Colombia Becomes the New Star of the South

Mac Margolis
Newsweek
July 16, 2010

In a time of emerging-market juggernauts, Colombia gets little notice. Its $244 billion economy is only the fifth-largest in Latin America, a trifle next to Brazil, the $2 trillion regional powerhouse. Yet against all odds Colombia has become the country to watch in the hemisphere. In the past eight years the nation of 45 million has gone from a crime- and drug-addled candidate for failed state to a prospering dynamo. The once sluggish economy is on a roll. Oil and gas production are surging, and Colombia’s MSCI index jumped 15 percent between January and June, more than any other stock market this year.

This is more than a bull run. Since 2002, foreign direct investment has jumped fivefold (from $2 billion to $10 billion), while GDP per capita has doubled, to $5,700. The society that once was plagued by car bombs, brain drain, and capital flight is now debating how to avoid “Dutch disease,” the syndrome of too much foreign cash rolling in. Stable, booming, and democratic, Colombia has increasingly become “a bright star in the Latin American constellation,” as emerging-market analyst Walter Molano of BCP Securities calls it. Michael Geoghegan, CEO of HSBC, recently picked Colombia as a leader of a nascent block of midsize powers, the CIVETS (after the smallish, tree-dwelling cat), which stands for Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa. “These are the new BRICs,” he said...

...But saying no to Uribe was hardly an automatic s’ for Santos. Low-key and bureaucratic, Santos was often dismissed as a ventriloquist’s doll with no script of his own. Instead, pundits and pollsters touted the rise of Antanas Mockus as the new face of Colombian politics. It turned out that Colombians were not looking for personalities but continuity. Tellingly, all the half-dozen or so serious candidates ended up endorsing the basics of the Colombian equation: security, the free market, and a rules-based democracy. Mockus himself at times sounded more hawkish than Uribe, trumpeting his crime-busting credentials as mayor of Bogotá and vowing to give no quarter to guerrillas and terrorists. Voters apparently wanted the original policies, not a copy, and, absent Uribe, went for the man who made Uribismo work. Santos garnered a record 9 million votes, a triumph larger even than his predecessor’s 2006 landslide. “Whether on security, democratic stability, or vibrancy, the strength of Colombia’s democracy is there for all to see,” says Eric Farnsworth, vice president of the Council of the Americas...

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