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Viewing cable 09BOGOTA970, SCENESETTER FOR TREASURY SECRETARY GEITHNER'S

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Reference ID Created Released Classification Origin
09BOGOTA970 2009-03-20 18:57 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Bogota
VZCZCXYZ0010
PP RUEHWEB

DE RUEHBO #0970/01 0791857
ZNR UUUUU ZZH
P 201857Z MAR 09
FM AMEMBASSY BOGOTA
TO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 7887
INFO RUEHBR/AMEMBASSY BRASILIA 8749
RUEHCV/AMEMBASSY CARACAS 1861
RUEHLP/AMEMBASSY LA PAZ MAR LIMA 7180
RUEHZP/AMEMBASSY PANAMA 3245
RUEHQT/AMEMBASSY QUITO 7906
UNCLAS BOGOTA 000970 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR ARUSHING AND LMANTEL 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PREL OVIP EAID SNAR CO
SUBJECT: SCENESETTER FOR TREASURY SECRETARY GEITHNER'S 
VISIT TO MEDELLIN, MARCH 29, 2009 
 
1. (SBU) SUMMARY: As the first Cabinet Secretary of the new 
administration to visit Colombia, you trip comes at a key 
time in the U.S.-Colombia bilateral relationship.  Evidenced 
by its hosting of the Inter-American Development Bank's 50th 
Annual Meeting in Medellin, Colombia has progressed from a 
near failed state and terrorist haven to an economic, 
political, and social leader in Latin America over the last 
decade.  Improved security and economic reform has grown the 
economy, reduced poverty, and attracted record levels of 
investment.  The GOC has leveraged these successes beyond its 
borders by playing a more prominent role in region on issues 
including security, trade, and energy policy.  Nevertheless, 
drug trafficking and social divides still prevent millions of 
citizens from benefiting fully from security and economic 
gains.  While its financial sector has remained largely 
insulated from the recent global crisis, the economic impact 
of decreasing foreign direct investment, higher credit costs, 
and reduced trade are slowing the economy this year and 
likely to exacerbate Colombia's social challenges in the near 
term.  Despite Colombia's significant progress, USG support 
remains critical to help the GOC confront its persistent 
challenges.  End Summary. 
 
Economic Growth and Free Trade 
------------------------------ 
 
2. (SBU) After several years of strong economic growth, 
Colombia has begun to feel the pinch of the global economic 
crisis.  Growth slowed to 3.5 percent in 2008 after a record 
rate of 7.5 percent in 2007.  Recent growth projections for 
2009 range from 0 to 2 percent.  Reacting to the anticipated 
economic slowdown in 2009, the Government of Colombia (GOC) 
plans to cut the national budget by $1.4 billion.  The cuts 
include defense spending and social programs that are 
critical to addressing many of the catalysts for the civil 
conflict.  The slowing economy and a pyramid scandal in 2008 
that cost Colombians an estimated $1 billion in savings has 
led to growing popular concern over pocketbook issues. 
Further economic decline could generate more social unrest, 
strikes and protests in Colombia in the run up to the May 
2010 national elections. 
 
3. (SBU) Colombia remains highly dependent on commodity 
exports (petroleum, coal, flowers, coffee), making it 
vulnerable to price drops.  Colombia cut unemployment and 
poverty during the past six years, but those gains have 
stalled.  The financial sector remains solid -- cushioned to 
date against the global credit crunch by conservative lending 
practices. The GOC inked trade deals with Canada, Chile, 
Central America and  smaller European countries in the last 
year.  The GOC is now negotiating an agreement with the EU. 
The U.S.-Colombia Trade Promotion Agreement (CPTA) remains a 
bilateral priority for the Colombian government and private 
sector, and the GOC may consult with you as to how it can 
work together with the Congress to promote its passage. 
 
Democratic Security Advances 
---------------------------- 
 
4. (SBU) Colombia has achieved successes in its fight against 
the FARC, National Liberation Army (ELN) and emerging 
criminal groups.  The rescue of 15 high-profile FARC hostages 
in July 2008, including three Americans, and the deaths of 
key FARC leaders highlight Colombia's progress in security. 
Colombian security forces captured or killed a number of 
mid-level FARC leaders, and reduced the space in which 
terrorists can operate freely.  A record number of FARC 
members deserted in 2008--including mid and high-level 
commanders.  Total demobilizations of illegal armed groups 
reached 3461 in 2008--primarily from the FARC--making it the 
highest level of demobilizations in Colombia's history. 
 
5. (SBU) With USG help, in 2008, Colombia again set records 
in eradication and interdiction of drugs, while further 
reducing murder and kidnapping rates.  Colombia extradited a 
record 208 criminals, narcotraffickers and terrorists to the 
United States in 2008, including 15 senior ex-paramilitary 
leaders; Colombia has already extradited more than 20 
criminals in 2009.  The number of homicides fell for the 
sixth consecutive year, dropping to 16,140 (or 33 for every 
100,000 habitants), 45 percent lower than 2002 levels. 
 
Regional Context 
---------------- 
 
6. (SBU) Colombia sees itself as a key U.S. ally in an Andean 
region increasingly hostile to U.S. values and goals. 
Ecuador broke diplomatic relations with Colombia after a 
military strike in March 2008 against FARC Commander Raul 
Reyes's camp just across the border in Ecuador.  The GOC 
maintains a moderate tone with Ecuadorian President Correa, 
despite his often angry rhetoric.  Ecuador recently imposed 
strict requirements on Colombians wishing to travel to their 
southern neighbor. 
 
7. (SBU) Relations with Venezuela are now stable, and have 
improved since Venezuela recalled its ambassador following 
the Reyes attack.  Presidents Uribe and Chavez met in late 
January 2009 in Cartagena, announcing several vague economic 
cooperation agreements.  However, Colombia remains wary of 
Venezuelan ties to the FARC, as evidenced in the computers 
found in the Raul Reyes camp.  Beyond the Andes, Colombia is 
helping Mexico to combat terrorism, narcotrafficking and 
other criminal activity.  Colombia is also working with 
Mexico, Chile, Peru and Brazil to promote economic 
integration and strengthen democratic institutions in Latin 
America.  Colombia has also offered to send engineering and 
special forces to Afghanistan under NATO auspices, and 
contributes troops to the Multi-National Observer Forces in 
the Sinai. 
 
Serious Challenges Ahead 
------------------------ 
 
8. (SBU) Despite advances in security and development, 
challenges related to violence, narcotrafficking, 
displacement, human rights, labor rights, and minority groups 
remain.  We estimate the FARC has some 9000 fighters in the 
field, and organized narcotrafficking groups continue to 
cause violence.  Internal displacement due to the armed 
conflict remains serious, with three million displaced by 
violence since 1995.  Deep historical social divides make it 
difficult for millions from the Afro-Colombian and indigenous 
populations to benefit fully from security and economic 
gains.  These minority groups suffer from limited education, 
health care, and employment opportunities, and 
disproportionate forced displacement in the mostly isolated 
rural areas where they reside. 
 
9. (U) Through the Center for Coordinated and Integrated 
Action (CCAI), the GOC is recovering territory previously 
held by illegal armed groups and establishing government, 
state services and securing vulnerable communities.  In 2008, 
the GOC reestablished a government presence in all 1098 
municipalities and all the country's mayors once again 
resided within their municipalities.  A coordination plan for 
Macarena--the historic heartland of the FARC--aims to 
establish a permanent military, police and civilian presence 
in post-conflict areas--some of which have never seen a 
viable GOC presence.  Challenges remain, as resource, 
security and staffing shortfalls continue to limit the 
initiative.  The United States, through USAID, MILGRP and 
NAS, provides assistance to CCAI. 
 
USAID: Aiding Communities At Risk 
--------------------------------- 
 
10. (U) Under Plan Colombia, the USG has provided more than 
$950 million in economic and social assistance via USAID. 
USAID's initiatives have delivered legal jobs, social 
services, and development in narcotrafficking and conflict 
zones.  We are reintegrating thousands of Colombians who have 
demobilized, abating child recruitment into armed groups, and 
increasing social services for victims of conflict.  We are 
restoring citizen confidence in governance, improving the 
criminal justice system and institutions, increasing the 
poor's access to justice, and promoting human rights through 
investigation and prosecution of human rights and 
labor-related cases.  These programs focus on communities at 
high-risk of violence, provide legal and psycho-social 
assistance, and strengthen key Government oversight and 
judicial institutions. 
 
11. (U) USAID's alternative development program is a key 
 
component of our counter-narcotics efforts.  It promotes 
sustainable economic opportunities in regions vulnerable to 
drug production and conflict.  These programs create jobs and 
economic opportunities in areas recently retaken from illegal 
armed groups and build the social infrastructure to mitigate 
future conflict.  USAID is expanding social and economic 
opportunities and improving livelihoods for Afro-Colombians 
and indigenous communities disproportionately affected by 
conflict.  These programs provide jobs, education, health 
care housing, and social services for these vulnerable 
populations. 
 
DOJ: Providing Justice Reform 
----------------------------- 
 
12. (U) The Department of Justice (DOJ) coordinates a 
multifaceted program focused on strengthening the Colombian 
criminal justice system, its institutions, processes and 
personnel.  This program involves six major areas: 
implementation of an accusatory system; human rights 
investigations and prosecutions; Justice and Peace 
investigations and prosecutions; complex areas of criminal 
law; improved forensics capability; and witness protection. 
The bulk of the assistance is provided through training and 
technical assistance to the Prosecutor General's Office. 
 
NAS: Eradicating, Training, Nationalizing 
----------------------------------------- 
 
13. (U) We made real strides in battling narcoterrorism in 
Colombia in 2008.  The most recent U.S. figures for cocaine 
production in Colombia show a 24 percent reduction in 
production since the peak year 2001.  In 2008, Colombian 
security forces seized 245 metric tons of cocaine and coca 
paste, eradicated 230,000 hectares of coca and destroyed 3667 
drug labs.  We kept hundreds of metric tons out of the United 
States.  We have reduced the funds available to the FARC and 
other criminal groups for the purchase of weapons and 
explosives, corruption of public officials, and coercion of 
local populations. 
 
New Initiatives 
--------------- 
 
14. (SBU) We are working with the GOC, other governments, and 
international organizations to develop an initiative to 
consolidate the gains made to date in key conflict areas. 
The initiative builds on current and past USG and GOC 
programs, and involves close coordination of security, 
eradication, alternative development, energy, and 
institutional development programs.  The initiative's primary 
goal is to provide incentives for Colombian citizens to join 
the licit economy in the conflict zones plagued by coca 
cultivation, narcotrafficking and illegal armed groups. 
These targeted regions produce roughly 80 percent of the coca 
in Colombia and serve as major trafficking hubs, with a high 
incidence of violence and displacement. 
NICHOLS