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Colombia's leading presidential candidate Ivan Duque says limits on trade would hurt emerging economies


Ivan Duque is currently leading in polls ahead of May 27 vote. Investors' favorite though some proposals have raised eyebrows. Play Video - Colombia's Duque Says Limits on Trade Would Hurt Emerging Economies

By Matthew Bristow

Petroleumworld 05 04 2018

Five years ago, Ivan Duque was a little-known official at a Washington development bank, commuting from the leafy suburb of Chevy Chase. Today he's the leading candidate to become president of Colombia.

If he wins, the challenges will be exceptional: hundreds of thousands of hungry Venezuelans pouring into Colombia's cities, a countryside overrun by the private armies of cocaine traffickers, an unraveling peace process with Marxist guerrillas and a stalled $300 billion economy.

That a 41-year-old lawyer with limited political experience finds himself the likely president of a chaotic country of 50 million people is testament to the influence of his mentor, Alvaro Uribe. As president from 2002 to 2010, Uribe inflicted a series of military defeats on the guerrillas and presided over an economic boom. He led opposition to the 2016 peace deal signed with the guerrillas, which was praised abroad but accused by many Colombians of granting undue leniency to those with blood on their hands.

Duque is expected to do what he can to take the deal apart. It's also widely assumed that Uribe will be the power behind the throne.

“Duque's youth and the fact that the political roles he's had he owes to Alvaro Uribe mean he's likely to have a great degree of dependence on him,” said Patricia Munoz, a professor of political science at Bogota's Javeriana University.

Generational Change

Energetic, with prematurely graying hair, Duque makes no secret of the relationship: His website devotes attention to Uribe's role in his career. But he's reaching out to more moderate voters and declares himself the torch bearer of a generational changing of the guard.

Recent polls show he has about 40 percent support, compared with about 30 percent for his closest rival, the leftist former mayor of Bogota, Gustavo Petro. The first round is on May 27, with a likely runoff three weeks later.

While many of Uribe's closest associates have been jailed or investigated for links to organized crime, Duque is seen as free of scandal. Even opposition Senator Ivan Cepeda, one of Uribe's harshest critics, said Duque is “clean, so far as I can tell,” in reply to written questions.

Duque's father was governor of Antioquia, the nation's richest province, as well as head of the national electoral authority and a member of the central bank's board. Duque is married to a lawyer with whom he has three young children.

Studied Abroad

Educated at expensive bilingual schools in Bogota, Duque went on to get a Colombian law degree. He later studied in the U.S. and received an LLM in international legal studies in 2004 from American University in Washington and a master's in public policy from Georgetown in 2007.

He quickly got a job as an adviser to Juan Manuel Santos, who was finance minister and is now president. In his mid-twenties, he joined the Inter-American Development Bank in Washington, where he worked alongside Uribe allies.

As head of the bank's Culture, Creativity and Solidarity Affairs Division, he oversaw projects such as an exhibition about the life of Brazilian soccer star Pele. Opponents have questioned whether this is adequate preparation for leading Colombia, but never having run a ministry or governed a province also makes it hard to tie him to scandals, allowing him to say he has “zero experience... of corruption, zero experience... of clientelism.”

Economic Doldrums

Colombia's economy has been in the doldrums since oil prices started crashing in 2014, with gross domestic product growing at the weakest pace since 2009 last year. Duque's plans to turn it around have drawn a number of skeptical responses.

In a March interview with Bloomberg TV, for example, he said he can revive investment by cutting taxes on companies and pay for this with a crackdown on tax evasion. He's pledged to “adjust” the balanced-budget act, potentially alarming some investors in the nation's bonds.

Fitch Ratings said last year that alterations to the act risk damaging the nation's credibility. The central bank has also opposed such a move. Fitch and Moody's Investors Service rate Colombia two notches above junk, while S&P Global Ratings has the country one notch above.

Former Finance Minister Guillermo Perry said in an interview that to cut taxes and bet on lower evasion to balance the books would put Colombia's financial health at risk. “To leap out of the window and then hope that your parachute opens seems dangerous,” he said.

1,700% Return

Duque's proposal to introduce six days a year free of valued added tax also raised eyebrows. Jorge Restrepo, who teaches economics at Javeriana University, described it as “utter nonsense,” adding, “people would postpone purchases to those days, creating an artificial cycle.”

But investors are giving Duque the benefit of the doubt, perhaps because the Colombian stock market returned 1,700 percent in dollar terms, the most in the world, under Uribe. A survey by Nomura found that Duque is the most “market-friendly” among the leading candidates, while Petro's election would trigger a selloff in the peso.

But unlike Uribe, whose government's finances were buoyed by the tripling of oil prices during his first term, Duque is likely to be strapped for cash.

Then there's security: Dissident guerrilla groups and private armies of drug traffickers are fighting for territory abandoned by the Revolutionary Armed Forces of Colombia, or FARC, with whom a peace deal was signed. The law says the accord must be implemented for 12 years, but Duque may seek ways to undermine it.

“Duque, if elected, would find every way possible to slow-walk that commitment and to do the bare minimum necessary to honor the accord's commitments,” said Adam Isacson, a Colombia expert at the Washington Office on Latin America. He added that Duque would probably extradite wanted FARC members to the U.S., leading to a growth of dissident guerrilla groups -- in effect, he said, killing the peace process.

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Story by Matthew Bristow from Boomberg. 05 03 2018

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