The crisp lines and bright colors of Ecopetrol S.A.’s latest corporate logo contrast sharply with the twisted and blackened wreckage depicted in newspaper photographs after members of Colombia’s left-wing guerilla army, the FARC recently attacked one of the company’s facilities, setting it ablaze. The images of partially destroyed buildings and burnt-out cars serve to highlight the fact that although Colombia’s security situation has improved in recent years, the threat of violence has not disappeared entirely. Rebel attacks continue to plague companies with operations in rural Colombia. With their bright logos, optimistic slogans, and ambitious plans for investment companies like Ecopetrol are now facing the fact that ongoing clashes between security forces and rebel groups are not likely to stop in the near future. Still, even with the violence, these companies are choosing to stay because they hope that short term risks will pay off in the form of long term rewards.
Christian, a Latin America Analyst at a major Boston area economic research group, who asked not to named directly in this article, because he was not authorized to speak with the press on this issue, explained in an interview this week that, when it comes to Colombia, most investors “are starting to become more realistic.” According to Christian, it is becoming clear that “the time for easy gains against the guerillas is over.” People are now becoming aware that “violence is here to stay for at least another five to ten years,” he added.
However, the fact that rebel forces continued to carry out attacks in 2009 and are expected to increase their activity in 2010 does not take away from the fact that security in Colombia has improved dramatically in the last decade. In a recent interview, Mario Chamorro, a consultant, who grew up in a small town in southern Colombia, on the border with Ecuador, explained that more or less, Alvaro Uribe, the country’s current president, has “defeated the guerillas.”
Chamorro explained that during the most violent periods of the 1990s, people from his town were unable to travel to nearby cities to sell their produce or buy supplies, the fear of kidnapping and violence was so high. Many residents, including Chamorro’s grandparents and other family friends, chose to leave Colombia, settling in what they perceived to be safer locations on the other side of the border in Ecuador. Those, like Chamorro, who chose to stay in Colombia began to feel trapped as the battles between the rebel forces and the army started coming closer and closer to home.
“Sometimes members of the FARC would come to our farm to ask for something to eat,” Chamorro said. Maybe for this reason, soldiers from the Colombian army came and accused some of his neighbors of helping the rebels. “The soldiers then raped his daughter, raped his wife, in front of [his neighbor],” Chamorro explained. “The people didn’t know who to support.”
In part due to funding from Plan Colombia, a multi-billion dollar military aid package from the U.S. government, since 2002 the Colombian army has been able to outfit itself with modern weaponry and achieve a series of decisive victories against the FARC. Many outside observers credit Uribe, Colombia’s president since 2002, with largely achieving his two main goals of restoring stability and regaining the trust of investors.
After a string of embarrassing defeats, the FARC and other rebel groups have been beaten to near submission. Only 213 kidnapping were reported last year, down from 2,882 in 2002, when Uribe took office, according to Ministry of National Defense figures. Chamorro explained that while a decade ago night-time travel between major cities was unheard of, now it is very easy to do. “Recently I had the opportunity to take a bus from [my hometown] Pasto to [the nearby city] Cali, and it was O.K.,” he explained. He added that while on the bus he talked to people who said they make the trip on a regular basis without incident. Likewise, oil pipeline assaults in Colombia fell from a peak in 2001, when a single pipeline was attacked 171 times, to about 11 in 2008.
Not only is Colombia’s security situation improving, but its economy is bouncing back quickly from the 2009 recession. According to estimates from the country’s Ministry of Finance, Colombia’s economy is expected to report economic growth of 2.5% in 2010.
Colombia is starting to earn a reputation as being a good bet for foreign investors. The country is now seen as standing out within Latin America for the stability of its legal system and continuity of its policies. Christian, the Latin America analyst, explained that the fact that there is “very little danger of nationalization sets Colombia apart from [its neighbors] Venezuela and Ecuador.”
With the threat of violence more remote, “the benefits [are now seen] as outweighing the potential costs” when it comes to investing in Colombia, Christian explained. According to official government figures, foreign companies’ oil investments in Colombia are expected to reach a record US$4 billion a year in 2010 and 2011, up from around US$3 billion in 2009. In January, Ecopetrol announced plans boost output and increase spending to US$7 billion, an 11 percent increase.
Ecopetrol will develop new projects on 128 million acres of land. The company is moving into territories where rebel groups are known to operate even though it is now clear that the threat of violence has not evaporated. Ecopetrol’s operations continue to be periodically disrupted by sabotage, kidnapping, and other criminal activities. Most political analysts expect that the number of violent terrorist attacks reported will actually increase in 2010.
As Ecopetrol and other oil companies seep deeper into territories controlled by rebel groups, the threat of violence will increase. Ecopetrol has been the target of attack before, and its facilities are likely to be attacked again in the future. As long as Colombia’s government is at war with the rebel forces, Ecopetrol will be trapped in the crossfire. But at least while investors are confident in the oil company’s long-term prospects, putting up with the sporadic kidnappings, pipeline attacks, and gun battles will quickly become just another cost of doing business.
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