Colombia: Don’t jump the gun over a return to civil war

Fears that the narrow rejection of Colombia’s peace accord with FARC insurgents will tip the country back into civil war are overblown. Peace is inevitable, sooner rather than later. But it is equally farfetched to think that an end to the conflict will trigger an economic boom. Investors need to focus on issues like endemic corruption and criminality.

President Juan Manuel Santos is pulling out all the stops to salvage the agreement which, after four years of arduous negotiations with the FARC, was shockingly rejected in a referendum on 2 October. Santos staked all his political capital on terminating Latin America’s longest-running insurgency.

Santos didn’t even need to put the peace accord to a vote but calculated that a referendum triumph would best legitimise the deal. The gamble failed, leaving his country in an eerie twilight zone between war and peace, a limbo in which the FARC’s 6,000 fighters are neither reformed outlaws nor bandits galloping off back into the mountains.

Fortunately there are already some positive signs. Santos has wisely extended a bilateral ceasefire between the military and the FARC until 31 October. That gives the parties four weeks to reach a solution. His award of the Nobel peace prize will energise his drive to finish the job.

An even more encouraging signal is that Santos has opened talks with former President Alvaro Uribe. His vociferous opposition to the deal was the crucial factor in the referendum defeat. For the past six years they have been bitter enemies. That Uribe would meet with Santos seemed as remote a possibility as did Santos shaking hands with FARC supreme commander Timoleón Jiménez, alias Timochenko, a year ago in Havana.

Uribe voices the demands of conservative Colombians. He wants FARC commanders to do prison time for their involvement in massacres and cocaine-trafficking, and army troops to be excluded from the transitional justice system. Uribe convulses with rage at the prospect of seeing members of the FARC, who killed his father, holding ten unelected seats in Congress until 2026.

Resolving the impasse will depend on whether Uribe and Santos can set their differences aside. Santos will toy with a number of possible modifications to the treaty but reconciling Uribe’s demands with the points already agreed with the FARC will prove tricky. FARC commanders have no appetite for going to jail, less still expose themselves to face trial for drugs-trafficking and the risk of being extradited to the US.

Equally though, few doubt that the FARC’s commitment to peace is genuine. Its elderly leaders are eager for the pleasures of civilian life. Some of Uribe’s demands are more over semantics than substance. It is still more likely than not that a modified peace agreement will be forged.

It is a mistake though to overestimate the scale of the eventual peace dividend. Predictions that an end to the civil war will boost economic growth by up to three percentage points are exaggerated. A deal won’t directly resolve a host of other problems for businesses. Difficult bureaucracy, woeful infrastructure, corruption, and rural social unrest that is completely unrelated to the war. In time these problems will become even more evident.

Nor will a peace deal—whatever shape it eventually takes—eliminate crime and insecurity. Many paramilitary fighters who demobilised in the 2000s joined gangs or formed new ones, many of which have become a menace. It is naïve to think that some FARC members won’t consider similar options during life outside their guerrilla columns.

As talks continue, hopes for peace will brighten, dim and brighten again. Investors shouldn’t worry about the details.