June 21 (Bloomberg) -- Colombia’s Juan Manuel Santos, after being elected president by a landslide last night, pledged to free his country from the “nightmare of violence” by sustaining all the government’s might against Marxist rebels.
The record 9 million ballots cast for Santos gave the U.S.- educated economist and former defense minister 69 percent of the vote against 28 percent for the Green Party’s Antanas Mockus.
Santos dedicated the victory to President Alvaro Uribe, who leaves office Aug. 7 having spurred record economic growth and investment while beating back insurgents and slashing by half the number of murders during eight years in office.
“Colombians voted massively today for a government that continues and advances your administration,” Santos told supporters in Bogota last night. “If we have come far it’s because we are standing on the shoulders of giants,” he said, quoting 17th-century English scientist Isaac Newton.
Santos’ victory will likely extend gains this week by the peso, the world’s top-performing currency, and the benchmark IGBC stock index, said Julian Cardenas, chief economist at Bogota-based brokerage Corredores Asociados SA.
The peso, whose 8.2 percent gain against the dollar this year is the biggest among 172 currencies tracked by Bloomberg, rose for a fourth straight week before yesterday’s vote as Santos coasted to victory. The peso jumped 1 percent to 1,889.15 at 10:46 New York time.
The IGBC, whose 7.7 percent gain this year is beating a 4.8 percent decline in the MSCI EM Latin America Index, rose 0.33 percent to 12,538.16.
“Santos won’t change the rules of the game,” Cardenas said, adding that Santos’ pledge to deepen Uribe’s security policies and not increase taxes will draw investment to the country’s new oil wells and mines. “This win is a positive signal for investors who have their sights on Colombia.”
Santos, 58, delivered some of the biggest blows against the Revolutionary Armed Forces of Colombia, or FARC, while serving as defense minister from 2006 to 2009. These include the rescue of 15 hostages including politician Ingrid Betancourt and three U.S. defense contractors. He also ordered the raid into Ecuador that killed the group’s second-in-command, Raul Reyes.
His most pressing challenge is improving relations with Colombia’s neighbors, said Felipe Botero, a political science professor at Bogota’s Universidad de los Andes.
Venezuelan President Hugo Chavez ordered troops to the border in retaliation for the airstrike and cut off trade ties with Colombia after Uribe inked a deal last year to increase U.S. access to seven military bases. Exports to Venezuela, traditionally Colombia’s biggest export market after the U.S., plunged 69 percent in April from the same month a year ago.
Santos has accused Chavez of allowing the FARC to stage attacks from across the border, while the Venezuelan socialist has attacked the president-elect as a “warmonger.” An Ecuadorean prosecutor in April ordered Santos’ arrest.
“Chavez and Santos are like two piranhas in a tank together,” said Larry Birns, head of the Council on Hemispheric Affairs, a Washington research group. “There will be every opportunity for provocation and brinkmanship.”
Santos, who during the campaign vowed to invite Chavez to his inauguration, said last night that “all the countries in the world, and above all those in the region, can be sure that in my government they will find an ally.”
Underscoring the rebels’ resilient strength in many rural areas, seven police officers were killed in an ambush near the border with Venezuela. Separately, two soldiers were killed in a firefight with the FARC in Meta province.
Yesterday’s 44 percent turnout was the lowest since 1994, as voters expecting Santos to rout Mockus stayed home to watch the World Cup soccer tournament.
Santos, who won 47 percent in the first round against 21 percent for Mockus, has capitalized on the support of Uribe.
In 2002, the year Uribe took office, Colombians suffered 28,837 murders and 2,882 kidnappings. By 2009, those numbers had been cut to 15,817 and 213 respectively. Uribe, a lawyer and rancher, leaves office with a 63 percent approval rating.
Mockus, 58, leveraged his record as two-time mayor of Bogota and a pledge to sweep away corruption to overtake Santos in polls taken before the first round. However, the so-called Green Wave faded after the former philosophy professor expressed “admiration” for Chavez and said he would consider extraditing Uribe to Ecuador.
“Starting today, the Green Party consolidates itself as a political force,” Mockus, brandishing a pencil that was a symbol of his campaign’s focus on education, told supporters yesterday in Bogota.
Santos, a former finance minister and scion of the family that founded the nation’s largest newspaper, Bogota’s El Tiempo, focused his campaign on reducing a 12.4 percent unemployment rate that is the highest in South America.
Colombia’s economy is recovering slower than its neighbors from the global financial crisis, in part due to the trade row with Chavez. The International Monetary Fund forecast in May that South America’s fifth-largest economy will grow 2.2 percent this year, the lowest in the region after Venezuela, which is in recession.
The economy likely grew 3.4 percent in the first quarter, according to the median estimate of 14 analysts surveyed by Bloomberg ahead of the first quarter GDP report on June 24.
Santos, a Harvard University-educated economist, promised to close by 2014 a budget gap equal to 3.6 percent of gross domestic product and achieve annual growth of 6 percent within two years.
He’ll be assisted in the effort by a congressional majority exceeding the one enjoyed by his former boss. Parties supporting his candidacy won 68 of 102 Senate seats in March congressional elections, compared with 5 for the Green Party. The Liberal Party, which had been the biggest opposition bloc to Uribe’s government, is split on whether to support Santos.
There are “no excuses if Santos really wants to tackle” fiscal reform and cut into the deficit, Pedro Tuesta, senior economist for Latin America at New York-based 4Cast Inc., wrote in a note to clients.
His victory will also help woo international investors, Tuesta said. The government expects foreign direct investment to rise to $10 billion this year, the bulk in mining and energy projects, from $7.2 billion in 2009.
Santos is likely to choose Juan Carlos Echeverry to be his finance minister, Bank of America said in a report today. The New York University-educated economist is the current president of Econcept, a Colombian consulting firm, and a former Economic Planning minister.
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