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School Brings Together Experts to Weigh in on Colombia’s Historic Peace Agreement Ahead of Referendum

September 30, 2016
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The panelists from left to right: Carlos Parra, Eduardo Gamarra,
Johnathan Rosen, Antonio Santiago, Bruce Bagley, Victor Uribe Uran,
Elvira Maria Restrepo, Leonardo Ferreira, German Leiva 

Days before voters in Colombia rejected a peace deal with FARC rebels Oct. 2, experts gathered at the School of Business to discuss the agreement, which they supported. The agreement, which failed by an extremely thin margin of 50.25 percent to 49.75 percent, defied the polls which predicted a win by a margin of two to one.

“The bottom line is Colombians are tired of this,” said Bruce Bagley, the University of Miami professor of international studies who moderated the School's panel session Sept. 28, ahead of the referendum. “It has cost well over 2 percent of the GDP for well over 50 years. What will Colombia become if they stop paying that price and start investing in their future?”

The event, was sponsored by the Center for International Business Education and Research (CIBER), housed at the School of Business, and University’s College of Arts & Sciences MA in International Administration program. The panelists included Elvira Maria Restrepo, a special advisor to Colombian President Juan Manuel Santos and an assistant professor at the University of Miami; Leonardo Ferreira, Eduardo Gamarra, Carlos Parra, Johnathan Rosen, and Victor Uribe Uran, all from Florida International University; German Leiva, CEO of MFZ Management Corporation; and Antonio Santiago, orchestrator at TIAGO Business Engineering.

Despite support for the agreement, panelists predicted the path forward would be a difficult one and the failed referendum, which sends the two sides back to the negotiating table, backs that up.

“Hopes are alive,” Bagley said. “The possibilities of building a better future are there, but it's not going to be easy or happen in the short run. It will require dedication, persistence, funding and fundamental reforms.”

To put things in perspective, Colombia’s GDP in 1991 was $41 billion; by 2014, it had increased to $371 billion. “Imagine how much more it would’ve increased without the war!” Rosen said. “Some say the GDP could be impacted as high as 18 percent.”

Panelists agreed.

For one, the economy is struggling. Unemployment is rising, oil prices have fallen, and production has been minimal ever since people were chased from their land by FARC. “We have to import a lot of raw materials,” Leiva said. “Industry is working better, but it hasn’t yet reached a position to cover the deficit from the oil. That’s going to take a while.” 

The private sector has a responsibility, Gamarra said, to abide by a more equitable tax structure, even though it’s been hit hard by a free trade agreement. Another obstacle, Bagley said, is convincing the private sector to employ demobilized guerrillas, which they have expressed considerable reluctance to do. If there are no jobs for them, Bagley predicted, they will return to the drug trade and the agreement could be derailed.

Furthermore, though FARC – which had been the most significant cartel in Colombia – signed a document as part of the agreement that it would no longer be involved in the cocaine industry, Gamarra is skeptical that voluntary eradication of the cocaine industry is feasible in a country with such historic violence. “Now we’re going to try to implement agrarian reform with no resources and wipe out the only source of income there is?” he asks.

Parra, however, is optimistic that the FARC rebels will turn their attention toward earning a proper living. “They don’t enjoy killing people,” he said. “Now in Colombia, you can go with your ID and get financing for a motorcycle. A rational agent would get a motorcycle and try to make a living.”

The former rebels, Santiago said, can pay reparations by clearing the minefields. “This will lead to increased business opportunities,” he said.

Another obstacle confronting workers, Rosen said, is that Colombia is one of the most dangerous places in the world to be part of a union. 

Meantime, while the world watches with interest, there likely won’t be a quick influx of foreign investment, despite expectations by hopeful Colombians, Bagley said. “We are going to see a wait-and-see attitude on the part of the foreign investors,” he said. “They’re not going to rush into a market that is still so unclear and so uncertain.”

Colombians also need to understand that there also won’t be an international bailout, Bagley said. Instead, the Colombians will need to battle corruption at home and pass tax reform to pay for modernizing the infrastructure. “The wealthy have made a national sport of avoiding their fair share of taxes, and there also needs to be tax reform in rural areas,” Bagley said.

Althought it is unclear about what will happen now that the agreement has been rejected by voters, experts say it is unlikely that the whole deal will be scrapped.

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