Colombia President Looking to Make Peace With FARC This Year

Colombian President Juan Manuel Santos said his government is working to reach a peace deal this year to end a five-decade conflict with guerrillas that has claimed 200,000 lives.

“I would very much die with a smile on my face if I leave my country with peace and with more social justice,” Santos, 62, who won re-election June 15, said in an interview today. “If we maintain the correct dynamic in this process, I hope that this year we can end the war.”

Speaking from the resort town of Punta Mita on Mexico’s Pacific coast, Santos said peace may boost economic growth by as much as 2 percentage points a year, enabling the expansion of oil production that accounts for more than half of exports. The government started talks with the Revolutionary Armed Forces of Colombia, or FARC, in Cuba in 2012.

An economist and a former defense minister, Santos this month won 51 percent of the runoff vote against Oscar Ivan Zuluaga, who had pledged to take a tougher stance against the rebels. The victory gives the incumbent a mandate to continue peace talks with the FARC, Colombia’s biggest guerrilla group.

Negotiators have reached three agreements in the six-point agenda with the FARC, including giving land to poor farmers, rebel participation in politics and policies for combating drug trafficking. Santos rejected the FARC’s calls for a cease-fire during the negotiations, arguing it would allow them to regroup.

Pipeline Attacks

The FARC, which is considered a terrorist organization by the U.S., was founded in 1964 as a peasant, Marxist insurgency.

Colombia’s last peace process collapsed in 2002 after the FARC used a Switzerland-size demilitarized zone to rearm and stage kidnappings of politicians.

During the talks, then-President Andres Pastrana was photographed sitting at a negotiating table next to an empty chair waiting for rebel commander Manuel Marulanda. He never showed up.

As the military continues to pursue the FARC in their jungle hideouts, the guerrillas have kept up attacks on oil pipelines. The attacks were one of the factors behind the government’s decision to cut its forecast for 2014 oil output over the past year to 981,000 barrels a day from 1.1 million barrels.

“Attacks on the oil pipelines is a cost” we have to bear, Santos said, speaking after holding trade talks with the presidents of Mexico, Chile and Peru, who together with Colombia form the Pacific Alliance bloc. “It’s part of the cost of the war. There’s no cease-fire until we end the negotiations and reach an agreement.”

Growth, Peso

Colombia’s economy will expand 4.5 percent this year, which would be the fastest growth among the biggest Latin American economies after Peru, according to economists surveyed by Bloomberg.

Santos has said repeatedly the economy can grow 6.5 percent or 7 percent per year if the government signs a peace deal with the FARC and overhauls its highway network.

Gross domestic product expanded 6.4 percent in the first quarter from the year earlier, up from 5.3 percent in the previous three months, boosted by a surge in government spending ahead of elections and a recovery in the coal and coffee industries.

Asked about the government’s policy regarding the Colombian peso, which is trading near the strongest level in 10 months, Santos said the central bank will continue to buy dollars.

‘Fiscal Equilibrium’

The central bank raised its benchmark interest rate for a third straight month today. Governor Jose Dario Uribe told reporters that Banco de la Republica will expand its dollar purchase program, buying as much as $2 billion between July and September, up from $1 billion in the second quarter.

“We have a fiscal equilibrium that will continue to maintain the exchange rate at an appropriate level,” Santos said.

The peso, which was little changed today at 1,882.60 per U.S. dollar, has rallied 5.9 percent in the past three months, the best performance among emerging markets tracked by Bloomberg.

Santos said Colombia has started to talk about where to hold peace negotiations with the National Liberation Army, or ELN, the nation’s second-largest guerrilla group, though he declined to provide details.

The government said on June 10 that it started exploratory talks with the Marxist rebels in January and is working with them on an agenda to form a basis for negotiations.

The exploratory talks with the ELN are following the procedures established in talks with the FARC, Santos said.

“I don’t want to put a timeframe, but I hope that we could speed up things in order to finish the conflict with the two groups, because it’s one conflict, and we will have one solution in many aspects to both groups.”

On the conflict with the FARC, Santos said “I doubt very much that it will go another four years.”

Peace is “something very difficult to achieve, but I’m optimistic we can finish this conflict once and for all.”

To contact the reporters on this story: Eric Martin in Mexico City at emartin21@bloomberg.net; Oscar Medina in Bogota at omedinacruz@bloomberg.net

To contact the editors responsible for this story: Andre Soliani at asoliani@bloomberg.net Robert Jameson, Randall Woods

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