July 5, 2022
For the first time in Colombia’s history, a left-wing president was elected on June 19. Gustavo Petro was running for the third time and, after winning this year’s presidential campaign, he will officially take office on August 7, 2022.
An economist by training, Petro won the runoff election with just over 50% of the vote against his opponent, businessman and independent candidate Rodolfo Hernandez. Colombia also elected its first Afro-Colombian woman to be vice president, Francia Márquez, a lawyer and environmental leader. With a similar backdrop to the United States’ upcoming midterm election, the vote in Colombia came amid widespread discontent over rising inflation, inequality, and crime.
There are many uncertainties around Gustavo Petro’s victory. But, one of the most important is how the new president will approach his relationship with the U.S. and how his policies will affect American interests in the region. Colombia has historically been one of the most stable U.S. allies in Latin America, so the foreseeable changes will have relevant implications for many American stakeholders.
Here are 6 key takeaways on how Colombia’s election may impact U.S. interests:
Changes are coming, but cooperation is expected. The relationship between the United States and Colombia is strong, with 200 years of diplomatic relations yielding cooperation on issues ranging from commercial ties to the environment, security, and migration. This relationship will likely continue to be strong. President Joe Biden called Petro shortly after his electoral victory, and USAID chief Samantha Power is expected to attend Petro’s inauguration.
The Venezuelan issue. Petro’s foreign policy is expected to be markedly different from that of his predecessor, Iván Duque, a conservative who backed Washington’s drug policies and worked with the U.S. to isolate the regime of Venezuelan President Nicolas Maduro. Petro has described U.S.-led antinarcotics policies as a failure. And he has instead said he will recognize Maduro’s government and try to work with the Venezuelan president on several issues, including fighting rebel groups along the border between the countries.
Trade relationship. One of Petro’s big promises during his campaign was to radically change Colombia’s economic development model. That likely means renegotiating parts of Colombia’s free trade agreement with the United States, in place since 2012. This could impact the 60% of Colombian exports to the United States that amount to non-mining energy products and nearly $6.5 billion in trade goods. Likewise, the United States has been the main foreign investor in the country with more than $22 billion over the last 10 years, equivalent to over 17% of all foreign direct investments in Colombia. Sectors such as the textile industry and agriculture could be impacted by possible renegotiations.
A generalized tax increase. One of Petro’s priorities will be to advance a tax reform focused on increasing taxes for the country’s upper classes. The president-elect also campaigned on increasing taxes on dividends, and many experts anticipate these proposals could scare off foreign investment. There are plans to increase taxes to dividend payments to nonresidents or limit benefits and exemptions for foreign companies.
Oil and gas explorations. Petro has pledged to stop issuing permits for oil, gas, and other hydrocarbon explorations. With oil and gas representing 40% of Colombia’s exports and 12% of the government’s revenue, many have questioned the feasibility of implementing Petro’s plans for Colombia’s energy sector—which receives considerable American investment. This may lead to bilateral tensions if he moves forward with such proposals.
A new drug trafficking policy. Petro’s vision of ending drug trafficking also includes making possible concessions to criminal groups to try to resolve the conflict domestically. This was one of the most critical points of his campaign. Petro might even revise the figure of extradition to the United States for the most wanted leaders.
There is no doubt that a new paradigm is opening in the relationship between Colombia and the United States. Certainly, Petro’s victory reflects a general shift to the left in many South American countries. Colombia will likely remain a major U.S. partner in the region, but the upcoming changes mean that American interests and companies’ investments in Colombia face a higher level of unpredictability than ever before.