Colombia's President Alvaro Uribe has moved a step closer to running for a third term, but investors are debating whether it is the best option for the country.
Earlier this week, Congress approved a bill to hold a referendum on whether to allow Colombian presidents the option of a third term. Uribe, a popular president nearing the end of his second term, has said he won't decide whether he will run for a third until after the referendum, but indications suggest it is very likely.
"Uribe has done a very good job but no matter how good he is, there is a time to step aside," said Nick Padgett, managing director at Chicago-based Frontaura Capital, which invests in frontier markets. "Whenever presidents move to change the constitution to allow them stay it's almost always a terrible idea."
The Colombian referendum bill must be approved by the Constitutional Court before it's put to the people. If the proposal then secures majority support, Uribe would be free to run in the May 2010 presidential elections.
The experiences of Russia and Venezuela showed that modifying the constitution to benefit one person ends "badly," Padgett said.
In the past several months, South America has seen a growing trend of presidents seeking to extend term limits.
In January, Bolivians approved a referendum allowing incumbent President Evo Morales to stand for a second five-year term. A month later, Venezuelan President Hugo Chavez won a referendum allowing him to run for unlimited reelection. More recently, Ecuadorean President Rafael Correa began a second term courtesy of a constitutional change.
Uribe, after seven years in office, is still widely popular, largely because of the stability brought by his tough stance against guerrilla groups. Consumer and business confidence grew dramatically, fueling a boom in investment and consumption and steady economic growth that reached 7.5% in 2007.
Colombia is suffering from the current global downturn, with economic growth slowing to 2.5% last year and likely to be marginal or flat this year, but that hasn't dented Uribe's electoral position. According to recent polls, the third- term referendum is likely to be approved and Uribe may well be re-elected.
As the president seeks to change rules and extend his power, political opponents - and even some of his supporters - say Uribe is weakening the institutions he had said he would protect.
"I am pro-Uribe but I am against the second reelection because with the first one he already rocked the system of checks and balances," said Marta Lucia Ramirez, a defense minister under Uribe and now herself a presidential hopeful.
A third term would allow Uribe to further consolidate an increasingly centralized political structure, according to some opponents. The attorney general, all the Constitutional Court's nine judges and most of the central bank's directors were appointed during Uribe's period in office.
"Democracy is at stake. A democracy needs to renew its leaders," said Jose Gregorio Hernandez, a former president of the Constitutional Court. "If Uribe wins a third election he will want to stay for a fourth and a fifth period."
Former Colombian President Cesar Gaviria recently claimed Uribe is becoming a dictator with extraordinary power. Gaviria cited reports from local news magazine Semana that Uribe is using the secret police department, known as DAS, to tap the phones of judges, journalists and other friends and foes.
For financial markets, it is less about democracy and more about capitalism, said Diego Aramburu, who manages the Miami-based fixed-income fund Latin American Enterprise Fund.
"What these people worry about is whether Colombia will pay its debt and, honestly, the risk [of a default] is low," he said.
Even so, he said, reelection is probably a bad idea as the quality of policies and decision-making deteriorate when a government stays in power for too long.
Paul Biszko, senior strategist at Canadian RBC Capital Markets, said a third
term for Uribe is good for economic policy continuity and to maintain a
business- and investor-friendly landscape. (Dow Jones)
