The rationing will primarily affect Colombia’s Caribbean region, encompassing departments such as Bolívar, Magdalena, La Guajira, Cesar, Córdoba, Sucre, San Andrés, and Atlántico. This recently planned restriction will mostly impact industrial sectors, with thermal power plants in the Caribbean facing significant reductions in gas availability. Residential and small commercial consumers are expected to remain unaffected in the short term, according to the Ministry of Mines and Energy.

The planned maintenance of the Spec LNG regasification plant in Cartagena—a critical facility for liquefied natural gas (LNG) processing—directly influences the gas rationing decision. Maintenance is typically conducted annually and is mandated under Decree 1073 of 2015. However, this year’s maintenance is notable due to the decreased gas reserves and high demand.

Gas Supply Shortfall and Import Strategy

The Colombian Natural Gas Association (Naturgas), represented by its president Luz Stella Murgas, has emphasized the urgency of sourcing gas imports from neighboring countries to counter declining internal reserves. According to Murgas, increasing gas imports is the only viable option to avoid mid- to long-term shortages. Colombia’s domestic reserves have seen accelerated depletion, raising alarms within the industry and highlighting a critical need for regulatory adjustments.

Colombia’s reliance on hydroelectric power sources—which account for approximately 70% of national electricity—compounds the situation. Reservoir levels dropped significantly due to the El Niño phenomenon, which concluded in April 2024. Although reservoirs have since begun recovering, their current levels remain below optimal. As of October 20, Ecopetrol reported reservoir levels at 53.64% capacity, a figure that remains insufficient as the country anticipates a dry season with lower-than-average rainfall beginning in December.

The increased reliance on thermal power plants to compensate for lower hydroelectric output has put additional strain on natural gas supplies. The Ministry of Mines and Energy indicated that imported gas volumes have been insufficient to meet this demand surge, leading to the current shortage. In response, the ministry has proposed regulatory “enablers” to facilitate gas imports, a policy adjustment aimed at stabilizing market conditions, according to Minister Andrés Camacho.

Rationing Details and Implications for the Industrial Sector

The rationing strategy includes staged reductions in gas supply to major industrial consumers over the four-day period, with planned volumes of:

• October 31 – November 1: 84.6 million cubic feet
• November 2: 75.7 million cubic feet
• November 3: 60.3 million cubic feet
• November 4: 72.4 million cubic feet

These allocations are part of a broader inventory management approach aimed at maintaining energy system balance. However, experts have raised concerns that these volumes may fall short of meeting the region’s rising industrial demand, especially in the Caribbean.

Broader Energy Policy and Economic Impact

The rationing decision highlights the complex intersection of Colombia’s energy policies, supply dynamics, and environmental factors. The Caribbean region’s high concentration of energy-intensive industries is expected to feel the brunt of the rationing’s indirect effects on electricity stability. While this measure remains temporary, the government’s exploration moratorium and current reserve limitations suggest a challenging outlook for Colombia’s energy sector.

The Ministry of Mines and Energy’s gas rationing strategy illustrates the critical need for policy adaptations to mitigate shortfalls and ensure energy security in the face of fluctuating internal resources and environmental variables. As the situation evolves, the government will face mounting pressure from industrial stakeholders and the public to develop more resilient energy policies.

Pearl was the country’s Environment Minister in 2011 where he led plans for the country to adapt to climate change, and was also High Commissioner for Peace, where he negotiated with guerilla groups ELN and FARC.

“I appreciate the confidence of the companies affiliated with the ACP and the hydrocarbon industry; I arrive with all the energy to lead this sector that is so important for the country, with the aim of building bridges for the joint construction of an energy policy for the benefit of all Colombian citizens and regions, since this industry has an enormous responsibility with the future generations and is therefore committed to sustainable development,” Pearl said.

Orlando Cabrales Segovia, president of the Board of Directors of the ACP, said: “Frank assumes the position at a crucial moment for the industry and the country, in which the efficient management of natural resources and innovation in the sector are essential for national energy security, economic diversification, well-being and a better quality of life for Colombians.”

“We must continue to think about growth, yes, this must be green growth focused on sustainable development, to which the human talent of the hydrocarbons industry is committed, men and women who innovate daily to ensure socially and environmentally responsible operations,” said Pearl in his first statement as the new President of the ACP.

Pearls appointment comes as the last president, Francisco José “Pacho” Lloreda retired after nine years leading the organization.

“On behalf of the ACP Board of Directors, we regret Dr. Lloreda’s decision not to continue leading the gremio (trade association). In these nine years, he was a firm defender of the industry and national interests, raising the name of the Colombian Association of Oil and Gas, and the hydrocarbon industry. We express our sincere feeling of gratitude and admiration, wishing him the best in his future plans,” said Cabrales.

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“This year in Colombia they have murdered 22 social leaders, there have been 19 massacres. In 2021, within the framework of the protests, the police murdered, disappeared and sexually assaulted hundreds of protesters. The systematic violation of human rights is endless. To complete the shamelessness, Duque is being received with a red carpet in Europe,” said Miguel Urbán Crespo, a radical leftist Member of the European Parliament from Spain.

Indeed during Duque’s tenure, Colombia seems to mirror the popular movie “The Hunger Games” where Bogotá and Medellín, analogous to Districts 1 and 2 from the movie are world class, modern cities complete with luxury housing, advanced health care, and imported delicacies, while much of the country remains without basic services, education, or unlike the Hunger Games, basic security and government protection. The United Nations is very clear that the worsening of conditions is solidly within Duque’s term of responsibility and can’t be blamed on longer term trends. From the UN Global Humanitarian Overview:

In 2021, organized NSAGs [Non-State Armed Groups] have expanded rapidly in peripheral areas of the country, creating an increase in hostilities and violence affecting civilian populations, particularly ethnic minorities. Increased use of explosive ordnance, including improvised landmines, has been reported, particularly in rural areas and regions bordering neighboring countries, where illicit crops and other illegal economies are located. In 2021, indigenous communities have been gravely affected by explosive ordnance, recording a 20 per cent increase in indigenous casualties compared with 2020.¹ The increase in recruitment of minors has also been reported.² 2021 witnessed the highest number of people affected by mass displacements and confinement in the last decade and a continuous trend in confinement affecting more than 113,000 people this year.³

The same report notes that while Colombia is classified as an “Upper Middle Income” country, on the INFORM Severity Index, Colombia ranks as 4.5 / Very High, in other words, a humanitarian disaster. The European Commission’s “INFORM Severity Index is an improved way to objectively measure and compare the severity of humanitarian crises and disasters globally.”

The Duque administration was further embarrassed by the United Nations’ Food and Agriculture Organization that listed Colombia as the only country in South America as “Food Insecure and in need of food assistance in 2022” along with South Sudan, Ethiopia, Somalia, Madagascar and Yemen. Rather than address the crisis, Vice President and acting foreign minister Marta Lucia Ramirez demanded that Colombia be removed from the report.

The administration didn’t dare protest when two years ago, the United States government said the same thing about Colombia: “Food security needs in Colombia remain high due to internal conflict and periodic natural disasters, as well as the influx of vulnerable Venezuelans and Colombian returnees crossing into Colombia as a result of the escalating economic and political crisis in Venezuela.”

During the COVID pandemic lockdowns, for almost a year there was a general curfew throughout the country, giving police more reason and power to stop and question people out on the roads, but during the pandemic, illicit narcotics exports surged. 1,228 metric tons of cocaine were produced in Colombia in 2020, an increase of 8 percent over the previous year.

Photo of Marta Lucia Ramirez by Felipe Castaño, Vicepresidency of The Republic

It has been difficult to take the Duque administration’s antinarcotics efforts seriously when his own Vice President Marta Lucia Ramirez, the same one who made demands against the UN report on Colombia’s precarious humanitarian situation, also tried to press criminal charges against investigative journalists at Insight Crime who revealed and verified her own family’s ties to narcotraffickers. Her husband had business dealings with now convicted paramilitary narcotrafficker “Guillermo León Acevedo Giraldo, AKA “Memo Fantasma,” and it was revealed that the vice president paid $150,000 to bail out her own brother who was caught and convicted for heroin trafficking.

The attorney general’s office has now revealed that criminal mafias such as the notorious Clan del Golfo have likely infiltrated the Colombian military and law enforcement at the highest levels, including army generals. Had this been revealed at the beginning of Duque’s term, he could claim to be the guy to clean things up, but he is in the final months of his presidency. Even the Catholic church has spoken out against what it sees as actual collaboration between the military and mafias.

“We found in various municipalities that in many places where there is a strong presence of the Army and the public force there is a concomitant presence of the Clan del Golfo,” said Monsignor Juan Carlos Barreto, Archbishop of Quibdó, Chocó “We confirm the seriousness of the humanitarian crisis due to the armed conflict and the abandonment of the state.”

It’s not hard to argue that Duque has been no friend of the campesinos. Criminal displacements—being run off your land or home by armed gangs—has more than doubled in the past year alone. From the UN Office for the Coordination of Humanitarian Affairs report (translated):

“The number of victims due to mass displacement has increased by 101% between January and May 2021 compared to the same period in 2020. Likewise, the number of displacement events has increased by 31%, that is, they have been registered 15 more events in relation to the same period in 2020. So far, only 19% of the victims of displacement in 2021 have returned to their homes, while 81% or 23,837 people remain displaced, due to the impossibility of having a safe return due to the inadequate security conditions that remain in the territory, and in the midst of intersectoral needs that require attention.”

The report goes on to say:

It is worrying that the attacks against the civilian population and that trigger mass displacements are expanding and increasing by 54% to other departments such as La Guajira, Cesar, Arauca, Meta, Guaviare and Caquetá, among others. The increase in homicides and intentional injuries in civilians stands out by 161% and 70% respectively, showing an increase in attacks against civilians in a large part of the national territory.

The security situation under Duque is deteriorating such that criminals are emboldened enough to even attack the Presidential helicopter, as happened last year when the president was arriving in Cúcuta, a city on Colombia’s border with Venezuela. The presidential Sikorsky Black Hawk took six hits from small arms fire.

Colombians at home are unhappy with Duque

Colombia’s ESMAD riot police have indiscriminately attacked journalists, bystanders, and unlucky passers-by caught in the area.

Last year, Colombians took to the streets after Duque’s finance minister, Alberto Carrasquilla sought to raise taxes by expanding Colombia’s income tax obligation to lower income Colombians and taxing basic staples, but in an interview demonstrated he had no idea how much a dozen eggs cost. The abusive response by Colombia’s ESMAD riot police further inflamed the situation.

Yesterday, Colombian polling firm Invamer released results of a poll taken the first two weeks of February that shows only 20% of Colombians approve of his governance, while 73% disapprove. Many Colombians and investors abroad fear a left-wing presidency by former guerilla militant Gustavo Petro, but Duque with his dismal ratings may inadvertently be Petro’s best ally. The same Invamer poll showed that for the first time since 2018, Petro’s favorable ratings at 42 points have exceeded his unfavorable opinion ratings, which are at 40 points. Other presidential candidates’ ratings:

• • Juan Manuel Galán (centrist): 29% favorable, 22% unfavorable
  • Sergio Fajardo (centrist): 25% favorable, 33% unfavorable
  • Ingrid Betancourt (left): 23% favorable, 43% unfavorable
  • Alejandro Gaviria (centrist) 17% favorable, 23% unfavorable
  • Francia Márquez (left) 16% favorable, 8% unfavorable
  • Rodolfo Hernández (right) 16% favorable, 16% unfavorable
  • Federico Gutierrez (centrist) 15% favorable, 22% unfavorable
  • Alejandro Char (centrist) 12% favorable, 32% unfavorable

The Centro Democrático political party controlled by former President and current Senator Álvaro Uribe’s candidate Óscar Iván Zuluaga has a favorable rating of 15% and unfavorable rating of 45%, a higher unfavorable rating than anyone except Ivan Duque himself, who cannot run due to Colombia’s single presidential term limit, and former president Álvaro Uribe Vélez, who has an approval rating of 21% and unfavorable image of 67%. Uribe was once widely seen as a hero, but his popularity has plummeted as allegations surface of human rights abuses during his administration, and more recent witness tampering and charges of attempting to frame opposition politicians. Uribe spent some time under house arrest due to the charges.

Members of Duque’s own Centro Democrático don’t seem to have much respect for him. “Uribista” senator María Fernanda Cabál was caught in a recorded phone call with a retired military officer sharing her true sentiment toward President Duque:

Uribista senator Maria Fernanda Cabal says Ivan Duque is a “Mamerto.”

“Duque is a leftist liberal, Duque is a mamerto,” says Cabal. Mamerto is a very strong insult in Colombian slang that can translate as idiot, but in Colombia is especially used as a pejorative for leftists, such as historically, sympathizers with the FARC or ELN rebel groups.

The soldier then asks how he could have infiltrated the party. “He didn’t infiltrate us, he was installed by Fabio Echeverri Correa, because Duque was intelligent and applied, and was sent to accompany [chaperone] his lazy son, who isn’t worth a butthole, Luigi Echeverri,” Cabal goes on to say. Fabio Echeverri Correa was a powerful businessman and president of ANDI, Colombia’s largest business trade association. His son, Luigi Echeverri is a friend of President Duque and a member of several corporate bords in Colombia, such as Telefónica Colombia (operating as Movistar), Ecopetrol, and the Bogotá Chamber of Commerce. He was President Duque’s campaign manager, and based on his LinkedIn profile, he presides over an “entity supporting the ideas of f. President Dr. Alvaro Uribe Vélez.”

Needless to say, Maria Fernanda Cabal is not impressed.

“It is that if you have a lazy son and you have money and you want him to graduate, then you invite the most intelligent girl in the class to blow him off. Like when your daughter is ugly, you have to take her with the pretty one to see if she picks someone up,” she continued.

“This guevón worked in Washington all his life and he carried Uribe’s suitcase when he went on a trip, but that’s only when we see the guy.” Guevón literally translates to “big eggs” but is also an insult in Colombian slang, like mamerto: strong words that would tend to start a bar fight if used with a stranger

“He is poison, so [President] Uribe always ends up falling, and we end up fucked because he [Duque] has the flavor of shit…There is nothing to do until he is gone, so I tell you, we win or we are all going to shit,” said Cabal. When the recording was leaked, she doubled down and stood by her words. Duque and Luigi Echeverry refused to respond, with Echeverry saying to simply consider the source, and Duque responding in Latin: “De minimis non curat praetor:” The magistrate does not consider trifles.

Let them eat eggs…and potatoes

Nos llevó el putas! Huevos a más de mil pesos cada uno pic.twitter.com/mNxjmKGsEq

— JUAN CARLOS VILLANI (@JUANVILLANI) February 15, 2022

Last year, the finance minister was lost when it came to the price of eggs. But Monday, a journalist with one of Colombia’s largest media networks was moved to profanity when he encountered eggs in a Bogotá supermarket selling for over $1,030 Colombian pesos per egg, or 26 US cents.

“On the issue of eggs, it depends on its quality. Let’s say $1,800 COP (48 cents, US) a dozen or something like that.”

For the record, Duque’s former Finance Minister Alberto Carrasquilla guessed that a dozen eggs cost $1,800 pesos, or 48 cents. Carrasquilla proposed adding Colombia’s 19% VAT tax to basic foodstuffs like eggs and rice, also to gasoline and funerals, while exempting firearms and sugary soft drinks. Carrasquilla’s answer? “On the issue of eggs, it depends on its quality. Let’s say $1,800 COP (48 cents, US) a dozen or something like that.”

Even though Colombia is a petroleum exporting country and petroleum prices have jumped, the Colombian peso is at a near record low, worsening inflation. Potatoes, another Colombian staple, have jumped 140% in prices compared to a year ago. Per capital potato consumption in Colombia exceeds a whopping 79 pounds, or 36 kilos.

The government has announced it is removing import duties on agricultural supplies such as pesticides in an attempt to reduce prices, but any effect will be delayed until future harvests.

Colombian food price increases between December 2021 & January 2022

The Ivan Duque Legacy

While it is far too early for historians to assess Duque’s presidency, it is hard to find economic or social indicators that can justify a positive assessment of Duque’s term.  Duque has promoted relatively investor-friendly policies, but his neglect of everyone outside of Colombia’s investor class has created a possible opening for the first-ever left-wing populist to enter the presidential palace.

Political risk expert Sergio Guzmán is co-founder of Colombia Risk Analysis

“There is a generalized negativity in the country and that favors candidates who show a platform of opposition to the status quo,” said Colombia Risk Analysis co-founder Sergio Guzman. “This drastically improves Gustavo Petro’s chances of not only making it to the second round, but potentially winning.”

Duque has publicly dragged his feet when it comes to implementing the peace accords negotiated under the previous administration, but bitterly opposed by Duque’s political godfather, Alvaro Uribe.

Overall, the Duque administration has seemed to do a competent job managing the COVID pandemic, with some notable fiascos such as his infamous “COVID Friday.” Duque also intervened to assure an insurance settlement between Spanish insurer MAPFRE and public utility conglomerate Empresas Públicas de Medellín, controlled by Medellín’s populist mayor Daniel Quintero.

Ivan Duque is seen buddy-buddy with then-head of the US International Development Finance Corporation Adam Boehler

Duque, who speaks fluent English having spent much of his professional career in Washington, has generally maintained friendly, even fawning relations with Colombia’s traditional allies such as the United States. His administration has been relatively scandal free, defined by the lack of criminal charges filed against his appointees; still, it is early. After Uribe was out of office, some of his political appointees were jailed for corruption, such as Uribe’s deputy transportation minister Gabriel Garcia Morales, and his agriculture minister Andrés Felipe Árias.

On the other hand, Duque’s attorney general and personal friend Francisco Barbosa has been seen by many to do his best making the charges that got Alvaro Uribe arrested “go away.”

Colombian President Ivan Duque does not seem like an evil person or a mean man. He may be a fairly competent administrator in the bureaucratic sense. On the other hand, he has had almost four years to demonstrate leadership and statesmanship in a country with bitter divisions, and promising economic prospects clouded by vast inequality and social stratification where it seems like the rich and poor are living in two completely different countries.

Duque has been impacted by factors out of his control such as the COVID pandemic and the Venezuelan refugee crisis. In both cases, his response deserves some praise. It must also be said that crime and insecurity seem to be on the rise, especially in rural areas beyond the cosmopolitan neighborhoods of Bogotá and Medellín. The extreme poor don’t seem to be any less poor. Colombia lost its investment grade rating under Duque’s administration. The president is left with few friends and many detractors, even within his own party.

On May 29, Colombians will go to the polls to vote for president. If no candidate wins a majority of votes, the top two candidates will go to a runoff on June 19. According to law, the new president will be inaugurated August 7. Things can get worse, much worse. But as Duque’s four year term comes towards a close, there is a practical consensus in Colombia that things could have been much better.

Oil transportation provider Cenit (Spanish for Zenith), the pipeline operator owned by government controlled Ecopetrol announced last week “relief of up to 50% on pipeline transportation fees for oil producers” according to the headline of a printed statement released by Cenit. Reading the details however, the transporter is only offering delayed terms.

“Producers can pay only 50% of their rates during May and June, and the remaining balance will be due in 2 months,” said the statement.

“Even though this conjuncture also impacts the midstream segment due to the lower volumes transported through the systems due to the drop in demand, we are convinced that it is necessary to support producers and senders in general with financing initiatives so that the industry of hydrocarbons in Colombia continues to be a lever for the country’s economic and social development,” said Héctor Manosalva Rojas, president of Cenit.

Petroleum producers are not impressed

ACP had a very direct response to the initiative, saying that it does practically nothing to address the situation, but is little more than public relations. In a written public response, the ACP said:

1. The proposal of the transporters does not reduce the rates. It is not a 50% decrease in rates, but an offer of financing (for two months) with interest charged on this percentage. The measure does not supply the financial requirements of the senders against the current value of the rates, which, as indicated, are excessively high. This would only increase transportation costs, since after two months the same rate would have to be paid with interest (1.5% annual cash).
2. The financing offered by the carriers does not take into account the reality of the price crisis that the sector is experiencing, the duration of which is not clear. This price situation is leading private companies to close fields and therefore reduce their production. To date, production has been reduced by about 52,000 barrels per day and a further cut of 30,000 barrels per day is expected, starting next month. This not only affects the production of crude with consequences for the energy self-sufficiency of the country, but also reduces important resources of royalties, taxes and economic rights, considerably impacting the finances of the Nation and the contributions to the regions.
3. Regarding specific rate reductions, the real proposal of Ocensa (the pipeline that transports the largest volume of oil in the country) is to decrease rates by only 0.6%. In other words, it goes from a rate of $7.75 USD to $7.70 per barrel; a minimum adjustment when oil prices have fallen 71% since January and 42% in the last two months, and more, if one takes into account that in July 2019 the company increased tariffs by 10%.
4. Considering that the crude oil pipeline transportation rates have an operating cost weight of around 45%, what the industry requires and has requested is a 60% reduction when the Brent reference price is below US $ 45 a barrel.
5. The stage of negotiation between carriers and senders has been exhausted without success, taking into account that the offers presented by the carriers have not been the product of a negotiation, but rather unilateral announcements.
6. It is for this reason that the ACP has requested the Ministry of Mines and Energy to intervene in oil pipeline transportation tariffs, using its powers provided by the Petroleum Code, issuing a resolution that restores an economic balance in the hydrocarbon sector in this period of low prices, as a measure to help mitigate the current crisis.

Finance Colombia was able to reach Alejandro Ospina Angarrita, the president of UTIPEC, Colombia’s principal petroleum workers’ union, who generally is in agreement with the industry association on this topic.

Alejandro Ospina Angarrita is president of UTIPEC, Colombia’s principal petroleum workers’ union

Finance Colombia: What is UTIPEC’s proposal to solve the crisis?

Ospina: An immediate reduction of the pipeline transportation rates that are approved by the Ministry of Mines and Energy, and not just a financing of these costs as the transporters have proposed, in order to make production possible in the fields that are closed today and thus recovering the job that is being destroyed due to the low competitiveness of the Colombian oil industry.

The measure must be adopted immediately, and must be maintained until a revision of the tariff methodology is made, which overcompensates the investments made in these systems, so that it has brought us to the current situation which although in the past was bearable at high oil prices, it clearly does not reflect the reality of the business when compared to nearby competitors, such as in Ecuador, where a system of similar length, which must cross the Andes mountain range, offers rates of less than 30% of those collected in Colombia.

Finance Colombia: What should the administration of Ivan Duque and the ANH do?

Ospina: Pipeline tariffs are currently defined and approved by the Ministry of Mines and Energy, so it must be the national government that takes the exceptional measure, making the temporary adjustments and this same entity, which must carry out a review of the methodology with all market agents, to harmonize it with the reasonable remuneration of the investments.

The ANH, as administrator of the country’s hydrocarbon resource, and therefore promoter of the development of the industry in Colombia, must support producers, both the state controlled Ecopetrol and private companies, in the search for a competitive scheme to keep viable the oil activity. It is important to explain that Ecopetrol is the main entity affected by the current pipeline tariffs and consequently the Colombian state as the main shareholder of the company, since although Ecopetrol it is true, benefits from midstream activity, it is also true that there it only acts as operator of some of the systems, and co-owner of most of them, so in this business, there are other external beneficiaries; meanwhile the adverse impact of the tariffs affects Ecopetrol as the main producer and user of the same.

According to the most recent ACP economic report “Double covid-19 crisis and price war industry: impact for Colombia and the hydrocarbon sector,” with the current crisis it will be necessary to severely curtail investments and production of oil budgeted for 2020, and the group projects a daily drop of 35,000 barrels, which could reach 100,000 if the Brent reference crude price remains below $25 USD a barrel the rest of the year. This situation, added to the already high costs of operating in Colombia, means that the revenues per barrel fail to cover the average costs to produce oil in the country.

The ACP report, prepared based on information provided by the managers of a representative group of the private production companies, indicates that the national average of operating costs is between $20 – $25 dollars per barrel. For its part, the “break-even” or balance point to cover costs of production in Colombia is located between $40 and $45 dollars a barrel, that is, below this range, companies earn revenue that barely covers their current cost of production.

“The price crisis and high uncertainty have led companies to reduce investments, closing wells and fields, with a serious impact on employment, the contracting of goods and services and in the economic dynamics of the producing regions; this without counting the effect on the collection of royalties, taxes and contractual economic rights, and their impact on the finances of the nation,” said Francisco José Lloreda Mera, president of the ACP on a morning conference call with reporters today.

• A daily drop of around 35,000 barrels of oil is expected, which could reach 100,000 if Brent remains below $25 a barrel the rest of the year.
• ACP says that regulated oil transportation rates for pipelines represent around 45% of the total cost of operation.
• Tax revenues of the central government and the regions could fall more than 75% due to the petroleum crisis.

“The national government is aware of this, important measures have been taken, but an urgent intervention in pipeline transportation rates, as they are excessively high compared to the cost of production, are not internationally competitive, and are the main obstacle to companies in this difficult situation,” said Lloreda.

The industry leader further explained that “pipeline transportation is the only link in the chain of the sector whose cost in recent years has remained practically the same, representing around half of production costs, is not manageable by E&P companies because it is regulated by the Ministry of Energy, and various studies show that it is excessive; so it is essential that the tariffs are reviewed not only for the moment of price crisis and for the sustainability of the industry in the short term, but the current methodology should be structurally reformulated towards the future,” added Lloreda.

Measures taken to date

In order to mitigate the double crisis caused by Covid-19 and the fall in international prices, the Colombian government has advanced in actions for E&P (Exploration & Production) contracts with the National Hydrocarbons Agency (ANH) related to extension of terms and reduction of bank guarantees. Likewise, for all taxpayers, progress was made in the refund of VAT balances and flexibility in the tax schedule. Finally, additional measures were announced to defer payment of economic rights.

According to ACP, these decisions are extremely important to the industry and are expected to help preserve E&P contracts, future investment and to partially alleviate the burden on companies to support their sustainability during the crisis.

“The reduction of contributions of this sector to the national economy, which is projected at more than 75% compared to 2019, is critical at this time when more income is required to help the population more vulnerable to the economic and social emergency caused by Covid-19. We hope to continue advancing in the search for effective measures with the government that allows us to continue operating and mitigate the crisis in the sector, while preventing a devastating effect on employment and the regional & national economy,” emphasized Lloreda.

Photos courtesy ACP

With a new executive director, Colcapital, Colombia’s private equity industry association, continues to grow, as evidenced by the expansion of their annual event from the Colombian Private Equity Congress to the Private Equity Congress of The Pacific Alliance.

Colcapital Executive Director Paula Delgadillo Sanz de Santamaria

After investment roles with Colombian insurance concern Seguros Bolivar and Bancolombia, Paula Delgadillo Sanz de Santamaria took over the reins of Colcapital from Isabella Muñoz, who moved back into a business role with an investment firm.  The “gremio” or trade association continues to grow along with Colombia’s nascent private equity sector.

This year’s event saw speakers from small boutique firms as well as partners and executives from Blackrock, the International Finance Corporation, Bancoldex, Baker McKenzie, Skandia, Bancolombia, Cushman & Wakefield, and dozens of others. Conference topics ranged from real estate finance to impact investing.  Technical topics were covered, such as secondary transactions and infrastructure financing, but also ESG topics such as gender equity in capital markets.

3rd Annual Private Equity Congress of The Pacific Alliance was

Colombia’s minimum wage is important to all sectors of society, as many governmental salaries, public policies, and fines are calculated as a certain multiple of the minimum wage. This represents an increase of 7% over the 2015 rate of $644,350. Though this increase is slightly higher than the inflation rate from January to November of 2015 of 6.11%, as measured by Colombia’s Departamento Nacional de Estadisticas (DANE), due to currency depreciation, if converted into US dollars, it represents a decrease from $270 per month, as of January 2015 exchange rates to $217 per month at exchange rates as of December 31, 2015.

The decree mentions that while the target inflation rate for 2016 is 3%, due to external pressures on the Colombian Peso, they expect consumer prices may increase between 4.3-4.8% over the coming 12 months. During negotiations through December between representatives from the government, private sectors, and labor unions, gremios (industry associations) proposed an increase of 6.8%, while labor union coalitions asked for increases of between 10-12%.

Transportation Subsidy Increased

In parts of Colombia with public transportation networks (major cities), workers who make less than double the minimum wage, are also entitled to a monthly transportation stipend, paid by the employer. Transportation Minister Natalia Abello Vives joined her counterparts in signing Decreto 2553 de 2015, setting the transportation stipend for 2016 at $77,000 COP ($24.26 US Dollars as of 31 December, 2015).

Both laws take effect January first. A large portion of Colombia’s workforce is informal, thus many laborers in reality, will not fall under the protection of these laws. Still, all formalized businesses are required to comply, irrespective of size. A law passed in September increases the wages of Colombia’s national legislators to $26,749,000 pesos per month, roughly $8,426 USD. At year-end exchange rates, that works out to just over $101,100 per year in US Dollars. This representas a raise of $1,749,000 monthly. Several prominent members of Colombia’s Chamber of  Deputies and Senate, from various political persuasions, have come out against the raise, including Alvaro Uribe, Ivan Cépeda, Claudia Lopez, and others.

Based on decreto 1086 del 26 de mayo de 2015 – President Juan Manuel Santos receives a salary equal to that of congress. According to an article in El Universal, the salary of the President is not out of line when compared to other world leaders, and lower than nearby countries such as Brasil, Uruguay, Chile, Guatemala, and México.

Photo of 2016 minimum wage negotiations courtesy of Mintrabajo, Ministry of Labor

While still relatively rare in most countries, Libertarians are gaining traction in parts of Latin America, especially as people look beyond the old dichotomies and ideas are more readily diffused because of the Internet, globalization, and travel allowing people to study abroad and be exposed to new ideas. Daniel Raisbeck is an example: Born and raised in Bogotá, but studying and contrasting the politics and philosophies in both Europe and North America before returning to his home town, Raisbeck brought some fresh—and to some, radical—ideas back with him.

Finance Colombia’s executive editor, Loren Moss met recently with Daniel Raisbeck to discuss his candidacy for mayor, the state of politics in Bogotá and Colombia as a whole, and prospects for libertarian philosophy in Colombia and Latin America in general.

Finance Colombia: Tell me who you are, your background and why you decided to run for mayor.

Daniel Raisbeck:  I’m Daniel Raisbeck,I was born in Bogotá, raised in Bogotá but I finished high school in the States. I did my college, my BA in DC and I did also my Masters in New Orleans at Tulane and then I lived in Germany  for around 5 years where I did my doctorate, then I’ve been back in Bogotá for—this is already my fourth year.  I’m a historian and I work at a university, I teach. I never had a plan as a child to become a politician, it wasn’t my dream but  having this education in the States and having had a chance, especially in Washington, to see how the political system works, having done a few internships also, as well, having been also in Europe and having seen the political system there, my family is Scot, we have a Scottish background so I still have relatives in the UK and in England, in Wales especially,

So being just in touch I paid attention to American politics, I paid attention to British politics, to German politics, to European politics at the EU level, and so when I came back and I saw the level of debate in Colombian politics I was quite disappointed because it was very personal at that point and still we have Uribe versus Santos, and Uribe, Santos and Pietro, and it’s all about  personalities, this good guy versus this bad guy and it depends on what band you’re in, but I mean, what are the ideas behind these people? What do they represent?

And, as I said, I interned at The American Enterprise Institute in Washington which is, the very renowned think tank on the conservative side, but I got to realize that in the end politics is about ideas and whoever controls the political grounds is usually the political group or the party or the movement that controls the intellectual narrative, so I saw that lacking in Colombia, and I also saw a lack of defense of liberty and basic ideas that maybe you would take for granted in the States, free markets, free enterprise, what you also call today The Libertarian Movement, that was missing in Colombia. But, as I also mentioned before, I think a lot of Colombians are natural libertarians without being aware of it necessarily, because no one has explained it to them well, the government should be limited and maybe there’s a lot that the state shouldn’t do that could get done in public services: things like charter schools, which already work in Bogotá actually, they can function quite well, so that was the main motivation, to be a part of the debate and to present these ideas, which is pretty much the first time in Colombia, the first time in a very long time and it’s been interesting because we’ve had a lot of very positive reactions, also a lot of opposition from people who don’t like our ideas, but that what it’s all about.

 …It doesn’t matter who it is as long as they have this model of a metro system that produces surpluses, that is financially sustainable and doesn’t have to be subsidized with taxpayer money or with government debt.

Finance Colombia: As far as Latin American countries go, it has a relatively free market. It’s not a free market but it’s a relatively free market compared to other Latin American countries, compared to European countries, but when we look at Bogotá, because you’re running for mayor, which is a municipal position, within the framework, because Colombia has a much stronger national government,within the constraints of the mayoral system, it’s one thing to talk about libertarian ideas, but we’re in a city that’s not always very ideological.

We have traffic problems in Bogotá, there’s talk now about building a subway or metro, but even without that it has amazing traffic, it has crime, it has insecurity, it has the Transmilenio bus system, and then we see things like strikes going on, how would a libertarian be able to find success in a system where the government is facing demands of “give me more, give me more and give me more?”

Daniel Raisbeck: It’s a good question, and you’re right in the sense that, when I ran for congress last year, under the conservative party, we’re now creating a new libertarian movement, but when I ran last year for congress it was an easier campaign in the sense of, since it’s a national campaign, or a campaign on national issues, it is easier to make the ideological or philosophical libertarian argument in favor of a small government, limited government, more free market, etc., but campaigning for mayor is a whole different animal.

But at the same time I think that there are libertarian solutions that apply to Bogotá, and that’s what we’re trying to do. You mentioned the teacher’s strike, so what’s happening is that the Teacher’s Union is striking and they’re demanding more pay, obviously, the problem is that they want more pay in return for nothing, they don’t even want to be tested for competency, so basically, the teacher’s union wants increased pay but they’re against being examined by the state, getting tested in terms of abilities, so I mean, any way you look at it it’s completely absurd what they’re asking for, on the other hand, you do have a system in Bogotá that has worked for 15 years, it’s now in its 16^th year, of 21 charter schools: public schools run by private organizations and universities and they have done very well, much better, in standardized test results like ICFES, than public schools run by the government.

Finance Colombia: Explain what ICFES is.

Daniel Raisbeck: ICFES is basically that, an equivalent of the SATs (college entrance exams), I would put it that way.

Finance Colombia: OK, like a standardized test.

Daniel Raisbeck: A standardized test you take, I think, a few times, but the big one is called Saber Once and it’s—11^th grade is the last grade in Colombia, we don’t have 12^th grade in most schools, in the public sector definitely not, so if you look at those standardized tests, the results of these 21 chartered schools are outstanding, especially compared with government run schools in the same district, in the same neighborhoods, the parents are completely thrilled and they’re happy with the schools, they want the schools to go on, the price in these schools is also lower, considerably less, around 1.5 million pesos less than in the government run schools

Finance Colombia: That’s about 600-700 dollars.

Daniel Raisbeck: Yeah, per year.

Finance Colombia: Wow.

Daniel Raisbeck: And if you take it to around 40,000 students it’s quite a bit of money and the problem is that the Union is against these schools because it represents competition

Finance Colombia: The same as in the States.

Daniel Raisbeck: The same as in the States, the same as in England, the same as in everywhere, the same argument, they say that it’s a privatization of public education which is completely false, they simply don’t like it for ideological reasons and because they don’t want to be compared to others, because if these charter schools didn’t exist then they  could blame it all on low pay, but since they have this reference then it’s very difficult for them to make that argument, so they want to sabotage these schools, they don’t want their contracts to be extended, etc., so that’s a big political issue, right now. In the last year, that’s one example of how the mayor of Bogotá has the power to implement free market or libertarian ideas, of course, as you know, school vouchers or charter schools are not 100% free market but it does mean subsidizing the consumer instead of subsidizing the producer without asking anything in return which is what traditional government education, state run education, is. And you also mentioned the metro, the subway, that’s going to be built, you also have a very free market solution to that: because most metro systems, subway systems, in the world, 99% are subsidized, New York City’s is heavily subsidized by city taxes, by city debt and Berlin, for instance, where I lived, heavily subsidized, and they’re good public systems but it means that they cost a lot and people have to pay out of their pockets to have these systems run efficiently, whereas we have the so called value capture system, that is invented and perfected in Hong Kong.

The government in Colombia, the state is present, and It’s present in an excessive fashion where it shouldn’t be like, for instance, taxes and red tape and bureaucracy, and it’s not present where it should which is, for instance, protecting people, people’s physical safety and their private property, so, in the first place, that’s a failure of government.

It’s not being applied elsewhere, where you use the real estate value of each station, which is usually in a strategic place and you build a shopping mall or you build a skyscraper. And then the company, whether it is government run or mixed or it’s in the stock market, receives utility from these stores, or apartments, or offices, and, if you have a lot of them, like the metro in Hong Kong, it produces surpluses. It had a $2 billion surplus in 2012 and that can pay for the entire metro system, it can pay for renovations, it pays to expand the line to go to places where it originally didn’t go so, I mean, that’s the solution that we’re proposing for Bogotá, whereas the discussion right now, I was at a debate today with another candidate, has been about how much it’s going to cost to build the first line, they’re talking about 15 billion to 20 billion pesos, you’ll have to convert that into dollars! But what they’re not talking about—you can find the 15 billion pesos, you can find the 20 billion pesos too, but that’s not the problem, the problem is how much it’s going to cost to run it once it’s built.

Finance Colombia: The long run, that’s the real cost.

Daniel Raisbeck: Yeah, exactly, and if it’s going to be subsidized, how is it going to be subsidized? And if we’re going to have—if the middle class in Bogotá is going to have to pay even more taxes it is going to be a problem, because the middle class in Bogotá has reached its limit with property tax and…

Finance Colombia: I’ve seen protests, you don’t want to see middle class protests, I’ve heard news that they’re complaining of the predio.

Daniel Raisbeck: Yeah, el impuesto predial, property taxes.

Finance Colombia: Well,  let me ask you this, because coming to this meeting with you, even the taxi driver asked me, he said “you know, why not have a private firm, even from abroad, if necessary, come in and build the subway? Give them the concession, let them operate the subway, let them charge whatever they charge for. Why do we need to pay for it with our tax money?” Now, I can see a lot of arguments, even free market problems with doing that but, I’m not running for mayor, you answer that, why do it that way—Is that one option? Or why not?

Daniel Raisbeck: Yeah, I propose, (something like) Mass Transit Railways, which is the Hong Kong Company, it’s in the stock market but the government, Hong Kong, owns about 80% of the shares.

Finance Colombia: So it’s like ETB (Bogotá’s telephone company that trades publicly but the city owns a controlling interest) here, where it’s partly government owned and partly private.

Daniel Raisbeck: But, I mean, they’re operating subway lines, metro lines, in Stockholm, in London, in Melbourne, I think they should come here, because, they’re one of the best in the world, but if it’s not them it can be someone else, it doesn’t matter who it is as long as they have this model of a metro system that produces surpluses, that is financially sustainable and doesn’t have to be subsidized with taxpayer money or with government debt, what you mentioned, I think it’s fascinating that the taxi driver made that suggestion because, as I said, I think that there are many people in Colombia and in Bogotá that are libertarians and without realizing it.

Finance Colombia: I think that’s interesting, but now we mentioned that Bogotá, from knowing a little bit about Colombia, it’s fascinating because Bogotá—Colombia is not a leftist country, however, Bogotá has seems to be bastion of the left. You look at the universities here, they seems to be bastions of not just the left, but the extreme left.

Not that everybody who graduates from there are, but obviously there is an influence. What’s the historical context? How has that come to be? And how does that fit in the context of what you are doing, because, it probably would be easier for you in a lot of other places, but you’re here in Bogotá.

Daniel Raisbeck: Well, I think you would have to take it into perspective, the comparison would not necessarily be with Medellín, I think, because they have very special circumstances, but I’d compare it to the region, if you go to a department nearby, a department is a state in Colombia, like Tolima for instance, if you go to Tolima you’ll find that the state practically runs the economy and that in Tolima getting a job usually means working for the state.

Finance Colombia: For the government.

Daniel Raisbeck: So when there’s an election in Tolima it’s about who can control the cake and dole out the pieces, so—whereas in Bogotá, Bogotá has such a dynamic economy of almost 25% of the nation’s GDP, and most people don’t work for the government so Bogotá has been traditionally an independent city, and you have that, for instance, when Mockus won here over a decade ago, he came out of nowhere, defeated the political parties, you have the Mockus-Peñalosa phenomenon which was completely independent, you have in Bogotá what in Colombia is called voto de opinión, opinion votes which just means votes that aren’t political machinery or votes that are paid for, so on the one hand you have this scenario, on the other hand I think the big political waves of the past 12 years or so, or 13 years, the big rainmaker is Alvaro Uribe without a doubt, if you look at the approval ratings, he really splits Colombian political history in two, at least the political history of the last 30 years, so you that when Uribe came to power his approval ratings were just phenomenal, especially for Colombian politics because usually you’d have, if a president left office with 35% approval rating he did well.

Daniel Raisbeck: And suddenly you had Uribe with 60+ percent

Finance Colombia: Look at elections before Santos, I remember being here in Colombia and basically people’s campaign platform was “vote for me because I’m with Uribe,” and that was their campaign platform.

Daniel Raisbeck: Exactly. That’s how Santos won, which is a different conversation, but then you had Uribe with about 67% , after Operación Jaque, you know the—after the army rescue of Ingrid Betancourt, that had 75% of Colombians thinking that the country was headed in the right direction, today it’s down to below 30% or something.

 I do think you should have some basic safety net for the poorest and most vulnerable in society, absolutely. I think at least, the problem is when that safety net becomes a form of dependency and you motivate people to not to go to work and to live off subsidies and to live off handouts, SISBEN, which is the Colombian welfare system, I think that’s a problem and it’s becoming a problem the left has exploited.

 So you have that phenomenon, but at the same time you have an extreme reaction against Uribe which wasn’t huge, but it did reach the portion of 20%-22%, and If you look at Carlos Gaviria who was the candidate of Polo Democrático which is the party that formed on the left as a result of Uribe.

Finance Colombia: The anti-Uribistas, basically.

Daniel Raisbeck: Right, and it was a coalition of the leftists, leftist politicians that really didn’t have that much in common but came together just to oppose Uribe, and they got 22% in that election in 2002 which is the best presidential result of the left and then what happened was that the left was able to capitalize on that anti-Uribe, independent, basically anti-establishment feeling of Bogotá in the last 3 elections for mayor, so that’s why you’ve had 3 administrations of the left, of the more extreme left, not the violent left, but the more extreme left, I would say that the liberal democrats, the social democrats

Finance Colombia: The democratic social, European style socialists.

Daniel Raisbeck:   Right, exactly, but then on the other hand you also had the huge mistake 4 years ago, where you had several center right candidates that between them won the overwhelming majority of the vote but they didn’t unite so they split the vote and they allowed Petro, the current mayor, to come in with 30% of the vote or less I think maybe 27% or something like that, so you have to take that into account, you also have to take into account that, well, something that’s quite worrying is that the last 3 leftist governments have built a client-state in Colombia, there was an article in La Silla Vacía, in the internet portal where you hake 4 million subsidized people in Bogotá, directly subsidized in some way by the city government, so that’s worrisome, but at the same time there’s a big disappointment with the last 3 governments, I mean they haven’t done—they haven’t finished—between 2000 and 2006 we had 2 phases of Transmilenio completed, each one was over 40 Kilometers, whereas from 2006 to 2015 we have barely had 1 completed and it’s less than 40—it’s 36 Kilometers, so, I mean, the inefficiency is just outstanding.

Finance Colombia: I still haven’t figured out theSiTP (Bogotá’s feeder transit system)!

Daniel Raisbeck: No, it’s just bad administration and I think that in general people are after practical solutions and a lot of people don’t want to vote for the left, they don’t want to vote for the right, but they don’t want to vote for someone just to vote against another person, so we see a very big opportunity for an independent candidate.

Finance Colombia: Ok, what I want to ask is: if this city, in Bogotá, has already had some administrations that say “this is what we’re giving you” to people, how do we say—when, look, Bogotá is an interesting city, it’s a city that has a lot of good things, a lot of nice things, but also, for very complex reasons because of moving and things like that, we have that more than half of the city is short on resources and residents are waiting to see who is going to give them something, or who is going to offer them something, and a lot of the times it’s not their own fault, it’s not that they’re lazy, but my question is, how can you apply libertarian principles to people that are saying “look, it’s not that I’m lazy but the government brought me all this stuff” or something like that, how can you tell those people—or how can you tell those people “this is society, you shouldn’t wait for us to give you something,” but what answer do you have for people in those cases?

So what do you do in a city where people who have been displaced, have come from places where they were happy, where they were self-sufficient, but now they find themselves, with through no fault of their own, depending upon the government, and now they’ve had a couple of, you know, several different administrations who were saying “vote for me because of everything I’m going to give you,” how do you apply free market solutions to somebody in that situation?” and say “look, I’m not going to promise that I’m just going to give you a bunch of handouts, but I’m going to make it better for you,” what do you say to somebody who says “look, I came here in the last government because they’re giving me this stuff,” like you said, I think 40% or more are depending upon government handouts, how do you say to somebody “that’s not the answer,” when that’s what they’re getting today?

Daniel Raisbeck: Right, well, first of all, you mentioned the displaced people problem, displaced population and I would say that in the first place you have to recognize that the problem of displacement in Colombia is a failure of government, a failure of government to fulfill its role to protect people’s lives and property. So it’s an absolute failure of government, like I said, the government in Colombia, the state is present, and It’s present in an excessive fashion where it shouldn’t be like, for instance, taxes and red tape and bureaucracy, and it’s not present where it should which is, for instance, protecting people, people’s physical safety and their private property, so, in the first place, that’s a failure of government.

It’s a failure of the state, so when you have the displaced people coming to Bogotá, and you have the state saying “well, we’re going to solve your problem,” and they’re skeptical because, I mean, if the state wasn’t able to protect them in the first place, why are they going to make the situation better afterwards, so, first of all I think you should make that clear, on the other hand, I do think you should have some basic safety net for the poorest and most vulnerable in society, absolutely. I think at least, the problem is when that safety net becomes a form of dependency and you motivate people to not to go to work and to live off subsidies and to live off handouts, SISBEN, which is the Colombian welfare system, I think that’s a problem and it’s becoming a problem the left has exploited, but I think that Bogotá is a place where you can address these issues because Bogotá is overwhelmingly a middle class city, so according—if you look at official figures from the Bogotá chamber of commerce, poverty in absolute terms in Bogotá, or the poor population, is around 10% and people in absolute or extreme poverty is less than 1 or 2% so we are talking about a minority, and you do have to address those problems but overwhelmingly you’re talking about a middle class city, and the middle class is growing more each year, so I think the libertarian message will be very appealing for that emerging middle class, the Colombian middle class, what it means to them is just being able to go to—people who come from somewhere, maybe they were also displaced but they were able to get a job, they were able to get ahead in a city like Bogotá and they’re able to take their children on a Saturday afternoon to a shopping mall and eat an ice cream.

The government and the state in Bogotá, and in Colombia, is perpetuating inequality with its bad education policies, it’s proven that the state in the majority of cases can’t run good, decent schools, so I think the government should really get out of the way. That doesn’t mean that there shouldn’t be public education, but I think parents in these schools and these neighborhoods should be given the choice of what kind of school they want or maybe they should even be given the vouchers, to say, if it costs 4 million pesos a year to educate a child then look, give them the 4 million pesos and they can choose their own private school, and they—I think they can make a better choice than the government, than the state.

And that is already something that they didn’t have before and it’s already part of beginning to belong to a middle class, so our policies are designed to help that emergent middle class and to enlarge that, enlarge that emerging middle class, and I think that the message is appealing, and especially, as I said, because the conditions in Bogotá are accepting for that kind of message.

Finance Colombia: The government has programs right now, I mean, there’s a national program, Ser Pilo Paga, you know, which is part of a scholarship program.

 One of the things that I’ve seen, you know, again talking as an outsider, I’ve met many people who are the first generation in their family to go to a university, or to graduate. In libertarianism, just like in any other political movement there are levels, there are those who would say that the government has no role, there are also those who say that the government has a limited role and so on, the people that have been able to graduate or to attend university as the first in their families were not able to do so because of any kind of family resources. How does that fit into a context? Is that a legitimate use of government? Is there an alternative? Is that good? Is that bad? In your opinion, not necessarily that program in specific, but let’s talk about the theme of social inclusion.

You know if we look at Medellín, they’ve done things like they’ve put public works up into their neighborhoods that are at the very low social strata and they’ve done things to try to encourage those people to feel a sense of civil participation, is that a legitimate role for a municipal government? Or where are those limits defined in your opinion?

Daniel Raisbeck: Well, I’ll talk about the education part first. I think that particular government program, I’m not a great fan of the Santos government but I think that particular scholarship program of 10.000 scholarships for needy families to go to universities is a wonderful program, again, it’s a—if it’s not purely libertarian it is a free market idea in the sense that you’re subsidizing the consumer, you’re giving the money to the student and the student can choose the university that he likes, which I think is a much more efficient way of having accessible public education than having the government itself run the national university. So you’re empowering people and I definitely think, I do believe in public education, I went to a public university in Germany, and I was a product of a public university system, I do think that—even Margaret Thatcher was—I mean, she went to Oxford, which is also a public university, so I do believe in public education, the question is how do we run a public education system?

And one of the alternatives, an alternative that I find very appealing is precisely that, subsidizing the consumer, empowering people, especially people from lower income families, and it’s fantastic that these people can go to a university, that they can be the first generation, or the first generation in their family, to go to a university, and even my mother is the first generation woman in her family to go to a university, because then it was more traditional for just the man to go. My grandmother I think would have been a fantastic professor or fantastic student but she didn’t go to a university because she was a woman, so we do have this social progress in Colombia, maybe not as fast as some would like but we do see it, so I think that’s a good policy.

Of course there are alternatives, we have, for instance, the university where I work, El Rosario—or Los Andes, they have scholarships programs or credit programs, which are also options, I don’t think public education should be the only option, like the left claims that should be done in Colombia, but in terms of education I think that that is one way of achieving social inclusion.

Finance Colombia: You know, in Colombia, for all of its progress, Colombia has a little bit of infamy for being, even though it’s a very—much an advancing country , Colombia does have very vast and very obvious areas of inequality, and while a socialist would want to have redistribution as solution, what do you say to somebody who is at that, you know, in Colombia has the stratus system, what do you say to somebody of estrato 1 or estrato 2, in Bosa or Usme, or Kennedy or Soacha?

Daniel Raisbeck: Well, I would say, the real inequality that matters in Colombia, I’m not worried about material inequality. I’m worried about inequality of opportunity, so it’s not fair that someone born here, in Rosario, or Chicó can go to a good school, because it’s—a private school, because state schools don’t even operate in this part of the city, whereas someone born in Usme or Ciudad Bolivar is doomed because the state school they’re assigned to is terrible, the teachers are on strike half of the time, like they are today, and they have absolutely no ability to compete to go to a university or in the job market, because their school is so terrible.

The government and the state in Bogotá, and in Colombia, is perpetuating inequality with its bad education policies, it’s proven that the state in the majority of cases can’t run good, decent schools, so I think the government should really get out of the way. That doesn’t mean that there shouldn’t be public education, but I think parents in these schools and these neighborhoods should be given the choice of what kind of school they want or maybe they should even be given the vouchers, to say, if it costs 4 million pesos a year to educate a child then look, give them the 4 million pesos and they can choose their own private school, and they—I think they can make a better choice than the government, than the state. These 25 charter schools, colegios en concesión that I mentioned, are precisely located in these neighborhoods like Usme, Ciudad Bolivar, Kennedy, etc., and that’s why they’re making an impact, but parents, like I said, they really are enthusiastic about these schools, they want to keep the schools, and it’s not only the parents of children who are enrolled in these schools, but it’s parents of children in nearby public schools that would like to have a similar school, or would like to transfer their child to that school. So I think that the first step to creating a real equality of opportunity to the greatest extent possible, is by reforming the education system, and what we have in Bogotá, and in Colombia, is an archaic education system, where it’s top-down: the mayor chooses a Secretary of Education and the Secretary of Education chooses the education model for all 400 state schools in Bogotá, whether the parents like it or not,

The government is acting as an obstacle to an equality of opportunity and to social mobility, especially in the poorer parts of Bogotá, neighborhoods that really need these opportunities.

And so, one thing, a very good thing, that these charter schools have done is that they have introduced an element of technical education for their students, so their students can choose whether or not they want to have—they can graduate with the bachillerato:the regular high school degree, but they can also graduate with a technical degree or with 2 technical degrees, in mechanics or something else. And they can get a job immediately, or they can even open their own business, or they can go into university with several semesters already advanced, so this is a fantastic system, it works, it’s proven that it works, and I think we should expand it, but the left and the current government are opposed. They’re opposed, for ideological reasons, and I think that’s a scandal, because the government is acting as an obstacle to an equality of opportunity and to social mobility, especially in the poorer parts of Bogotá, neighborhoods that really need these opportunities.

Finance Colombia: We’ve talked about the people at the bottom, estrato 1, let’s talk about people of estrato 5, or estrato 6, for example, the gremios in Colombia—there’s no real direct translation of the gremio in English, but it’s like a trade—

Daniel Raisbeck: It’s like a guild,

Finance Colombia: It’s like a—yeah, it’s like an industry group. Yeah, but let’s look at that, because what happens is that we see policies, and it’s interesting because we see how they try to manipulate things, like they’ll say “Well, let’s make a law that no trucks can be on the road that are more than 7 years old,” well obviously the truck dealer’s gremio wants to sell new trucks to everybody, on the other hand, that would devastate a lot of people who can’t afford a new truck.

Daniel Raisbeck: Exactly, you expel them from the market.

Finance Colombia: Yeah, and it’s like “How do people come up with ideas like this?” and now—and they’ll say something like  “Well, we care about the environment!”

Daniel Raisbeck: [laughs]

Finance Colombia: Well, no, bullshit! You want to sell the trucks, you know, but they’re very powerful in Colombia, and it’s interesting because on one hand they serve to balance against the unions, on the other hand, they are no more for a free market than the unions are because they’re saying “let’s do market distortion, let’s say you have to do B, you have to do C,” how do you balance them? Because there are pressure groups that are very powerful in Colombia that want to promote their interests on the backs of everyone else, you know, and generally it’s the left that says “well, we want to protect you against these big interests but they are really protecting some other entrenched interests,and you have this tug-o-war between left and right but neither one of them are really for a free market or a free choice, it’s really just rent seeking—who your ally is, you know.

Daniel Raisbeck: Yeah, and that’s a great question because in Colombia academics have written about this, for instance, James Robinson from Harvard, the Colombian economic system tends to create, and historically has tended to create monopolies. And these are monopolies, or oligopolies, that are extremely powerful and extremely powerful economically—because they’re protected by the government, by excessive regulation or, for instance, obstacles to trade, to foreign trade, so this is just a feature of Colombian politics, but what is very clear is that it is not a matter of left and right because, maybe you would think, at least that’s some mythology that the left protects the workers and the right is more free market and therefore they protect the rich guys,

Finance Colombia: The marketing and spin-doctoring of it all.

Daniel Raisbeck: Right, whereas in truth, you have very curious alliances, for instance, the pueblo democrático, which is very much to the left and opposed to free trade, and you have one of their main figures which is Jorge Enrique Rebolledo, and up to 3 years ago, he was openly allied with Alvaro Uribe, who is associated with a more right wing in Colombia, opposed to the free trade agreements that Uribe signed.

And you also have them allied, for instance, in the struggle against the free trade agreement with South Korea, and it turns out that one of Rebolledo’s and the Pueblo’s main allies is the local auto manufacturing lobby, so these people are supposed to protect the workers but they’re they’re really protecting, big local industrial interests, and this is the way the Colombian economy functions. So in Bogotá we have a very good example, and you mentioned the  mobility problems, how difficult it is to get around in Bogotá,and then you had one solution, or a partial solution, which is the arrival of Uber, the American firm. In Bogotá, Uber has had a one of the most exponential growth rates, one of the largest growth rates for them in the world, because the transportation system is so bad that many people just began to use Uber, even though credit cards are not as widespread or widely used in Colombia as in the States, or in other countries.

One of the interesting things about being a libertarian in Colombia, is that you’re constantly attacked by the left and they call you a Neoliberal and say that you want to privatize education, public education, that you want to sell whole state assets and that you’re basically the devil, but, on the other hand, you’re also attacked by these gremios, because you are also a threat to them, because competition is beneficial for the consumer because the consumer can choose in terms of prices  in terms of service, etc., But that’s not what these gremios want, they want  to capture the market by force and force people to buy…

And then what happened? You had the yellow taxi lobby, which is politically very strong, and they put heavy pressure on the Santos government, Santos promised the taxi lobby or the taxi drivers two weeks before reelection that he was going to put Uber out of the market and then Uber is technically illegal, at this moment, but it’s still operating. So the government really, with this position, wants to keep the taxi votes, which are either hundreds of thousands of votes, especially in an election year, like 2015, but at the same time they know that if they really go after Uber, they’re going to have an uproar from the consumers—

Finance Colombia: But the taxis here are infamous, especially in Bogotá, for throwing people out or robbing people and—

Daniel Raisbeck: Right, the infamous millionaire´s ride!

Finance Colombia: Yeah, El Paseo Millonario, you know, it’s funny because, if I am in Zona T I won’t catch a taxi, I walk and I go to the eleventh and I walk down eleventh for a while.

Daniel Raisbeck: Yeah, because that’s the place where you get caught in a moment! I know so many people that have been victims of the Paseo Millonario. I think 2 years ago we had the case of a DEA agent who was killed in a taxi, and that’s the reason why people like Uber, because you know who your taxi is, you know that it’s safe, because they have a screening process,

Finance Colombia: No cash.

Daniel Raisbeck: No cash, you can pay with your credit card, so—

Finance Colombia: Like AirBnB.

Daniel Raisbeck: Exactly, the same with Air BnB, but going back to the question, this is a good example of how a gremio, in this case the taxi lobby, tries to use its political influence: they don’t try to improve their service in order to compete and get more customers, their modus operandi, their way of operating is to get the government, the state, their allies in the state, to basically forbid the competition. That’s the way that traditionally the Colombian economy has worked. Fortunately today, for instance, I think it would be very difficult, even technologically, for the government to forbid Uber, to get them out of the market, so with the rapid rise of mobile applications, digital applications, it’s going to be ever more difficult for these gremios to maintain their hold on power. But that’s a very big difficulty and one of the interesting things about being a libertarian in Colombia, is that you’re constantly attacked by the left and they call you a Neoliberal and say that you want to privatize education, public education, that you want to sell whole state assets and that you’re basically the devil, but, on the other hand, you’re also attacked by these gremios, because you are also a threat to them, because competition is beneficial for the consumer because the consumer can choose in terms of prices  in terms of service, etc., But that’s not what these gremios want, they want  to capture the market by force and force people to buy, I mean, even beer, we’re drinking Club Colombia, well, Bavaria controls—I don’t know that the percentage is now—but a few  years ago it was 96% of the beer market, and then you saw the arrival of Peroni, an itallian beer, and I thought “Oh, interesting, Peroni,” and I looked at the back and I saw “Imported by Bavaria,”—

Finance Colombia: [laughs]

Daniel Raisbeck: So you have, basically in every major sector of the economy, you have these big groups and that’s the reason, and that’s what Robinson says: Colombia is a big market but it’s not a huge market, 40 million people, 50 million people, but you have 3 of the richest people in the world because Ardila Lülle in sodas, Sarmiento in financial services and Santo Domingo in beer. It was the creation of monopolies a few decades back, and the Colombian market is sufficiently big, whereby, if one person controls the entire market they can become one of the 100 richest people—

Finance Colombia: So it’s not—so even though it’s a free market compared to its neighbors, it’s not a free market because just—it’s a private market but not necessarily a free market, because we’re operating like the United States operated in 1910, where you have a more mercantilist than a capitalist system. People confuse mercantilism with capitalism, you know, and you see when they’re denouncing capitalism, they’re really denouncing mercantilism.

Daniel Raisbeck: Exactly. And we’re arguing in the libertarian movement is that what really benefits the consumer is a real free market where, fine, you can have Bavaria, they can have the same products but let people have a choice, like you have a choice of Peruvian beer or Mexican beer, of American beer, of German beer, and have a, basically, free trade, no import tariffs or quotas, or any of these ridiculous things, you don’t even need a free trade agreement, you can say—what Hong Kong did was you say, basically anyone can come here and trade.

Finance Colombia: The freest economy in the world.

Daniel Raisbeck: Exactly, and you can see Hong Kong was just about as poor as Colombia was in the 1950s and now there’s a huge difference and these are the types of policies that we’re promoting because we think that economic policies should be geared towards the consumer. It should be the consumer who’s benefitted, the consumer who can choose, based on the price, based on the quality, based on whatever he wants, and he shouldn’t have these special interest groups enriching themselves by being the only product available to consumers.

Finance Colombia: What do you tell people in Bogotá, that will say “look, the Tapahueco (a device that the current mayor purchased from Great Britain to fill potholes but has not lived up to its hype, and been mired in a malfeasance scandal) has not come to my neighborhood, I don’t care about a Tapahueco, I just want these damn holes filled?” You know, I stay up here above the Circunvalar,and if you take Calle 53, you try to go north, or you try to go up the hill and you fall into the holes!

Daniel Raisbeck: Right.

Finance Colombia: You know, I feel bad because I’m sometime in a taxi and the taxi driver is—doesn’t know the neighborhood and he doesn’t know there is going to be a big hole and boom, it’s like ¡se rompió el eje! (you broke an axle!)

Daniel Raisbeck: [laughs] yeah.

Finance Colombia: Ok, so mayors are not usually a very ideological position like congress, or even a president can be, but people who want their garbage taken out, the people that want their water, the people who want to be safe when they walk down the street, the people who want to be able to ride the Transmilenio, whether it’s a good idea or not that we have a Transmilenio, it’s there.

Daniel Raisbeck: Right.

Finance Colombia: What the people want—they don’t want to have holes in their neighborhood, you know, the people who want to deal with the insecurity so they don’t get robbed, what message do you have for them? This is not ideological, like what you’re running for as mayor is an administrative position. What do you have to say for them?

Daniel Raisbeck: Well, first of all, I would say “you’re absolutely right, it’s not about ideology, when—if you are mayor,” but, again, I do think that libertarian ideas, free market ideas, can bring solutions to these problems which you mention, and I’ll just mention, I’m not saying that this is necessarily going to be our policy, but, you know, I’ve read in the States, if I’m not mistaken, a neighboring state to Ohio, Kentucky, so what they did was that they allowed, I think it was KFC or something, if KFC gets rid of the pothole they have the ability to, or they have right to advertise over the previously existing pothole.

 So we get Exito or whoever, you know—

Finance Colombia: Este hueco fue patrocinado por Exito [This hole was sponsored by Éxito] [laughs]

Daniel Raisbeck: Exactly, and I mean, that’s a practical solution, you would have to examine.

Finance Colombia: Wow. Este hueco fue tapado por KFC [This hole was filled by KFC] [laughs]

Daniel Raisbeck: But whoever it is, I mean, it doesn’t matter, and on the other hand since we do believe in initiative, we do believe in a greater participation of the citizens in decision making, we believe in digital technology, we have the ability to create applications whereby the citizen can inform whoever is in charge, whether it’s the mayor or it’s someone in the administration of getting rid of that pothole, paving the street, you can do it per application and the citizen can rate the efficiency of the Secretaría de Movilidad (transportation department), or whoever, and you just create the system where you have greater ability to communicate and it’s all faster and it gets done, and it doesn’t really matter how it gets done.

Out of every ten thieves that are caught after stealing a mobile phone, nine go free after a few hours, so, I mean this is proven also from New York during the Giuliani years, if you tolerate relatively small crimes, like graffiti, like stealing cell phones, like small muggings, you would think that it’s not such a large problem, but when you tolerate that, you create a sense of insecurity and that sense of insecurity empowers criminals and really empowers the bad guys.

I mean, these are just some examples. When you talk about security, again, I do think that it’s pretty much the main responsibility of the state. I do believe that it’s the main responsibility of the state to uphold security in the neighborhoods, on the Transmilenio; like I said, I think we only have 18,000 police officers in Bogotá. We have over eight million people, that’s far too little because, internationally, what is usually said is that you need 1 police officer per 250 people and if you take into account those 18,000 they’re not all working at the same time, they’re working in shifts, so you really have around 6,000 police officers working at the same time, so that’s far too little. I do think that we need to increase the amount of police officers in the streets. Now, how are you going to finance that? You can look at reducing the bureaucracy in other parts of the city administration, so you can transfer the resources from where they’re being wasted in bureaucracy and in creating this client-patronage system to where they’re really needed, which is providing security on the streets and in the buses.

Finance Colombia: How do you fix the culture?I go to Bucaramanga and I don’t see graffiti on the walls. I go to Medellín and nobody hops on to the metro for free.

Daniel Raisbeck: Well, I think there are 2 things, first of all, there’s a phrase I like that’s—that was used a few years ago by the current mayor of London, Boris Johnson, he might be the next leader of the British Conservative Party, in London they had to criminalize crime, and I like that phrase because we had that problem in Bogotá where the theft of cellphones, for instance, of mobile phones, basically goes with impunity. Out of every ten thieves that are caught after stealing a mobile phone, nine go free after a few hours, so, I mean this is proven also from New York during the Giuliani years, if you tolerate relatively small crimes, like graffiti, like stealing cell phones, like small muggings, you would think that it’s not such a large problem, but when you tolerate that, you create a sense of insecurity and that sense of insecurity empowers criminals and really empowers the bad guys.

So what you have to do is you have to start by having a zero-tolerance policy towards all kinds of crime, whether it’s graffiti on private or public property, or whether it’s stealing a cellphone, or whether It’s going into Transmilenio without paying your fare. When  Giuliani started catching people with undercover policemen, policemen dressed as civilians, in the new metro system, they found out that the people who were going in without paying the fare were usually the same people with criminal records and it’s a relatively easy problem to deal with if you have the political will to deal with it.

Finance Colombia: But you know what? If I may, even looking at it from a libertarian standpoint, as you see in the United States, we have a problem with that going too far, we have a problem right now in the United States where people without probable cause are being harassed and the police are overstepping all kinds of 4^th Amendment boundaries—

Daniel Raisbeck: Right, no, no, no. I talked about the big mistake here that was to militarize the police in Bogotá, I’m not talking about militarizing the police, I’m not talking about searching people, I’m completely against what happened to you a few weeks again when you were just randomly stopped in Bogotá, I was randomly stopped in my car, also a few weeks ago, absolutely absurd.

Finance Colombia: But here that’s legal. There is no 4^th Amendment (to the United States Constitution)

Daniel Raisbeck: Yeah, it is.

The challenge for the libertarians in Colombia, or for groups like Students for Liberty, which is a group that’s growing across the world, Europe also, the US also, is to take these arguments from the strictly think-tank academic level where only very few people are going to be able to understand it, and really evangelize and become a citizens movement or a mass movement if need be, and I use the word evangelize on purpose, because if you look even at the rise of the conservative movement in the United States they really did use these evangelists techniques.

Finance Colombia: But at least it’s legal here, I mean, I’m not defending it but I’m saying, at least—in the States, as you know, they do it anyway and it’s even illegal.

Daniel Raisbeck: Yeah, ok, great, we agree but I’m not talking about going too far, I’m not talking about random searches on the streets, I’m talking about criminalizing crime, I’m talking about going after the people who really did it, and it’s evident that they did it, and I will admit that a big part of the problem which a mayor can’t control is the justice system, because if the justice system is broken, if the justice system is corrupt and if the police do their job and they take the people, the criminals down to the station and then nothing happens to them—

Finance Colombia: You’re right.

Daniel Raisbeck: Well, it goes beyond the mayor, it goes beyond the police, you also have to tackle corruption within the police, and it’s very common in Bogotá, when you get stopped for, for instance, pico y placa, when you drive when you’re not supposed to, given the limits and people usually get out, or many times get out, of the fine by paying—by bribing the police officer, that’s commonly known, we have to get rid of those kinds of police officers because it’s all a matter of rule of law, and that brings me to the second point which is what you mentioned about the culture in Bogotá: If you had been here under Mockus, 10 or 15 years ago, you would have found a different kind of city, where people did respect norms and people did stop where they were supposed to, in their cars, because Mockus called it Cultura Ciudadana and he made an effort for the city and the authorities to educate people, even paying mimes to be on the street—

Finance Colombia: I heard about that, he’s famous for those tactics.

Daniel Raisbeck: Publicly shaming people if they would stand on the white lines, for instance, on the street, I think that’s a good idea that should be reenacted, but I think in the end Cultura Ciudadana, if you would translate it into English, the real sense is rule of law.

Finance Colombia: How big is the Libertarian movement in Colombia?

Daniel Raisbeck: It’s very small, I wouldn’t exaggerate, as I said, the libertarian movement is growing in Colombia and in Latin America as a whole, I think this is also a result of very left wing populous governments like Hugo Chavez, like Correa in Ecuador or Evo Morales in Bolivia, you really have students, especially young people who realize that these populist policies aren’t working, they’re making their countries poor. They’re taking away opportunities for people and they’re looking for an alternative, and that’s when these free market ideas that are based on very solid academic work by lots of scholars during many generations, that’s when they really can start gaining adepts. The challenge for the libertarians in Colombia, or for groups like Students for Liberty, which is a group that’s growing across the world, Europe also, the US also, is to take these arguments from the strictly think-tank academic level where only very few people are going to be able to understand it, and really evangelize and become a citizens movement or a mass movement if need be, and I use the word evangelize on purpose, because if you look even at the rise of the conservative movement in the United States they really did use these evangelists techniques.

You really have to be a big fanatic in the sense of going, getting up on a Saturday morning and knocking on people’s doors and delivering the leaflets, saying this is what we believe and you’re going to get rejected thousands of times but you’re also going to reach people, and well that’s—

Finance Colombia: And we see in Miami, the best capitalists are those people who escaped from communism and understand what it’s really like.

Daniel Raisbeck: Right. You don’t have to be a PhD economist to realize that the kind of economic policies that lead to a lack of basic goods in Venezuela and, I don’t know, like sugar and toilet paper in Venezuelan supermarkets and, well there’s probably something wrong with that. Then they start to see “well, what’s the alternative?” or “why don’t we have those problems here?” and—

Finance Colombia: The best capitalists are former, you know, people who come from Venezuela, people who come from Cuba, people—Colombians, they look at what Chavez has done to Venezuela, what the Kirchners have done in Argentina, and they look at the FARC and ELN, Sendero Luminoso, and they think: “screw that!”

Many believe that fears of inflation and rising import costs due to the falling peso are fueling accelerated auto sales by customers wanting to take advantages of current prices before projected increases.

The 2014 total for new car sales (including light trucks) was 326,023, representing an increase of almost 11% over 2013’s quantity of 294,362. The statistics indicated that 34% of new cars were assembled in Colombia, versus 66%, or 218,152 imported.

The entire report, in Spanish, may be accessed here.

As to be expected, Bogotá saw the most new vehicles registered with 36.8%, followed by metropolitan Medellín (Envigado 5.4% and Medellín proper 3.8%) at 9.2%, then Barranquilla at 3.7%. Cars comprised half the vehicles registered (50.8%) followed by SUVs at 27.1%, then pickup trucks at 5.4% and taxis at 4.9%.

2015 Ford Mustang being loaded for export. Photo courtesy FORD