The Colombian government announced a series of measures designed to alleviate an economic crisis in its border areas, following Venezuela’s severing of all ties with its neighbor.
According to a press release issued on Monday, economy officials intend to reduce the requirements for the installation of free trade zones, whilst simultaneously investing one million dollars in its border regions in an effort to prevent business closures and increased unemployment, which may eventuate from the bilateral crisis
The release also stated that plans are in motion to slash sales tax.
The measures were requested by local authorities and guilds following an announcement on Thursday by Venezuelan Foreign Minister Nicolas Maduro that all land, air and sea trade between the two countries would be frozen.
Businessmen and political experts have said that they do not expect a major change in the trade relations between Colombia and Venezuela. Venezuelan President Hugo Chavez has discouraged cross-border trade since 2009, after Colombia signed an agreement granting the U.S. military access to seven Colombian army bases. Chavez has consistently expressed his belief that the pact is an attempt to undermine regional sovereignty.
As such, Colombia’s exports to Venezuela were worth $652 million between January and May of 2010, 71.4% lower than the same period in 2009. According to El Tiempo experts estimate that the crisis has caused Colombians around half a million jobs over the past year.
Speaking about the state of bilateral relations over the past year, former Colombian Foreign Minister Maria Emma Mejia said “although a break hadn’t been officially declared we were on the verge of a break. This formalizes a situation that was [already] difficult to sustain.”
Relations between two countries came to head following Colombia’s July 15 allegations made before the Organisation of American States (OAS) that its neighbouring nation was harboring up to 1,500 FARC and ELN rebels.
Venezuela has strenuously denied the accusations and said it views the affair as an attempt by Colombian President Alvaro Uribe to stir trouble before for the incoming administration of Juan Manuel Santos, who takes office on August 7.