Alvaro Uribe: The Change Agent

Colombia's no-nonsense President is winning over investors. But critics charge that he's linked to paramilitaries, and that threatens a new trade agreement with Washington

Since Alvaro Uribe took office in May, 2002, crime, inflation, and unemployment have all plunged, in large measure because of his ironfisted crackdown on guerrillas.

But Uribe's tough tactics are becoming a major problem as he seeks to expand Colombia's trading partnership with the U.S. Critics have charged that the President and his political allies are linked to right-wing paramilitaries responsible for the deaths of labor unionists and others. With accusations swirling, congressional Democrats in the U.S., prodded by the AFL-CIO, are cooling to the idea of ratifying Colombia's free-trade agreement with the U.S. Last month, Congress froze $55.2 million of aid earmarked for the Colombian military, while former Vice-President Al Gore snubbed Uribe at an April environmental summit in Miami.

Uribe vigorously denies that he has personal ties to paramilitaries, arguing that the dark allegations have been leveled by a frustrated opposition party, along with a free press and judiciary that are still coming to terms with decades of bloodshed. "We are taking apart what we found: a country that for 30 years was guerrilla-dominated, with 20 years of paramilitary presence," he says. "The country is making the transition from terrorist groups that usurped the state to a transparent, institutionalized democracy."

A failure in Washington would nevertheless be a blow to Uribe. Throughout his tenure he has gotten intimately involved in bringing foreign investors to his stigmatized country. "I have worked all my life with the private sector," he says, "and I consider that the state is the most important private enterprise."

Consider the role Uribe played in luring cruise lines back to Colombia's coastal resorts after a multiyear absence. None of the American cruise ship company executives would even take the President's calls until, by chance, Uribe got hold of a Colombian-American receptionist for a trade group and pleaded with her to help him arrange a sit-down with Carnival Cruise Lines Chief Executive Mickey Arison. In 2005, Arison dispatched a group of industry executives to Colombia. There, Uribe had them picked up on his private plane, complete with headrests emblazoned with their various corporate logos, and flew them to an island off Colombia's north coast. He wined and dined them before flying them down to his ranch in Medellín. "It is necessary," he says, with a hint of a rare smile. "You have to work the details." Uribe subsequently buttonholed the CEO of Royal Caribbean Cruises Ltd. (RCL ) at a business conference. The hard work has paid off: This year both Royal Caribbean and Norwegian Cruise Line are returning to Colombia; Carnival is still planning its reentry.

Uribe must build on that momentum to modernize Colombia's capital markets. Critics contend that the government's traditional preference for public debt financing is crowding out private investors, delaying the development of roads and ports, among other things. "I see a renaissance of the equity culture," Uribe says. "We are taking to the stock market many corporations that were state-owned, capitalizing not just Ecopetrol and [utility] Isagen but also six state energy agencies that will be sold to investors in totally transparent public bidding." The President notes that 17 road projects are under way, as is construction of a second rail line on the Atlantic coast.

Despite the paramilitary allegations, Uribe still enjoys better than a 60% public approval rating. Assuming he survives the turmoil, will he tweak the constitution again to seek a third term? "Come on," he says, rolling his eyes, "that is not the subject of this interview."

By Roben Farzad

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