Swallowing frogs, kissing the ring, and doing the responsible thing
Why did Donald Trump want to meet with Gustavo Petro in Washington? Probably because it was cheaper to scold Petro face to face; to ask for real commitment and actions that comply with the U.S. agenda; and to bring him to the White House to kiss the ring, instead of intimidating him with the U.S. Marines. Why did Petro want to meet? Likely because, after Nicolas Maduro was seized from Caracas, and rumors that some actions were being prepared for Colombia too, it was personally and politically cheaper to make amends, and to end his term this August without major incident. This was good old Realpolitik, then, on both sides. U.S. Secretary of State Marco Rubio stated: “We don’t want the actions of a president, whose term will end soon, to damage the United States’ relationship with Colombia. This is a very close relationship that has been built over the last 50 years, and a relationship that matters commercially, diplomatically, militarily and in security.”
Colombian institutions remain in a state of conflict. In December, Congress rejected an invasive tax reform. The government opted for an extreme measure: declaring an economic emergency, used to implement a range of reforms, including reviving the tax reform. Panic ensued in households and firms, as they were required to begin paying the confiscatory wealth tax rates, and other taxes. The country is waiting for the final constitutionality ruling.
The number of viable presidential candidates has narrowed to Iván Cepeda, Abelardo de la Espriella, Sergio Fajardo, Paloma Valencia and Juan Carlos Pinzón, from the nearly 100 candidates in December. Only Fajardo and Pinzón have executive experience. Cepeda, De la Espriella and Valencia don’t, yet are the most popular at the polls. Anything could happen, and the current polls, of questionable quality, don’t leave us with a clear sense of direction. We’ll have to wait until March 8 to gauge Colombians’ preferences, where Cepeda could not participate.
Under the Trumpian-Rubio ruling, Venezuela will likely transition from 21st-century socialism to a 20th-century oil-producing enclave, and from a Cuba-China-Russia-Iran ally to a U.S. protectorate. That’s not the end of the story for northern South America. It all comes down to place. Two hundred years ago, Simón Bolívar envisioned Gran Colombia, comprising present-day Colombia, Ecuador, Panama and Venezuela. We seem to be witnessing the reemergence of Bolívar’s dream in a Trumpian Gran Colombia of sorts, a zone critical to defending the Lebensraum of the United States to the south. The bad actors, both geopolitical and criminal, will be combated vigorously, and compliance will be monitored. The new U.S. protectorate may not be restricted to Venezuela, but may extend to Ecuador, and comprise the once-dreamt-of country of Bolívar delirium.
Market expectations were trumped by a bold Central Bank Board January 30th move to hike by 100 bp. Four Board members voted for a 100 bp hike; one to keep the policy rate constant; and the remaining two for a 50 bp cut, oblivious to the impact the enormous minimum wage hike could have on inflation. It’s in the best interest of all Colombians that the anti-independent CB stance doesn’t prosper during the presidential debates, and negatively influence the electoral outcome.
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