Gustavo Petro and Colombia's Future

Colombia’s late 20th century has been an outlier in the progressive movement of Latin America; it is one of the region’s most conservative countries. That was until August 7th 2022, when President-elect Gustavo Petro became the Republic of Colombia’s first leftist president in history. Petro, now in office, vows to change a country which has been slow to do so. Still, Gustavo Petro is faced with a formidable task: transforming Colombia in 4 years.

Who is Gustavo Petro?

The former mayor of Bogota, guerilla, and senator promises widespread change to finally address deep-rooted challenges. Exasperated by the economic crisis from the pandemic, ever increasing socioeconomic inequality, and organized crime, voter frustration culminated into a watershed moment for Colombia in the form of Petro. What does this Gustavo Petro promise to change for voters while in office?

Petro's Promises

The Petro campaign has 3 items most important on the agenda: resetting income inequality, the approach to combat the war on drugs, and diversifying economic opportunity.

The Colombian government’s Departamento Administrativo Nacional de Estadística census states that in 2021 21 million Colombians, or 44.6% of the population, are living in poverty. The goal of the Petro cabinet, then, is to combat income inequality. The most important of campaign promises for the combatting of income inequality is the repair of income taxation. In an Executive Summary by the OECD, studies find only 5% of Colombia’s population pays income taxes at all. The problem stems from high rates of informal employment (60% of popl.) and tax evasion. The Petro campaign’s Minister of Finance promises a plan to raise 50 billion pesos ($10.5 billion) in income tax over the duration of presidency to solve the issue. Rolling back the campaign promise of only taxing the 4,000 richest Colombians, the moderated declaration is to close tax evasion loopholes on the richest 2% of the Colombian population. In return, the Minister of Finance proposes lowering the corporate tax rate by 5 percentage points to 30% over a gradual period. Still, the Petro government also seeks to reduce tax exemption for mining and energy sector companies in order for the payment of said 30% to be enforced on all corporations. These efforts will finance social programs. Petro proposes free public higher education, a universal health system, a guaranteed minimum income for the elderly and single mothers, and cheap credit for reduction of unemployment levels.

The Petro presidency promises to change the approach on the war on drugs as well. Petro wants to end the prohibitionism approach to combating drug production. The country, in Petro’s promises, will not use funds to criminalize previous producers of coca crops from rural populations who had no alternative to earn a wage. Instead, programs will be enacted to guarantee decent income in agricultural production. Further, Petro proposes the legalization of marijuana in Colombia in order to disincentivize criminal activity in production. Gustavo Petro’s approach is to focus on criminal suppression, whereby the production of illicit drugs is unfavorable economically and lawfully.

The promised diversification of economic opportunity may be the most important item on the Petro campaign. A harsh combination of crashing oil prices coinciding with the COVID-19 pandemic caused a meltdown of the crude oil sector. Between early January 2020 to April 2020, the global oil benchmark WTI fell 71%. Making up 28 percent of Colombia’s exports, the result was a poverty rate that rose 43% in a year and a new wave of deadly anti-government protest. Oil dependence has wiped out 8 years of social progress in Colombia. Dependence on oils has Colombia reliant on world prices, meaning any recession in a foreign consumer means crippling the Colombian economy. The new Colombian plan is to build an economy diversified to protect against dependence. The Petro government’s most important promise is promotion of agrarian reform in food production. The country is currently importing 30% of food it consumes although the nation was previously self-sufficient. The incoming minister of agriculture, Cecilia Lopez, summarizes the problem. “The farmers were abandoned because our economy focused on developing big industries.” These big industries are commodities of coffee and oil, dependent on world markets which make or break the economy. Reformation of agriculture decreases dependency on world markets for imports and exports, and develops a secondary sector of exports that mitigates commodity crashes. Along the same line, the Petro government promises better credits for entrepreneurs to rejuvenate its tertiary sector as well. Petro promises the acceleration of the transition to renewable energy, growth in construction, expansion of the services industry, and the incentivization of international tourism. These changes create a tertiary sector of development. Development of secondary and tertiary sectors of growth mitigates the chance of the primary sector’s commodity exportation from destroying the nation once more.

Potential Problems

The biggest hurdle to Petro’s change is Colombia’s Congress. Transformation of Colombia is impossible if the majority of Congress continues to oppose his minority party coalition, the Historic Pact. The Colombian congressional system is fractured into a multitude of political groups. Currently, there are 8 different Political parties or coalitions. Among them, the only leftist party is the Historic Pact. The objective of the Petro campaign is to gain support from the political leaders and thereby parties outside his coalition. Without it, Petro’s lawmakers in the legislature are incapable of reaching a majority to pass his legislation. The new Finance Minister José Antonio Ocampo is the first step for Petro to gain favor from centrist parties. As of August 7, José, a moderate, will hold the most important cabinet position in Colombia. Ocampo’s presence has helped calm both political and investor fears over aggressive reform and mismanagement. Ocampo’s prestige comes from a long list of credentials. These include being a former part of a Colombian president’s cabinet and as a professor at the esteemed Columbia University. “Ocampo is respectful of institutions,” said Munir Jalil, chief economist of BTG Pactual. “What markets don’t like is inexperience.”

What Petro Has Tried

Since Ocampo’s appointment, he has appointed two further cabinet positions to moderate and conservative leaders. Conservative political veteran Álvaro Leyva has been appointed foreign minister, and Alejandro Gaviria, who worked for center-right cabinets in previous years, as head of the ministry of education. This pragmatism is what Petro needs for any promised legislature to succeed in the splintered congress. Moderation in the Petro campaign has already started the formation of a broad coalition in Congress, proving his strategy is working. Gustavo Petro’s Historic Pact has formed an alliance with Colombia’s third largest party in the Senate, the powerful Liberal Party. Though a governing majority is yet to be reached, efforts are being made to sway one more political party for a majority rule in congress.

Conclusion

Gustavo Petro promises to bring Colombia positive change in income equality, the war on drugs, and diversity of economic opportunity. However, the grand promises of the current campaign may be compromised and significantly cut down in order to obtain a majority in Congress. His presidency is a balancing act; revolutionary enough for his core supporters, yet moderate enough to avoid congressional minority. Gustavo Petro is faced with a tremendous task in front of him for the next couple years, and it is to be seen whether or not he succeeds in rebuilding Colombia.

Sources

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