Colombia’s president is every inch a revolutionary. From the balcony of the presidential palace last week, Gustavo Petro blamed “neoliberalism” for causing war, Covid-19, hunger and the climate crisis. He scorned businessmen who said there were plans to derail the reforms.
Then he said to the crowd the following: “The moment has come: the president is calling his people to wake up, not to bow down, to be a mass that knows that the future is in their hands.”
Six months into his presidency, Colombia’s first left-wing president shed the moderate mantle he had worn in last year’s election campaign and revived the revolutionary rhetoric of his youth as a member of an urban guerrilla group.
Petro is betting that he can mobilize his army of supporters to help push through radical plans to expand the state’s role in pensions, healthcare and the labor market.
Investors are wondering how Petro will finance his expensive campaign promises at a time when a large budget deficit, persistent inflation and a high current account deficit have become concerns. Congress is expected to approve budget legislation that will raise an additional $5.1bn in spending this year.
At stake is the future of one of South America’s most conservative conservative nations, popular with investors for its prudent economic policies and considered Washington’s closest military ally in the region.
Some people close to Petro insist that the administration will be pragmatic, more akin to European social democrats than Latin American left-wingers such as former Venezuelan leader Hugo Chávez.
“This is not a government that will bury all the institutions and end the market economy,” said senator Iván Cepeda, leader of a left-wing party that is part of Petro’s Historic Pact coalition. “On the contrary: this is a moderate government, but it also has a clear orientation to change and reform.”
Far from creating an uproar, Cepeda argued, Petro has brought stability to one of the most unequal countries in the world by building a coalition for long overdue change.
“Reform does not happen in society without unrest,” he said. “But the government has managed the unthinkable: a peaceful step in Colombia from an elite traditional government to a progressive government.”
Since Petro took power last August, the massive demonstrations that brought down the government of his unpopular centre-right predecessor Iván Duque have ended: many protest organizers are now in power.
Petro raised eyebrows by comparing the international court’s ruling that Colombia was responsible for the “systematic extermination” of more than 6,000 left-wing activists in the past decade to the Nazi murder of 6 million Jews. “Nazi Germany had a genocidal state,” Petro said. “There is no difference between the Colombian state and the Nazi state from that point of view. They are genocidal.”
Vice president Francia Márquez, an environmental activist from Colombia’s marginalized Pacific coast black community, recently visited Cuba to “build alliances around common goals”.
Criticism has been muted, at least in public: most congressmen have been elected. “Everyone gives the benefit of the doubt,” said Paca Zuleta of the University of the Andes in Bogotá. “No one has offered any real opposition.”
Outside of Colombia, few are more honest. Débora Reyna at Oxford Economics believes the government risks a “bad recession” this year if it doesn’t change course. “Petro has increased the risk of policy mismanagement when the fundamentals are broken,” he said in a note.
Colombia was the fastest growing large economy in Latin America last year, with gross domestic product growing by 7.5 percent, but this year the government is forecasting growth of 1.2 percent, while Capital Economics predicts just 0.8 percent.
Investments in oil, gas and mining – sectors that make up more than half of Colombia’s export earnings – are uncertain after mixed signals from the government on new exploration. The peso has fallen about 18 percent in the past year, making it one of the weakest emerging market currencies.
But business leaders prefer not to fight the president. Instead, he lobbied privately and hoped that the moderate faction, including finance minister José Antonio Ocampo and education minister Alejandro Gaviria, would put the brakes on Petro.
Ocampo successfully launched tax reforms last November, which increased taxes on wealthy Colombians and on oil and mining. The plan has been praised for increasing profits without harming competitiveness.
As Petro pursues more controversial reforms, finding those compromises becomes more difficult. Gaviria, a former health minister, asked Petro to revise his plan to nationalize most of Colombia’s health system, but he was rebuffed. “The original proposal didn’t change much and we didn’t get responsible reform,” Gaviria said.
Colombia has one of the best-resourced public health systems in the Americas, mostly financed by compulsory insurance. Petro plans to generally eliminate private intermediaries that run the system, widen coverage and control hands to the state. The government estimates the additional costs could be as much as 3.5 percent of GDP — double the amount raised in last year’s tax reform, according to Capital Economics.
Next on Petro’s list is retirement. He has yet to publish a draft law, but took aim last Tuesday at two unnamed bankers, saying they had enriched themselves at the expense of workers.
“These two bankers are loaded with money,” he said. “Eighteen million [contributors] giving money every month to the two biggest banks while no one receives a pension.
It is unclear whether Petro’s popularity will sustain him amid a slowing economy. Appeals last week for a mass rally to support the reforms backfired. Only a few thousand came out in Bogotá, while the next day’s counter-demonstrations were larger.
Some have doubted Petro’s ability to deliver, saying he is stronger as a campaigner than an executor.
“Petro is a revolutionary who has left many revolutions obscure,” said Juanita León, editor of the political website La Silla Vacía.
“He wants to change a lot of things with his power, but he has not shown that he has the capacity to take the necessary steps to replace them with something new.”