frustrated by years of austerity, structural

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adjustment, and privatization measures that have failed to yield greater equality or sustained growth and prosperity. Since 2000, protests against market reforms have pressured the government to renationalize some previously privatized firms in sectors such as petroleum and natural gas. Unlike Bolivia, Ecuador has never been a focal point for illicit crop cultivation, although Colombian traffickers exploit the country’s porous borders and weak enforcement to transship drugs. Still, few Andean states can match Ecuador’s record for acute, short-term political instability. Between 1996 and 2000, Ecuadorians saw four presidents ousted for corruption or incompetence. The latest turmoil, a January 2000 attempted coup that ultimately led to the removal of Jamil Mahuad and brought Vice President Gustavo Noboa to power, was fueled by the country’s worst economic performance in generations. From 1998 to 2000, gross domestic product (GDP) fell 5.7 percent, GDP per capita tumbled over 11 percent, foreign investment declined 34.7 percent, and imports fell by 38.4 percent. The economic freefall—which ensued despite market reforms and a newly dollarized currency—mobilized broad opposition against Mahuad, Noboa, and currently against Lucio Gutiérrez. Though the economy has recovered, growing 3.5 percent in 2003, unemployment has continued to rise, and with it popular discontent.4 In Peru, coca production dropped 64 percent from 1996 to 2000, but coca cultivation has grown between 2002 and 2004.5 The Alejandro Toledo government remains burdened by enervated political institutions, scandals, mounting opposition to free market policies, and poor economic performance.6 To push structural adjustment and market measures, former president Alberto Fujimori centralized power in the executive via his so-called selfcoup and severely weakened Peru’s democratic institutions. His national security adviser, Vladimiro Montesinos, became a shadowy political puppet master adept at bribery, coercion, and electoral fraud, all used to orchestrate Fujimori’s controversial third term. The spectacular corruption scandal that toppled the president in 2000 also revealed Montesinos’s complicity in arms and drug smuggling. These developments, plus scandals and persistent poverty (more than 50 percent of Peruvians live below the poverty line), have left Toledo’s popular support hovering around 6 percent.7 They also have eroded public faith in democratic government, soured Peruvians on economic liberalization, and sparked waves of violent antiprivatization protests. Colombia’s situation warrants special attention. Whereas coca production fell in Bolivia and Peru from 1996 to 2000, in Colombia it grew 103 percent. This upsurge transformed Colombia into the largest cocaine supplier to the United States and, by June 2000, had moved Washington to adopt Plan Colombia, a two-year $1.3 billion aid package designed to cut Colombia’s coca cultivation and resolve its decades-old guerrilla insurgency. From 2000 to 2002, Colombia’s coca production actually increased 25 percent, even as its civil war intensified.8 Under Alvaro Uribe’s administration, however, there

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was a sharp decline in coca cultivation between 2002 and 2003, with production falling by over 15 percent in 2002. Decline in coca production was greatest in the southern region of Putumayo (where most of the U.S.-led crop eradication programs were focused); however, this has not resulted in decreased levels of cocaine entering the United States.9 On the political front, Colombia’s principal parties dominate elections but have not been inclusive beyond the elites nor ensured stable, consolidated democratic governance. Consequently, a great deal of political activity occurs outside the party system. These politics, violent and destabilizing, take place within what can only be described as an unconsolidated state—one subject to severe restrictions on national sovereignty and unable to perform the most basic functions of maintaining order and protecting the citizenry. Leftist FARC and ELN guerrillas control 50 percent of the national territory. Their right-wing paramilitary counterparts protect rich landowners from the guerrillas, often by terrorizing peasant villages suspected of harboring guerrilla sympathizers. Both sides profit from and flourish through the drug trade.10 In important ways the state’s weakness is a self-inflicted wound. For decades, the political elite ignored southern Colombia, where farmers now grow coca because the state failed to establish a basic infrastructure conducive to community development and the rule of law. In the 1960s, insurgent guerrillas emerged as a result of the state’s inability or unwillingness to perform its basic functions, and the paramilitaries now justify their existence because the state failed to protect individual rights and property. Colombia’s drug lords and combatants capture much of the revenue derived from the narcotics trade. Although some of these profits no doubt get funneled into legitimate activities, the formal economy itself remains anemic. Economic inequality is especially acute. From 1998 to 2001, the richest 10 percent of the population commanded 40 percent of all income earned.11 Unlike Colombia, Venezuela has not experienced significant coca cultivation. As the second most popular point of departure for drugs smuggled into the United States (behind Colombia), however, it plays no small role in the hemisphere’s drug distribution network.12 But more disturbing to the United States has been Venezuela’s political trajectory under President Hugo Chávez. In 1998, Chávez capitalized upon Venezuela’s economic turmoil and ineffective political parties to win office, then progressively weakened what had been historically close U.S.-Venezuelan ties. Of particular concern to Washington is the Bolivarian Revolution that Chávez launched against political corruption, inequality, and economic mismanagement, as well as against market reforms, globalization and those he held responsible for imposing them on Venezuela. As the revolution unfolded, Venezuelan society became more polarized, jeopardizing its political stability and, from Washington’s perspective, its democratic bona fides too. “We have been concerned,” Colin Powell

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told the U.S. Congress, “with some of the actions of Venezuelan President Chávez and his understanding of what a democratic system is all about.”13 Domestically, Chávez rewrote the national constitution, concentrated executive power at the expense of Congress, and promised but largely failed to reinvigorate the economy. In the process he garnered broad support from poor and working-class Venezuelans but antagonized the upper, middle, and business classes. Internationally, he campaigned against the proposed Free Trade Area of the Americas, ordered the U.S. military to leave its offices in Caracas, refused permission for U.S. war planes to use Venezuelan air space in conjunction with drug interdiction campaigns, and provided assistance to the FARC. He supported Organization of Petroleum Exporting Countries (OPEC) production caps to boost crude oil prices and agreed to provide cheap petroleum to Cuba, undermining U.S. economic embargo efforts. He also paid visits to the leaders of Iraq and Libya and publicly criticized the U.S. bombing of Afghanistan and the war in Iraq. Having survived a recall referendum in August 2004, Chávez is now set to carry out the remainder of his presidential term ending in 2006. To summarize, citizens of Andean states live in (sometimes nominally) democratic countries with market economies. Yet frustration over the way democracy works or does not work and the failure of pro-market policies to improve social welfare fuels much of the region’s political discontent and instability. It also complicates U.S. efforts to promote security and stability, expanded trade, and democratic governments.

Major Challenges Several other challenges stand between Washington and its principal policy goals. Ironically, one is the temptation not to conform to a preferred policy philosophy or to engage in preferred policy tactics at the expense of those policy goals. As shown in the following discussion, U.S. actions to promote security and democracy in Colombia and Venezuela, respectively, illustrate this point. Another challenge is to minimize policy offsetting in terms of trade and counternarcotics policies. A third challenge is to avoid the worst consequences of having conflated the war on drugs and the global war against terrorism.

Ensuring Security and Stability (Without Nation-building) The security problems generated by failed and failing states are attracting increased attention. Failed states lack effective political, economic, and social institutions. These states are not simply underachievers. Rather, they demon-

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strate a marked incapacity to perform such classic state functions as exercising sovereignty over the national territory, providing a common defense, or maintaining law and order. They also demonstrate profound deficiencies in modern state functions such as reducing gross inequality, ensuring sound economic performance, and enhancing social welfare. States that are failing become conflict ridden and are prone to political violence and corruption. They become hotbeds of instability and refugee flows that can affect the quality of life far beyond their borders, and they serve as havens for a range of criminal enterprises. As Al-Qaida’s terrorist attacks launched from ostensibly sovereign Afghanistan clearly showed, the consequences of a failed state can be disastrous. Initiatives to strengthen a country’s political, economic, and social institutions can help prevent state failure. Such nation-building measures can be pursued multilaterally through international financial institutions or unilaterally as foreign policy. For successful self-interested states in an increasingly interdependent world, nation-building can be a useful policy tool. In the past, the consequences of failed states were more easily confined with fewer spillover effects. Today, failing states threaten their own people, their neighbors, and more distant populations as well. The U.S. administration that assumed power in January 2001 initially saw little utility in nation-building. This antipathy extended beyond the Clinton administration’s use of U.S. troops for peacekeeping in Haiti or Somalia (actions that the Bush administration believed might impair the military’s readiness to fight wars). It also helped define the administration’s foreign policy priorities and, thus, the appropriate policy tools to address them. In a Foreign Affairs article published in 2000, a chief architect of current U.S. policy, Condoleezza Rice, listed five priorities that would command attention under a new administration: military strength, global economic growth, alliance maintenance, Russia and China, and so-called rogue states.14 Although informative on several levels, the omission of failed states signaled both how little importance the new administration would attach to the problem and its disinterest in nation-building to address it. The September 11, 2001, terrorist attacks and subsequent war in Iraq compelled the United States to abandon a no-nation-building posture toward the Middle East. To realize its principal objectives in the Andean region— where the lack of effective, legitimate government and political institutions fuels a host of problems—the Bush administration must rethink its stance toward nation-building there. If states can be said to exist on a spectrum of viability whose benchmarks read successful, weak, failing, and failed, several Andean states already are clustered between the second and third markers; Colombia hovers perilously close to its endpoint. By no means is Colombia a failed state yet, but although Uribe has made significant gains against armed

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insurgents, the government lacks control over vast segments of the national territory. Pitched battles among guerrillas, paramilitaries, and regular armed forces have spread from the countryside into urban areas. FARC death threats have compelled dozens of city mayors to vacate their posts, creating vacuums of legitimate power at local levels. Colombia’s internal violence also reverberates routinely across borders in armed clashes and refugee flows. Given Colombia’s strategic location adjacent to Venezuela’s oil fields, the Panama Canal, and the Caribbean Basin, these spillover effects are especially worrisome. In this context, it is difficult to see how the United States can secure its goals without sustained nation-building efforts. One reason critics faulted the U.S.-backed Plan Colombia was its failure to address adequately the political, institutional, and economic factors that weakened the state and gave rise to guerrilla and paramilitary forces. Washington’s subsequent Andean Regional Initiative—which funneled nearly $800 million toward nation-building efforts across the region—reflects these concerns and is a step in the right direction. But it is a small step. Since most of the money targets Colombia’s neighbors, the initiative seems unlikely to induce effective nation-building where it is needed most.

Promoting Democracy (Without Supporting Coups) The United States has long promoted democracy in Latin America for strategic, ideological, and altruistic reasons. It believes democratic governments make good political allies and can best safeguard human rights and unlock human potential. In different ways and with different degrees of success, such efforts marked the Wilson, Kennedy, Carter, Reagan, and Clinton administrations. Of course, sometimes democracy brought to power governments that the United States disliked intensely. The leftist governments of Guatemala’s Jacobo Arbenz and Chile’s Salvador Allende are two such instances. Each tested the U.S. commitment to democracy, and in each case Washington failed the test by orchestrating Arbenz’s overthrow in 1954 and at the very least welcoming Allende’s in 1973. Knowledge of U.S. actions against these governments severely damaged Washington’s moral and political standing in Latin America, and the brutal regimes that replaced them did nothing to advance its broader democracy-promoting agenda. Those who justified U.S. support or sponsorship of these coups typically did so on the basis of realist Cold War calculations. The communist threat was such that it was safer to facilitate the downfall of democratically elected socialist regimes than to permit their continuation. As Henry Kissinger reportedly explained, “I don’t know why we need to stand by and watch a country go Communist due to the irresponsibility of its own people.”15 Many

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observers believed the end of the Cold War vitiated such logic and had given the United States the luxury of supporting democracy even when it spawned governments Washington disliked. Those holding such views can take little comfort in the U.S. response to Venezuela’s 2002 coup. The coup’s comic-opera aspects are well known. On April 12, 2002, Venezuelan military officers moved against President Hugo Chávez, announced his resignation, and placed him under house arrest. Pedro Carmona, leader of Venezuela’s national federation of business chambers, assumed the presidency, inexplicably bypassing Vice President Diosdado Cabello. Carmona suspended the constitution, and then dissolved Congress, the Supreme Court, and the attorney general’s office, essentially laying the grounds for a government-by-decree until elections the following year. Nineteen Western Hemispheric leaders quickly condemned the putsch and threatened to invoke sanctions under the Inter-American Democratic Charter adopted by the OAS. Several refused to recognize the Carmona regime. By contrast, the United States appeared to endorse the coup. Washington blamed Chávez for his own demise, refused to label his ouster a coup (“That is not a word we are using,” one official told The Washington Post16), and promised to work with the government that had just steamrolled Venezuela’s democratic institutions. Only when the coup crumbled two days later and Chávez returned to power did the United States temper its enthusiasm and bring its official statements more in line with its stated pro-democracy policy objectives. This diplomatic clumsiness, plus Washington’s failure to demand that Venezuela’s crisis be resolved constitutionally, sparked intense speculation over U.S. complicity in the events. The U.S. government strongly denied any involvement, but circumstantial evidence put Washington on the defensive.17 Moreover, through various means the United States had signaled repeatedly its displeasure with the Chávez regime: both Secretary of State Colin Powell and Central Intelligence Agency (CIA) director George Tenet, for example, had spoken critically of Chávez in February 2002 in comments that were front page news in Venezuela. When President Bush addressed a meeting of the Andean Community of Nations in Peru the next month, Chávez was conspicuously not invited, despite Venezuela’s membership in the community. Whether intended to green light a coup or not, these actions undoubtedly encouraged Chávez’s domestic foes. As one Defense Department official later explained, “We were not discouraging people. We were sending informal, subtle signals that we don’t like this guy.”18 Regardless of its actual role, by appearing to accept an unconstitutional end to a distasteful but democratically elected government, the United States badly damaged the credibility of its commitment to democracy. Editorials around the world scoffed at U.S. denials of complicity and pointed out that it

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was the Western Hemisphere’s small players, not its moral leader, who stood up to defend democratic principles. For those already dubious of Washington’s intentions toward Chávez, a subsequent State Department report exonerating U.S. officials of wrongdoing in Venezuela’s turmoil seems unlikely to change many minds.19 The United States has good reasons for promoting democracy in Venezuela and across the Andean region. Bolivia, Ecuador, and Peru constitute part of democracy’s “third wave” where political transitions have yet to yield fully consolidated democratic regimes. Other longtime democracies such as Colombia and Venezuela now teeter on the brink of deconsolidation. The collapse of democracy in the region would be a tragedy for our Andean neighbors. It could easily affect U.S. energy supplies and almost certainly would complicate U.S. counternarcotics efforts. “The next 25 years,” wrote the U.S. Commission on National Security/21st Century, “will determine whether Latin America’s march toward democracy is successful or not, and the consolidation of democracy is probably the most important overall determinant of the region’s prospects for security and stability” (emphasis added).20 If these predictions hold, consistently supporting democracy, despite the occasional thorns, will advance U.S. interests more effectively and enduringly than any short-term gains from sanctioning unconstitutional changes of power.

Policy Offsetting: Liberal Trade Versus the Drug Trade Policy offsetting occurs when the underlying logic of two policies conflicts, such that the policies themselves work at cross-purposes. Neither policy, therefore, can achieve its full measure of success, and tilting the balance toward one imposes efficiency costs on the other. The dilemma is most acute with free trade and anti–drug trafficking policies. The former requires increasingly open borders to facilitate commercial transactions. The latter requires ever-tighter controls over those same borders. Thus, a second challenge facing the United States is to minimize the costs incurred when policy offsetting cannot be avoided. Robust liberal trade rests on subsidiary policies that reduce tariffs, upgrade transport infrastructure, and deregulate financial systems. Even without comprehensive free trade agreements like the North American Free Trade Agreement (NAFTA), these measures help expand trade volume by lowering trade barriers, including regulatory barriers and transport and transaction costs. These benefits, however, are not without costs to anti–drug trafficking campaigns.21 Liberalized trade can increase the volume of legally traded goods as well as the variety of hiding places for illicit ones. Infrastructure upgrades for roads, ports, railways, and airports lower transport costs for legal

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and illegal products. Financial deregulation facilitates legitimate transactions and money laundering. These dynamics reflect the fact that a majority of illegal drugs enter the United States disguised inside legal products and transport containers and that the logic of vigorous drug interdiction runs directly counter to that of expediting the flow of goods across borders.22 The more aggressive border inspections become, the higher the transaction costs imposed on legal trade. Conversely, the more border inspections are streamlined to facilitate licit trade, the greater the volume of illicit goods. This is an important, but surprisingly undervalued aspect of the drug trade–free trade relationship. Failure to take this relationship seriously obscures the reality of policy offsetting and can promote mischaracterization of the effects liberal trade actually has on drug trafficking. The following example illustrates these points. In 1991, the United States adopted the Andean Trade Preference Act (ATPA), in part to help stem the flow of Andean drugs coming into the United States. The basic idea was that export expansion would complement coca eradication programs and help Andean countries move from illegal to legitimate commercial exports. The act sharply increased trade between the United States and Bolivia, Colombia, Ecuador, and Peru by eliminating duties and restrictions on a range of U.S.-bound products. U.S. exports to ATPA countries rose 65 percent from 1991 to 1999, and ATPA country exports to the United States jumped 98 percent.23 Yet ATPA produced only minimal effects on the region’s overall drug production. From 1991 to 2000, coca cultivation declined in some ATPA countries but actually doubled region-wide. The increase came from Colombia, which saw its legal and illegal exports to the United States jump dramatically under the trade accord. This surprising development reflects the underscrutinized assumptions of U.S. trade and antinarcotics policy. As shown in Figure 7.1, the United States based ATPA’s drug reduction potential on the premise that Andean coca producers could substitute legal crops for coca and shift their production positions along the production possibility frontier from points A to B. Such a shift assumed, however, that Andean countries already had devoted their resources fully to coca production, but, as noted above, Colombia had not. Colombia’s actual position was perhaps at point C. Thus, its underutilized resources positioned it to increase both the production of licit and illicit exports (point D). Consequently, today Colombia provides more than 60 percent of ATPA exports to the U.S. market but roughly 90 percent of the cocaine Americans consume.24 The more customs agents attack the drug influx through closer border inspections of Colombian products, the greater the costs they will impose on legitimate U.S.-Colombian trade. To be sure, expanded trade between the United States and Andean countries can benefit each. Yet, whatever ATPA’s merits were on trade—the legis-

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Figure 7.1 Colombia’s Production Possibility Frontier

Illicit Goods

Licit Goods Notes: A = assumed coca production

B = assumed coca production C = Colombia’s initial coca production D = Colombia’s new coca production

lation expired in December 2001—it was hardly the effective counternarcotics measure some advocates believed. Vice President Richard Cheney, for example, urged the U.S. Senate to reauthorize ATPA, because the accord provided “solid economic alternatives to the production of illegal drugs” in those countries; and John Walters, director of the White House Office of National Drug Control Policy, argued for renewal because “for the past ten years [it] has been a powerful trade tool in the fight against illicit drug production and trafficking.”25 The evidence, however, suggests otherwise. Although Congress now has reauthorized the trade accord, it’s unlikely to dampen illegal drug flows significantly. ATPA’s mediocre antinarcotics record—and that record’s mischaracterization—highlight the need to reflect critically upon the relationship between the narcotics trade and liberalized trade and underscore the challenge officials face in minimizing the effects of policy offsetting.

Conflating the War on Drugs and the War on Terrorism The third major challenge Washington confronts is to avoid the pitfalls inherent in conflating the war against drugs in Colombia with its global war against terrorism. These pitfalls include (1) the perils of fuzzy policy analysis, and (2) a commitment trap of long-term, increasingly costly obligations in Colombia and surrounding states.

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Several factors helped move Washington to view Colombia primarily through an antiterrorism lens, including reported linkages between the Irish Republican Army (IRA) operatives and Colombia’s FARC, and Plan Colombia’s initial failure to check either the guerrillas or coca production under the Pastrana administration. Three additional factors, however, entwined the antinarcotics initiative in the broader war against terrorism: the post–September 11, 2001, political climate, the collapse of peace negotiations between the FARC and the Pastrana administration, and the election of Alvaro Uribe as Colombia’s new president. In the U.S. Congress, the post–September 11 political climate freed up money for antiterrorist initiatives but made any pitch to fund counterinsurgency measures in Colombia a nonstarter. Pastrana’s peace process, meanwhile, had worked against waging all-out war against the FARC. Congress implicitly tied U.S. aid to a political settlement and in theory had restricted that aid solely to counternarcotics purposes. When Pastrana withdrew from peace negotiations in February 2002, the FARC greatly increased its military assaults, often against noncombatants. These attacks moved lawmakers to call for stronger White House action against Colombian terrorist organizations.26 Uribe’s election brought the process full circle. His entire campaign platform was based on opposition to peace talks, a frontal assault against the guerrillas and paramilitaries, the doubling of men in police and military uniforms, and the creation of a million-strong civilian militia. It resonated strongly with the get-tough antiterrorist temperament brewing in Washington. By late summer 2002, U.S. policy no longer legally distinguished among Colombia’s narcotics, guerrilla, paramilitary, and terrorism problems.27 The Bush administration asked Congress for explicit authority to mount “a unified campaign against narcotics trafficking, terrorist activities, and other threats” to Colombia’s national security.28 In July 2002, Congress agreed to lift the restrictions on U.S. aid, permitting its use against Colombia’s guerrillas (and presumably paramilitaries) whether they are involved in drug trafficking or not. The United States has legitimate concerns regarding Colombia’s future. Although their current ties are quite modest, closer collaboration between the FARC and the IRA (itself a world-class terrorist operation) could transform the FARC’s lethal potency by orders of magnitude, and access to FARC drug profits could help finance a range of terrorist activities elsewhere. Moreover, should the Colombian state eventually fail, a country controlled by guerrillas, paramilitaries, and drug lords almost certainly would boost coca production, threaten its neighbors’ sovereignty, and endanger transit through the Panama Canal. It could also play host to other terrorist groups. There is no question that Colombia matters to the United States or that Washington should act to protect its interests there. But there are inherent risks in conflating the wars on drugs and terrorism. One risk is inaccurate

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analysis. Does the black-white, good-evil dichotomous framework of antiterrorism capture the essence of Colombia’s problems? If terror is the overriding issue and force the only true option, this framework is appropriate. Within this framework, however, conflating the war on drugs with the war on terror could sustain antidrug policies beyond their usefulness instead of orienting policy around counterinsurgency. If terrorism is not the overriding issue, masking the situation’s complexity in a false sense of clarity could foreclose viable policy alternatives to all-out war. Another risk of conflating the two wars is the mission creep it will produce. As the Uribe administration wages its promised “war without quarter” against Colombia’s guerrillas and paramilitaries, refugee flows and cross-border reprisals are just two of the humanitarian and security issues the United States will feel increasingly obligated to address.29 Perhaps the greatest risk, however, is the ease by which an antiterrorist campaign might lead the United States into a commitment trap of costly, expanding obligations. Both the nature of Colombia’s irregular combatants and Washington’s preference not to negotiate with terrorists heighten prospects of a trap. On the one hand, classifying the FARC as a terrorist entity, which it is, does not erase its basic guerrilla warfare modus operandi. Other Colombian guerrilla and paramilitary groups operate similarly. It is standard military doctrine that conventional armies require a 10:1 numerical superiority to defeat guerrilla forces. With 37,000–39,000 guerrillas distributed among the FARC (18,000), the ELN (5,000), and paramilitaries (14,000–16,000), Colombia must recruit, train, equip, feed, and pay tens of thousands of new troops to achieve this ratio and will look to Washington to help underwrite these needs. On the other hand, because guerrilla wars can last remarkably long (Vietnam’s endured for thirty years; Colombia’s has lasted thirty-five years), a refusal to negotiate with terrorists could preclude a political settlement with the FARC and lock the United States into pursuing a costly, longterm military victory. It may be possible to sidestep an unintended, full-scale commitment trap, provided the United States clarifies the scope and time parameters of its Colombian policy. Regarding scope, the utility of unilateral and bilateral action, such as upgrading Colombia’s police and military forces, need not preclude innovative multilateral arrangements. This is especially important for Colombia, whose varied problems affect neighboring states and cannot be mitigated effectively without a coordinated response. Simply put, the more that antidrug strategies, targets, objectives, and assessment criteria are determined by consensus between Washington and its Andean neighbors—perhaps through a Western Hemisphere Inter-Governmental Narcotics Commission— the more likely Andean states are to make credible commitments to enforce them. This would greatly increase these measures’ regional impact and international legitimacy.30 Washington also could realize significant ancillary div-

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idends from the goodwill generated via such a liberal institutionalist approach. Hemispheric trade, promoting democracy, and transnational crime are all issues the United States could address more effectively in a political climate where Latin American governments view Washington as a partner rather than a unilateral actor. The United States might minimize some of the worst consequences of a commitment trap by establishing clearer policy time horizons before the trap is sprung. Does Washington, for example, accept former president Pastrana’s time frame of “15 to 20 years” of sustained U.S. aid, or does it have a shorter time frame in mind?31 Although there is nothing inherently wrong with assuming long-term obligations, a knowing embrace of such commitments is more likely to get and maintain domestic political support, conserve financial resources, and preserve policy flexibility as developments unfold.

Conclusion In this chapter I have underscored the reasons why Andean states matter to the United States, the new threats to U.S. interests in the region, and the challenges Washington confronts in achieving its policy goals. These challenges, though significant, are not insurmountable. They are best addressed by striking a sound balance between realist and liberal institutionalist policy strategies—a balance forged upon more careful, sustained statecraft. By refusing to sacrifice its principal policy goals to preferred policy philosophies or tactics, by minimizing the costs of policy offsetting, and by avoiding the worst consequences of conflating the wars on drugs and terrorism, the Bush administration can enhance its prospects of policy success considerably.

Chronology of the Recent Evolution of U.S. Policy Toward the Andean States 1986. President Ronald Reagan signs National Security Decision Directive No. 221, declaring that drug production and trafficking constitute a security threat to the Americas. The drug certification process begins (amended in 1988). Certification requires the president to review antidrug efforts taken by governments of drug-producing countries and to certify to Congress those governments’ cooperation with U.S. antidrug efforts. Countries decertified lose their eligibility to receive U.S. aid. Operation Blast Furnace targets Bolivia’s cocaine factories for destruction. 1987. Operation Snowcap targets Bolivian and Peruvian coca fields and cocaine factories for eradication.

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1989. Colombian presidential candidate Luis Carlos Galán is assassinated by Colombian drug lords. President George H.W. Bush adopts a five-year, $2.2 billion multifaceted Andean Initiative designed to disrupt activities of trafficking organizations, encourage increased action by the Andean military, and provide U.S. military support for counternarcotics forces in Andean states. The Andean Trade Preference Act is proposed to provide economic and alternative development assistance to Andean cocaproducing countries by reducing tariffs on cut flowers, vegetables, leather goods, and luggage and with the goal of generating legal employment that would provide opportunities to transition small farmers away from coca. 1990. The Cartagena Summit is held with Bolivia, Colombia, Peru, and the United States. The Declaration of Cartagena pledges cooperation in the war on drugs, and the United States pledges new resources to assist antidrug efforts. 1991. The Andean Trade Preference Act goes into effect. Exports from Andean countries to the United States rise by 65 percent over the next decade, and U.S. exports to Andean states jump 90 percent during this period. 1992. The San Antonio Summit among Bolivia, Colombia, Ecuador, Mexico, Peru, the United States, and Venezuela takes place. The Declaration of San Antonio reaffirms prior commitments made under the Declaration of Cartagena. The United States pledges to support multilateral antinarcotics efforts and to provide its counterparts technical and financial assistance to eradicate coca production, control trade in narcotics chemical precursors, and promote alternative development programs. 1994. The United States decertifies Bolivia as an effective collaborator in the war on drugs. 1996. The Leahy Amendment restricts U.S. aid from going to military units implicated in human rights abuses. The United States and Bolivia ratify a new extradition treaty to facilitate more effective prosecution of drug traffickers and criminals. The United States decertifies Colombia as an effective collaborator in the war on drugs (and again in 1997). 1998. The United States certifies Colombia as an effective collaborator in the war on drugs. 1999. The United States and Ecuador agree to establish a Forward Operating Location (FOL) for U.S. military surveillance aircraft at Manta, Ecuador, to detect drug-trafficking flights. 2000. The Clinton administration launches Plan Colombia, a $1.3 billion emergency aid package designed to support Colombia’s democracy, increase its security, and assist its efforts to defeat insurgent guerrillas and eradicate coca production. 2001. Through the Andean Regional Initiative, approximately $780 million for both military and nonmilitary aid is dispersed among Andean states.

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2002. A Venezuelan coup topples President Hugo Chávez; the United States appears to support the coup until Chávez returns to power.

Notes 1. U.S. General Accounting Office (GAO), “Drug Control: Efforts to Develop Alternatives to Cultivating Illicit Crops in Colombia Have Made Little Progress and Face Serious Obstacles,” GAO-02-291 (Washington, DC: GAO, 2002), 5. 2. Juan Forero, “From Llama Trails to the Corridors of Power,” New York Times, July 6, 2002, A4. 3. Bolivia’s major parties include Nationalist Democratic Action, the Nationalist Revolutionary Movement, and the Movement of the Revolutionary Left. 4. Xinhua General News Service, “IDB to Grant 682 Million Dollars in Loans to Ecuador,” May 6, 2004; Reuters, “Ecuador: April Unemployment Rises to 12.1 pct.,” June 3, 2004. 5. Russell Crandall and Akilah Jenga, “New Complications in the Andes,” 2003–2004 Strategic Survey (London: International Institute for Strategic Studies, 2004), 84–99. 6. U.S. GAO, “Drug Control: Efforts to Develop Alternatives,” 5. 7. “S&P Upgrades Peru Sovereign Debt as Public Finances Strengthened,” WMRC Daily Analysis, June 9, 2004. 8. Juan Forero, “U.S. to Step Up Spraying to Kill Colombian Coca,” New York Times, September 4, 2002, A1. 9. Paul E. Simons, “U.S. Narcotics Control Initiatives in Colombia,” Senate Drug Caucus, June 3, 2003, www.ciponline.org; Crandall and Jenga, “New Complications in the Andes.” 10. Two groups comprise the brunt of the guerrilla forces: the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, FARC), and the National Liberation Army (Ejército de Liberación Nacional, ELN). Paramilitary groups are organized under the auspices of the United Self-Defense Forces of Colombia (Autodefensas Unidas de Colombia, AUC). The FARC reportedly controls a third of the national territory, and the FARC and ELN combined control roughly onehalf. Between 30 and 50 percent of the FARC’s revenues derive from “taxing” the cultivation of coca in FARC-controlled territories. Similarly, the AUC’s paramilitaries earn about half a million dollars each trimester from illicit drugs. See Andrés Cala, “The Enigmatic Guerrilla: FARC’s Manuel Marulanda,” Current History 99, no. 634 (February 2000): 56–59; Jeremy McDermott, “Guerrillas Control Half of Colombia,” San Francisco Examiner, August 28, 2000, A1; and Scott Wilson, “Colombia’s Other Army: Growing Paramilitary Force Wields Power with Brutality,” Washington Post, March 12, 2001, A1. 11. World Bank, World Development Indicators, Data by Country: Colombia, Consumption/Income Inequality database, www.worldbank.org. 12. U.S. Department of State, International Narcotics Control Strategy Report (Washington, DC: U.S. Department of State, Bureau for International Narcotics and Law Enforcement Affairs, 2002). 13. Colin Powell, “Testimony Before the U.S. Senate Foreign Relations Committee,” Foreign Policy Overview and the President’s Fiscal Year 2003 Foreign Affairs Budget Request (Washington, DC: Government Printing Office, 2002). Also www.access.gpo.gov/congress/senate/senate11sh107.html (accessed June 2004).

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14. Condoleezza Rice, “Campaign 2000: Promoting the National Interest,” Foreign Affairs 79, no. 1 (January/February 2000): 45–62. 15. Paul E. Sigmund, The Overthrow of Allende and the Politics of Chile, 1964–1976 (Pittsburgh: Pittsburgh University Press, 1977), 103. 16. Scott Wilson, “Leader of Venezuela Is Forced To Resign; Ex-Oil Executive Takes Office as Interim President,” Washington Post, April 13, 2002, A1. 17. Since 2001 the United States had funneled over three-quarters of a million dollars through the National Endowment for Democracy to various Venezuelan media, business, and labor groups that opposed Chávez, and in November 2001, State Department, Pentagon, and Central Intelligence Agency (CIA) officials convened to strategize over the Venezuelan situation. Beginning in December 2001, Venezuelan military officers and civilians who planned and participated in the coup met periodically in Washington with senior U.S. officials from the National Security Council, the State Department, and the Pentagon. The Venezuelans included Pedro Carmona, General Lucas Rincón Romero, and Rear Admiral Carlos Molina Tamayo; the Americans included Elliot Abrams of the National Security Council, Otto Reich of the State Department, and Rogelio Pardo-Maurer, deputy secretary of defense for Western Hemisphere affairs. Similar meetings occurred in the U.S. Embassy in Caracas. 18. Christopher Marquis, “Bush Officials Met with Venezuelans Who Ousted Leader,” New York Times, April 16, 2002, A1. 19. U.S. Department of State, “A Review of U.S. Policy Toward Venezuela, November 2001–April 2002,” Report Number 02-OIG-003 (Washington, DC: U.S. State Department, 2002). 20. “Seeking a National Strategy: A Concert for Preserving Security and Promoting Freedom” (Washington, DC: U.S. Commission on National Security/21st Century, 2000), 107. 21. For example, although the quantity of legal goods traded between Mexico and the United States rose after NAFTA’s advent in 1994, so apparently did the volume of cocaine shipments. Drug seizures at the border—which provide a proxy indicator of the volume of these illegal flows—tell the story. Between 1994 and 2001, the quantity of cocaine seized at the border rose from 22.1 to 29.3 metric tons. See U.S. Department of State, Narcotics Control Reports (Washington, DC: U.S. State Department, Bureau for International Narcotics and Law Enforcement Affairs, 2002), V-6. Also www.state.gov. 22. Kal Raustiala, “Law, Liberalization and International Narcotics Trafficking,” New York University Journal of International Law and Politics 32, no. 1 (1999): 91. 23. U.S. Trade Representative (USTR), Third Report to the Congress on the Operation of the Andean Trade Preference Act (Washington, DC: USTR, 2001), 10. 24. Economic Commission for Latin America and the Caribbean (ECLAC), United States–Latin America and the Caribbean Trade Developments 2002 (Washington, DC: ECLAC, 2003), www.eclac.org; U.S. Department of State, International Narcotics Control Strategy Report (Washington, DC: U.S. Department of State, Bureau for International Narcotics and Law Enforcement Affairs, 2002). 25. Richard Cheney (remarks delivered to the Council of the Americas, Washington, DC, May 6, 2002), www.whitehouse.gov; John Walters, “Drug Czar Urges Passage of Andean Trade Preference Act” (press release, Office of National Drug Control Policy, White House, Washington, DC, 2002), www.whitehousedrugpolicy.gov. 26. In March 2002, both the House and Senate passed nonbinding resolutions urging the president to propose legislation to this effect. Miles A. Pomper, “Colombia Aid Restrictions Reconsidered as Focus Shifts to War on Terrorism,” CQ Weekly, March 9, 2002, 658.

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27. Assistant Secretary of State Otto Reich aptly captured Washington’s new thinking. “There is no [guerrilla] insurgency in Colombia,” Reich explained. “What you have is three terrorist groups” (emphasis added). Quoted in James Wilson, “Aid to Colombia Prompts Fears of US ‘Mission Creep,’” Financial Times, March 18, 2002, 8. 28. U.S. Department of State, “Testimony of Ambassador Otto J. Reich, Before the House International Relations Committee’s Subcommittee on the Western Hemisphere,” in State Department’s Otto Reich Outlines Terrorist Threat in Colombia (Washington, DC: U.S. Department of State, 2002). 29. The “war without quarter” promise came from Marta Lucía Ramírez, Colombia’s former defense minister, interviewed by Reuters. Reuters, “Colombia’s 1st Female Defense Chief Promises War,” August 6, 2002. 30. For discussion of such a multilateral approach, see Viron P. Vaky and Jorge I. Domínguez, “Can an Anti-narcotics Effort Be Multilateralized?” Policy Brief, InterAmerican Dialogue (Washington, DC: Inter-American Dialogue, 2001). 31. Scott Wilson, “Colombia to Ask Bush for Additional Funds,” Washington Post, February 16, 2001, A18.

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8 From Drugs to Security: A New U.S. Policy Toward Colombia Russell Crandall

On February 13, 2003, a single-engine Cessna 208 plane carrying four U.S. Department of Defense contractors and one Colombian crashed in the southern department (state) of Caquetá, a region of Colombia that is a stronghold of the country’s largest guerrilla insurgency. Soon afterward, rescuers discovered the bodies of the Colombian and one American; the other three Americans were missing. Quickly, it became apparent that the three men had been captured by the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, FARC), Colombia’s largest guerrilla group. Then on February 24, the FARC issued a communiqué declaring the three men “prisoners of war” and saying that “the three gringos will be freed along with other Colombian prisoners of war as soon as an exchange occurs between the FARC and the government in a large demilitarized zone.”1 The Bush administration responded by sending additional Special Forces troops to help locate and try to rescue the men. At the time of this writing the fate of the three men is still uncertain. What is more evident, however, is that U.S. policies toward Colombia are changing rapidly and that many assumptions about the nature of U.S. policy no longer hold. Since September 11, 2001, the U.S. government increasingly views the situation in Colombia in the context of global terrorism and regional security. In this chapter I address the evolving nature of U.S. policy toward Colombia at a critical point in that country’s civil war. The war on terrorism ensures that there will be no more business as usual with respect to Colombia policy. But these new security concerns do not replace the more traditional U.S. counternarcotics priorities in Colombia. Rather, their effect will most likely be in addition to the war on drugs.

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Colombia’s democracy is in crisis. In 2002, then president Andrés Pastrana’s three-year effort to find a peaceful solution to the country’s decadeslong conflict collapsed under the weight of the FARC’s duplicity and terror. Rightist paramilitary groups further complicate this scenario, as they are bent on fighting the leftist guerrillas and expanding their own dominion, even as they negotiate with the government. The conflict takes roughly 3,500 lives each year. The Colombian population is weary of the violence and fed up with the FARC’s intransigence at the negotiating table. A March 2002 poll indicated that 76 percent of Colombians would support a U.S. invasion; 83 percent support the deployment of U.S. antiterrorist forces to South America.2 Colombian congressional elections in March 2002 resulted in a strong showing for candidates allied with presidential candidate Alvaro Uribe, ensuring strong support for his new policies.3 Elected with 54 percent of the vote, Uribe now enjoys public approval ratings of between 70 and 80 percent, the highest of all Latin American leaders.4 Washington has enthusiastically applauded Uribe’s new strategies, and heightened U.S. counterinsurgency assistance to bolster the Colombian government for the foreseeable future. Yet any increased U.S. assistance and training will take years before it has any demonstrable effect, if at all, on Colombia’s war. Until then, the brutality and breadth of the war broaden every day. The FARC’s bomb attack on the El Nogal club in Bogotá in February 2003, killing more than thirty civilians, and the attempted assassination of President Uribe in Neiva are just two indications of the growing terrorist nature of Colombia’s war.5

FARC Rampage and the End of the “Peace” Era In late 2001, it looked as if there might be a breakthrough in the peace negotiations between the Colombian government and FARC insurgents. The FARC dropped its demand that the Colombian military pull back from the border of the despeje, a liberated zone the size of Switzerland that the government had granted the FARC three years earlier to jump-start peace talks. The group also agreed to an April 7, 2002, deadline to set cease-fire terms. Many analysts believed the FARC decided it was better off cutting a deal with the outgoing Pastrana administration, knowing that any new government would be less willing to grant concessions that were so generous. In the month that followed these surprise announcements, however, the FARC increased its attacks on government targets and killed more than forty Colombian soldiers. Then, on February 20, 2002, the FARC hijacked a Colombian commercial plane carrying thirty-five passengers, forced it to land, and abducted a senior senator, Jorge Gechem, who was on board. The hijacking turned out to be the last straw for President Pastrana, who had staked his credibility on a successful accord with the guerrillas.

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In a nationally televised address, an enraged Pastrana announced that he would halt the peace process and insisted that the FARC vacate the despeje. The next day, Colombian Air Force planes bombed FARC camps and airstrips in the enclave, and a day later Colombian ground troops began to retake the area. Soon after, FARC rebels kidnapped presidential candidate Ingrid Betancourt. The FARC also kidnapped, tortured, and murdered Senator Martha Catalina Daniels and her two companions. Currently, in addition to Betancourt, the FARC is holding several members of the Congress in captivity. Since President Pastrana ended the despeje, the FARC has embarked on a killing and kidnapping spree unprecedented in the guerrilla group’s almost forty-year history. In February and March 2002 alone, the FARC attacked 143 electrical towers, cutting service in seventy-six cities. The 20,000 electrical targets throughout the country make the potential for FARC economic sabotage all too real. The group also set off a bomb at a dam complex that provides water to the capital, Bogotá. The FARC’s ability to carry out such brazen operations stems from an estimated $300 million in annual narcotics revenue.6 The group took advantage of its sanctuary to double the amount of coca cultivated in the region in a three-year period, generating even more drug revenue. Well-trained, wellequipped, ruthless, and growing in numbers, the FARC in 2002 barely resembled the group that started in the early 1960s to create a social utopia in Colombia. Today, the FARC is a group that harbors Irish Republican Army (IRA) bomb-making specialists and uses crude Libyan-made gas-cylinder mortars. The group now possesses the means that allowed them to acquire, for example, 10,000 Kalashnikov rifles from Jordan and to smuggle them into the country via Vladimiro Montesinos, spymaster for former Peruvian president Alberto Fujimori. It also appears that the FARC may never have intended to negotiate in good faith when it agreed to peace talks in late 1998. According to one FARC deserter, “The thinking has always been to take power. This is what you are seeing now, blowing up bridges, kidnapping high government functionaries, dynamiting towers, aqueducts, oil pipelines.”7 Amazingly, most of the FARC’s growth came at a time when Washington was obsessed solely with prosecuting the drug war in Colombia. In early 2002, the FARC dispatched 5,000 troops to four key regions throughout Colombia. These troops were trained in the despeje, and it is believed the training included bomb making and other techniques of urban warfare. Since then, direct confrontations between the FARC and the United Self-Defense Forces of Colombia (Autodefensas Unidas de Colombia, AUC) have increased dramatically. In a particularly gruesome episode during a FARC-AUC battle in the northwest province of Chocó, the FARC soldiers lobbed gas-cylinder bombs into a church in which local residents had sought refuge. One hundred and nineteen civilians inside the church were killed,

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mostly women and children. The FARC also stepped up attacks on democracy itself. In June 2002, the group issued a statement that all mayors and provincial government officials were to be targeted for death if they did not resign their posts. More than 150 mayors have resigned their positions, dozens have been killed, and several city halls have been forced to close.

Colombians Turn to Alvaro Uribe Colombians reacted to the dramatic upswing in FARC military activities by galvanizing support for Alvaro Uribe’s candidacy. Running on a platform of “Firm Hand, Big Heart,” Uribe pledged that he would not openly negotiate with the FARC until they demonstrated a willingness to talk in good faith. Uribe’s campaign was marred by some two dozen attempts on his life, including one episode on April 14, 2002, that killed three people and injured twenty when a bomb was detonated in a bus as Uribe’s campaign convoy drove through the port city of Barranquilla. In June 2002, Uribe won an unprecedented first round victory against Liberal Party candidate Horacio Serpa. Despite heavy security for Uribe’s August 5 inauguration, FARC guerrillas shot mortar shells at the presidential palace and nearby military academy. The mortars landed erratically and set off fires, killing nineteen civilians. This attack was a technological and organizational leap for the insurgency and a clear indication that they were increasing terrorist campaigns in the cities. Upon taking office, President Uribe imposed emergency rules under a “state of domestic commotion” for ninety days and renewed it in November with Senate approval as required by the constitution. Although not as extreme as a “state of siege” with government curfews, Uribe’s move sent an unequivocal signal that his new administration meant business.8 The decree granted the military power to detain individuals, search private premises, and monitor phone calls without judicial warrants. It also established Rehabilitation and Consolidation Zones (RCZs). These areas in twenty-seven municipalities in the departments of Arauca, Bolívar, and Sucre were placed under the command of a military officer empowered to impose curfews and restrict the movements of residents. On September 24, 2002, President Uribe traveled to Washington, D.C., and met with officials from Congress, the Pentagon, and the Departments of State and Treasury. Uribe indicated that his administration would do more to combat drugs and illegal groups and launch the controversial plan to train peasant soldiers and organize one million civilian informants. Uribe also told his Washington hosts that although New York City has 42,000 police officers, there are only 75,000 for Colombia’s entire national territory.9

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The Uribe Administration Gets Tough Bolstered by the green light he received in Washington, President Uribe unveiled his “domestic security policy,” which included a one-time security tax of 1.2 percent on liquid assets greater than $60,000. Revenue from the tax produced approximately $800 million for the armed forces.10 Sixty percent of the income was used to cover the shortfalls in the 2002 and 2003 defense budgets, and 40 percent went to increase troop levels. Even though unprecedented for Colombia, this tax generated revenues far short of what is needed to fulfill Uribe’s promise to double the number of combat troops and police.11 Uribe is also hoping to train 6,000 new elite army troops for two mobile brigades and pay small sums to 100,000 civilian informants. The government also announced plans to use a U.S.-trained commando force to track top insurgent and paramilitary leaders.12 In addition to the security decrees, Uribe also ordered the military to take the offensive against the guerrillas. Soon after his inauguration, the military began operations against the FARC in the southern department of Meta, leading to the deaths of an estimated 100 rebels. Colombian military officials reported that from July to September 2, 2002, 525 guerrillas and paramilitaries were captured or killed in 400 skirmishes. During that same period in 2001, 1,683 guerrillas and paramilitaries were killed in 262 operations.13 Since President Uribe has been in office, all armed groups, especially the FARC, have increased their urban activities. Between January 2001 and September 2002, the Colombian National Police recorded 409 terrorist acts committed in the three largest cities, Bogotá, Medellín, and Cali. FARC attacks increased by 23 percent in 2003, and negotiations over prisoner exchanges have reached an impasse as the Uribe administration has made clear that no negotiations will be possible without a complete cease-fire, a condition the FARC has rejected.14 In early 2004, the government set into action Plan Patriota, deploying 15,000 troops to the FARC’s southern heartland where a military presence has not existed for fifteen to twenty years. Uribe insists the troops will remain there until the FARC is annihilated.15 A new and key development in recent years has been the Colombian military’s operations against the AUC. Unlike previous years when the military conducted virtually no operations against the paramilitaries and often provided them with tacit support, the military has begun to treat them as the terrorist groups they are. More paramilitary troops were killed or captured in 2002 and 2003 than at any time previously. Some analysts believe that the military’s greater pressure on the paramilitaries might have been one factor in AUC leader Carlos Castaño’s November 29, 2002, call for a unilateral cease-fire to start on December 1. In a twelvepoint document issued by Castaño, the AUC promised to cease offensive

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operations against guerrillas because the government was “demonstrating its capacity and political will” against the guerrillas. Although few believed that the AUC would adhere to the cease-fire, Castaño’s announcement did reinforce the idea that any deal to end AUC military activities would immediately place greater military and political pressure on the FARC. In 2003, the Uribe administration publicly stated its ambitious goal to have the paramilitaries fully demobilized by December 2005. Although this will be difficult to fulfill given the paramilitaries’ proclivity and perfidy, it is worth noting that in late November 2003 roughly 800 paramilitary members located in and around the city of Medellín surrendered to government authorities, marking a small but important first step in the demobilization process. Negotiations with the AUC began to falter as factions began to violate the cease-fire. The Uribe administration responded to continuing violence with the demand that paramilitaries gather in a “concentration zone” in order to monitor cease-fire adherence. AUC leaders refused, claiming they could not leave civilians defenseless against guerrilla attacks. On March 31, 2004, the AUC issued what it termed a “unity for peace manifesto” in which it declared factions to have adopted a united front for negotiations and committed themselves to shifting troops into concentration zones.16 Although the peace process appeared back on track, the April 16, 2004, disappearance of Castaño, reportedly taken from his home by fifty AUC assassins, ended the seeming progress as a more hard-line faction led by Salvatore Mancuso seized control.17 The AUC demanded assurances against extradition to the United States, but Uribe continued to insist that extradition was nonnegotiable. Paramilitaries began to threaten the president’s assassination, to which he responded with threats of annihilation.18 Compromise came in early May 2004 with ten AUC commanders agreeing to negotiate from a 368-square-kilometer (142-square-mile) concentration zone in which they would be safe from arrest or extradition. The disappearance and likely murder of Castaño, however, makes many wonder if the AUC will truly change its ways. Some analysts speculate that the AUC will negotiate peace because an agreement with the Uribe administration will likely be better than with future administrations. Yet similar logic led to the belief that the FARC would negotiate peace with the Pastrana administration from their despeje. The government, however, insists this is not a repeat of the despeje because the concentration zone is much smaller and more closely monitored.19 Uribe has made significant progress against illegal armed groups since his election. The annual rate of arrests of suspected terrorists and paramilitaries has increased by 133 percent, including 700 arrested in the first three months of 2004. Over 4,700 illegal armed actors have demobilized, though recruitment efforts have continued to reinforce guerrilla groups.20 The 2004 acquittal of three members of the IRA arrested in August 2001 disappointed many. Niall Connolly, Martin McCauley, and James Monaghan

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were arrested in Bogotá after arriving on a flight from the FARC’s despeje and were accused of training the insurgents in the use of explosives. The government’s case was legally weak, as the eyewitnesses who claimed to have seen the men training the guerrillas submitted conflicting testimonies. The government also used forensic tests that it claimed showed that traces of drugs and chemicals used in the fabrication of drugs were present on the men’s clothes when they were apprehended. In any event, U.S. secretary of state Colin Powell added some international intrigue to the case during his December 4, 2002, visit to Bogotá when he said, “When you start to see members of the IRA in Colombia sharing experiences, sharing knowledge, doing only heaven knows what, it suggests that these kinds of organizations . . . are committed to destroying democracy in our hemisphere. . . . Should that not be a concern of ours?”21

The “War on Drugs” Overlooks Colombia’s Civil Conflict For more than a decade a central goal of the international war on drugs waged by the United States was to reduce the supply of illicit drugs being cultivated and exported from the Andean region of South America. In the case of Colombia in particular, for most of the 1990s this strategy involved pressuring the government to go after the leaders of the cocaine cartels based in the provincial cities of Medellín and Cali. Washington thought that this “kingpin strategy,” if successful, would deal a mortal blow to the cartels’ ability to ship drugs to the United States. In many ways the strategy worked. By 1995, all of the Cali and Medellín cartel leaders were either dead or in prison in Colombia or the United States. But for all of its success in apprehending narco-traffickers, the kingpin strategy did little to reduce the overall drug trade. Instead, drug production atomized from the large, visible Medellín and Cali cartels to a much greater number of small drug producers. These “boutique” drug traffickers became harder to track and apprehend, making subsequent operations much more difficult. Successful U.S.-led drug eradication efforts in Bolivia and Peru have further complicated antidrug efforts. Raw coca cultivation normally done in these two countries (and transported into Colombia for processing) shifted into Colombia, especially to guerrilla-controlled regions near the Ecuador border. This shift in drug cultivation has swelled the war chests of both leftist guerrillas and right-wing paramilitary groups. These changes in the dynamics of drug cultivation and production took place before Andrés Pastrana was elected president in 1998. Although Pastrana pledged cooperation with U.S. anti-drug efforts, he also initiated farreaching peace talks with the guerrilla groups and granted the despeje to the FARC, in return for promised cooperation at the peace table.

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For the United States, the arrival of the Pastrana administration represented a convenient opportunity to change its antidrug policies.22 First, the U.S. government realized the high profile kingpin strategy had done nothing to reduce the supply of cocaine leaving Colombia, and a new approach was needed. Second, Washington realized that its efforts to subvert Ernesto Samper—whose presidential campaign was accused of receiving money from the Cali cartel—had resulted in weakening the Colombian state just as guerrilla and paramilitary groups were becoming stronger than ever. Washington considered the Pastrana government to be a reliable antidrug ally, support that allowed the United States to adjust its drug strategies without having to admit its previous policies had failed. Faced with this deteriorating security situation, the Clinton administration set out to “save” Colombia in the summer of 1999.23 The attempt to save Colombia was encapsulated in a set of policies known as Plan Colombia.24 Although it did recognize the wider security concerns facing Colombia, the $1.3 billion plan was still largely an antidrug effort. Reluctant to break the taboo on counterinsurgency support for the Colombian military, the Clinton team decided the best way to help the Colombian government fight the insurgencies was to fight the war on drugs. This support took the form of a major escalation in fumigation efforts in the southern region of the country. From the outset, the plan’s objectives were bold: to cut drug production in half within six years and provide long-term security needed for economic and political change. Implementation has been fraught with problems.25 The United States has supplied Colombia with more than seventy helicopters, trained and equipped three special army battalions for antinarcotics operations, upgraded Colombian Air Force planes, and built up its radar systems and intelligence-gathering capabilities. But still, the U.S. State Department readily admits that positive results have been elusive. In 2001, coca cultivation in Colombia soared 25 percent, on top of a 50 percent increase from 1998 to 2000. Costly efforts to promote substitution have proven futile, as the poor soil and lack of security in these coca-growing regions have made the transition impossible.26

The Bush Administration’s Response to the Uribe Administration By late 2001, once the U.S. war on terrorism was nearly over in Afghanistan, the Bush administration began gearing up for phase two, and the insurgencies in Colombia were high on that list. The Bush administration has had little patience for the FARC’s bad faith at the negotiating table, its continued involvement in drug trafficking, and its increasingly urban terrorist activities.

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The Bush administration applauded the election of President Uribe and considers him a reliable and capable ally. At the same time, however, Washington has made it clear to Uribe that Colombia’s war will need Colombian solutions and that much more needs to be done by the Colombian government before security and peace can be attained. The Bush administration’s first concrete support for Uribe’s aggressive efforts came in February 2002 when it announced a $98 million program to fund and train an elite Colombian counterinsurgency military battalion.27 The battalion’s primary mission is to protect the Caño Limón-Coveñas oil pipeline, which has been attacked by guerrilla groups more than 1,000 times since the 1980s. Those attacks on the nation’s largest pipeline have been costing the government as much as $500 million a year in lost revenue. (Petroleum royalties make up 25 percent of the government’s annual revenue.) The battalion consists of approximately 1,000 soldiers and received training by U.S. Special Forces. The military’s long-term goal is to eliminate the pipeline bombings altogether. Before the U.S. training program, the military responded on its own in 2002 by deploying five of the six battalions in the Eighteenth Brigade for pipeline protection. This increase from two battalions the year before helped reduce pipeline bombings from 170 in 2001 to thirty in 2002.28 In January 2003, a few dozen U.S. Special Forces troops arrived in the department of Arauca to begin training the new battalion. The troops are limited to sixty soldiers at any one time in the areas of conflict, are barred from any military action, and are housed in specially fortified barracks. The decision to directly fund the Colombian military’s counterinsurgency efforts shattered a fundamental taboo of U.S. policy in Colombia that all military assistance had to be for counternarcotics. Observers expect this elite battalion will be the first step in significantly increased U.S. counterinsurgency support over the next several years.29 The Bush administration’s new strategy received bipartisan support in August 2002 when the U.S. Congress approved the use of U.S. donated helicopters by the Colombian military in counterinsurgency campaigns. Until then, helicopters, other military assistance, and training, such as a 3,000-man antidrug brigade trained by U.S. Special Forces, could only be used in counternarcotics efforts. Even Senator Patrick Leahy (D-VT), a long-time critic of U.S. policy in Colombia, supported the decision to allow for U.S. assistance to be used against the insurgents.30 In late September 2002, U.S. attorney general John Ashcroft announced the indictments of AUC paramilitary leaders Castaño, Mancuso, and another commander. In the indictment, the U.S. government accused them of protecting cocaine laboratories, setting price controls on cocaine, and managing shipments from Colombia’s coast-to-maritime vessels. On November 13, Ashcroft

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announced indictments of three other FARC leaders, including Jorge Briceño Suárez, number two in the FARC command structure.31 The indictments signaled a willingness to use antidrug laws to go after insurgent terrorists. Although increasingly looking for ways its aid can be used for both antidrug and counterinsurgent efforts, the United States will continue to place drugs before terrorism. This has been the nature of U.S. assistance in the 1990s and the early twenty-first century. The bureaucratic inertia of the drug war and political risks of a counterinsurgency effort will ensure that it continues.

Whither the Drug War? Not Just Yet Along with U.S. assistance for counterinsurgency efforts, Washington continues its almost two decades of antidrug efforts in Colombia. Despite the $1.3 billion Plan Colombia to reduce the production and export of illicit drugs, as much processed cocaine (700 tons) was leaving Colombia in 2002 as in any previous year. Coca is being cultivated in roughly twice as many areas of the country as a few years ago, although overall coca cultivation did drop in 2002.32 In early September 2002, the United States started the biggest and most aggressive fumigation effort to date to wipe out coca cultivation in southern Colombia. A previous fumigation campaign in February 2002 was beset with problems. U.S. and Colombian officials stated that small coca farmers would be spared if they stopped growing coca in exchange for government benefits. Some 3,500 farmers in the southern department of Putumayo signed up, agreeing to pull up their crops within twelve months in return for government aid. Many farmers never pulled their coca crops, however, and government aid was slow in arriving. That resulted in almost four times as much coca killed by fumigation as by voluntary removal. The effort was a public relations disaster for both the U.S. and Colombian governments.33 The results of the February 2002 campaign aside, the more recent campaign targeted 300,000 acres to be fumigated in 2002, up 30 percent from the previous year. The fleet of crop-duster planes is slated to increase from twelve to twenty-two, and authorities hoped to double the acreage fumigated in 2003. The antidrug strategy aims to fumigate coca plantings faster than they can be replaced.34 The State Department’s annual International Narcotics Control Strategy Report concluded that the area devoted to coca cultivation had decreased by 21 percent in 2003 and by one-third since the launching of Plan Colombia.35 Yet, it is too soon to tell whether these gains will be upheld or if the coca cultivation will only shift to other areas, both inside Colombia and in other Andean countries. Secretary of State Powell announced that the United

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States would also restart the joint program aimed at forcing down or shooting down suspected drug-trafficking planes. The program had been suspended in April 2001 when a Peruvian Air Force jet shot down a U.S. missionary group’s plane, killing an American mother and her infant daughter.36 The U.S.-led antidrug efforts were dealt a severe blow in late 2002 when a Colombian judge ordered the release of Cali cartel kingpin Gilberto Rodríguez Orejuela on grounds of good behavior. During the early 1990s, Gilberto and his brother Miguel were responsible for nearly 80 percent of the world’s cocaine exports. Gilberto Rodríguez’s release came after he had served seven years of a fifteen-year sentence. Miguel will remain in jail to serve a four-year sentence for bribing a judge. Both the Bush and Uribe administrations were furious at the decision, and Uribe’s attorney general ordered an investigation of the judge, Pedro Suárez. The drug war in Colombia is not going to end any time soon. But the U.S. Department of Defense has indicated that it wants to scale back its $1 billion antidrug efforts in South America. Citing poor results and scarce resources with so many international conflicts at hand, senior Pentagon officials now say publicly that funding for the drug war is hard to justify. In October 2002, for example, Deputy Secretary of Defense Paul Wolfowitz circulated a memo about a department review of counternarcotics policies in light of the “changed national security environment, the corresponding shifts in the department’s budget and other priorities, and evolving support requirements.” Wolfowitz did point out that the Pentagon will continue to support counternarcotics programs that “contribute to the war on terrorism,” suggesting that Colombia may escape the Pentagon downsizing of the drug war.37 In September 2003, Congress approved another $393 million in aid and, in May 2004, sent Colombia another 400 soldiers.38 (For an overview of U.S. aid to Colombia from 1997 to 2003, see Table 8.1.)

Table 8.1

U.S. Aid to Colombia, 1997–2003 (millions of U.S. dollars) 1997

Military and police 88.56 Economic and social 0 Total 88.56

1998

1999

2000

2001

2002a

2003b

112.44

308.81

785.97

224.68

374.61

499.02

.52 112.96

8.75 317.56

212.00 997.97

5.65 230.33

127.50 502.11

154.80 653.82

Source: Ingrid Vaicius and Adam Isacson. “The ‘War on Drugs’ Meets the ‘War on Terror,’” Policy Memo (Washington, DC: Center for International Policy, February 2003), 2. Notes: a. estimated b. requested

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Redefining a Post–September 11 U.S. Policy Toward Colombia The Bush administration appears to understand the weaknesses of the Clinton era’s strategy inspired by Plan Colombia. Its request for Congress to lift the restrictions on aid for counterinsurgency operations and for the money to train Colombian troops to protect the Caño Limón-Coveñas pipeline reflects its shift in thinking.39 The muted opposition to the request for counterinsurgency aid indicates a growing consensus in Washington that the United States can no longer pretend to ignore the counterinsurgency issue. The question then becomes: How will the United States address counterinsurgencies? More direct support of the Colombian government’s efforts is a belated but badly needed recognition that Colombia’s troubles go well beyond drugs. Unfortunately, due to the bureaucratic inertia in the war on drugs, it is possible that the Bush administration’s policies toward Colombia will become a sort of Plan Colombia–Plus, that is, the drug war as usual bolstered by secondary support for security and democracy concerns. Another scenario is that Washington comes to consider the drug traffickers and leftist guerrillas, especially the FARC, as major enemies in the war on terrorism. That could lead to a U.S. declaration of war and insertion of combat troops. This is a less likely scenario but still a plausible one. Both scenarios trivialize the complex and idiosyncratic nature of Colombia’s conflict. If the past two decades of futility in fighting the supply-side drug war in Colombia have been any indication, continuing the drug war as usual would only lead to poor results and growing frustrations. At the same time, turning the FARC into a “Latin Al-Qaida” would also be counterproductive, as this confuses the FARC’s largely domestic focus with Al-Qaida’s global, directly anti-U.S. objectives. Washington must realize that an end to civil conflict and drug trafficking will occur only when the Colombian political and economic classes commit to reforming state institutions, including the military. Some critics believe that continued military assistance to the Colombian government will lead to the inevitable slippery slope and quagmire that characterized U.S. involvement in Vietnam. This analogy does not fit the Colombian case. A more appropriate comparison, however, is how Washington wanted to win the war against the North Vietnamese and Vietcong more than South Vietnam did. In its fervor to address legitimate security concerns in Colombia, the U.S. government needs to be extremely careful that it does not shift the burden of ending the conflict from Bogotá to Washington. At the same time, the U.S. government would make a tremendous error if it severed its relationship with the Colombian military in its desire to promote human rights.40 Many human rights groups have urged Washington to distance itself through reduced funding and therefore serve to isolate the

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Colombian military for its ties to paramilitary groups. What these critics fail to realize is that during the Samper administration, Washington provided almost no aid to the Colombian military, yet it was during this time that the security situation began to spin out of control. Moreover, U.S. pressure has made the Colombian military more responsive to human rights concerns. Although there is still a long way to go, the military has made some moves against paramilitary leaders.41 At the same time, too much U.S. pressure could provoke a backlash from an already nervous Colombian military that often believes the international community is out to tear it down. Military commanders who are forced to resign are often tempted to join the paramilitaries, and that only makes a bad situation worse. The U.S. government must be aware of several important issues as it reorients its Colombia policy. A massive infusion of counterinsurgency aid before the Colombian government and its political class commit to creating a more professional military would be counterproductive and reinforce the notion that the conflict was somehow Washington’s to win or lose. As of now, the Colombian military lacks the ability to effectively absorb significant amounts of U.S. assistance.42 The Colombian military, with about 150,000 soldiers, is extremely small for a rugged country of 30 million people. It has 0.14 soldiers per square mile of national territory. A comparable figure for the Salvadoran military in the 1980s was 2.37. At the end of the conflict in El Salvador, the military had fifty helicopters, whereas Colombia, fifty times larger, has only four times as many. The military has an 8 to 1 advantage over the guerrillas, but many believe that this must be at least 15 or 20 to 1 (although more conservative estimates propose a 10 to 1 ratio, as noted in Chapters 2 and 7 of this volume) for the military to take the initiative in the conflict. Fortunately, in recent years the Colombian military has begun to seriously address strengthening and reforming its forces. The often-criticized policy of exempting high school graduates from combat service is still in place; but the military increased draft call-ups from 22,000 in 1998 to 53,000 in 2002.43 A bill to implement a universal draft is pending in the Colombian Congress. The army is also adopting innovative ways to pressure the FARC. For example, it placed a one-million-peso ($475) bounty on its leaders, a successful tactic against drug cartel kingpins in the early 1990s.44 To be seen as a legitimate and effective institution, the Colombian military must take more forceful action against the AUC’s ruthless paramilitary network. With its hands already full dealing with the FARC and other guerrilla groups, the Colombian military often ignores right-wing paramilitary groups and their frequent attacks on civilian populations. At times, military officers tacitly collaborate with the paramilitaries. They still do not understand that allowing paramilitary groups to operate with virtual impunity undercuts the military’s legitimacy, as residents see them as collaborators in

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the paramilitary dirty work. The Uribe administration’s efforts to deal with the AUC are long overdue but welcome and extremely important. A strengthened, more professional army committed to upholding human rights and attacking guerrillas as well as paramilitaries is key to any eventual negotiated settlement. It is only with this new military, and a concomitant political commitment, that the Colombian state can end the violent lawlessness that pervades so much of the country. Washington should continue to make it clear that sustained military assistance is dependent on demonstrated progress on the paramilitary issue. Only if the U.S. government is seen as adequately pressuring the military to go after the paramilitary groups will it be advancing its policy of promoting human rights, not to mention avoiding hours of congressional testimony about counterinsurgency programs. U.S. policy toward Colombia remains mired in over two decades of unsuccessful antidrug efforts. Future attempts to attach counterterror window dressing to these, such as the Plan Colombia–Plus approach, will be inadequate and doomed to failure. Washington must realize that Colombia’s future is about much more than drugs. The United States should make it clear to the Colombian authorities and people that it is aware of the complexities of the conflict and is committed to a broad set of efforts—including counterinsurgency support—to help the Colombian people end the conflict. Today, more than ever the United States needs to offer the Colombian state a more balanced approach. It must recognize that the FARC poses a dire threat to democracy and understand that Colombians must retain the responsibility for finding a solution to their conflict. It also must admit that U.S.-led antidrug efforts—the core of Colombia policy today—have failed to make a dent in America’s drug habit. A new U.S. security policy for Colombia should also leave no doubt that the paramilitaries are an enemy in this conflict, both to the United States and Colombia. The U.S. government is currently on the right track in reformulating its Colombia policy. Its preliminary steps toward broadening U.S. support for Colombia’s democracy are a welcome change from the drugs-only policies of the past. During his December 2002 visit to Colombia, Secretary of State Colin Powell articulated the new priorities: Today, Colombia is engaged in its own war against terrorism and the narcotrafficking that funds it. The United States stands with the people of Colombia in this struggle. The President has committed his administration to taking the difficult steps needed to provide security throughout Colombia and we support him in these efforts. He is also committed to making the necessary investment in social and development programs to promote long-lasting peace and stability in Colombia. Security and economic development, sustainable development, are linked with security to create an environment where people want to come and invest in Colombia, to visit Colombia. And as they come and invest and visit Colombia and bring resources into Colom-

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bia, jobs are created. And when people see these jobs, they will see alternatives to growing illicit crops. They see the benefit of supporting the democratic process, and that, in return enhances security. It’s a cycle that repeats over and over.45

When confronted with a deteriorating security situation in the late 1990s, the Clinton administration thought that it could save Colombia by fighting drugs. The Bush team and subsequent administrations should be careful not to believe that they too can save Colombia, this time by single-mindedly fighting drugs and terrorists. An effective U.S. policy will be one that supports an effective Colombian policy. And, given an option, Bogotá will certainly place counterinsurgency efforts well above antidrug concerns, something that most Colombians continue to see as a sort of gringo obsession. The U.S. government should continue to use assertive prudence as it decides how to support Colombia in its efforts to end this bloody war. So far, the results are encouraging but there is a long way to go. Many Colombians are for the first time optimistic that their government is dedicated to generating such a commitment and that the United States is prepared to support these efforts. Nothing short of the survival of Colombia’s democracy rests on progress on these fronts.

Notes 1. “U.S. Demands FARC Release Captured Americans,” PBS NewsHour, February 25, 2003, www.pbs.org/newshour (accessed July 2004). 2. John Otis, “U.S. Invasion of Colombia Urged; but Observers Say Nation Ought to Focus on Its Own War Effort,” Houston Chronicle, March 24, 2002, A28. 3. Juan Forero, “Colombian Voters Veer to the Right in Congressional Election,” New York Times, March 12, 2002, A7. 4. Richard Lapper and Andy Webb-Vidal, “President’s Tough Policies Bear Fruit in Colombia,” Financial Times, July 12, 2004, 6. 5. James Wilson, “Bogota Bomb Poses Tough Test for Uribe Security Policies,” Financial Times, February 10, 2003, 8. 6. All dollar amounts are in U.S. dollars, unless otherwise noted. 7. Juan Forero, “Apprehension Grows as Colombia Rebels Step Up Pace and Intensity of Their Attacks,” New York Times, March 4, 2002, A6; also see Russell Crandall, “FARC Thrust into Terrorist Limelight After 11 September,” Jane’s Defence Weekly Terrorism and Security Monitor, March 12, 2002, http://jdw.janes.com (accessed July 2004). 8. Before the 1991 constitution that severely limited presidential powers, Colombian presidents used a statute creating a state of siege almost continuously for nearly forty years. See Christian Miller, “Uribe Widens War on Rebels,” Los Angeles Times, August 13, 2002, A1. 9. Tim Johnson, “Colombian President Vows to Go After Rightist Militias Also,” Miami Herald, September 25, 2002, 7A. 10. The comments in this section were first published in Russell Crandall, “Inse-

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curity in the Andes,” 2001–2002 Strategic Survey (London: International Institute for Strategic Studies, 2002), 101–112. 11. “Will Uribe’s Honeymoon Last?” (policy memorandum, International Crisis Group, Brussels and Bogotá, December 2002). 12. Juan Forero, “U.S. Strategy in Colombia Connects Drugs and Terror,” New York Times, November 14, 2002, A12. 13. Frances Robles, “Colombia’s Fight with Rebels Grows,” Miami Herald, October 8, 2002, 5A. 14. Russell Crandall and Akilah Jenga, “New Complications in the Andes,” 2003–2004 Strategic Survey (London: International Institute for Strategic Studies, 2004), 84–99; “Colombian President Rejects Peace Talks, Urges Army to Crush Rebels,” BBC Monitoring International Reports, May 9, 2004. 15. “New Campaign Against the FARC,” Andean Group Report–LatinNews, May 4, 2004. 16. “Paramilitary Peace Process Back from the Brink,” Andean Group Report– LatinNews, April 6, 2004. 17. Rachel Van Dongen, “Colombian Peace in Flux After Leader Disappears,” Christian Science Monitor, April 30, 2004, 7; Andy Webb-Vidal, “Uribe Peace Talks with Paramilitaries in Colombia on Brink of Collapse,” Financial Times, May 3, 2004, 5. 18. “Colombia: Paramilitaries Threaten to Kill Uribe,” LatinNews Daily, April 28, 2004. 19. Juan Forero, “With Chief Missing, Colombia Militias Gain Leverage,” New York Times, May 19, 2004, A16; “Bandits or Politicians? Colombia’s Paramilitaries,” The Economist, May 22, 2004, 34. 20. “Uribe’s Barrage; Colombia’s President,” The Economist, March 20, 2004, 38. 21. Tim Johnson, “Powell Promises Aid for Colombia, a Larger U.S. Role,” Miami Herald, December 5, 2002, 5A. 22. These views were first published in Russell Crandall, “Clinton, Bush and Plan Colombia,” Survival 44, no. 1 (Spring 2002): 159–172. 23. See ibid. 24. For a highly critical analysis of Plan Colombia, see William M. LeoGrande and Kenneth E. Sharpe, “Two Wars or One? Drugs, Guerrillas, and Colombia’s New Violencia,” World Policy Journal 17, no. 3 (Fall 2000): 1–11. 25. For more on the difficulties of antidrug policies, especially alternative crop programs, see U.S. General Accounting Office (GAO), “Drug Control: U.S. Assistance to Colombia Will Take Years to Produce Results,” GAO-01-26 (Washington, DC: GAO, 2000). 26. U.S. General Accounting Office (GAO), “Drug Control: Efforts to Develop Alternatives to Cultivating Illicit Crops in Colombia Have Made Little Progress and Face Serious Obstacles,” GAO-02-291 (Washington, DC: GAO, 2002), www.gao.gov. 27. The funding for the pipeline protection battalion was part of the 2003 foreign aid bill. The Bush administration was able to get the program going earlier, since $6 million had been authorized in the emergency outlay for counterterrorism (H.R. 4775) that was signed into law on August 2, 2002. See Ingrid Vaicius and Adam Isacson, “The ‘War on Drugs’ Meets the ‘War on Terror,’” Policy Memo (Washington, DC: Center for International Policy, February 2003). 28. Juan Forero, “New Role for U.S. in Colombia: Protecting a Vital Oil Pipeline,” New York Times, October 4, 2002, A1. 29. For a sample of the sentiment in support of greater military assistance to Colombia, see Mary O’Grady, “Does Colombia Count in the War on Terror?” Wall Street Journal, February 14, 2003, A9.

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30. “Shifting Colombia’s Aid: U.S. Focuses on Rebels,” New York Times, August 10, 2002, A4. 31. Forero, “U.S. Strategy in Colombia Connects Drugs and Terror.” 32. U.S. General Accounting Office, “Drug Control: Efforts to Develop Alternatives.” 33. See “The Weedkiller War,” The Economist, September 7, 2002, 36–37. 34. Juan Forero, “U.S. to Step Up Spraying to Kill Colombian Coca,” New York Times, September 4, 2002, A1. 35. “Bush Pushes to Increase U.S. Military Presence in Colombia,” Latin American Weekly Report, March 30, 2004. 36. Johnson, “Powell Promises Aid for Colombia.” 37. Paul Richter, “Military Is Easing Its War on Drugs,” Los Angeles Times, October 20, 2002, A1. 38. Crandall and Jenga, “New Complications in the Andes”; Kate Joynes, “U.S. Congress Sends Colombia 400 Extra Drug-Fighting Soldiers,” World Markets Analysis, May 17, 2004. 39. H.R. 4775 was signed into law on August 2, 2002. This counterterror bill allowed for all past and present counterdrug aid to be used against terrorist groups. See Vaicius and Isacson, “The ‘War on Drugs’ Meets the ‘War on Terror.’” 40. For more debate on this topic, see Gustavo Valdivieso, “A New Kind of Intervention for Colombia,” American Diplomacy 6, no. 1 (November 2001), www .americandiplomacy.org (accessed July 2004); Michael Radu, “Colombia: Lucidity at Last?” American Diplomacy 7, no. 1 (November 2002). 41. See Russell Crandall, “Colombia’s Military Prospects Are Not Getting Any Brighter,” Wall Street Journal, October 27, 2000, A19. 42. See Julia E. Sweig, “What Kind of War for Colombia?” Foreign Affairs 81, no. 5 (September/October 2002): 122–141. 43. Juan Tamayo, “Analysts: Colombia Army Is Short of Resources, Money, Men to Defeat the Guerrillas,” Miami Herald, February 25, 2002, 1A. 44. Frances Robles, “100 Guerrillas Killed Since Talks Failed,” Miami Herald, March 8, 2002, 18A. 45. Secretary of State Colin Powell (press conference from Bogotá, December 4, 2002). Available through the Center for International Policy’s website, www .ciponline.org/colombia/02120401.htm (accessed July 2004).

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9 Conclusion: The Andean Crisis in Context Riordan Roett

The extraordinary and tragic convergence of fitful economic growth, weak political institutions, and social malaise in the Andean countries is reflected in the poor showing of the region in the annual Global Competitiveness Report (GCR).1 Why is that relevant to the future of the five countries under consideration in this book? Simply put, the Andean region cannot address the underlying social problems, different in each society but all too similar at many levels of analysis, without capital investment. Investors, for example, will not put good money into countries with weak and feckless political institutions and with the potential—or reality—of social upheaval and lawlessness. Today, more than ever, institutions matter. And, unfortunately, the Andean region is widely recognized as an area with institutional arrangements that seem to be unraveling as they are consolidating. The “elusive trinity” dilemma presented by Russell Crandall in Chapter 1 remains at the forefront of reconciling the Andes’ increasingly critical condition. But how can the region move forward on the three dimensions of domestic security, democracy, and economic reform simultaneously? The GCR offers many useful indicators to analyze today’s realities in the Andean states. It is useful because it addresses the three components of the “elusive trinity” from an investment and development perspective. It employs two overall rankings to gauge the competitive position of some seventy-five countries each year. The Growth Competitiveness Index (GCI) seeks to rank the underlying potential for medium-term growth (five years). The Microeconomic Competitiveness Index (MICI) strives to estimate the underlying conditions defining the sustainable level of productivity in each of the eighty economies covered, assessing their current productive potential. The MICI is an aggregate measure of microeconomic competitiveness. The specific

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strengths and weaknesses measured in the GCR provide a list of concrete priority areas for the individual countries included in the report. This is the challenge that the political leaders in the Andean countries confront each day. On both rankings, the Andean countries were to be found at the bottom of the list. For the GCI, Peru was ranked 54, Colombia 56, Venezuela 68, Ecuador 73, and Bolivia 78. On the MICI, Colombia was ranked 56, Peru 66, Venezuela 72, Ecuador 77, and Bolivia 79, second to last in the index.2 To be sure, the needs of the international capital markets or the peculiarities of investor preferences should not be the only “driver” in governmental priorities. But it is clear in the twenty-first century that given persistent fiscal deficits, corruption, foreign debt, and growing unemployment, the urgency for economic growth and distribution is mounting. Given the track record of the past century, the Andean countries are falling behind and will continue to do so unless new strategies are identified and new tactics adopted. To think that it will be easy to do so would be uncharitable to those national leaders trying to cope with the internal inconsistencies of two centuries of flawed development efforts and, at the same time, attempting to make sense of globalized financial markets and escalating worldwide interdependence. The chapters in this book provide a clear and challenging analysis of what must be done. The hopes of the 1990s for a turning point in the region’s development as outlined in the so-called Washington Consensus have been buried. It is now evident that the realities on the ground have not changed significantly since the mid-1990s in terms of income distribution, social equality, or job creation. Even though there was a wave of general economic liberalization and, more specifically, some progress in economic cooperation if not real integration, the attitudes of the average Andean citizen with regard to democracy, markets, and mobility are more negative and deteriorating. Are national policies only to blame? Should the United States shoulder some blame for the current situation? Have financial markets been too harsh in dealing with the Andean countries? Or have the citizenries of these nationstates expected too much too soon in the development process? Are political institutions—parties, legislatures, and courts—intrinsically flawed? Is there no hope of escaping from the natural resource trap in terms of generating desperately needed foreign exchange? And is there any government in the region able to claim that there is less corruption and public mendacity today than a decade ago?

Innovation and Growth The well-known story of the “Asian Tigers” and their success in the international market stresses innovation as a critical component of growth. That innovation has translated into growth, exports, and foreign exchange earnings.

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Those achievements resulted in dramatically higher standards of living for a large majority of the Asian people over a period of twenty-five years. The GCR argued that the vitality of innovation is shaped by national innovative capacity. National innovative capacity is a country’s potential—as both a political and economic entity—to produce a stream of commercially relevant innovations. This capacity reflects the fundamental conditions, investments, and policy choices that create the environment for innovation in a particular nation. On the National Innovative Capacity index, the United States, the United Kingdom, and Finland ranked 1, 2, and 3. In the Andes, Colombia was ranked 61, Peru 62, Venezuela 64, Ecuador 68, and Bolivia 73.3 There is little mystery to innovation. It needs a progressively more sophisticated educational system with growing and equal opportunity for all social classes. Emphasis needs to be given to human resources, especially scientific, technical, and managerial personnel. There needs to be a strong basic research infrastructure in the universities. A high quality information infrastructure is increasingly a sine qua non. There is also a need for an institutional environment that encourages investment in innovation-related activity as well as vigorous competition among locally based rivals. It is also helpful to have the presence of capable local suppliers and an expanding sophisticated local customer base. How close do the Andean countries come to reaching these goals? As the country chapters clearly point out, continuity in public policy has been notably absent. Disintegrating political parties, or polarized or fragmented ones, do not provide a framework for policy decisions that support innovation. In the Andean countries, basic education is poor, and secondary training is unpredictable. Access to the university is often reserved for the privileged, who see admission less as an opportunity to gain innovative skills and more as a social “card” needed to play the country club game. One of the serious impediments to innovation in the Andean region has been a scarcity of scientists and engineers. The issue is less one of training and competence than it is the “brain drain.” In terms of the availability of trained personnel in these areas, Venezuela ranked 59, Colombia 63, Peru 66, Bolivia 71, and Ecuador 75 of the eighty countries surveyed.4 Another overview of the situation in the Andes with regard to innovation is skill-based exports as a percentage of gross domestic product (GDP) in the late 1990s. Of the seventytwo countries for which there were data, the Andean rankings were low: Bolivia 51, Colombia 61, Ecuador 66, Peru 68, and Venezuela 69.5 The issue is not that the countries do not produce scientists and competent managers but that the reality of social crisis, political instability, and economic mismanagement drives the best and the brightest out of the country to practice their professions elsewhere. The loss of the best educated reduces the possibility for innovation and entrepreneurship. Risk-taking is not given high value in the Andes. A vicious circle ensues. Countries cannot add value to

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their exports because they lack the skilled personnel to help them do so. The skills exist at one point but are lost through the brain drain and the limited number of individuals with access to higher levels of education. Latin American education budgets are often very generous. But where does the money go? It goes into buildings for which there are no teachers or supplies, but which provide the contracts attractive to local builders with the right political connections. It goes to backward-looking teachers unions who fear innovation and new skill sets. And a disproportionate share of the budget often goes into expensive public universities that only benefit the upper-class students who have been admitted based on skills developed in private primary and secondary schools.

Macroeconomic Management The country chapters nicely capture the unpredictable nature of economic growth and development in the Andean countries. Drug trafficking for some is a major problem. A lack of export diversification plagues one and all. Petroleum dependence in Venezuela has destroyed opportunities for new lines of economic endeavor. All the countries are tied to natural resource, mineral, and agricultural exports for which the terms of trade are unpredictable and almost always deleterious. Disjointed policymaking helps explain some of the dilemma. Regime breakdown often leads to untried policy innovations. But even the turn to the free market in the 1990s, vaunted as the answer to the region’s problems, has resulted in antiglobalization movements and protests in Ecuador, Peru, and Bolivia. Venezuela’s economy would collapse if it were not for the high price of oil. Colombia’s much vaunted macroeconomic stability hides a myriad of underlying structural problems that only recently has its government felt able to address—politically and economically. The countries have had access to international assistance. The international financial institutions—the World Bank, the International Monetary Fund, the Inter-American Development Bank—and a variety of regional and subregional institutions have offered trade and investment support for decades. Yes, the countries lag behind. Much of the funding was misspent. Portions were siphoned off for personal benefit. Little of the revenues available were targeted to create a “social contract” between governed and government. There are many ways to measure a country’s macroeconomic state at any one point in time. The GCR highlighted a number of them, a few of which are particularly instructive for the region. When asked about the capacity to obtain credit, of eighty states Colombia was 24, Peru 55, Venezuela 69, Bolivia 72, and Ecuador 76.6 Hernando de Soto placed great importance on credit and argued persuasively that in developing countries, including his

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own, Peru, the true entrepreneurs are in the informal sector but without access to credit.7 Their capacity to innovate is therefore limited. As the country chapters in this book indicate, the informal sector is large and growing in most of the countries of the region. Banks are viewed as institutions for the powerful and wealthy. The GCR asked, “How easy is it to obtain a loan in your country with only a good business plan and no collateral?” The Andean countries were ranked as very difficult or nearly impossible: Colombia was 48, Peru 62, Venezuela 67, Bolivia 74, and Ecuador 79.8 Banks are often familycontrolled. Fears that loans will not be repaid are widespread. The concept of “micro credit” is only now entering the Latin American marketplace; it has been widely used in Asia for decades. But the greatest challenge facing the Andean countries, as the country chapters point out, is discontinuity in policymaking. Venezuela’s president Hugo Chávez’s chaotic and highly politicized management has thrown the economy into a period of prolonged uncertainty, and even in a post-Chávez era there will be no easy solutions to diversifying the economy away from its decades-long and highly distorted oil dependency. Although Peruvian growth is high when compared to its neighbors, rising discontent with the neoliberal model threatens whatever continuity is desirable from the decidedly nondemocratic Fujimori era. Indeed, the threat in Peru is less the collapse of the Toledo government, which is not impossible, but the return of the American Popular Revolutionary Alliance (Alianza Popular Revolucionaria Americana, APRA) and Alan García, president from 1985 to 1990, who literally destroyed the economy and legitimated the Fujimori “electoral dictatorship.” Sánchez de Lozada in Bolivia had no easy answers to the widespread rejection of the market model and the rise of an anticapitalist indigenous movement now with strong representation in Congress. His successor Carlos Mesa faces almost all of the same obstacles. President Gutiérrez in Ecuador, although admirably juggling the incessant demands of the International Monetary Fund and private investors, faces uncertain support and probable increased opposition from Pachakutik, the fiery populist coalition that helped vault Gutiérrez to the presidency.

Political Institutions Matter As the World Bank has long held, institutions matter.9 If that is so, why are institutions so weak and fragile throughout the Andean region? Some will argue that it has always been so since the times of colonial rule. Independence did not improve the institutional framework. And the national period of the late nineteenth and twentieth centuries appeared to actually provide a framework for the final death knell of independent, honest, transparent, and competitive institutions.

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The GCR raised high levels of concern about political institutions in the Andean countries. When asked whether “the judiciary in your country is independent from political influences of members of government, citizens or firms,” the response was deafening. The Andean countries scored from influenced to heavily influenced, and of eighty countries surveyed, Colombia ranked 52 in terms of judicial independence, Peru 69, Bolivia 76, Ecuador 78, and Venezuela 79.10 Without uncorrupted courts, it is difficult to imagine a highly innovative and competitive economy. And without “clean” courts, the average citizen has little chance of a fair hearing, let alone access to the atrophied judicial system. Political regime changes almost automatically result in the renovation or the closing down of the courts. Justices and judges are usually political appointees. Judicial appointment is an opening to cronyism and to instant enrichment. This was reflected in the question about the competence of the personnel in the public sector: Colombia ranked 66, Peru 70, Bolivia 72, Ecuador 76, and Venezuela 79.11 As a complement to the question regarding judicial independence, the GCR asked whether or not financial assets and wealth are clearly delineated and protected by law. Sadly, the rankings remained as poor: Colombia 48, Peru 61, Bolivia 70, Ecuador 73, and Venezuela 76.12 And finally, in asking about “public trust in the financial honesty of politicians,” Peru was ranked 65, Colombia 67, Venezuela 71, Ecuador 75, and Bolivia 77.13 These results are confirmed in the country chapters in this book. The fault line between good politicians and bad ones is wide and deepening. And this of course extends to the political parties in the Andes. In Bolivia, we have probably seen the last gasp of the traditional parties. As Ramiro Orias comments in Chapter 3, the indigenous challenge from the Movement Toward Socialism (Movimiento Al Socialismo, MAS) and the New Republican Force (Nueva Fuerza Republicana, NFR) forced the “liberal” rival parties, the Nationalist Revolutionary Movement (Movimiento Nacionalista Revolucionario, MNR) and the Movement of the Revolutionary Left (Movimiento de Izquierda Revolucionaria, MIR), into an uneasy coalition. The truncated track record of the Sánchez de Lozada government thus far provides little hope for his successors. Why? As Orias states, “Bolivia’s various social movements share disillusionment with the traditional political system and consider it to be corrupt and tied to interests not valued by the majority of Bolivian society.” Ecuador, like Bolivia, is one of a number of examples where the indigenous population is much better organized and mounting political challenges. In Chapter 6, Fredy Rivera and Franklin Ramírez correctly indicate the fragmentation and near collapse of the weak and shallow traditional political organizations in the 2002 election. Gutiérrez created his own political machine, the Patriotic Society Party of January 21 (Partido Sociedad Patriótica 21 de enero, PSP), precisely to contest the elections and used it to graft on the volatile but critical support of Pachakutik. The latter also doubled the number

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of deputies in the Chamber. But this highly volatile alliance is probably due for greater instability in the next few years. Indigenous demands are antiglobal and antimarket. They are also distributional and inclusionary. Some say they are prerevolutionary. It is a critical task for Andean governments to effectively incorporate and address the social and political demands of an increasingly mobilized indigenous population. At the same time, though, indigenous groups will need to develop more concrete political demands and platforms. Their cries for justice and equality are understandable given centuries of repression; yet, this fact alone does not automatically make their policies any more efficacious. Peru witnessed the feeble collapse of the traditional political parties in the 1990s with the juggernaut of the Fujimori machine. The courts went. The legislature went. The parties went. What remained was Fujimori and, although not widely understood, APRA. APRA is the survivor in the Peruvian political game. As much a social movement as a party, it has deep and traditional roots in the rural areas of Peru. When Alan García, its democratic president, stepped down in 1990, the country was in shambles, and observers thought APRA was also. Wrong. APRA went underground and resurfaced to challenge President Toledo in 2002. Since the Toledo government took office in that year, APRA and García have become a growing force in Peruvian political life. Toledo’s political party is adrift. His popularity could not be lower. Efforts to restore institutional integrity have moved slowly. In Chapter 5, Juan Carlos Sainz and Guadalupe Paz summarize the dilemma in the Andes. Even where a country like Venezuela once had reasonable political parties, they atrophied to the point of collapse under the burden of corruption and mismanagement. Democratic Action (Acción Democrática, AD) and the Social Christian Party (Partido Socialcristiano Comité de Organización Política Electoral Independiente, COPEI) were once held as models for the hemisphere. They were seen as inclusive, transparent, and responsible. History proved the opposite. As the years passed they rotated in power and grew increasingly exclusionary, opaque, and corrupt. Party and union leaders in concert drained the great wealth of Venezuela. The 1990s were a spectacle of last-gasp efforts to resuscitate the old system, and the inexorable march toward power of the Bolivarian Revolution of Hugo Chávez. The colonel has changed everything—from the perspective of many international observers, for the worse. At the same time, though, his fiery rhetoric ignites a majority poor in Venezuela that is desperate and is looking for salvation. Over a period of several years, Chávez rewrote the constitution to reflect his personal and idiosyncratic goals. He has taken steps to incapacitate the petroleum industry in the long run—the lifeline of the Venezuelan economy—by a vengeful and misguided reorganization. Nothing he has tried to create has been able to fill the void created by the ineptitude of AD and COPEI. No matter how emotive his oratory, social programs have not moved

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much beyond the symbolic. Public law and order have broken down. Many would argue Venezuela is a society that has broken down into class warfare. Where to go next?

Is Colombia the Exception? As the reader will note, Colombia consistently scored somewhat higher in the rankings of the GCR. This is consistent with the assertion by Julia Sweig and Michael McCarthy in Chapter 2 that “U.S. observers revered Colombia as a showcase of democratic stability and consistent economic growth in Latin America.” The Colombian elite carefully maintained the mythology. Good universities, a more competent public sector, sophisticated English-speaking leaders, and reasonable macroeconomic management all combined to fix Colombia in the eye of the international community as the exception in the Andes. But as Sweig and McCarthy point out, “the myth of the country’s strong democracy and robust economy began to unravel in the late 1990s.” What went wrong? The answer is both simple and complicated. Although the urban oases in Colombia prospered more or less, there was no commitment of resources or political will to integrate most of the territory and population of Colombia into the Colombian state. Over time, three armed guerrilla movements intersected with drugs, petroleum, and violence to create a no-man’s-land in which kidnapping, sabotage, murder, and mayhem ruled. The election of Alvaro Uribe, as the authors note, was a turning point: recognition by the elites that “the country’s enormous security crisis threatens the viability of the state itself.” Unlike in any of the other countries, in Colombia the United States is a key and expanding player in the intricate war underway there. All three armed groups have been designated as foreign terrorist organizations by the U.S. State Department. American Special Forces are on the ground. Advisers have increased in a variety of capacities. The United States’ involvement is both simple to understand but also complicated. Colombia provides the largest single source of cocaine flowing to the streets of the United States. Unwilling to take controversial and tough policy decisions at home, the U.S. government has taken the war against drugs to the field. But drugs are not the only story. Colombia is the fourth largest supplier of petroleum to the United States in the hemisphere. Given growing uncertainty regarding Middle Eastern supplies, and disquiet over Venezuelan policy, Colombia is not an insignificant player in the oil markets. President Uribe appears to many Colombians as a breath of fresh air. He has proposed far-reaching political and institutional reforms. He seeks to reduce corruption in public life. At his urging, the Colombian Congress has approved four major macroeconomic reforms. All of these are long overdue

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and necessary to balance the three pillars of the “elusive trinity.” But the danger of overmilitarizing the campaign against the guerrillas is a real one. Security may be gained at the price of democracy and with an uncertain economic outcome.

U.S. Policy and the Future of the Andes Chapters 7 and 8 address directly the involvement of the U.S. government in the Andean states. In Chapter 7, Mark Williams makes the cogent argument that “yes, the Andean states matter to the United States.” But to divert policymakers’ attention in Washington away from the antinarcotics campaign is the challenge at hand. Moreover, the Andean countries, in different ways, all demonstrate some symptoms of “failed states.” To address that state of affairs will require a U.S. commitment to “nation-building.” That, in turn, will need a clear understanding of the consequences of the failure to consolidate democracy in the region. Can the United States avoid incorporating the Andes in the war on terrorism? Will the United States be drawn further into conflict on the ground, first in Colombia, and then elsewhere? As Williams asks, will the United States meet the challenges in the Andes “by striking a sound balance between realist and liberal institutionalist policy strategies—a balance forged upon more careful, sustained statecraft”? The jury is still out, but the evidence against such a subtle approach makes it unlikely. If it is unlikely that the United States will be able to craft a new set of policies for the dilemma in the Andes, should it at least fashion a new approach to Colombia, as Russell Crandall argues in Chapter 8? Yes, but only if “nation-building” is added to the paradigm. As Crandall indicates, “Washington must realize that an end to civil conflict and drug trafficking will occur only when the Colombian political and economic classes commit to reforming state institutions, including the military.” But is there time to do so? If there is, what is an appropriate role for the United States, beyond its rightful concerns over the war on terror? Will the political support that Alvaro Uribe has generated for reform survive his presidency? If it does not, where does Colombia go, and how does the United States react?

The Prospects for Stability in the Andes From the World Bank to the Global Competitiveness Report, the message is clear: new and/or revitalized institutions—political, economic, and social— are needed to consolidate democracy and to avoid the “failed state” syndrome in the Andes. Competent and committed public servants are required. The formalization of the informal sector is a clear priority. Transparent and

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responsible judiciaries and legislatures are needed. Innovation and learning need to be endorsed. Old economic bromides need to be buried. And guerrilla wars must be neutralized and eliminated. Can the United States play a useful role? Useful, yes; but determinative, no. The long overdue threats and challenges to nation-building are home grown. Today, leadership counts. Colombia’s Uribe is one example of the appropriate role of a new generation; Chávez is not. Toledo’s inability to govern may result in a terrible regression to the worst days of 1980s populism with Alan García. The failure of Gutiérrez and Sánchez de Lozada to meet rapidly rising demands for new policies will almost certainly produce more radical, populist, and antimodern regimes in the Andes. One can only be cautiously optimistic that the challenges will be met in the foreseeable future. A more robust global economy would help. A commitment to greater regional economic integration would be useful. The elimination of drug trafficking would be an extraordinarily important development. And there are many other external and internal influences that could change the dynamics of the institutional game. But success is measured one government at a time, and the track record in the Andes thus far in the twenty-first century is very mixed and the outcomes very uncertain.

Notes 1. Peter K. Cornelius (ed.) and Michael E. Porter and Klaus Schwab (co-directors), The Global Competitiveness Report, 2002–2003 (New York: Oxford University Press, 2003). 2. Peter K. Cornelius, “Executive Summary,” in ibid., xv. 3. Michael E. Porter and Scott Stern, Table 1, “The Impact of Location on Global Innovation: Findings from the National Innovative Capacity Index,” in ibid., 229–230. 4. Table 3.13, “Brain Drain,” in ibid., 582. 5. Table 3.23, “Skill-based Exports,” in Michael E. Porter, Jeffrey D. Sachs, Peter K. Cornelius, John W. McArthur, and Klaus Schwab, The Global Competitiveness Report, 2001–2002 (New York: Oxford University Press, 2002), 376. 6. Table 2.05, “Access to Credit,” in Cornelius, Porter, and Schwab, The Global Competitiveness Report, 2002–2003, 559. 7. Hernando de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (New York: Basic, 2000). 8. Table 2.04, “Ease of Access to Loans,” in Cornelius, Porter, and Schwab, The Global Competitiveness Report, 2002–2003, 558. 9. See, for example, Shahid Javed Burki and Guillermo E. Perry, Beyond the Washington Consensus: Institutions Matter (Washington, DC: World Bank, 1998). 10. Table 6.01, “Judicial Independence,” in Cornelius, Porter, and Schwab, The Global Competitiveness Report, 2002–2003, 602. 11. Table 6.06, “Competence of Public Officials,” in ibid., 604. 12. Table 6.03, “Property Rights,” in ibid., 603. 13. Table 7.12, “Public Trust of Politicians,” in ibid., 619.

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Acronyms

AD ADN AGD AP APRA ATPA ATPDEA AUC BD BP CAN CANTV CCJ CD CNE COB COFENAE

Democratic Action (Acción Democrática) Nationalist Democratic Action (Acción Democrática Nacionalista) Deposit Guarantee Agency (Agencia de Garantía de Depósitos) Popular Action (Acción Popular) American Popular Revolutionary Alliance (Alianza Popular Revolucionaria Americana) Andean Trade Preference Act Andean Trade Promotion and Drug Eradication Act United Self-Defense Forces of Colombia (Autodefensas Unidas de Colombia) Democratic Bloc (Bloque Democrático) British Petroleum Andean Community of Nations (Comunidad Andina de Naciones) National Telephone Company of Venezuela (Compañía Anónima Nacional de Teléfonos de Venezuela) Colombian Commission of Jurists (Comisión Colombiana de Juristas) Democratic Coordinator (Coordinadora Democrática) National Electoral Council (Consejo Nacional Electoral) Bolivian Labor Confederation (Central Obrera Boliviana) National Amazonic Confederation of Ecuador (Confederación Nacional Amazónica de Ecuador) 201

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202

CONAIE CONDEPA COPEI CSUTCB

CTV CUT DEA DIRCOTE DISIP DP ELN ELPV FARC FIDES FOL FTAA FTSE GCI GCR GDP GEMA GIR GOE IACHR IDB ILO IMF INTI IRA MAS MBL

ACRONYMS

Confederation of Indigenous Nationalities of Ecuador (Confederación de Nacionalidades Indígenas del Ecuador) Conscience of the Fatherland (Conciencia de la Tierra Patria) Social Christian Party (Partido Socialcristiano Comité de Organización Política Electoral Independiente) Union Confederation of Rural Workers of Bolivia (Confederación Sindical Unica de Trabajadores Campesinos de Bolivia) Venezuelan Workers’ Confederation (Confederación de Trabajadores de Venezuela) United Workers Federation (Central Unitaria de Trabajadores) Drug Enforcement Administration Directorate Against Terrorism (Dirección Contra el Terrorismo) Directorate of Intelligence and Prevention Services (Dirección de los Servicios de Inteligencia y Prevención) Popular Democracy (Democracia Popular) National Liberation Army (Ejército de Liberación Nacional) Army for the Liberation of the People of Venezuela (Ejército de Liberación del Pueblo de Venezuela) Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia) Intergovernmental Fund for Decentralization (Fondo Intergubernamental para la Descentralización) forward operating location Free Trade Area of the Americas Financial Times/London Stock Exchange Growth Competitiveness Index Global Competitiveness Report gross domestic product Special Mobile Antinarcotics Group (Grupo Especial Móvil Antinarcóticos) Intervention and Rescue Group (Grupo de Intervención y Rescate) Special Operations Group (Grupo de Operaciones Especiales) Inter-American Commission on Human Rights Inter-American Development Bank International Labour Organization International Monetary Fund National Land Institute (Instituto Nacional de Tierras) Irish Republican Army Movement Toward Socialism (Movimiento Al Socialismo) Free Bolivia Movement (Movimiento Bolivia Libre)

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ACRONYMS

MBR-200 MICI MIP MIR MNR MRTA MST MUPP

MVR NAFTA NAM NED NFR OAS OPEC PAP PDVSA PP PRE PRI PSC PSP RCZ SAFCO

SELA SIN TCOs TSJ UCS

203

Bolivarian Revolutionary Movement–200 (Movimiento Bolivariano Revolucionario–200) Microeconomic Competitiveness Index Pachakutik Indigenous Movement (Movimiento Indígena Pachakutik) Movement of the Revolutionary Left (Movimiento de Izquierda Revolucionaria) Nationalist Revolutionary Movement (Movimiento Nacionalista Revolucionario) Túpac Amaru Revolutionary Movement (Movimiento Revolucionario Túpac Amaru) Landless Movement (Movimiento Sin Tierra) New Country Pachakutik Movement of Plurinational Unity (Movimiento de Unidad Plurinacional Pachakutik Nuevo País) Fifth Republic Movement (Movimiento Quinta República) North American Free Trade Agreement Non-Aligned Movement National Endowment for Democracy New Republican Force (Nueva Fuerza Republicana) Organization of American States Organization of Petroleum Exporting Countries Peruvian Aprista Party (Partido Aprista Peruano) Petroleum of Venezuela (Petróleos de Venezuela) Perú Posible Ecuadorian Roldosist Party (Partido Roldosista Ecuatoriano) Institutional Revolutionary Party (Partido Revolucionario Institucional) Social Christian Party (Partido Social Cristiano) Patriotic Society Party of January 21 (Partido Sociedad Patriótica 21 de enero) Rehabilitation and Consolidation Zone Integrated System of Financial Administration and Governmental Control (Sistema Integrado de Administración Financiera y Control Gubernamentales) Latin American Economic System (Sistema Económico Latinoamericano) National Intelligence Service (Servicio de Inteligencia Nacional) Territories of Communal Origin (Territorios Comunitarios de Origen) Supreme Tribunal of Justice (Tribunal Supremo de Justicia) Civic Solidarity Union (Unidad Cívica Solidaridad)

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UDP UN URD USCR VAT YPF YPFB

ACRONYMS

Democratic and Popular Union (Unidad Democrática y Popular) United Nations Democratic Republican Union (Unión Republicana Democrática) United States Committee for Refugees value-added tax In Fiscal Oil Fields (Yacimientos Petrolíferos Fiscales) Bolivian Fiscal Oil Fields (Yacimientos Petrolíferos Fiscales Bolivianos)

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Selected Bibliography

Acosta, Alberto. “El entorno mágico de las expectativas.” Ecuador Debate (Quito, Centro Andino de Acción Popular), no. 24 (December 1991). Andean Commission of Jurists. Informe anual sobre Democracia en los países de la Región Andina. Andean Commission of Jurists, Lima, 2001. Anicama, Cecilia. Perú 2000: Un triunfo sin democracia. Lima: Andean Commission of Jurists, 2000. Araujo, María Claridad. “Crisis y políticas de ajuste.” In La ruta de la gobernabilidad, by Corporación de Estudios para el Desarrollo (CORDES), 388–389. Quito: CORDES, 1999. Ashwell, Nick. “Colombia’s Uribe Announces Another VAT Extension Attempt.” World Markets Analysis, 19 March 2004, www.worldmarketsanalysis.com. “Attacks on the Press: Colombia.” Committee to Protect Journalists, 10 March 2004, www.cpj.org. Bagley, Bruce M. “Drug Trafficking, Political Violence, and US Policy in Colombia in the 1990s,” www.mamacoca.org/bagley_drugs_and_violence_en.html. Baird, Vanessa. “Raising the Dead: The Shocking Report of Peru’s Truth Commission.” New Internationalist, no. 361 (October 2003): 8. Barrera, Augusto. Acción colectiva y crisis política: El movimiento indígena ecuatoriano en los noventa. Quito: CLACSO/CIUDAD/ABYA YALA, 2001. Bases del Plan Nacional de Desarrollo: Hacia un Estado Comunitario. Departamento Nacional de Planeación, Presidencia de la República, Bogotá, 2002. Bejarano, Ana María. “The Constitution of 1991: An Institutional Evaluation Seven Years Later.” In Violence in Colombia, 1990–2000: Waging War and Negotiating Peace, edited by Charles Bergquist, Ricardo Peñaranda, and Gonzalo Sánchez G., 53–74. Wilmington, DE: Scholarly Resources, 2001. Bennet, Philip. “Pol Pot in Peru: ‘Shining Path’ to a Dark Future.” The New Republic 192, no. 4 (28 January 1985): 16–18. Bergquist, Charles, Ricardo Peñaranda, and Gonzalo Sánchez G., eds. Violence in Colombia, 1990–2000: Waging War and Negotiating Peace. Wilmington, DE: Scholarly Resources, 2001. 205

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U.S. Department of Energy. “Colombia Country Analysis Brief.” Washington, DC: Energy Information Administration, U.S. Department of Energy, March 2002. U.S. Department of State. Country Report on Human Rights Practices—2002. Washington, DC: U.S. Department of State, 31 March 2003. ———. International Narcotics and Law Enforcement Budget Justification, Fiscal Year 2003. Washington, DC: Bureau for International Narcotics and Law Enforcement Affairs, May 2002. ———. International Narcotics Control Strategy Report. Washington, DC: Bureau for International Narcotics and Law Enforcement Affairs, March 2002. ———. Narcotics Control Reports. Washington, DC: Bureau for International Narcotics and Law Enforcement Affairs, 2002, www.state.gov. ———. “A Review of U.S. Policy Toward Venezuela, November 2001–April 2002.” Report No. 02-OIG-003, Washington, DC, 2002. ———. “Testimony of Ambassador Otto J. Reich, before the House International Relations Committee’s Subcommittee on the Western Hemisphere.” In State Department’s Otto Reich Outlines Terrorist Threat in Colombia. Washington, DC: U.S. Department of State, 2002. U.S. General Accounting Office (GAO). “Drug Control: Efforts to Develop Alternatives to Cultivating Illicit Crops in Colombia Have Made Little Progress and Face Serious Obstacles,” GAO-02-291. Washington, DC: GAO, February 2002. ———. “Drug Control: U.S. Assistance to Colombia Will Take Years to Produce Results,” GAO-01-26. Washington, DC: GAO, October 2000. U.S. Trade Representative (USTR). First Report to the Congress on the Operation of the Andean Trade Preference Act as Amended. Washington, DC: USTR, 2003. ———. Peru and Ecuador to Join with Colombia in May 18–19 Launch of FTA Negotiations with the United States. Washington, DC: USTR, 2004. ———. Third Report to the Congress on the Operation of the Andean Trade Preference Act. Washington, DC: USTR, 2001. Vaicius, Ingrid, and Adam Isacson. “The ‘War on Drugs’ Meets the ‘War on Terror.’” Policy Memo, Washington, DC: Center for International Policy, February 2003. Vaky, Viron P., and Jorge I. Domínguez. “Can an Anti-narcotics Effort Be Multilateralized?” Policy Brief, Inter-American Dialogue, Washington, DC, April 2001. Valdivieso, Gustavo. “A New Kind of Intervention for Colombia.” American Diplomacy 6, no. 1 (November 2001), www.americandiplomacy.org. Venezuela Country Profile 2002. London: The Economist Intelligence Unit, 2002. “Venezuela Country Report.” The Economist Intelligence Unit, September 2004. “Venezuela Country Report.” The Economist Intelligence Unit, July 2004. “Venezuela Country Report.” The Economist Intelligence Unit, May 2003. “Venezuelan Lawmakers Pass Controversial Supreme Court Reform.” AFX European Focus, 30 April 2004. “Venezuela RiskWire: Overview.” The Economist Intelligence Unit, 26 July 2004, http://riskwire.eiu.com. Villalobos, Joaquín. “Por qué las FARC están perdiendo la guerra.” Semana, 6 July 2003, http://semana.terra.com.co. Walters, John P. “Drug Treatment Proposals.” Hearing on “Overview of U.S. Policy Toward the Western Hemisphere.” U.S. House of Representatives Subcommittee on Criminal Justice, Drug Policy, and Human Resources, Committee on International Relations, Washington, DC: Federal Document Clearinghouse Congressional Testimony, 2003. Weyland, Kurt. The Politics of Market Reform in Fragile Democracies: Argentina, Brazil, Peru, and Venezuela. Princeton: Princeton University Press, 2002.

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———. “Will Chávez Lose His Luster?” Foreign Affairs 80, no. 6 (November/ December 2001): 73–87. Whitfield, Teresa. “Colombia: The Paramilitaries.” Unpublished paper, 15 November 2002. Williams, Bob. “PDVSA’s Credibility Push Bumps Up Against Lingering Concerns over More Political Unrest.” Oil and Gas Journal, 22 December 2003, p. 22. Williamson, John. The Progress of Policy Reform in Latin America. Washington, DC: Institute for International Economics, 1990. Wise, Carol, and Manuel Pastor. “From Poster Child to Basket Case.” Foreign Affairs 80, no. 6 (November/December 2001): 60–72. “World Refugee Survey 2004.” United States Committee for Refugees, 24 May 2004. Youngers, Coletta, and Peter Zirnite. “Their Own Worst Enemy: Washington’s War on Drugs in Latin America.” In Democracies Under Fire: Drugs and Power in Latin America, edited by Martin Jelsma and Theo Roncken. Montevideo: Transnational Institute, Ediciones Brecha, and Acción Andina, 1998.

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The Contributors

Russell Crandall is assistant professor of political science at Davidson College. He is also adjunct professor of Latin American studies at the Paul H. Nitze School of Advanced International Studies (SAIS) at Johns Hopkins University. He is an International Affairs Fellow at the Council on Foreign Relations for 2004 to 2005. Michael M. McCarthy was a research associate in the Latin American Studies Program at the Council on Foreign Relations in Washington, D.C., from 2002 to 2004 and is currently a graduate student in political science at Johns Hopkins University. Ramiro Orias Arrendondo is professor of international studies at the Academia Diplomática (School of Foreign Service) in La Paz, Bolivia. Guadalupe Paz is assistant director of the Latin American Studies Program at the Johns Hopkins Paul H. Nitze School of Advanced International Studies (SAIS) in Washington, D.C. Franklin Ramírez Gallegos is a research associate at the Centro de Investigaciones Ciudad in Quito, Ecuador. Fredy Rivera Vélez is coordinator of the international relations program at the Facultad Latinoamericana de Ciencias Sociales (FLACSO) in Quito, Ecuador.

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Riordan Roett is Sarita and Don Johnston Professor and director of the Latin American Studies Program and Western Hemisphere Studies at the Johns Hopkins Paul H. Nitze School of Advanced International Studies (SAIS) in Washington, D.C. Juan Carlos Sainz Borgo is a research professor at the Law School of the Universidad Central de Venezuela. He is former deputy director of the Instituto de Altos Estudios Diplomáticos “Pedro Gual” (School of Foreign Service). Julia E. Sweig is senior fellow at the Council on Foreign Relations in Washington, D.C. Mark Eric Williams is associate professor of political science at Middlebury College and the Antonio Madero Visiting Associate Professor for the Study of Mexican and Latin American Politics in the Department of Government at Harvard University (2005).

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Abrams, Elliot, 171(n17) Acción Democrática Nacionalista (ADN), 47 Acosta, Patricio, 139 Afghanistan, U.S. invasion of, 159 Agrarian reform: Ecuador’s regressive law halting reform, 128; Peru, 68 Agriculture: Chávez’s controversial land reform law, 108; coca crop replacement programs, 28, 32, 168–169, 182; Colombia’s diversification program, 32; Colombia’s resource war, 26–28; Ecuador’s economic reforms, 124; farmers’ losses through coca eradication programs, 156–157; Peru’s mahogany war, 78–79 Aid: U.S. aid to Colombia, 183(table); U.S. drug certification process, 169 Alarcón, Fabián, 130, 144 Alfaro Ucero, Luis, 98, 99 Allende, Salvador, 161–162 Alliance for Progress, 13 Aló Presidente, 109 American Popular Revolutionary Alliance (APRA), 68–69, 195, 197 Amnesty programs, 73, 98 Andean Finance Corporation, 31 Andean Initiative (1989), 140, 168 Andean Regional Initiative (2001), 169 Andean Trade Preference Act (ATPA), 52, 164–165, 168, 169 Andean Trade Promotion and Drug

Eradication Act (ATPDEA), 32, 77–78 Anomie, political, 80 Antireform coalition, Ecuador’s, 121–122 Approval rating: Colombia’s Uribe, 17, 30, 38(n26); Ecuador’s Gutiérrez, 138–139; Ecuador’s Mahuad, 147(n41); Peru’s Fujimori, 72, 74; Peru’s Toledo, 81, 85; Venezuela’s Chávez, 103 Arauca, Colombia, 11–12, 29–30 Arbenz, Jacobo, 161–162 Arequipa, Peru, 78 Argentina, 152 Arias Cárdenas, Francisco, 101 Arms trade, 40(n44), 77, 175 Army for the Liberation of the People of Venezuela (ELPV), 96–97 Arzabe, René, 57 Ashcroft, John, 181–182 Asian Tigers, 192 Aspiazu, Fernando, 132, 144 Assassinations, 13, 25, 35, 168 Asset forfeiture laws, 33 ATPA. See Andean Trade Preference Act AUC (United Self-Defense Forces of Colombia): approval rating, 38(n26); battling for control of oil and coca, 11; black market arms trade, 40(n44); Colombia’s military ignoring, 185–186; Colombia’s urban conflict,

219

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25–26; current strategies and activities, 19–20; drug trade involvement, 28, 41(n78), 170(n10); eluding authorities, 41(n61); establishment of, 36; FARC-ELN-AUC relations, 16–17, 175–176; interest in oil industry, 29–30; kidnapping statistics, 17; U.S. counterinsurgency activities, 181–182; Uribe’s domestic security policy targeting, 177–178 Austerity programs: Colombia, 31; Ecuador, 138; Peru under Fujimori, 71; Venezuela, 95, 103, 116 Authoritarianism: breakdown of Fujimori regime, 72–75; Chávez’s Bolivarian Revolution, 100–101; Ecuador under Bucaram, 129; Ecuador’s velasquismo failing to overcome, 123; Fujimori’s self-coup and subsequent rise of authoritarianism, 71–72, 85; hidden beneath democratic processes, 3; Peru under Fujimori, 67, 68; Peru’s prospects for democracy after, 83–84 Autogolpe (self-coup), 71–72, 123 Bail-out programs, 132 Balloon effect of coca eradication, 52, 141, 156–157 Bank rescue, Ecuador’s, 131–132, 144, 146(n34) Banzer, Hugo, 47, 48, 57, 62 Basket case, Andes as, 1, 8(n1) Belaúnde Terry, Fernando, 68, 83 Betancourt, Ingrid, 17, 175 Betancourt, Rómulo, 92–93 Bilateral trade agreements, 32 Black Hawk helicopter crash, 23 Black market arms trade, 40(n44) Blast Furnace, Operation, 168 Bolivarian Circles, 102 Bolivarian Constitution, 109, 111–112, 116 Bolivarian Labor Force, 102 Bolivarian Revolution, 7, 50, 91–92, 96–99, 99–100, 115 Bolivarian Revolutionary Movement–200, 97–98 Bolivia: absence of security, 7; Andean Trade Preference Act, 164; coca production, 1999–2000, 156(table);

credit rating, 194–195; demise of political parties, 196; democracy and political stability, 49–55; democratic paradox, 2–4; economic reforms leading to violence, 32; efficacy of eradication programs leading to power transfer, 156–157; future prospects, 56–57; GCR index of influence of political institutions, 196; Growth Competitiveness Index, 191–192; increasing unrest, 45–46; increasing violence of social protest, 55–56; macroeconomic and inequality indicators, 155(table); National Innovative Capacity index, 193; orthodox economic liberalization, 5; political consensus and reforms, 46–49; political parties, 170(n3); popular support for democracy and protection of civil liberties, 154(table); shock therapy stabilization program, 6; U.S. decertification of, 169 Bolivian Fiscal Oil Fields (YPFB), 59 Bolivian Labor Confederation (COB), 56 Bolivian Poverty Reduction Strategy, 48 Borges, Julio, 112 Borja Cevallos, Rodrigo, 143, 147(n54) Brady bond debt, 132, 146(n36) Brain drain, 193–194 Brazil: FTAA, 54; U.S. foreign policy, 152 Bribery, 75, 79, 85 Briceño Suárez, Jorge, 181–182 British Petroleum (BP), 29–30, 35–36, 42(nn86,88) Bucaram, Abdalá, 3, 128–130, 134, 144 Bucaram, Adolfo, 147(nn54,55) Bush, George H.W., 140, 151, 168 Bush, George W., 82, 112, 151, 160, 166, 180–182, 188(n27) Business sector, 125–126 Cabello, Diosdado, 109, 162–163 Caldera, Rafael, 92–96, 98–99, 103, 116 Cali cartel, 13–14, 15, 36, 179 Campaign contributions, 132, 139 Caño Limón-Coveñas oil pipeline, 11, 19, 29–30, 181 Capitalization, 4–6

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Car bombings, 82 Caracazo riots, 94, 97, 116 Cárdenas, Víctor Hugo, 48 Carmona, Pedro, 109, 162–163, 171(n17) Cartagena Declaration, 169 Cartagena Summit, 169 Carter Center, 113, 117 Carter, Jimmy, 106 Castaño, Carlos, 19, 36, 177–178, 181 Castro, Fidel, 7, 54 Castro, Orlando, 113 Castroists, 69 Casualties: anti-Chávez coup attempt, 109; Bolivia’s social protests, 56; Colombia’s conflict, 16, 22–23; Colombia’s urban conflict, 25–26; FARC violence against civilians, 175–176 Cease-fire agreement, 177–178 Central America, 107–108 Certification process, 168, 169 Charles, Robert, 27 Chávez Frías, Hugo: coups and coup attempts, 94–95, 116, 169; deterioration of Venezuela’s party system, 91–92; economic liberalization, 6; economic reform and decline under, 103–106; electoral democracy hiding authoritarianism, 3; foreign policy, 106–108; politics undermining security, 7; quality of leadership, 197–198, 200; referendum victory, 114–116; rise to power, 96–99; U.S. foreign policy and, 158–159; U.S. response to coup, 162–163 Cheney, Richard, 164–165 Children: Colombia’s urban conflict, 26; indigenous Bolivians, 51 Chile, 55, 85, 152 Chipoc, Carlos, 73 Chronology: Bolivia, 61–62; Colombia, 35–37; Ecuador, 143–144; Peru, 84–85; U.S. foreign policy, 168–169; Venezuela, 116–117 Cifuentes, Eduardo, 24 Citizen insecurity, 121 Citizenry, 3 Civil liberties, popular support for protection of, 154, 154(table) Civil society, 6, 9(n8), 154(table)

221

Civilian population, involvement in security, 23–24 Clinton administration, 36–37, 151, 160, 169, 180 Coalition governments: Bolivia, 47, 48; Ecuador, 136–139, 144, 146(n28); Ecuador’s indigenous movement, 197; Venezuela’s Caldera, 96 Coca production: Andean production 1991–2000, 156(table); Bolivia’s coca growers’ movement, 52; Colombia’s resource war, 26–28; increase after ATPA, 164; political instability and U.S. foreign policy, 157–158. See also Drug trade Cochabamba, Bolivia, 55–56 Colán, Blanca Nélida, 77 Cold War, 13, 161–162 Colombia: absence of security, 7; aid distribution, 40(n45); Andean Trade Preference Act, 164; as model of democratic stability and economic growth, 198–199; attitude toward guerrilla and paramilitary violence, 174; AUC’s current strategies and activities, 19–20; chronology of recent events, 35–37; coca production, 1999–2000, 156(table); credit rating, 194–195; decline of democratic institutions, 154; democratic paradox, 2–4; drug trade income, 42(n85); economic situation, 30–33; Ecuador’s withdrawal from conflict, 137; efficacy of eradication programs leading to power transfer, 156–157; ELN peace talks, 38(n13); ELN’s current strategies and activities, 18–19; ending state failure, 160–161; FARC activities in Bolivia, 53; FARC’s current strategies and activities, 17–18; FARC’s rampage, 174–176; GCR index of influence of political institutions, 196; government security initiatives, 20–26; Growth Competitiveness Index, 192; guerrilla economy, 39(n28); historical perspective on current conflict, 13–16; IRA-FARC collusion, 38(n12); macroeconomic and inequality indicators, 155(table); macroeconomic reform policies, 6;

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National Innovative Capacity index, 193; oil partnerships, 42(nn86,88,89); Plan Colombia, 140–142; political economy of conflict, 37(n5); political reforms, 33–34; popular support for democracy and protection of civil liberties, 154(table); potential for democratic collapse, 163; resource war, 26–30; results of U.S. coca eradication programs, 182–183; scope of current crisis, 16–17; state weakness and U.S. foreign policy, 157–158; U.S. aid to Colombia, 183(table); U.S. decertification of, 169; U.S. foreign policy after September 11, 2001, 184–187; U.S. foreign policy conflating the war on drugs and war on terrorism, 165; U.S. oil imports, 153–154; U.S. response to Uribe administration, 180–182; Uribe’s anti-guerrilla policies, 176; Uribe’s domestic security policy, 177–179; Uribe’s increasing popularity, 38(n26); Venezuela’s relations with, 107; violence defining political and reform agenda, 11–13; vying for control of oil industry, 29–30; war on drugs obscuring civil conflict, 179–180; zones of rehabilitation and internal commotion, 41(n61) Commitment for Bolivia coalition, 48, 62 Commitment traps, 166–168 Communications industries, 81, 105 Communist Party (Colombia), 14 Communist Party (Venezuela), 92 Communist threat, 161–162 Community networks, 102 Confederation of Indigenous Nationalities of Ecuador (CONAIE), 54, 127–128, 138–139, 144 Conflict: Bolivia’s social protest, 45–46; capital flow despite, 4–5; Colombia’s drug industry, 7–8; Colombia’s resource war, 26–30; Colombia’s urban population, 25–26; scope and progression of Colombia’s, 16–17. See also Security Congress: Bolivia, 47, 51, 156–157; Colombia, 31, 175, 198–199;

Ecuador, 125; Venezuela, 94–95, 99–101 Congress, Peru: constitutional manipulation, 73; Fujimori’s suspension of, 71–72, 85; post–Fujimori weakened state of, 80; prosecution of Alan García, 84 Connolly, Niall, 178–179 Conscience of the Fatherland (CONDEPA), 48 Consensus, political, 45–46, 46–49 Conspiracy, accusations of, 112–113 Constitutional Court (Colombia), 16 Constitutional reform: Bolivia, 47, 48; Ecuador’s National Constituent Assembly, 130–131 Constitutions: Bolivia, 58, 63(n5); Colombia, 13–15, 23–24, 34, 35; Ecuador, 125, 130, 146(n27); Peru, 72, 85; Venezuela, 92, 99–101, 111–112, 116, 159, 197 Convivir, 19 Corruption: before economic reform and liberalization, 5; Colombia’s corruption referendum, 33–34; defining Peru’s post-Fujimori government, 81; Ecuador under Bucaram, 129; Ecuador under Mahuad and Gutiérrez, 138–139, 144, 148(n58); Ecuador’s bank rescue, 131–132; Ecuador’s reformist agenda, 127; failing states’ tendency to, 160; GCR index and judicial independence, 196; hidden beneath democratic processes, 3; Peru under García, 69; Peru’s Vladimiro Montesinos, 75, 77, 79, 85, 157, 175; Venezuela’s oil-rentist economy, 93; Venezuela’s political party leadership, 197 Counter land reform, 28 Counterinsurgency activities, 30, 82, 166–167 Coups d’état and attempted coups: attempted ouster of Venezuela’s Chávez, 108–110; democratic paradox leading to, 3; Ecuador’s antiMahuad coup, 132–134; Ecuador’s political instability, 157; Ecuador’s presidential overthrow, 144; Ecuador’s weakened political stability, 123; failure to ouster Chávez, 115;

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Fujimori’s self-coup, 71–72; Morales’s conspiracy theory, 58; ouster of Venezuela’s Pérez Jiménez, 92; Peru, 68; U.S. foreign policy promoting democracy without supporting coups, 161–163; U.S. funding for Venezuelan coup attempt, 170(n17); Venezuela’s Hugo Chávez, 94–95, 98, 116, 169 Credibility, Fujimori’s loss of, 72–73 Credit, 194–195 Crime. See Drug trade Cronyism, 94, 196 Crop-replacement programs, 28, 32, 168–169, 182 Cuba, 115, 159 Currency controls, 105 Currency devaluation, 69, 132 Cut-flower industry, 32 Dahik, Alberto, 127 Daniels, Martha Catalina, 175 Dañino, Roberto, 80 de la Madrid, Miguel, 5 de Soto, Hernando, 194–195 Debt, external: Ecuador, 125, 132; Mexico, 5; Peru, 69 Decentralization: Chávez’s criticism of Venezuela’s, 99; Peru, 80 Decertification, U.S., 6, 36 Declaration of Cartagena, 169 Deficit, Ecuador’s, 138 Definitive Peace, Commerce, and Border Integration Agreement, 85 Deinstitutionalization, 103–104 del Valle Allegro, Italo, 97 Demilitarized zone, 15, 36–37, 174–175, 178, 179 Democracia Punto Fijista, 99 Democracy, 1–2; Andean countries’ support for democracy and protection of civil liberties, 154(table); as U.S. foreign policy objective, 151; Bolivia’s pacted democracy, 60; Bolivia’s political stability, 49–55; Chávez’s Bolivarian Revolution and democracy, 99–101, 101–103; Colombia’s Communal Councils, 33–34; decline in popular support for, 154; democratic paradox, 2–4; efficacy versus, 83–84; FARC attacks on, 176; frag-

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mentation of Ecuador’s, 121; historical perspective on Colombia’s, 13–16; importance of Ecuador’s coup, 134; MUPP’s democratic practices, 148(n59); U.S. foreign policy promoting democracy without supporting coups, 161–163; Venezuela’s democratic construction, 92–93 Democratic Action (AD), 92, 95, 98–99, 197 Democratic and Popular Union (UDP), 46 Democratic Bloc (BD), 111 Democratic Coordinator (CD), 110, 115 Democratic fragility, 121 Democratic Manifesto, 32 Democratic paradox, 2–4, 15–16 Democratic Security strategy, 37 Democratic stability, 126–128 Democratic transition, 67, 68–70, 83–84, 124–125 Democratization movement, 2 Deposit Guarantee Agency (AGD), 131–132, 144 Despeje (Colombia’s demilitarized zone), 15, 36–37, 174–175, 178, 179 Developing countries, globalization and, 4–6 Developmentalism, Ecuador’s, 122–124, 125–126 Dictatorships, 91–92, 92. See also Authoritarianism Diez Canseco, Raúl, 81, 85 Directorate Against Terrorism (DIRCOTE), 82 Disarmament of Colombia’s paramilitaries, 19 Displaced persons, 16 Dollarization program, 6, 129, 131–134, 137–138, 144, 147(n41) Domestic credit, 131 Doria Medina, Samuel, 53 Drug Enforcement Agency, 41(77) Drug trade: Andean countries’ coca leaf production, 1991–2000, 156(table); as threat to U.S. interests, 152; as U.S. foreign policy focus, 152, 153; Bolivia’s anti-narcotics programs, 47, 48; Bolivia’s coca growers’ movement, 52; Bolivia’s internal conflict over, 61; Colombia’s economy,

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39(n28), 41(n78), 42(n85); Colombia’s history of democracy, 13–14; Colombia’s resource war, 26–30; creating an absence of security, 7; Ecuador’s Gutiérrez, 138–139; FARC involvement, 41(77), 175; Fujimori’s anti-drug policy, 71; liberal trade versus drug trade in U.S. foreign policy, 163–165; NAFTA increasing drug flow, 171(n21); Peru, 69; Plan Colombia, 140–142; results of U.S. coca eradication programs in Colombia, 182–183; Samper’s ties to, 36; Shining Path’s resurgence, 82–83; U.S. dollars distorting Colombia’s economy, 6; U.S. foreign policy conflating the war on drugs and war on terrorism, 165–168; U.S. role in resolving Colombia’s conflict, 198; use of forward operating locations, 149(n74); war on drugs obscuring Colombia’s civil conflict, 179–180 Durán Ballén, Sixto, 127 Economic crisis: Ecuador, 157; Peru, 68–69, 70–72 Economic growth: Colombia as model of economic growth, 198–199; Ecuador, 126, 128, 132; innovation and, 192–194; oil industry as engine for, 5; Peru under Fujimori, 72–73; Peru’s economic gains after Fujimori, 77–79; Peru’s growth failing to benefit populace, 78, 83–84 Economic reform: Bolivia under Paz Estenssoro, 47; Bolivia’s institutional and economic reforms, 45; Bolivia’s opposition to free-market reforms, 53–55; Colombia, 31; Ecuador under Durán, 127; Ecuador under Gutiérrez, 138, 148(n58); Ecuador’s developmentalism, 124; international economy and, 4–6; Venezuela under Pérez, 94–95; Venezuela’s reform and decline under Chávez, 103–106 Economic stability: Fujimori’s attempts to establish in Peru, 71; neglecting through overemphasis on democracy, 3–4; Peru’s failure to benefit populace, 78, 83–84

Economic stabilization and transformation, 1–2, 6, 125, 134–136 Economist Intelligence Unit, 105 Economy: anti-Chávez strikes crippling Venezuela’s, 110; Colombia’s current situation, 30–33; Colombia’s dual economy, 158; deterioration of Venezuela’s, 91; Ecuador’s under Bucaram, 129; Ecuador’s bank rescue, 131–132; Ecuador’s dollarization program, 132–134, 134–136, 147(n41); Ecuador’s rise of developmentalism, 122–124; Ecuador’s stagnation, 121; Growth Competitiveness Index, 191–192; impact of drug trade on Colombia’s, 28–29; liberalization damaging Colombia’s, 14; macroeconomic management, 194–195; Venezuela’s performance under Chávez, 104–105, 115 EcoPetrol, 11, 42(n86) Ecuador: adjustment, social conflict, and democratic fragility, 126–128; Andean Trade Preference Act, 164; anti-Mahuad coup, 132–134; border clashes with Peru, 85; chronology of recent events, 143–144; credit rating, 194–195; decline of developmentalism, 125–126; decline of political organizations, 196–197; democratic paradox, 2–4; democratic transition, 124–125; dollarization program, 6, 129, 131–134, 137–138, 144, 147(n41); economic growth, 126; forward operating location for drug traffic monitors, 169; Free Trade Area of the Americas, 54; GCR index of influence of political institutions, 196; Growth Competitiveness Index, 192; Gutiérrez’s rise to power, 136–139; Gutiérrez’s victory over Noboa, 147(n54); interim government, 130–131; macroeconomic and inequality indicators, 155(table); MUPP’s democratic practices, 148(n59); oil and dictatorship, 124; orthodox economic liberalization, 5–6; political institutions affecting U.S. foreign policy, 157; popular support for democracy and protection of civil liberties, 154(table); presi-

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dential overthrows, 128–130, 131–132; rise of developmentalism, 122–124; security concerns, 139–142; U.S. oil imports, 153–154 Ecuadorian Roldosist Party (PRE), 129 Education, 108 Efficacy over democracy, 83–84 El Caracazo, 94, 97, 116 El chiripero (the cockroach nest), 96 El Gran Viraje (The Great Turnaround), 94 El Salvador, 25 Elections: assassination of Colombia’s political candidates, 35; Bolivia’s democratic transition, 46–47; Bolivia’s failure to elect by majority, 61, 62(n1), 63(n5); Bolivia’s radical indigenous movement, 51; camouflaging inadequate democratic regime, 3; Chávez’s referendum victory, 114–116; Colombia’s economic reform referendum, 31; Ecuador’s election of Gutiérrez, 136–137, 147(n54); election fraud, 74, 113–114, 116–117; Fujimori’s obstruction of his opposition, 73–74; Peru’s radical APRA, 68–69; reelection of Venezuela’s Chávez, 101; rise of Fujimorismo in Peru, 70–71; success of Bolivia’s free-trade opponents, 156–157; support for Uribe’s policies and candidates, 174; triumph of Ecuador’s Pachakutik, 129; Uribe’s victory, 176; Venezuela’s attempted electoral ousting of Chávez, 111–114 Electoral Chamber (Venezuela), 112 Electoral democracy. See Democracy ELN (National Liberation Army): battling for control of oil and coca, 11; Bolivian ties, 57; concern with social issues, 39(n34); control of Colombian territory, 158; current strategies and activities, 18–19; drug trade involvement, 41(n78), 170(n10); FARC-ELN-AUC relations, 16–17; Hugo Chávez’s relationship with, 7; interest in oil industry, 29–30; kidnapping statistics, 17; peace negotiations, 38(n13); pipeline attacks, 36

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Elusive trinity: Bolivia, 60; Colombia, 33–34, 198–199; concept of, 1–2; Ecuador, 121; Growth Competitiveness Index addressing, 191; Peru, 67; Venezuela, 91–92 Embassy attack, 69, 110 Embezzlement, 77, 95 Emergency, state of, 79, 176 Empowerment of citizenry, 3 Energy needs, 153. See also Oil industry Engineers, 193–194 Environmental concerns, 27 Eradication programs: Bolivia’s loss of income over, 63(n18); Bolivia’s violence over, 52; causing spillover into Ecuador, 141; efficacy leading to power transfer in Bolivia and Colombia, 156–157; Peru, 82–83; protesting Peru’s programs, 78; U.S. eradication in Bolivia and Peru, 168; U.S. funding for, 169. See also Drug trade Escobar, Pablo, 35 Ethnic representation, 35 Ethnicity. See Indigenous population Exchange rate index, 135 Executive powers, 115 Export economy, 32 Extradition, 19, 20, 35, 169 Failed states, 159–161, 166, 199–200 FARC (Revolutionary Armed Forces of Colombia): approval rating, 38(n26); battling for control of oil and coca, 11; Bolivian ties, 53; breakdown of peace talks, 174–176; capture of U.S. personnel, 173; Chávez’s assistance to, 159; contribution to state failure, 161; control of Colombian territory, 158; current strategies and activities, 17–18; drug eradication programs, 27; drug trade involvement, 28, 41(n78), 170(n10); FARC-ELN-AUC relations, 16–17; Gaviria’s condemnation of, 35; Hugo Chávez’s relationship with, 7; interest in oil industry, 29–30; IRA-FARC collusion, 38(n12); kidnapping statistics, 17; Montesinos’s arms trade with, 77; Plan Colombia negotiations, 15; result of Uribe’s government security

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initiatives, 23; U.S. extraditions for cocaine smuggling, 41(77); U.S. impatience with, 180; U.S. policy conflating the war on drugs and the war on terrorism, 165–166; U.S. response to kidnappings, 8; urban conflict, 25–26; Uribe’s domestic security policy, 177–179; Venezuelan aid to, 107 FEDECAMARAS, 108, 109–110, 114 Fernández, Carlos, 110 Fernández, César, 138–139 Ferrero, Carlos, 81 Fifth Republic Movement, 98 Financial Times/London Stock Exchange (FTSE) Group, 105 Finland: National Innovative Capacity index, 193 Five securities, Gutiérrez’s, 137 Foreign Affairs, 160 Foreign investment, 6; Bolivia’s lowered credit rating, 57; Ecuador, 157; Ecuador’s attempts to attract foreign investment through the oil industry, 134–135; measuring macroeconomic state, 194–195; Peru’s loss of funds during guerrilla insurgencies, 70; stagnation in Ecuador, 126; Venezuela as investment risk, 105 Foreign policy: Ecuador, 137–138; Plan Colombia, 140–142; United States (See United States foreign policy); Venezuela under Chávez, 106–108 Forward operating locations (FOLs), 140, 149(n74), 169 Fox, Vicente, 151 Free Bolivia Movement (MBL), 47–48, 58 Free trade agreements, 163, 171(n21) Free Trade Area of the Americas (FTAA), 54, 61, 137, 152, 159 Free-market economics, 53–55 Freedom Commandos, 111 FTAA. See Free Trade Area of the Americas Fujimori, Alberto: authoritarianism under, 67; constitutional amendment extending presidential terms, 34; economic and antiterrorism policies, 70–72; electoral democracy hiding authoritarianism, 3; granting asylum to Venezuelan dissidents, 98; regime

breakdown, 72–75; sacrificing democracy to security, 7; weakening Peru’s democratic institutions, 79, 157 Fujishock, 71 Fumigation programs, 27, 30, 78. See also Eradication programs Gaitán, Jorge Eliécer, 13 Galán, Luis Carlos, 35, 168 Gamarra, Ernesto, 77 Garatea, Gastón, 83 García, Alan: as popular prospect for 2006 elections, 84; concerns over return to power of, 195, 197; election victory and subsequent popular dissatisfaction with, 68–69; electoral democracy hiding authoritarianism, 3; public nostalgia for, 73; Toledo’s victory over, 75 García Márquez, Gabriel, 35 García Meza, Luis, 46, 70 Gaviria, César, 110 Gaviria Trujillo, César, 35 GCR. See Global Competitiveness Report Gechem, Jorge, 174 Geographical political alignments, 127 Global Competitiveness Report (GCR), 191–192, 193, 195, 196 Globalization. See International economy González, Felipe, 106 Governability Pact among Bolivia’s UCS, MBL, and MNR, 47–48, 61 Grassroots movements, 125 Great Turnaround (Venezuela), 94–95 Gross domestic product (GDP): Bolivia, 62(n3); Ecuador, 124, 126, 145(n5), 157; macroeconomic and inequality indicators, 155(table); Peru, 69; skillbased exports, 193–194; Venezuela, 93 Group of Friends, 110 Growth Competitiveness Index (GCI), 191–192 Guarimba Plan, 111 Guatemala, 25 Guerrillas: anti-Fujimori activists, 73; Colombia’s conflict spilling into Venezuela, 107; Colombia’s diverse groups, 170(n10); Colombia’s gov-

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ernment security initiatives, 20–21; Colombia’s war without quarter, 167; Colombian guerilla insurgency as terrorism, 171(n27); control of Colombian territory, 158; drug-trade links, 28; FARC, ELN, and AUC vying for control of Colombia’s oil pipeline and coca harvest, 11–13; Fujimori’s triumph over, 71–72; Gaviria’s condemnation of, 35; hampering petroleum exploitation, 29; historical perspective of Colombia’s, 13–14; Hugo Chávez’s relationship with Colombia’s, 7; increased action under Samper, 36; links to drug trade, 8; need for eliminating, 200; Peru, 69; pipeline attacks, 35–36; profiting from kidnapping, 53; targeting informants, 24–25; Uribe’s civilian antiguerrilla offensive, 23–25; Uribe’s domestic security policy, 177–179. See also ELN; FARC Gutiérrez, Lucio, 122, 133, 136–139, 195, 196–197, 200 Guzmán, Abimael, 71, 85 Haiti, 160 Haya de la Torre, Víctor Raúl, 68 Heroin production, 27. See also Drug trade Herrera Campíns, Luis, 93 Hijackings, 174 Hostage-taking, 73, 173 Human rights: AUC abuses, 19; Colombia’s armed groups, 16; Colombia’s civilian informant program, 24–25; erosion in Venezuelan rule of law, 102–103; Peru under Fujimori, 71–72, 73, 76, 85; Plan Colombia, 141; U.S. desire to protect in Colombia, 184–185 Human Rights Watch, 19 Humanitarian law, 41(n61) Hurtado, Oswaldo, 125 Hussein, Saddam, 7, 107 Hyperinflation. See Inflation Hyperpresidentialism, 101–102, 109 Impeachment, 95, 116 Imprisonment, 25–26 Indigenous population, Bolivia: antigovernment protests, 56; multicultural

227

movement, 47–48; opposition to natural gas pipeline, 55; radical indigenous movement, 51; renewed protests under Mesa, 57 Indigenous population, Ecuador: constitutional reforms, 130–131; Ecuador’s antireform coalition, 121–122; January 21 military uprising, 133–134; mounting political challenges, 196–197; political power of, 127–128, 129; presidential overthrow, 129–130; PSP-indigenous alliance, 136–139; Quito takeover, 143; suffrage for, 125 Indigenous population, Peru: Fujimori’s appeal to, 70–71; human rights abuses under Fujimori, 76; socio-ethnic gap leading to protest and state anomie, 80 Industrialization, Ecuador’s, 123, 124 Inequality, 9(n8), 155(table) Inflation: Bolivia, 46, 50, 54, 62(n3); Ecuador, 128, 130; macroeconomic and inequality indicators, 155(table); Peru, 69, 71; through dollarization, 135; Venezuela, 105 Informal sector economy, 195 Informant programs, 23–25 Infrastructure, FARC attacks on, 26 Innovation, 192–194 Institutional development, 5, 9(n8); camouflaging Colombia’s lack of democracy, 13; decline in all Andean states, 154; Ecuador’s velasquismo, 123; effect on elusive trinity, 4; erosion of Venezuela’s institutions, 115; importance of political institutions, 195–198; institutional instability, 121; Peru’s representative institutions, 79–81; prospects for political stability, 199–200; role in anti-drug efforts, 142 Institutional Revolutionary Party (Mexico), 50 Insurrections. See Coups d’état and attempted coups Integrated System of Financial Administration and Governmental Control (SAFCO), 47 Intelligence gathering, 97, 140, 142 Inter-American Commission on Human Rights (IACHR), 102–103

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Inter-American Development Bank (IDB), 31, 138, 194 Intergovernmental Fund for Decentralization (FIDES), 95 Interim governments, 109, 130–131 Internal commotion, Colombia’s, 23–24, 41(n61), 176 International community’s response to Chávez’s authoritarianism, 110 International Crisis Group, 27 International economy, 4–6 International Labour Organization (ILO), 102 International Monetary Fund (IMF): Bolivia’s gas pipeline, 55; Colombia’s stand-by package, 31; economic stagnation despite assistance from, 194; Ecuador’s stand-by agreement, 138, 144; Peru’s ineligibility under, 69; Peru’s structural reforms, 85; providing capital flow, 4–5; renegotiating Ecuador’s debt, 127 International Narcotics Control Strategy Report, 182 Iraq, U.S. invasion of, 40(n45), 137, 159 Irish Republican Army (IRA), 38(n12), 165, 166, 175, 178–179 Ivcher, Baruch, 73 Jackman, Galen, 53 January 21 uprising, 133–134, 147(n45) Japan, Peru’s relations with, 71 Jaramillo, Bernardo, 35 Journalists, violence against, 17 Judicial independence, 196 Judicial reform in Bolivia, 48 Judiciary: Peru, 76–77; Venezuela under Chávez, 101 Kidnappings: Bolivia’s radical indigenous movement, 53; Colombia’s conflict spilling into Venezuela, 107; Colombia’s statistics, 16–17; ELN activities, 19; FARC, 37, 174, 175; Peru’s MRTA, 70; Peru’s Shining Path, 82; U.S. response to FARC, 8 King Capital, 4–5 Kingpin strategy, 7, 179–180 Kissinger, Henry, 161 La Rosa, Leonor, 73 La Violencia (Colombia), 13, 15

Labor unions: Bolivia’s social mobilization, 47, 50, 54; Bolivia’s union movement crisis, 56; Chávez’s purge of union leaders, 102; Colombian violence against union members, 17; hostility to Gutiérrez’s reforms, 138–139 Land rights and tenure, 48; Bolivia’s radical indigenous movement, 51; Chávez’s controversial land reform law, 108; Colombia’s counter land reform, 28; Colombia’s land reform, 32–33 Landless Movement (MST), 58, 59 Lara, William, 112 Latin American Economic System (SELA), 106 Law of Constitutional Reform, 62 Law on Modernization (Ecuador), 127 Leahy, Patrick, 181 Leahy Amendment, 169 Leoni, Raúl, 92 Lerner, Salomon, 76 Liberal institutionalist policy, 152 Liberal trade, 163–165 Liberalization, economic, 5–6, 14, 71 Living standards: Ecuador, 135–136, 145(n14); Venezuela, 93 Loans, 31–32 Lobbyists, 102 Logistical sites, 138 Lusinchi, Jaime, 93 Macas, Luis, 128 Macroeconomic management, 194–195 Maduro, Nicolás, 112 Mahogany war, 78–79 Mahuad, Jamil, 3, 131–134, 144, 157 Mancuso, Salvatore, 19, 181 Manta air base, Ecuador, 140–142 Maoists, 69 Marín, Giovanni, 19 Marín, Rafael, 113 Marulanda Vélez, Manuel, 36 Massacres against civilians, 18, 19 Maza Zavala, Domingo, 115 McCauley, Martin, 178–179 Medellín cartel, 13, 15, 179 Media: Chávez’s harassment and control of, 109; Chávez’s overuse of, 101–102; support of anti-Chávez strike, 109–110

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Mesa, Carlos, 56–60, 62, 195 Mexico: economic reform and liberalization, 5; George W. Bush visit, 151; mediating talks between administration and ELN, 19; social mobilization and political stability, 50; U.S. foreign policy, 152 Microcredit, 195 Microeconomic Competitiveness Index (MICI), 191–192 Middle class, 103, 123 Middle East, Venezuela’s relations with, 107 Military: anti-FARC activities, 175; Bolivia’s constitutional crisis, 58; Bolivia’s political consensus over ending military rule, 46; Colombia’s government security initiatives, 21–23, 23–25, 37; Ecuador’s democratic transition, 124–125; Ecuador’s January 21 uprising, 133–134; Ecuador’s presidential overthrow, 128–130, 144, 147(n46); Ecuador’s reformists, 124; Ecuador’s use in anti-drug efforts, 141; Ecuador-Peru border clashes, 85; Fujimori’s selfcoup, 71–72; Hugo Chávez’s rise to power, 96–99; intervention in antiChávez coup attempt, 109; intervention in Colombia’s urban conflict, 25; intervention in Peru’s government, 68; Peru’s division of funds by, 75; Peru’s human rights violations, 76; Peru’s response to guerrilla activities, 70; shooting down drug planes, 182–183; U.S. aid to Colombia’s, 184–185; U.S. training of Colombian counterinsurgency troops, 181; Uribe’s domestic security policy targeting guerrillas and paramilitaries, 177–179; Venezuela’s presidential control over, 101. See also Coups d’état and attempted coups Molina Tamayo, Carlos, 171(n17) Monaghan, James, 178–179 Monetary policy, 146(n23) Money-laundering, 141 Montesinos, Vladimiro, 75, 77, 79, 85, 157, 175 Morales, Evo, 45, 51–54, 57–60, 62, 62(n1), 156 Morales Bermúdez, Francisco, 68

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Movement of the Revolutionary Left (MIR), 47, 58 Movement Toward Socialism (MAS), 46, 58 Movimiento al Socialismo (MAS), 46 MRTA. See Túpac Amaru Revolutionary Movement Multiculturalism, 47–48 MUPP. See Pachakutik Nation-building initiatives, 152, 159–161, 199 National Amazonic Confederation of Ecuador (COFENAE), 139 National Constituent Assembly (Ecuador), 130–131 National Dialogue (Bolivia), 48 National Electoral Council (CNE), 111–112, 116 National Endowment for Democracy, 170(n17) National Front power-sharing pact, 13 National Governability Pact (Peru), 80 National innovative capacity, 193 National Intelligence Service (SIN), 75 National Liberation Army. See ELN National Planning Ministry (Colombia), 32 National Security Decision Directive No. 221, 168 National Telephone Company of Venezuela (CANTV), 105 National Unity party (Peru), 80 Nationalism, Peru’s, 68–69 Nationalist Democratic Action (ADN) (Bolivia), 47 Nationalist Revolutionary Movement (MNR), 50, 62(n4) Nationalization: Bolivia’s natural gas industry, 59; Venezuela’s industries, 93 Natural disasters, 73 Natural gas, 54–55, 59 Natural resources. See Oil industry; Resource use and exploitation Nebot, Jaime, 127 Neira, Xavier, 147(nn54,55) Neoliberal economic programs: Ecuador, 126–128, 130–131, 146(n28); Peru under Fujimori, 71 Neopopulism in Bolivia, 50 Nepotism, 81

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New Country Pachakutik Movement of Plurinational Unity (MUPP). See Pachakutik New Economic Policy (Bolivia), 47 New Republican Force (NFR), 48, 58 Noboa, Alvaro, 136, 147(nn54,55) Noboa, Gustavo, 133–134, 144, 157 Non-Aligned Movement (NAM), 137–138 North American Free Trade Agreement (NAFTA), 163, 171(n21) Occidental Petroleum, 11, 29, 42(n86), 42(nn88,89) Ochoa Antich, Fernando, 94, 98 Oil industry: as engine for economic growth, 5; Chávez’s dependence on, 115; Chávez’s relations with Cuba, 106–107; Chávez’s use of oil revenues to finance social programs, 113; Colombian partnerships, 42(nn86,89); Ecuador’s attempts to attract foreign investment, 134–135; Ecuador’s boom and subsequent developmentalism, 124; FARC, ELN, and AUC vying for control of Colombia’s oil pipeline and coca harvest, 11–13, 29–30; financing Venezuela’s early reforms, 93; penalizing Colombia’s strikers, 17; pipeline violence, 35–36; U.S. reliance on Andean imports, 153; Venezuela’s economic reforms under Chávez, 103–104; Venezuela’s general strike, 110 Oligarchic-mafioso agreement, 132 Organization of American States (OAS): Bush address, 151; Colombia-AUC peace process, 20; intervention in Fujimori election, 74; Latin American Economic System, 106; Venezuela’s general strike, 110; Venezuela’s recall referendum, 113, 117 Organization of Petroleum Exporting Countries (OPEC), 107, 127, 159 Orión, Operación, 25 Ortega, Carlos, 110 Pacari, Nina, 137 Pachakutik (New Country Pachakutik Movement of Plurinational Unity),

122, 136, 145(n22), 148(n59), 196–197 Pacted democracy, Bolivia’s, 47, 60 Paniagua, Valentín, 75, 85 Paramilitary organizations: as part of Chávez’s conspiracy theory, 112–113; Colombia’s urban conflict, 25–26; Colombia’s war without quarter, 167; control of Colombian territory, 158; establishment of AUC, 36; FARC, ELN, and AUC vying for control of Colombia’s oil pipeline and coca harvest, 11–13; history of Colombia’s democracy, 14; Venezuela’s Bolivarian Circles, 102. See also AUC Pardo-Maurer, Rogelio, 171(n17) Party of Republican Unity (Ecuador), 127 Party system: Colombian politics outside of, 158; decline in all Andean states, 154; decline of Venezuela’s, 95–96; Gutiérrez’s rejection of, 137; marginalization of Ecuador’s parties, 132; need for trustworthy politicians, 196; Peru’s need to rebuild, 83–84; Peru’s post–Fujimori crisis, 79–81; role in Chávez’s Bolivarian Revolution, 100 Pastrana, Andrés, 15, 36–37, 166, 174–175, 179–180 Patriotic Accord, 47 Patriotic Society Party of January 21 (PSP), 136–137, 196–197 Paz Estenssoro, Víctor, 47, 62(n4) Paz Zamora, Jaime, 47, 58, 61, 62 Paz Zamora, Néstor, 53 Peace negotiations, 36–37, 38(n13), 174–176, 177–178 Peacekeeping operations, 160 Peasantry. See Rural populations Peña Farfán, Saúl, 75 Peñafiel, Alejandro, 144 People’s militias, 113 People’s Parliaments (Ecuador), 133 Pérez, Carlos Andrés, 93–94, 106, 111, 113, 116 Pérez de Cuéllar, Javier, 72, 85 Pérez-Jiménez, Marcos, 92, 99 Peru: Andean Trade Preference Act, 164; breakdown of Fujimori regime, 72–75; chronology of recent events, 84–85; coca production, 1999–2000,

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156(table); conflict with Ecuador, 144; counterinsurgency measures, 25; credit rating, 194–195; demise of political parties, 197; democratic paradox, 2–4; democratic prospects, 83–84; democratic transition, 68–70; discontinuity in policymaking, 195; economic gains and social protest, 77–79; economic isolation of, 5; Fujimori’s economic policies, 70–72; GCR index of influence of political institutions, 196; Growth Competitiveness Index, 192; infiltration into Bolivia’s drug traffic, 52–53; judicial branch and the rule of law, 76–77; macroeconomic and inequality indicators, 155(table); National Innovative Capacity index, 193; orthodox economic liberalization, 5; popular support for democracy and protection of civil liberties, 154(table); representative institutions and social demands, 79–81; sacrificing democracy for security, 7; security threats to, 82–83; weakening of democratic institutions, 157 Perú Posible (PP), 75, 80, 81 Peruvian Aprista Party (PAP), 80 Peruvian Revolution, 68 Petroleum of Venezuela (PDVSA), 104, 107, 109–110, 113, 115, 116 PetroPerú, 81 Pipelines: Bolivia’s natural gas industry, 55; Colombia’s oil, 29–30; Colombia’s violence centered on, 11; Ecuador’s oil, 134–135; Peru’s gas pipeline protest, 82; protection funding, 188(n27); U.S. protection for, 181, 188(n27) Pizarro Léon-Gómez, Carlos, 35 Plan Colombia: conflating the war on drugs and the war on terrorism, 165–166; criticisms of, 161; Ecuador’s participation in, 140–142, 144; Gutiérrez’s foreign policy, 137; land tenure and crop-substitution programs, 32; launching of, 169; objectives of, 180; Pastrana’s negotiation of, 15 Plan Dignity (Bolivia), 48, 52 Plan Ecuador, 142, 144 Plan Patriota, 37, 177

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Plaza, Galo, 122–123 Plaza, Marisol, 112 Polarization, political, 8, 105–106, 109, 114–115 Polay, Víctor, 71 Police agencies: Ecuador’s goal of strengthening, 141; Peru’s mahogany war, 79 Policy offsetting, 163–165 Policymaking, 195 Political economy, 42(n89) Political reforms: Bolivia, 48; Colombia, 33–34; Ecuador, 125 Political stability, 1–2; Bolivia increasing, 49–55; Bolivia under Mesa, 56–57; Ecuador, 121; ensuring security and stability without nationbuilding, 159–161; erosion of Peru’s, 75; Fujimorismo, 71; Peru’s instability, 68; prospects for, 199–200; Venezuela’s Punto Fijo Pact, 92. See also Democracy Politics of the masses, 123 Poppy cultivation, 27. See also Drug trade Popular Democracy (DP), 130–131, 146(n28) Popular Liberation Army, 57 Popularity. See Approval rating Populism: Ecuador’s velasquismo, 123; Peru, 68–69, 70–72; Venezuela’s Chávez campaign, 98–99 Poverty: Bolivia, 48, 51, 60; Colombia, 30; Ecuador, 135–136, 145(n14); macroeconomic and inequality indicators, 155(table); Venezuela, 91, 105 Powell, Colin, 158–159, 162–163, 179, 182, 186–187 Pozo, Mauricio, 137, 139 Presidential overthrow, Ecuador, 128–130, 131–132, 144 Presidential overthrow, Venezuela, 95 Presidential powers, 100–101 Press, freedom of the, 101–102 Private sector economy, 31, 132 Privatization: Bolivia, 61; economic liberalization, 5; Ecuador, 127, 144; Peru’s oil and communications industries, 81; protests against Peru’s, 78, 85 Property rights, 48

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Protest. See Social mobilization; Strikes Public security. See Security Punto Fijo Pact (Venezuela), 92 Qaddafi, Muammar Al, 107 Quiroga, Jorge, 48, 58, 62 Quispe, Luis Felipe, 51, 57, 58 Radical organizations, 51, 55, 68 Ramírez, Marta Lucía, 171(n29) Rangel, Alfredo, 30 Rangel, Vicente, 112, 113 Reagan administration, 151, 168 Realist policy, 152 Recall referendum, 111–112, 114–116 Recession, economic, 73 Referendum, 31, 33–34, 111–112, 114–116 Reform: Ecuador’s reformists and antireformists, 121–122; Peru’s military coup, 68; second-generation reforms, 9(n8). See also Agrarian reform; Constitutional reform; Economic reform; Structural reform Regime Governing Coca and Controlled Substances (Bolivia), 47 Regional government, Peru’s, 81 Rehabilitation and consolidation zones, 24, 41(n61), 176 Reich, Otto, 171(nn17,27) Remittances, 134–135 Representative institutions, 81 Repsol Fiscal Oil Fields (YPF), 11 Resource use and exploitation: Bolivia’s gas exportation, 59; Bolivia’s radical indigenous movement, 51, 54–55; Bolivia’s Water War, 55–56; Colombia’s political economy of conflict, 37(n5); Colombia’s resource war, 26–30. See also Oil industry Restrepo, Juan Camilo, 33 Restrepo, Luis Carlos, 20 Revolutionary Armed Forces of Colombia. See FARC Reyes Villa, Manfred, 58, 62(n1) Rice, Condoleezza, 160 Rincón, Iván, 112 Rincón, Lucas, 108 Rincón Romero, Lucas, 171(n17) Robinson, Mary, 24 Rocha, Manuel, 53 Rodríguez, Alejandro, 77

Rodríguez, Felipe, 111 Rodríguez Orejuela, Gilberto, 183 Rodríguez Orejuela, Miguel, 183 Roldós, Jaime, 125, 147(n55) Roldós, León, 147(n54) Roldosistas, 129 Rospigliosi, Fernando, 81, 82 Rule of law, 76–77, 102–103 Rural populations: economic reform in Colombia, 32–33; peasant soldiers, 24–25; Peru’s Shining Path insurgents, 69–70; supporting Peru’s coca production, 83 Sáez, Irene, 98, 99 Salas Romer, Enrique, 98, 99 Samper, Ernesto, 14, 33, 36 San Antonio Summit, 169 Sánchez de Lozada, Gonzalo: Congressional election of, 61; election results, 62(n1); indigenous movement’s ouster of, 156; Mesa’s conspiracy theory against, 58; popular dissatisfaction with, 3, 45, 56; quality of leadership, 195, 200 Scandal. See Bribery; Corruption Scientists, 193–194 Second-generation reforms, 9(n8), 34 Secret Indigenous Revolutionary Committee Juan Cosme Apaza, 57 Security, 1–2; as U.S. foreign policy objective, 151; Colombia’s government security initiatives, 20–26; Colombia’s need for economic security, 31; Colombia’s oil industry, 29; Ecuador’s concerns over, 139–142; Ecuador’s new security agenda, 121; ensuring security and stability without nation-building, 159–161; Gutiérrez’s five securities, 137; historical perspective of Colombia’s democratic decline, 14–15; National Security Decision Directive No. 221, 168; neglecting through overemphasis on democracy, 3–4; promoting political and economic reform, 6–8; threats to Peru’s, 82–83; Uribe’s domestic security policy, 177–179 Sedition charges, 20, 110 Self-coups, 71–72, 123 September 11, 2001, 8, 160, 173 Serpa, Horacio, 36, 176

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Shining Path, 7, 69–71, 76, 82–83, 85 Siege, state of, 176, 187(n8) Siles Zuazo, Hernán, 46–47 Skill-based exports, 193–194 Snowcap, Operation, 168 Social Christian Party (COPEI), 95, 96, 98–99, 116, 144, 197 Social Christian Party (PSC), 130–131, 146(nn28,34) Social conflict, 126–128 Social Democratic Party (AD), 93 Social exclusion, 121 Social issues, ELN’s concerns, 39(n34) Social mobilization: farmers’ losses through eradication programs, 156–157. See also Strikes Social mobilization, Bolivia: coca growers’ movement, 52; increasing violence, 55–56; leftist movements, 46; Mesa’s attempts to address, 56–57; Mesa’s concessions to protest organizations, 57–59; opposition to freemarket reforms, 53–55; popular dissatisfaction with traditional system, 49–50; protesting international position, 61; radical indigenous movement, 51; terrorist ties, 57 Social mobilization, Ecuador: CONAIE, 127; demanding Gutiérrez’s resignation, 139; presidential overthrow, 129–130 Social mobilization, Peru: after Fujimori, 77–79; anti-Fujimori protests, 74; anti-privatization protest, 85; channeling Peru’s social demands, 79–81; instability following García’s term, 69; riots during Fujimori’s third term, 75; threats to Peru’s security, 82–83 Social mobilization, Venezuela, 94 Social spending, 32, 42(n88), 113 Socialism, 46, 161–162 Socioeconomic crisis, Ecuador’s, 121 Solórzano, Carlos, 133 Somalia, 160 Sovereignty, 137 Spain, 110 Stabilization. See Economic stabilization and transformation State failure. See Failed states State of internal commotion, Colombia’s, 23–24

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Strikes: Bolivia, 47, 51; Ecuador’s CONAIE, 127; Peru under Toledo, 78, 81; Venezuela’s CTV and FEDECAMARAS protesting Chávez’s decrees, 108, 109–110, 116; Venezuela’s oil industry protesting Chávez’s policies, 104 Structural reform, 31, 126–128, 143–144, 157 Suárez, Pedro, 183 Sucretization of debt, 126 Suffrage, 125 Suicide bombings, 57–58 Summit of the Americas, 151 Supreme Court (Venezuela), 111–112 Supreme Tribunal of Justice (TSJ), 111–112 Taxation: conflict over Bolivia’s tax law, 62; FARC’s drug revenue tax, 170(n10); Uribe’s armed forces tax, 22, 177 Teachers, violence against, 17 Technocrats, Venezuela’s, 94 Technology: Ecuador’s velasquismo, 123; speeding globalization, 4–6 Telecommunications. See Communications industries Telefónica de Perú, 81 Tenet, George, 162–163 Territorial disputes between Peru and Ecuador, 85 Territories of Communal Origin (TCOs), 48 Terrorism: as threat to U.S. interests, 152; avoiding focusing foreign policy on, 152; Bolivia’s coca growers’ movement, 52–53; Bolivia’s internal conflict over drug trafficking, 61; Colombian guerilla insurgency as, 17–18, 171(n27); Fujimori’s antidrug policy, 772; funding Colombia’s antidrug activities, 183; impact on U.S. Andean policy, 8; international terrorist groups in Bolivia, 57; Peru under Fujimori, 73; Peru’s guerrilla insurgents, 69–70; Peru’s Shining Path, 7, 69–70, 71, 76, 82–83, 85; Peru’s withdrawal from Chilean case, 74; sacrificing democracy for security, 7; September 11, 2001, redefining U.S. Colombian policy, 184–187;

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U.S. foreign policy conflating the war on drugs and war on terrorism, 165–168; U.S. rethinking nationbuilding stance, 160; Uribe’s domestic security policy targeting AUC, 177–178; war on terrorism influencing U.S. foreign policy in Colombia, 173–174 Third wave of democracy, 163 Toledo, Alejandro, 74–80, 85, 157, 197, 200 Torture, 72, 73 Trade: Bolivia’s natural gas exporting, 59; Ecuador’s dollarization program, 135; liberal trade versus drug trade in U.S. foreign policy, 163–165; NAFTA increasing drug flow, 171(n21); skill-based exports, 193–194; trade barriers, 5; trade liberalization, 71, 151; U.S. foreign policy and, 152; U.S.-Venezuela relations, 107 Trade unions. See Labor unions Transparency, 199–200 Treason charges, 110 Truth and Reconciliation Commission, Peru, 76–77, 85 Túpac Amaru Revolutionary Movement (MRTA), 53, 69, 71, 73, 76, 82 Túpac Katari Guerrilla Army, 53 U.S. Treasury, 4–5 Unemployment and underemployment: Colombia, 30; Ecuador, 135–136; macroeconomic and inequality indicators, 155(table); Peru under Fujimori, 73; Peru under García, 69; Peru under Toledo, 78 Union Confederation of Rural Workers of Bolivia (CSUTCB), 51 Unión Patriótica (Colombia), 18 Unions. See Labor unions United Kingdom: National Innovative Capacity index, 193 United Nations High Commission for Human Rights, 16, 24 United Self-Defense Forces of Colombia. See AUC United States: Andean Trade Promotion and Drug Eradication Act, 32; Bolivia’s conspiracy accusations, 58;

coca eradication, 27, 52, 53; criticism of Venezuela’s Chávez, 110; decertification program, 36; drug war and security policy, 7–8; Ecuador’s foreign policy, 137–138; ending Colombia’s conflict, 30; FARC involvement in drug trade, 41(77); FARC, ELN, and AUC vying for control of Colombia’s oil pipeline and coca harvest, 11–13; Latin American threats to U.S. interests, 152; National Innovative Capacity index, 193; Peru’s anti-U.S. terrorism, 82; Plan Colombia, 140–142; protesting Peru’s halt to eradication programs, 78; resolving Colombia’s conflict, 198; role in Andean stability, 200; Venezuela’s anti-Chávez referendum, 112; Venezuela’s coup attempt, 109, 170(n17); VenezuelaU.S. relations, 106–107, 115–116 United States Committee for Refugees (USCR), 16 United States foreign policy: chronology of events, 168–169; ensuring security and stability without nation-building, 159–161; future of Andean stability, 199; importance of Andean states to, 153–159; liberal trade versus drug trade, 163–165; promoting democracy without supporting coups, 161–163; results of Colombian eradication programs, 182–183; September 11, 2001 redefining Colombian policy, 184–187; traditional objectives and current challenges, 151–153; U.S. response to Uribe administration, 180–182; war on drugs and war on terrorism, 165–168; war on drugs obscuring Colombia’s civil conflict, 179–180 United Workers Federation (CUT), 17 Unity for peace manifesto, 178 Urban sub-proletariat, 123 Uribe Vélez, Alvaro: “law and order” campaign, 12; anti-drug policies, 27; anti-guerrilla policies, 176; attempt at a second term, 34; campaign promises and election victory, 15; Colombia’s government security initiatives, 20–26; domestic security

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policy, 177–179; election victory, 37; ending state failure, 160–161; FARC’s urban conflict, 26; increasing popularity, 38(n26); quality of leadership, 198–199, 200; U.S. aid after Iraq invasion, 40(n45); U.S. response to Uribe administration, 166, 180–182 Value-added tax (VAT), 22, 31–32, 95 Vargas, Antonio, 133 Vargas Llosa, Mario, 70, 74 Vargas Valdivia, Luis, 77 VAT. See Value-added tax Velasco Alvarado, Juan, 68 Velasco Ibarra, José María, 123 Velásquez, Ramón J., 95, 116 Velasquismo, 123 Venezuela: anti-Chávez coup attempt, 108–110; attempted electoral ousting of Chávez, 111–114; Chávez’s Bolivarian style democracy, 101–103; Chávez’s rise to power, 96–99; chronology of recent events, 116–117; credit rating, 194–195; demise of political parties, 197; democratic paradox, 2–4; deterioration of the party system, 91–92; economic reform and decline under Chávez, 103–106; eliminating insurgents, 37(n7); foreign policy, 106–108; FTAA, 54; GCR index of influence of political institutions, 196; Growth Competitiveness Index, 192; macroeconomic and inequality indicators, 155(table); National Innovative Capacity index, 193; orthodox economic liberalization, 5–6; political polarization, 8, 105–106, 109, 114–115; political trajectory and U.S. foreign policy, 158–159; popular support for democracy and protection of civil liberties, 154(table); potential for democratic collapse, 163; revolution from within presidential palace, 99–101; rise of democracy before Chávez, 92–95; sacrificing democracy for security, 7; U.S. oil imports, 153–154; U.S. response to Chávez coup, 162–163, 170(n17)

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Venezuelan Workers’ Confederation (CTV), 102, 108, 109–110 Villalba, Jóvito, 92 Villanueva, José, 77 Violence: Bolivia under Mesa, 58–59; Bolivia’s coca eradication, 52; Bolivia’s insurgent groups, 53; Bolivia’s renewed protest under Mesa, 57–58; Bolivia’s social protest, 55–56; Bolivia’s tax law, 62; economic reforms leading to, 32; Ecuador’s January 21 military uprising, 133–134; erosion in Venezuelan rule of law, 102–103; failing states’ tendency to, 160; FARC’s retaliatory rampage, 174–176; FARC, ELN, and AUC vying for control of Colombia’s oil pipeline and coca harvest, 11–13; historical perspective on Colombia’s current conflict, 13–16; impact on Colombia’s economy, 29; Peru’s Shining Path insurgents, 69–70; scope of Colombia’s current crisis, 16–17; Venezuela’s Guarimba Plan, 111 Voter participation in Venezuela, 93, 99, 100 Wage levels, Ecuador, 135–136 Wagner, Allan, 78 Walters, John, 165 War of the Pacific (1879–1883), 55 War without quarter, 167, 171(n29) Washington Consensus, 5, 6, 9(n8), 121 Water resources, 55–56 Water War (2000), 55–56 We Are Bolivian We Want Peace movement, 60 Wealth distribution: Chávez’s Bolivarian Revolution, 100; Chávez’s campaign promises, 99; Ecuador, 145(n14); Ecuador’s future, 136; Ecuador’s sucretization, 126; Ecuador’s velasquismo, 123; macroeconomic and inequality indicators, 155(table) Wolfowitz, Paul, 183 World Bank, 85, 194 Zárate Willca Liberation Army, 53 Zúñiga Córdova, Jaime, 82

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About the Book

How can a region roiled by political strife, civil war, illicit drug trafficking, and dismal economic performance achieve political stability and support economic growth? The Andes in Focus addresses this question with an in-depth look at the complex factors underlying the present volatile situation. The authors offer detailed analyses of Bolivia, Colombia, Ecuador, Peru, and Venezuela, as well as examinations of U.S. policies with regard to the Andes. The result is a detailed but accessible study of current political, economic, and security issues in a beleaguered region. Russell Crandall is assistant professor of political science at Davidson College and adjunct professor at the School of Advanced International Studies (SAIS), Johns Hopkins University. Guadalupe Paz is assistant director of the SAIS Latin American Studies Program. Riordan Roett is Sarita and Don Johnston Professor of Political Science and director of the Latin American Studies Program and Western Hemisphere Studies at SAIS.

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