Colombia’s Spy Scandal Turns Uribe Against Former Ally Santos

A widening spy scandal in Colombia is heightening tension between its two most powerful politicians as former President Alvaro Uribe’s legacy comes under fire by his handpicked successor’s anti-corruption drive.

Uribe, after backing Juan Manuel Santos’s election last year, has become his fiercest critic. In Twitter postings, he’s criticized key legislation, rising crime and Santos’ outreach to Venezuelan President Hugo Chavez. His strongest rebuke is for the government’s handling of allegations that Uribe’s DAS intelligence agency tapped phones to spy on judges, journalists and political opponents during his eight-year rule.

Uribe’s criticisms are a distraction that will make it harder for Santos to govern, said Senator Armando Benedetti, who has been an ally of both men. While it hasn’t yet dented Colombia’s economic performance, the tension could damage Santos’s hold on his base and interfere with initiatives such as returning land taken from farmers by guerrillas and paramilitary groups, according to analysts including Adam Isacson of the Washington Office on Latin America.

“As the government uncovers more and more, Uribe will take a more radical position against Santos,” said Benedetti, who until July was the president of congress. “It’s going to get tough. Uribe will question everything in ways we haven’t seen before.”

For now, investors have shrugged off the feud. The government says the $288 billion economy may expand 6 percent in 2011. The peso has gained 4.4 percent this year, the second best performance among 25 emerging-market currencies tracked by Bloomberg after the Czech koruna, as foreign direct investment jumped 60 percent from a year ago to $5.8 billion through May.

Market Performance

Bogota’s benchmark IGBC stock index has declined 12.5 percent this year, the smallest drop among South America’s five biggest bourses, which have all fallen. The yield on the benchmark peso bond due July 2024 is down 83 basis points at 7.33 percent.

Since allegations of illegal spying surfaced in Colombian media in 2009, more than 20 officials from the intelligence agency have been arrested, several of them Uribe allies. In July, Uribe’s chief of staff, Bernardo Moreno, was jailed in connection to the chief federal prosecutor’s investigation days after another top aide, former agricultural minister Andres Felipe Arias, was arrested in a separate criminal probe for allegedly favoring political cronies with irrigation subsidies.

Yesterday, former DAS chief Jorge Noguera was sentenced to 25 years in jail for allowing paramilitary death squads to infiltrate the agency and obtain intelligence on activists and union leaders who they later killed. Noguera ran Uribe’s 2002 campaign in a state near the Caribbean coast.

Noose Tightens

As the noose tightens around Uribe’s inner circle, the former president has become more vocal. After Moreno’s arrest, he said in a message posted on Twitter that he was “deeply pained” by what he called the “abuse” of justice. Arias’s arrest he called a “publicity stunt” fueled by “hate.” Both have denied any wrongdoing while they await trial.

“It’s all too close for comfort,” said Michael Shifter, president of the Washington-based Inter-American Dialogue. “It’s increasingly difficult for Uribe to disassociate himself from the corruption cases.”

Santos, who served as Uribe’s defense minister, has refused to respond, promising instead to strengthen the rule of law. In July, he signed a law aimed at rooting out corruption by toughening campaign financing rules.

“I have a new mantra,” Santos, 60, said during an interview on RCN Television Aug. 3. “Don’t fight with Uribe. Don’t fight with Uribe. Don’t fight with Uribe.” Santos has repeatedly said that Uribe isn’t being investigated. The former president denied any involvement in the spying in testimony to lawmakers, who are weighing whether there is enough evidence to charge the former president.

Uribe and Santos didn’t respond to requests for an interview or provide comments when contacted by Bloomberg News.

Uribe’s Rating

Santos may be ignoring Uribe at his own peril, said Benedetti. The former president left office with a 75 percent approval rating, after crushing Marxist guerrillas who used to control large swaths of territory. Between 2002 and 2010 kidnappings and murders fell 90 percent and 46 percent respectively, helping to fuel an investment boom.

The Revolutionary Armed Forces of Colombia, originally a peasant insurgency, grew in numbers and firepower in tandem with its involvement in Colombia’s cocaine trade in the 1990s. Paramilitary groups formed by ranchers to protect against guerrilla raids were also corrupted by the drug trade, though their leaders demobilized as part of an Uribe-brokered peace deal in 2006 that has been criticized by human rights groups.

Polarized Electorate

If relations between the two men deteriorate further, it could split the pro-business vote and stoke divisions between the countryside and richer urban areas in a nation already polarized along class lines, said Isacson.

Uribe may take advantage of divisions within the opposition to become Santos’ chief adversary, said Felipe Botero, a political science professor at Bogota’s Universidad de los Andes.

Santos, whose family founded Bogota’s biggest newspaper, angered Uribe by pushing for a land program that would return property stolen during the country’s half-century conflict. Uribe, a lawyer and cattle rancher, opposed such policies while in office.

Outreach to Venezuela

Uribe also opposes Santos’s outreach to Chavez and the government’s harder line against human rights abuses by the military. Santos restored relations with Venezuela, Colombia’s second-biggest trading partner, which Chavez severed after Uribe accused him of harboring rebels.

Dozens of Uribe backers in congress, including his cousin, former Senator Mario Uribe, have been removed from office or jailed in recent years for allegedly conspiring with paramilitary groups.

Opposition lawmaker Ivan Cepeda has asked the federal prosecutor to open a probe into Uribe’s sons, Tomas and Jeronimo, for ties to paramilitaries. Uribe in turn has called Cepeda a “moral assassin” and friend of the guerrillas.

“Investigations are no longer just against his lawmakers, they are now being made into his ministers and his home,” said Cepeda. “It’s so hard to see all of this happening without Uribe’s knowledge.”

To contact the reporters on this story: Helen Murphy in Bogota at hmurphy1@bloomberg.net; Blake Schmidt in Sao Paulo at bschmidt16@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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