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)