NO LOST CAUSES - INSIDE DE TRANSFORMATION OF COLOMBIA

NO LOST CAUSESInside the transformation of Colombia

Remarks by Álvaro Uribe VélezJanuary 2014

Issues to address1. A historical problem2. Facing the problem: From

campaign to Government3. Generating change in times of

crisis4. Colombia current challenge5. Peace process with FARC

1. A historical problem“Every creative journey begins with a

problem”Colombia in 2002 was a fragile State

Security

28.837 homicides

2882 kidnappings

69 homicides per 100.000 habitants

1645 terrorist attacks

350 mayors out of their municipalities

158 municipalities without police

Economy

Average Economic Growth 1994-2001: 2.1%

GDP per Capita: US$2377

Investment as % of GDP: 16.5%

Exports: US$11.975 million

FDI: US$2.100 million

Inflation: 6.99%

Fiscal balance: -3.2%

SocialUnemployment: 16.2%

Health Coverage: 25 million Colombians.

Pension affiliates: 4.5 million

Poverty:57%

Education Coverage: Primary 97%, High school: 57%, University: 24%.

Mobil Phone Lines: 4.6 million

Internet coverage: 1.9 million

The Colombian Paradox: a long and stable democracy in a permanent threat from terrorist groups, drug dealers and organized

crime…

1. A historical problem

Colombia faced a Confidence DeficitThe elusive quest for

peaceMany governments exhausted all their

political capital attempting to reach

peace through political dialogue…the result was military strengthening

from illegal armed groups and a rapid growth in

their criminal activities (68% thought the

country was going in a negative track)

Terrorist Groups (Guerrillas and

Paramilitaries) had created a sense of

defeat in the Colombian people.

Fear impacted in the Colombian people

Mindset

The lack of investmentThe drain of human

capitalThe sense of danger in

Colombian roads.The expansion of

massive kidnappings created an emotional

domino effect

2. Facing the problem

Vision

Policy

PRINCIPLES

CommunicationInnovation

Leadership

Results


VISIONOur vision was to build a Comunitary State:

CONFIDENCE was our main goal Without Confidence:

No investment Unemployment Lack of opportunities Brain Drain (Young people wanted to leave without a

return ticket) Three main Policies:

Democratic Security Investment with fraternity Social cohesion

For the First Time a National Development Agenda had Security as a driver of Development (Security = Investment = Social Cohesion)

No more a debate between left and right


POLICY• Democratic Manifiesto (100 Points)

Democratic Security

Security for All

Fight all forms of crime

Security without Martial Law

Security with liberties and Human Rights

Victims recognition

Investment with Social

Responsibility

Investor Security (Human, Legal and Political)

Sound Macroeconomics

Incentives

Access to markets

Competitiveness Factors (Infrastructure, Connectivity,

Banking,)

Social CohesionEducation Revolution

Health with coverage and quality

Access to credit (Banca de oportunidades)

Vocational Training

Conditional Cash Transfers


Principles

Political Pedago

gyBuild a citizen

coalition

Macro Vision &

Micro Manageme

nt

Permanent dialogue

with citizenship.

Beyond traditional

politics (Colombia

FIRST)

Accountability

Security as a

Democratic Value


MessagesSecurity as a Democratic Value

Strong hand with a big heart

To work, work and work

Against corruption and traditional politics

Communication


InnovationBefore

Presidents inside the office

Presidents not engaged in details

Lack of an effective vision communication

Solve problems through political

channels

Political calculations

Secretaries appointed by Political

Representation

Secretaries rotated on a permanent basis

Luxurious governments

Congressional Governance

InnovationPresident with the People(Consejos Communitarian)

Macro vision & Micro Management

Three eggs

Face problems with regular citizens

Pedagogic policy formulation

Secretaries appointed by experience

4 year term secretaries

Austerity

Citizen Governance

2. Facing the problemInnovation in SecurityRecovering

SecurityMacro Vision and Detailed Follow up:•Daily commitment to monitor security in every region.

•How citizens had the President Mobile Phone Number

Early Victories :•Road caravans

•Massive kidnappings are over

Strategic Force Integration•All Forces working together.

•Share success

National Informant Network•Citizens became active in denouncing criminals

•Reward Mondays

Commander in Chief assumes responsibility•The Granda Story

•Operation Fenix: Fire the Air Force Commander

•Operation Jaque: The pressure for a humanitarian exchange and the final outcome

Smart Weapons:•The importance of strategic warfare

Extradition:•The decision to extradite the Paramilitary Kingpins

2. Facing the ProblemLeadership

Mobilization

Drivers

306 Communita

rian Councils

Weekly Security Councils

52 Economic dialogues

Result Driven

Administration

Leading by example

Direct Democracy

(Sate of opinion)

Determination to find solutions

Communication with the truth


Moments of truth:1. Nogal Bomb: Bogota cries but never surrenders.2. Killing of 11 regional senators: Facing their families when

rejecting humanitarian exchanges.3. The rescue of Fernando Araujo.4. Meeting Chavez after the Bombardment in Ecuador: a

debate in live T.V.5. The rescue of National University President.6. The story of Emmanuel.7. The military agreement with the U.S.8. Operations FENIX and Jaque.9. Extradition of the paramilitary leaders.

Leadership: Tough Decisions

Structural Elements

Political Stability

Sound Macroeconomic Management

Human, Political and Legal Security

Competitive elements

Investment incentives

Access to markets (Canada, EU, EEUU, MERCOSUR, etc)

Free Trade Zones

Logistical advantages

Legal stability agreements

Comparative elements

Investment GradeStable

institutionsGrowing internal

demand

Complementary

Human CapitalNew World Class

Sectors incentives

Strong financial system

We made Colombia a viable country for FDI due to a multiplicity of factors…

2. Facing the problem: Investment Confidence

We had a consistent and coherent investment promotion agenda…

Social Cohesion was our ultimate objective

Social Cohesi

onEducation Coverage

and quality

National Learning System –

SENA-

Conditional Cash

Transfers

Access to Finance

(Banca de Oportunidades, Micro-

Credit)

Financial Sector

Downscaling

Public Utilities

Coverage

Rural Developme

nt

Breaking the

communication and

technology gap

2. Facing the problem: Social Cohesion

In 2002 it was believed that by

2009 Colombia oil production will not be able to attend national demand

In 2003 the oil and gas sector

restructuring was designed

ECOPETROL undertook a strategy

shift to become a more competitive and professional

corporation

The National Hydrocarbon Agency

was created

Between 2002 and 2010 341

exploration and production contracts

were signed

In 2007 ECOPETROL was capitalized by 10% through local capital markets.

486.000 Colombians bought shares

Between 2002 and May 2010 447 new fields were explored

From 2002 to 2010 successful

exploration passed from 40% to 61.4%

Seismic exploration in the country

(Onshore, Offshore and 2 dimensions) increased by more

than 250%

Colombia is currently close to produce 1

million oil barrels per day

Success triggers

Security: Investment, exploration

Government Reform: New ECOPETROL and

ANH

Investment target policies: New players and new exploration

and production contracts

The case of the oil sector in Colombia: Change is possible

2. Facing the problem: Oil and gas case story


Indicator 2002 2010

Homicides 28.838

15000

Kidnappings 2.882 228

Homicides per 100K Habitants

69 35

Terrorist attacks

1.645 250

Municipalities without mayors

presence

350 0

Municipalities without police

158 0

Security EconomyIndicator 2002 2010

Average Economic Growth

2.1% 4.3%

GDP per Capita

2.377 5300

Invest % GDP

16.5% 24.6%

Exports US$11.000

US$ 39.000

FDI US$2.100

US$ 7.000

Inflation 6.9% 2.5%

SocialIndicator 2002 2010

Unemployment 16.2% 11.6%

Health Coverage 25.1 million

43.1 million

Pension affiliates 4.5 million

7.1 million

Poverty 57% 37%

Education coverage (Primary,

Hs, University)

97%57%24%

100%79.4%35.5%

Mobile phone users

4.6 million lines

41 million lines

The combination of our Policies produced significant results: Lowest violence levels in two decades, highest levels of social coverage in Colombian History and highest levels of

Exports and FDI in more than 5 decades.

Results


Leadership, governance based on citizen support and political Will, helped built significant historical changes in strategic sectors: Reform the oil and gas sector:

1. Colombia is close to produce 1 million barrels per day from 250.000 in 2002. 2. Ecopetrol Reform 3. Created the National Hydrocarbon Agency

Reform the Telecom Sector:1. Restructure the Colombian Telecommunications Agency

Reform the Colombian Social Security Agency More than 2000 criminals were extradited Paramilitary structures were dismantled FARC suffered its biggest historical defeats Colombia experienced its largest historical FDI flows Biggest historical reduction in illicit crops More than 10 FTA’s signed and negotiated Largest historical health and education coverage Largest historical credit expansion Largest historical tourism flows to the country

Results

2. Facing the problem: our vision for the financial sector

The role of governments for financial

services expansion and private sector development

High investment

levels

Inclusive and

sustainable social

policies

Middle class expansion

Sound Macroecono

mic performanc

e

Rule of Law


Policies and

initiatives

Micro-finance

expansion.

Bank of opportuniti

es

Consumption credit

expansion

Credit Card

Penetration

Bancarization

Portfolio Quality

Financial services in Colombia 2002-2010

Indicators 2002 2010Delinquency rates 9.5% 4%

Coverage for bad loans 80% 125%Solvency 13.8% 15.2%

Colombian Financial Sector Penetration 2002-2010: Quantity and Quality

Financial inclusion, quality of life and consumption….

Sales 2002 2010Motorcycles 73.000 470.000Refrigerators 628.000 1.4 million

Cars 56.630 300.000Computers 500.000 2 million


Bank of opportunities: Lessons learned

PartnersNon Financial intermediaries Banks NGO’s Cooperatives

Functional elementsNon Financial Intermediaries Saving Accounts Account opening red

tape reductionState of the art

information systemsDifferential interest

rates Mobile Banking

PrinciplesDo not make sustainable unsustainable projects

Sustainable interventions for long term sustainability Never distort markets

Why Bank of OpportunitiesCorrect market failures Social and private sector improvement.

Public-Private Alliance Government provides the regulatory framework and pro market incentives to insure sustainable and profitable financial products

Private sector expand coverage, products and services to the non financially included population.


3. Change in times of crisis

Lessons

Lincoln• Get out of the

office• Honesty• Courage• Strong Hand• Commit to

results• Preach a vision• Talk to people

directly

Kotter• Honesty• Energy• Competence

Moss Kanter• Consistency• Congruence• Competence• Caring

Security

Maintain Macro-Vision and Micro-

Management

Continue dismantling all

terrorist organizations

Continue dismantling drug cartels apparatus

Strengthen Citizen Security agendas

with local authorities

Economic

Face new trends of currency

appreciationMaintain and

increase FDI flows (Security,

incentives and stability rules)Fiscal Policy to

face new countercyclical

challenges

Increase tax collections

Expand new trade markets through

FTA’s

Social Cohes

ionFight labor

informality and create quality jobs

Insure education and health quality

Expand vocational training coverage

Create Entrepreneurial Family Transfers

program

Political

Judicial reform

Strengthen Democratic Center

Improve local institutional

capacity

New law implementation

(Victims and land)Prevent the

emergence of populist

movements

4. Colombia current challenges

5.Peace talks in Colombia

1. Defining peace: Colombian National Seal has two important concepts: Liberty

and Order A peaceful country requires the right exercise of individual

liberties and a general environment of institutional and social order

In 2002 Colombia lacked both Concepts: 28.000 homicides 2800 Kidnappings 1645 terrorist attacks 350 Municipalities without majors

Our Democratic Security Policy was built to restore institutional order and protect the exercise of individual liberties. It was a policy for peace not a policy for war. The great evidence is that by 2010 homicides were reduced 50%, kidnappings 80% and terrorist attacks by 90%

5.Peace talks in Colombia

2. Our Democratic Security Policy was based on Strong Hand and Big Heart. We conceived Universal Demobilization for all members of

illegal armed groups. We confronted all illegal armed groups with the same

determination and open the door for peace processes. Under clear conditions defined in the Peace, Truth and Reparation Law.

The peace process with AUC was based on: Cease of illegal activities International verification (OAS) Incarceration Anyone who did not cooperate or continued with illegal activities will

lose the privileges and be extradited if any extradition request existed.

No eligibility for those accused for crimes against humanity or crimes different than political delinquent practices.

5.Peace talks with FARC Prevent Big Failures today:

Negotiation without seizure of criminal activities Negotiating Policy with weapons on the table

clearly affects Colombian Democratic Values Allowing political participation to individuals

responsible for crimes against humanity is a wrong message for our democracy

No imprisonment Allowing dictatorial regimes that affect liberties

and support FARC, as guarantors is a bad signal

5. Peace talks in Colombia The Peace process that I would support:What Colombia

thinks68% of Colombians are not

willing to pardon crimes committed by terrorist

organizations

78% of Colombians are against no prison

sanctions for terrorists

72% of Colombians are against political

participation by terrorist groups

My opinions

No impunity for crimes against humanity

Justice, peace and reparation

Immediate release of kidnapped people

Unilateral cease of criminal activities

My opinions

International verification of disarmament

No policy agenda on the table

Reinsertion agenda

Final Thoughts1. Human problems require human

solutions2. Our strategy worked because it

was conceived by the people, by the people for the people.

3. Our esence was pedadogy not demagogy

4. Macro Vision and Micro Management are esential to succed in times of crisis

www.alvarouribevelez.com

Presentations & Public Speaking

NO LOST CAUSES - INSIDE DE TRANSFORMATION OF COLOMBIA