Note: This article is an abridged version of an in-depth country study produced as part of the Prosperity Index project of the Legatum Institute. Complete versions of all 12 are available on the Institute website.
Colombia has emerged from its violent, chaotic past, and is ready to join the club of nations that respect human rights, share power with the people, and offer a decent -- and rising -- standard of living.... Or maybe not.
Colombia is the embodiment of paradox. On the continent that has defined macroeconomic volatility, Colombia has managed incredible stability. Since the 1930s it never experienced a year of negative economic growth until 1999. And in the 20th century it has never had a problem with inflation. Moreover, while democracy was collapsing everywhere in Latin America in the 1930s, power changed hands in Colombia (from the Conservative Party to the Liberal Party) in a free election. And, apart from a short spell in the 1950s, Colombia has neither been the victim of a political coup nor lived under the yoke of a military government.
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Yet the gains that should have followed from economic stability and political pluralism never materialized. Though Colombia has been growing virtually non-stop since 1900, the pace has been deliberate. Indeed, on average it has grown no faster across the business cycle than volatile Latin American countries like Peru or Bolivia.
Moreover, while Colombian democracy has endured, Colombia hasn't fared well by other measures of societal stability. The murder rate has been the highest in the world for over the last half-century. But murder isn't Colombia's only symptom of social dysfunction. The country has been fighting a civil war with leftist guerillas continuously since at least 1964. And in the early 1980s, Colombia became ground zero for the international drug trade, home to the cocaine cartels. It should be no surprise, then, that Colombia ranks 136 on the Legatum Institute Prosperity Index's safety-and-security sub-index -- the lowest in the Americas by far.
Liberal Party politician Dario Echandía once quipped that Colombian democracy was like "an orangutan in a tuxedo." By this he meant that, in Colombia, the civilized and uncivilized, the orderly and chaotic, the legal and illegal, all coexist -- and the membrane separating them is often very porous. Indeed, opposites seem to interact in ways that perpetuate an equilibrium in which both exist. The tuxedo promotes democracy and macroeconomic stability, while the orangutan generates violence, civil war, drug dealing, and anemic economic growth.
So what exactly is this orangutan in a tuxedo? Where did these two very different sides of Colombian political culture originate, and how is it they can coexist?
The model for Colombia's political system is a form of indirect rule, common during the period of European colonial empires, in which the national political elites (mostly residing in cities) delegate authority over the countryside to local elites. Colombia's local bosses are given discretion to run things as they like in exchange for an implicit commitment not to challenge the authority of the center. International drug markets, organized crime, leftist guerillas, and rightist paramilitaries are thus not the causes of Columbia's problems; they are part and parcel of a dysfunctional style of governance. As the Colombian writer R.H. Moreno Duran put it: "In Colombia, politics corrupts drug dealing."
This explanation raises obvious questions in turn. Which interests keep this awkward, seemingly unstable system in place? How can chaos and order remain in equilibrium? Why do local elites find it in their interest to sustain the chaos?
The chaos in the periphery in Colombia simplifies the task of creating a winning coalition in the center -- or, to put it another way, it lowers the price of votes. Instead of having to win support the old-fashioned way (with patronage or popular policies), politicians can get elected by gaining the support of local bosses, or perhaps by becoming the bosses themselves.
Consider, too, that the orangutan-in-a-tuxedo system makes Colombian democracy very elite-friendly. One salient theory of the origins of democracy is that it results from concessions made by elites to avoid disorder, or even revolution. This does not, however, explain the origins of Colombia's democracy. It was, from the beginning, a means for elites to share power among themselves in a way that would avoid fighting. It didn't always work, though, so the elites came up with other political institutions to facilitate power-sharing. After the bloody inter-party conflict known as the Thousand Days War (1899 - 1902), the two political parties agreed to assign two-thirds of the legislative seats to the then-dominant Conservatives, but guaranteed one-third to the Liberals, however many votes they polled. In 1958, after another inter-party civil war, it was replaced by the National Front agreement that restored the fixed allocation of seats, adjusting the division to 50-50.
Yet another way the system works in the interest of the elites is that a high level of conflict in rural areas prevents the periphery from cooperating together against the center. This is hardly unique to Colombia: A common theory of African political dynamics is that the center foments chaos at the periphery in order to "divide and rule." Sudan and Congo are the classic cases.
In most places in the world, one would have thought that either the orangutan would have eventually ripped off the tuxedo and overwhelmed the more functional part of the country, or, that, at some point, the tuxedo would have straitjacketed the orangutan. (The metaphor is strained, but you get the point.) As suggested above, though, disrupting the equilibrium may not be in the interests of those benefitting from the system.
However, the fact that everyone is better off without the ever-present specter of mayhem doesn't guarantee that reason will prevail. I think the real reason for the stability of the Colombian system is that it's largely self-adjusting: The incentives in place are adequate to sustain power-sharing without the need to periodically renegotiate the grand bargain between urban and rural elites.
The answer to why elites on the periphery keep the pot boiling at just the right temperature that denies them dominance over the center is also elusive. The best explanation is that regional elites turn over rapidly, making it difficult to identify collective interest or to act on it when they do.
Rural conflict is further exacerbated by the fact that the ownership of much of the land in Colombia is in dispute, making it difficult to legalize any particular status quo. The rise of the drug cartels since the late 1970s has further complicated conflict resolution, since a lot of illicit drug wealth has gone into acquisition of land (and elite status).
The system is not held in place by some grand Faustian pact or Machiavellian calculation, but has evolved organically over more than a century. Local elites find it in their interest to act in ways that keep the system from veering far off-kilter without understanding their role in general equilibrium. And this makes the whole system hard to grasp conceptually, let alone reform.
Despite this history, Colombia has seemingly turned over a new leaf in the last decade. After President Andrés Pastrana's drawn-out, ultimately unsuccessful effort to negotiate an end to the civil war with the leftist FARC guerilla army, Álvaro Uribe was elected president on the promise that he would intensify the fighting.
His offensive pushed the FARC and the ELN (the National Liberation Army, another leftist guerilla force) out of numerous municipalities and led to the killing of guerilla leaders Raúl Reyes and Mono Jojoy. (Moreover the FARC's commander-in-chief, Manuel "Tirofijo" Marulanda, died of natural causes in 2008). After Uribe was replaced as president in 2010 by his former defense minister Juan Manuel Santos, the new leader of the FARC, Alfonso Cano, was killed by the army.
These military successes coincided with a plunge in both the homicide rate and the number of kidnappings. In 2005, President Uribe had also persuaded 30,000 members of paramilitaries to demobilize in exchange for reduced sentences and confessions of their crimes -- quite a considerable political feat.
As the security situation improved, so did Colombia's international image. Foreign direct investment rose from $1.5 billion annually to $13 billion in a decade, while investment went from 17 percent of GDP to 27 percent. Prudent as ever, Colombia ran budget surpluses that reduced the national debt from nearly 60 percent of GDP in 2002 to 43 percent today.
President Santos has been building on these positive developments since coming to office. While trying to maintain the military initiative, he has launched an ambitious attempt to "take the water away from the fish" -- to bring peace to the countryside by restoring as much as 12 million acres to owners and implementing a land reform program.
Have Uribe and Santos, in fact, succeeded in chaining the Orangutan? I'm skeptical. Despite all the gains under the last two administrations, neither made a clear break with the system of governance that created Colombia's problems in the first place.
President Uribe invested vast amounts of time and political capital attempting to change the term-limit provision in the constitution so that he could maintain his grip on power -- hardly the work of a devotee to democracy. He succeeded once, but only through an alliance with the politicians elected with paramilitary support in 2002.
The unaccountability of politicians, an important characteristic of the system, has also persisted. One telling example concerns Santos himself, when he was still minister of defense under Uribe, During his tenure, there came to light what Colombians have called the "false positive" scandal. In pressing the military to intensify the conflict with the guerillas, the government offered pay rises and promotions for verified killings. Though this no doubt led to the deaths of many guerilla fighters, it also led to the execution of some 3,000 innocent civilians who were murdered and dressed up as guerillas after the fact. Yet when the scandal broke, Santos did not take any responsibility for the acts of the soldiers under his command.
It's true that violence has fallen in Colombia and that the economy has been doing exceptionally well in the interim. But violence also fell in the 1960s, only to bounce back. Moreover, Colombia still suffers from the most unequal distribution of income in Latin America (with the possible exception of Bolivia). And the growth spurt is largely explainable by the temporary global boom in the price of oil and coal, which constitute 60 percent of the country's exports.
The Orangutan is lurking. In the local elections of October 2011, 41 candidates were murdered and countless others were threatened with violence. Perhaps the most revealing statistic about the state of the commonwealth is that the richest tenth of Colombians pay just three percent of their income in tax, while the poorest tenth pay eight percent.
I'd like to believe that good things will beget better things -- that declining violence and faster growth will create a virtuous circle of social progress. But I fear Colombia is still the Colombia where the tuxedo fits the Orangutan all too well.