May 19 (Bloomberg) -- Colombia’s Senate passed a bill paving the way for a national referendum on whether to allow President Alvaro Uribe to seek a third consecutive term in next year’s presidential election.

The Senate voted 62-to-5 today to approve the bill, which cleared the lower house in different form in 2008. A reconciliation committee of senators and deputies will hammer out a compromise in the coming weeks before the measure goes to the Constitutional Court for its review.

The upper house version calls for a binding referendum to remove constitutional term limits and allow Uribe, who hasn’t disclosed his intentions about a third term, to run again in 2010. The lower house measure would require him to sit out a term before running in 2014. A referendum may be held by yearend, supporters say.

“Uribe hasn’t said if he wants to run yet, but my bet is that he will stretch it out until he has guarantees that the referendum will go through,” said Patrick Esteruelas, a Latin America analyst at Eurasia Group in New York.

Congress took up the proposal after supporters of a third- term presented 5 million signatures to the government last year. Uribe has championed policies that have helped restore business confidence and attracted investment to Colombia. He says he needs more time to defeat the leftist guerrillas and drug traffickers who’ve made the country one of the world’s most violent.

Defense Minister

Colombia’s Defense Minister Juan Manuel Santos resigned on May 18 and said he would run for president if Uribe decides not to seek another term. Uribe, who won re-election in 2006 after pushing through a constitutional amendment to allow him a second term, would need to declare himself a candidate by Nov. 30.

The constitutional court has up to six months to rule on the legality of the referendum bill.

Still, Uribe, who took more than 60 percent of the vote in 2006, may have difficulty mobilizing 25 percent of Colombia’s registered voters, roughly 7.2 million people, to agree to amend the constitution. While enjoying an approval rating of 68 percent, he was re-elected in 2006 with 7.3 million votes, according to Esteruelas.

Since congress began considering the third-term question last year, Uribe’s government has had to address disclosures that the army murdered hundreds of civilians who it passed off as guerrillas from the Revolutionary Armed Forces of Colombia killed in combat.

Just before last Christmas, a series of pyramid schemes collapsed, leading to losses of millions of dollars for roughly 500,000 Colombians, who criticized his government for failing to protect them.

“If people said it was plain sailing in 2006 then the reverse is true this time around,” said Rupert Stebbings, head of international sales at Interbolsa SA in Medellin. “Uribe’s coalition parties have been dogged by scandal and the world economy has hardly been a great help either.”

The government forecasts the economy will expand 0.5 percent to 1.5 percent this year, down from 2.5 percent last year. Gross domestic product rose 7.5 percent in 2007, the fastest pace in three decades.

To contact the reporter on this story: Helen Murphy in Bogota at hmurphy1@bloomberg.net

Last Updated: May 19, 2009 19:00 EDT