Parasites and Predators: Guerrillas and the Insurrection Economy of Colombia.

• Author: SUAREZ, ALFREDO RANGEL

" ... the negative impact of the violence and insecurity generated by guerrilla activities has tended to be more serious for Colombia since 1990 as its economy has opened up to globalization, than when the economy remained relatively insulated from international competition."

From issues of foreign policy and the administration of justice to the way that citizens travel within their own country, the activities of Colombia's guerrilla movement today permeate every aspect of Colombian government and civil society. The insurrection's 40 year-old conflict with the state is today largely responsible for roughly a quarter of all kidnappings worldwide, large-scale destruction of communities and infrastructure, a significant part of Colombia's more than one-half million displaced persons and chronic "brain drain," as some of the nation's most educated emigrate to safer nations. In addition to becoming a force politically, Colombia's guerrilla groups have established broad-based underground economies with regular expenses, coherent flows of income and systematized investments both in illicit economies and within Colombia's formal economy. Now, at the beginning of the 21st century, as Colombia opens up economically to the world, the guerrilla economy will increasingly threaten Colombia's formal economy.

The recent economic prosperity of Colombia's guerrilla groups places them among the most outstanding examples at the international level of successfully self-financed insurgent groups.(1) Twenty years after their emergence in the 1960s, Colombian guerrilla groups have embarked on a decisive stage of economic ascent that has allowed them to sustain tremendous growth in their ranks as well as territorial expansion and a significant increase in their military power.(2)

The two main insurgent groups, the Colombian Revolutionary Armed Forces (FARC) and the National Liberation Army (ELN), have succeeded in designing and applying multiple strategies for acquiring and utilizing financial resources amounting to roughly US$ 1.5 million a day.(3) These monies are secured in different ways, depending on the degree of control the guerrillas have attained in each territory.(4) Since the early 1980s, rebels have systematically drained large amounts of resources from some of the most prosperous sectors of the national economy, many of which are linked to foreign markets and generate revenues in foreign currencies.

But these important economic activities are not the insurrection's only sources of income. Guerrilla groups have been progressively widening the radius of their activities, and many sectors of the economy are now paying taxes to the guerrillas. In fact, in areas controlled by the guerrilla forces, there are scarcely any businesses that do not pay tribute to these armed groups. Refusal to pay these forced contributions can result in the kidnapping of business owners, family members or officials of an organization. Kidnapping and ransoming by the guerrilla--which victimize hundreds of people every year--also function as an independent source of income for the guerrilla groups which is not necessarily linked to non-payment of compulsory contributions. Beyond extortion and kidnapping, the guerrilla groups profit from cattle theft, bank robbery and the removal of funds from city administrations. Furthermore, a large part of these monies produce interest and other earnings through a variety of money-laundering mechanisms.

Colombia's guerrilla groups, naturally, face a range of ongoing expenses, consisting chiefly of the costs of maintaining and expanding their combat fronts and undertaking the construction of a military industry The groups also allocate funds for political action, for the maintenance of a precarious social security system for the guerrillas and their families and for carrying out occasional infrastructure work in remote regions.

Yet a very large portion of their resources, perhaps as much as 80 percent, is not spent immediately on combat activity. Rather, it is invested in diverse ways in the formal economy, on the local, national and international levels. Investments serve different purposes at each of these levels. In towns and cities, investment in small businesses serves to generate revenues and to create intelligence and support networks. At the national level, investment in big business or in the financial sector allows the groups to maintain a steady, secure cash-flow. At the international level, deposits in hard currency afford them access to the international black market in weapons, allow them to finance diplomatic activities and permit them to maintain the strategic resources necessary for meeting the demands of internal warfare.

While the volume of resources that the guerrilla groups extract from the formal economy is not quantitatively great when measured against the larger Colombian economy, its effects on certain regions and economic sectors are considerable. By the same token, as we will see later, the negative impact of the violence and insecurity generated by guerrilla activities has tended to be more serious for Colombia since 1990, as its economy has opened up to globalization, than when the economy remained relatively insulated from international competition. The escalating war in Colombia, accompanied by ever-greater pressure from the guerrillas on the national economy, threatens the long-term viability of the open economy.

This essay first presents a brief examination of the evolution and current situation of the. guerrilla phenomenon in Colombia. It next analyzes the guerrilla economy as a function of its expansion and territorial control. It then examines its structure and sources of income--which include drug trafficking, various forms of extortion and kidnapping--as well as its expenses and investments. Finally, it presents a discussion of the various impacts of this underground economy on the larger Colombian economy.

GUERRILLA GROUPS IN COLOMBIA

Colombia has experienced an internal armed conflict for the past 40 years. Each of the two main guerrilla groups emerged out of the partisan violence of the 1950s. In fact, the FARC was originally a farmers' defense coalition which formed spontaneously in the 1950s in resistance to the state's oppression of a minority conservative group. This guerrilla group later established ties to the Colombian Communist Party, which lent the group a Marxist-Leninist ideology that, informs its politics even today, even though the FARC severed its ties with the party several years ago. The FARC started acting as an insurgent guerrilla group in the mid-1960s. The ELN, born around the same time, was created by university students inspired by the Cuban revolution and strongly influenced by Che Guevara's theory of focal guerrilla warfare. The group developed also with the significant participation of Christian groups informed by the so-called teologia de la liberacion ("liberation theology").

After a long period of hibernation in the 1960s and 1970s, during which its growth was very precarious and its presence limited to jungle regions and the colonization of the agricultural frontier, these groups reached a period of highly accelerated growth beginning in the 1980s. The FARC grew from 900 fighters and nine combat fronts at the start of the 1980s, to 12,000 to 15,000 men on 60 fronts by the end of the 1990s. Over the same period, the ELN grew from 70 fighters to nearly 3,500 and from three to some 30 battlefronts. Its territorial expansion has been very significant. In 1985 the guerrilla group was present in 75 out of a total of 100,000 municipalities in Colombia and by 1998, their presence was felt in nearly 600 municipalities, though they do not necessarily have control over all of these areas. Nonetheless, their influence is very strong and they exert some degree of control over nearly 200 municipalities.(5) The urban middle-class and intellectual sectors, which supported the armed struggle during the period of gestation and growth of the FARC and ELN, has ceased to be sympathetic in recent years. Subsequently, the groups' social and political support bases have been grounded primarily in the countryside.

Every year some 3,500 people die in Colombia as a direct result of the actions of the armed insurrection and the counter-insurrection of both the state and private paramilitary groups.(6) The FARC and ELN rarely fight one another; the majority of the conflict occurs between one of the two groups and right-wing paramilitary groups, state armed forces or unarmed civilians. Two-thirds of the dead are civilians, and only a third are combatants killed in armed confrontations between the different factions.(7) The number of victims may be much higher, however, if we take into account several key facts: many homicides occur in a gray area where insurrectionary actions are mistaken for common criminal activity; there are other murders that do not appear politically motivated but are related to the conflict; and many of the different factions hide some of their own dead.

In recent years, the FARC has shown a growing capacity for military action. This is evidenced by the group's successive capture and destruction of fortified state military bases in different parts of the country, its success in field combat and its seizure of a number of towns. The FARC has captured and currently holds 500 members of state forces as prisoners of war.

In general, the political platforms of these guerrilla groups contemplate radical reforms, including the nationalization of strategic sectors, a state-directed economy, agrarian reform, political and institutional reforms--the nature of which is still not very clear--and military reform. Even as both the FARC and ELN have voiced their intention to arrive at an agreement with the state to end the armed conflict through political negotiation, the FARC have continued to develop war plans. These include a significant arms race...