SCENESETTER FOR THE USTR SCHWAB-LED CODEL AND

UNCLAS BOGOTA 007748

SIPDIS

SENSITIVE
SIPDIS

USTR FOR MCARILLO; WHA/EPSC FOR JSALAZAR; EEB/TPP FOR
WMUNTEAN

E.O. 12958: N/A
TAGS: ETRD ELAB EAGR OVIP PGOV PREL CO
SUBJECT: SCENESETTER FOR THE USTR SCHWAB-LED CODEL AND
ACTING SECRETARY OF AGRICULTURE VISIT TO COLOMBIA -
NOVEMBER 2-4, 2007


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Summary
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1. (SBU) Your delegation will visit a Colombia far safer,
economically stronger, better governed and more democratic
than it has been in decades. Many Colombians say conditions
today have improved to a level better than any other time in
their lives or those of their parents. During your visit you
will have the opportunity to see how broadly the improvements
extend--from major urban centers like Medellin to regional
hubs such as Popoyan. Murder rates declined 40 percent since

2002. Murders of union members dropped even faster--70
percent during the same period. Kidnapping rates plummeted
76 percent. The Government maintains a presence in all
municipalities for the first time in memory. Increased
security has led to an economic boom, registering 7.5 percent
growth in the first half of 2007 after reaching 6.8 percent
in 2006. The economic expansion has reduced poverty 20
percent since 2002. Regional elections October 28, the
fourth under the Uribe Administration, went smoothly with
limited violence and fraud. More than 40,000 combatants,
mostly paramilitaries, have laid down their arms. Despite
the progress, the Uribe Administration recognizes the need to
reduce human rights violations further by beefing up the
judiciary, speeding up the judicial process and protecting
more at-risk union members, journalists and human rights
workers. The delay in U.S. congressional approval of the
U.S.-Colombia Trade Promotion Act (CTPA) has raised concern
about the commitment of the USG to Colombia. Studies
estimate the CTPA will create hundreds of thousands of jobs
in Colombia; jobs needed to employ the poorly-educated young
men that recently put down their weapons with the promise of
reintegration in to legitimate society. End Summary

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Positive Economic Outlook
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2. (U) Significant gains in security have boosted the
Colombian economy. GDP growth in 2006 hit 6.8 percent, while
2007 first semester growth reached 7.5 percent. Both exports
and imports grew more than 20 percent in 2006. The U.S.
remains Colombia's largest trade partner (approximately 40
percent of exports and 26 percent of imports). Colombian
exports to the U.S. have grown USD 1 billion per year since
the Andean Trade Preferences Act's (ATPA) renewal and
expansion in late 2002, while U.S. exports to Colombia
increased approximately USD 2 billion. The largest U.S.
investors - Drummond (coal),ChevronTexaco and ExxonMobil -
plan considerable expansion due to the improved investment
climate and security situation. Investors from around the
world continue investing or considering investing in Colombia
in large part because of the possibility of unfettered access
to the U.S. market provided under the free trade agreement.
In 2006, Foreign Direct Investment increased to USD 8.9
billion, quadruple the 2002 level.


3. (SBU) The CTPA remains the GOC's highest economic
priority. The Colombian Congress ratified the CTPA in June
by a substantial margin, and should complete the ratification
of the supplementary protocol on labor, environment and
intellectual property in early November (only Senate approval
remains). The U.S. Congress has extended trade preferences
for Colombian exporters under the ATPA through February 2008.
The Uribe Administration has redoubled efforts to win U.S.
Congressional support for CTPA approval. Visits in 2007 by
high-level USG officials, including President Bush, Secretary
of Defense Gates, Deputy Secretary Negroponte, DUSTR
Veroneau, OPIC CEO Mosbacher, U/S Jeffery, and Commerce
Secretary Gutierrez have reassured them of the

SIPDIS
Administration's commitment, but the GOC remains cognizant of
the daunting political challenges ahead.

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Jobs and Agriculture
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4. (U) The Colombian agricultural sector provides
approximately 12 percent of the GDP, but generates 20 percent


of national employment and about 60 percent of rural
employment. While overall growth remains modest with respect
to other sectors, the GOC expects the agricultural sector to
play a more dynamic role in the future. The agricultural
sector has transformed since 2004 as a result of increased
security in rural areas and improvements in transportation
infrastructure. Furthermore, with negotiations of several
free trade agreements, such as the Andean-Mercosur, Chile,
Central America, and the United States deals as well as the
beginning of talks with Canada and the European Union, free
trade has shaped Colombia's agricultural policy over the last
two years. Agricultural growth in the foreseeable future
will likely come from the production of food commodities and
raw materials for biofuels. Palm oil production grew ten
percent in 2006 compared to 2005, largely due to increased
demand for biodiesel. In 2006, Colombia exported
approximately $1.6 billion of agricultural products to the
U.S. mostly concentrated in coffee, cut flowers, and
bananas--all hit hard by the weak U.S. dollar. The CTPA,
once implemented, will expand Colombia's exportable
agricultural base and make market access to the U.S.
permanent, which in turn will increase foreign direct
investment and employment opportunities.

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Medellin - A City Reborn
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5. (U) Medellin, a city of just over 2 million, has rebounded
dramatically over the last five years. While known
throughout Colombia for its entrepreneurial know-how,
Medellin achieved international infamy for violence and
mayhem. In 1991, the nadir of the Pablo Escobar era,
Medellin ranked as the most dangerous city in the world with
a murder rate of 381 per hundred thousand, eleven times
higher than Chicago. Through an aggressive police and
military effort to clear out the drug lords and guerrilla
elements, proactive governance and an economic rebound driven
in part by the unilateral trade preference program with the
U.S., Medellin reemerged as a livable, prospering city. By
2006, the murder rate plummeted 920 percent to 29 per hundred
thousand, a tad lower than Baltimore's. Medellin's Mayor
Sergio Fajardo has led efforts to reduce crime, increase
access to services, and foster economic opportunity. Alonso
Salazar, who served in Fajardo's administration, won the
October 28 race to succeed Fajardo and should continue with
the reforms.


6. (U) The success of the textile, apparel and cut flower
industries, which employees tens of thousands of people, have
buoyed the economy of Medellin and the surrounding area, as
well as provided jobs and business to U.S. partners. These
industries flourished because of the access provided by ATPA.
However, the program's frequent expirations (2001, 2006,
2007 and scheduled February 2008) has limited growth as
companies refrain from making necessary capital investment
and lose contracts because of the program's uncertainty. In
fact, Colombian apparel exports to the U.S. declined in the
first half of 2007 due to competition with China and a steep
appreciation of the peso. U.S. Congressional approval of the
CTPA, therefore, remains a top concern for business and
political leaders in the region.

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Popoyan - Recovery In Action
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7. (U) The delegation will travel to Popoyan, located in the
fertile southern valley region of Colombia. Narcotics
traffickers and insurgents long ransacked Popoyan's
surroundings, but since the beginning of the Uribe
Administration the area has experienced a significant
recovery. Agriculture and tourism, the twin economic pillars
of the region, both rebounded. Today, Popoyan has
recuperated its position at the heart of Colombia's Catholic
history, once again hosting the country's largest Easter Holy
Week celebration. As part of the effort to rebuild Popoyan's
agricultural base and generate employment, USAID funds
projects to assist small farmers in the area. In addition to
visiting one of USAID's projects, the trip to Popoyan will


highlight President Uribe's commitment to rebuilding remote
areas previously lacking security.

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Democratic Security Fosters Successful Elections
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8. (U) The establishment of greater GOC territorial control
and the paramilitary demobilization allowed civil society and
political parties to operate more openly than ever before.
In May 2006, the leftist Polo Democratico candidate for
president received over 2.5 million votes, the highest level
ever for a leftist candidate. Colombia's October 28 local
elections occurred without significant violence or problems,
according to the OAS, Embassy observers, and local press.
The GOC deployed 167,000 police and military to voting sites,
and electoral officials appeared well-organized overall. The
GOC and local officials quickly deployed security and
investigative officials to the few areas where allegations of
fraud--or localized violence--occurred. Elections centered
on local issues and alliances, and results did not represent
a referendum on President Uribe or other national
politicians--though the Uribe coalition fared well. Samuel
Moreno of the Polo Democratico Party won the key Bogota
mayoral race. Observers told us candidates and parties
associated with the para-political scandal fared poorly
overall--though a few questionable candidates did win.
Fighting between security forces and the Revolutional Armed
Forces of Colombia (FARC) forced the postponement of voting
in the small town of Argelia Cauca, though voting proceeded
normally in the remainder of the department.

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Labor
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9. (U) Labor violence and impunity remain major concerns in
Colombia. In June 2006, the GOC, trade confederations and
business representatives signed a Tripartite Accord at the
International Labor Organization (ILO) in Geneva, removing
Colombia from discussion in the ILO's Committee for the
Application of Standards for the first time in 21 years. A
resident ILO representative arrived in Colombia in January
2007 to implement the agreement committing the government to
financing the ILO Special Technical Cooperation program and
allocating USD 1.5 million annually to the Fiscalia to
prosecute cases of violence against trade unionists. The GOC
has assigned nearly 100 prosecutors and investigators to this
task. Labor leaders and the UNHCHR's local representative
praise the initiative.


10. (U) Although trade unionists continue to fall victim to
violence for both political reasons and common crime, the GOC
remains determined to protect labor leaders. In 2006, the
GOC's Protection Program assisted over 1,500 trade unionists
and 10,000 human rights activists, journalists, politicians,
witnesses and other individuals under threat. As a result,
the murder rate for trade unionists has dipped below that for
the general population. The GOC expects to spend some $34
million on protection in 2007. Attorney General Mario
Iguaran reaffirmed to Ambassador Veroneau in August that his
office is committed to prosecuting cases of violence against
labor. Under his leadership the Attorney General's office
focused resources for the human rights office's sub-unit
concentrating on prosecuting 352 priority labor violence
cases. In those cases, the GOC has already scored 12
convictions.

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U.S. Assistance
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11. (SBU) In January, the GOC presented a Plan Colombia
"consolidation strategy" pledging a Colombian investment of
$78 billion between 2007 and 2013. The proposal contains a
heightened emphasis on social development, assigning new
resources to consolidate governance, human rights, displaced
people, and Afro-Colombian and indigenous communities. It
also aims to reintegrate 42,000 demobilized ex-combatants and
deserters and to promote Colombia's competitiveness and licit


exports. The GOC seeks funding from the United States and
European countries, but also brings substantial resources of
its own to the table. USG security assistance combats drug
trafficking and terrorism and includes training, material
aid, and technical assistance to security forces and other
institutions. It also provides support for GOC aviation,
essential for all programs--civilian or military--outside
Colombia,s major cities.


12. (U) The USAID Mission in Colombia funds $139 million of
programs in four key strategic sectors: alternative
development and economic policy reform; justice reform, human
rights and strengthening governance; demobilization and
reintegration of illegal armed groups; assistance to
internally displaced persons (Colombia has between 2 and 3
million displaced persons),Afro-Colombians and other
vulnerable populations.

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Drug Eradication and Interdiction
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13. (SBU) Eradication of coca and poppy crops and
interdiction of cocaine and heroin reached record levels in
2006, and political support for manual and aerial eradication
continues to grow in Colombia. President Uribe understands
that manual eradication cannot replace aerial eradication
without a sharp increase in expenditures, and he seeks a
complementary approach using both methods. The National
Police and military forces seized over 203 metric tons of
cocaine and coca base in 2006, a near-record quantity, and
destroyed 200 cocaine laboratories, also a record. We
continue to work with the GOC to refine our eradication
strategy and determine how best to transfer key tasks from
the USG to the Colombian government.

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Military Justice and Improved Human Rights Record
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14. (SBU) The Uribe Administration continues to make progress
on human rights cases involving military abuse or
collaboration with paramilitaries. All members of the
military and police receive mandatory human rights training.
Minister of Defense (MOD) Santos identified military justice
reform as a top priority; in October, he named the first
civilian - and the first woman - as director of the Military
Criminal Justice System. The UN Human Rights Commission and
private human rights groups all play active roles here.
Progress on certain high profile human rights cases against
the public security forces has gone agonizingly slow and
injured the GOCs reputation in the international community.

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Extradition
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15. (SBU) President Uribe remains a strong supporter of the
U.S.-Colombia extradition relationship. Since taking office,
he has approved over 550 extraditions to the United States,
including almost 100 cases so far in 2007.

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Demobilization and Peace Process
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16. (SBU) Over 32,000 former paramilitaries have demobilized
since 2002, and a further 11,000 deserted from all illegal
armed groups (about one-half from the FARC). FARC desertions
increased significantly in 2007, and this has resulted in the
largest such reintegration program ever attempted and
operates while the GOC continues to battle the FARC and the
Army of National Liberation (ELN). A small percentage of
renegade former-AUC members have joined new criminal groups.
Job creation remains a priority, but many of the recently
demobilized have few employable skills and need intense
psycho-social and vocational training before they can enter
the labor force. The GOC,s reintegration program has
significantly increased the number of former combatants now
employed or in training. The GOC has identified increased


investment in small and medium enterprise development as a
priority for promoting job creation for demobilized
ex-combatants.


17. (SBU) The ELN has negotiated with the GOC for well over a
year, so far without success and prospects remain doubtful.
Although the ELN retains hostages, their military capability
continues to decline. The FARC has refused to engage in any
meaningful peace talks, and recently killed eleven state
legislators they had held hostage. At the end of August,
Venezuelan President Hugo Chavez visited Colombia to offer
his assistance in facilitating peace talks between the GOC
and the FARC and ELN.

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U.S. Hostages
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18. (SBU) The three U.S. contractors captured by the FARC in
February 2003 remain the longest held U.S. hostages in the
world. Their safe release continues as our top priority.
The Colombians provide full assistance, and President Uribe
has assured us that any humanitarian exchange will include
the U.S. hostages.
Brownfield