Colombians must wait a little longer to elect a new president. With none of the candidates receiving more than 50 percent of the vote in the first round, a runoff is to be held on June 19 between two anti-system candidates: Gustavo Petro, who won 40.3 percent of the first-round vote, and Rodolfo Hernandez, who won 28.2 percent.
Federico Gutierrez, supported by right-wing parties that have governed Colombia during the past four years, who was expected to make it to the runoff, finished third with 23.9 percent. After conceding defeat, he endorsed Hernandez.
This is an unusual outcome for Colombia. Neither Petro nor Hernandez is supported by the traditional parties that have ruled the country for over two centuries.
Both are running on platforms that emphasize change, capturing the enormous discontent that brought people into the streets first in 2019 and then a year ago, in one of Colombia’s most violent protests on record.
There are some similarities with last year’s presidential election in Chile, which was also a clash of populist factions. If the outcome there serves as a guide, the winner should be the candidate able to capture more moderate votes.
The overwhelming support for anti-system candidates is partly the result of the COVID-19 pandemic. The poverty rate rose to 39.3 percent last year compared with 35.7 percent in 2019, and the decrease in inequality of the past decade was reversed.
Some estimates indicate that students lost an entire year of schooling. Inflation in April climbed to 9.2 percent, and the unemployment rate was above 11 percent. Ordinary Colombians are dissatisfied, and support for the government stands at just 27 percent.
However, there is a more fundamental cause of unrest. Politics in Colombia is seen as fundamentally corrupt, with a state that has been captured by predators, as Hernandez has constantly said, or for the benefit of the elites, as Petro claims. Either way, both want to change the system.
Petro has been campaigning to reverse some of the pro-market reforms of the past. He wants to squeeze private pension funds by redirecting contributions to a public fund. The government would use the extra cash to pay for new social benefits, such as a universal basic income and a job program for the unemployed.
He also wants to increase revenues by one-third through a progressive tax reform that would target income, dividends and wealth.
Luis Fernando Medina, one Petro’s main economic advisers, has said that this agenda is not “social democratic” but “socialist.” It is not about reconciling the state and the market, but about empowering the state and redefining its role. One example is the health sector, run by private insurers and providers. Petro wants direct government provision of some health services.
The budget numbers simply do not add up, and markets are naturally worried. Colombia’s 10-year sovereign bonds are selling at 72 cents on the dollar. Petro’s fiscal populism could cost the country dearly in terms of investment, especially in today’s volatile global economy.
To calm the waters, Petro said that he would appoint a respected economist in the finance ministry, following the example of Chilean President Gabriel Boric, but the fiscal outlook is complex. Domestic gasoline prices have not increased since last year’s strikes, a decision that is likely to consume 2 percent of GDP in subsidies this year.
Hernandez is a different type of populist. He communicates through short, vague statements. In a post-election interview, he reiterated that his principles are “not stealing, not lying, not betraying, zero impunity.”
“We need to remove all those thieves that are getting into the Senate, the Chamber of Representatives, into very important positions in the executive power,” he said. “That is the supreme objective and the mandate that Colombians have given me.”
Hernandez wants to make members of Congress pay for their own vehicles, to transform the presidential palace into a museum and to cut the number of presidential advisers, embassies and so on. His trademark is to use ordinary and often vulgar language.
As he is a successful self-made real-estate developer, he generates empathy in a country with very low social mobility. The ingeniero, as he likes to be called, is a world apart from the lawyers who have traditionally run Colombia.
His message is simple and effective: Getting rid of corruption can provide the resources to solve ordinary Colombians’ problems. The state is ineffective, and he can make it work.
Hernandez is the easy-fix populist. He does not support prohibiting oil exploration (although he opposes fracking), and said he would lower taxes for businesses and raise tariffs to decrease food imports and develop the rural economy. He wants to transform the 19 percent value-added tax into a 10 percent consumption tax that “would revive the productive sector.”
That is about as much detail Hernandez has provided on what he would do as president. He has not mentioned a single legislative proposal, and said that he would not seek the support of political parties.
Colombians must choose between a candidate who proposes radical reforms that emphasize redistribution and new roles for the state, and a candidate who embodies a business-like management style, but has no specific plan.
Despite their very different styles and ideologies, this is not a traditional left-versus-right race. Both candidates said they would implement the peace agreement that ended the decades-long civil war with the guerrillas of the Revolutionary Armed Forces of Colombia — a divisive issue in the 2018 election. They also said they would negotiate with another guerrilla group, the National Liberation Army, and restore relations with Venezuela.
Hernandez defends February’s establishment of abortion rights and the ban on herbicide use to eradicate illicit crops, distancing himself from the government’s positions.
The electoral divisions are of a different nature. Petro dominates in the poorer Pacific and Caribbean coasts, as well as in the capital, Bogota, where he was mayor. He also holds a large majority lead in Narino and Putumayo, Colombia’s largest coca-producing regions, probably owing to his long-standing criticism of the war on drugs.
Hernandez overwhelmingly wins in the more traditional interior of the country, as well as in the main oil-producing regions.
Neither candidate wants to talk about hard choices. In their view of the world, there is no need to reduce the critically high fiscal imbalances, reform pension benefits or liberalize labor markets. None of that is in the cards. Everything can be fixed with a large dose of fiscal populism or, alternatively, by a successful businessman’s magic touch.
Mauricio Cardenas is former Colombian minister of finance and a visiting senior researcher at Columbia University’s Center on Global Energy Policy.
Copyright: Project Syndicate
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