COLOMBIA'S AMAZON REGION: A RIVER RUNS THROUGH IT,

UNCLAS BOGOTA 000372

SIPDIS

E.O. 12958: N/A
TAGS: ECON SENV EAID CO
SUBJECT: COLOMBIA'S AMAZON REGION: A RIVER RUNS THROUGH IT,
BUT CAN AN ECONOMY?


1. SUMMARY. The economy of Amazonas Department, which
borders Brazil and Peru, contributes less than .05 percent to
Colombia's GDP. Local experts tell us that the Department's
limited infrastructure and prevalence of protected areas --
there are only 25 miles of paved roads in the department and
the GOC has designated 95 percent of the Amazonas as national
park or indigenous territory -- prevent it from developing an
industrial or manufacturing sector. The urban economy of the
Amazonas is based upon small-scale retail businesses, GOC
employment, tourism and fish exports, with all economic
activity centered in the capital of Leticia. The GOC is
banking on ecotourism as the anchor for increased development
and employment. However, not all locals desire ramped-up
economic activity, and regional authorities made clear that
they will not jeopardize the integrity of the Department's 26
indigenous communities to promote any sector. END SUMMARY.

Isolated By Rivers And A Jungle
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2. The Amazonas Department in Colombia's southeast corner
has 48,000 inhabitants (2005 statistics),with 53 percent
living in the capital Leticia and Puerto Narino, both located
on the 116-kilometer slice of the Amazon River that flows
through Colombian territory. It is one of Colombia's most
under-populated departments, ranking 30 out of 33. Despite
comprising 10 percent of continental Colombia and 23 percent
of Colombia's Amazon Basin, the Department enjoys merely 25
miles of paved roads. (NOTE: The GOC defines Colombia's
Amazon Basin as 10 departments: Amazonas, Caqueta, Guainia,
Guaviare, Vaupes, and segments of Cauca, Meta, Narino,
Putamayo and Vichada. END NOTE.) That lack of
infrastructure inherently limits the Department's economic
activity, which is centered in Leticia on the border with
Brazil. The President of the Amazonas Chamber of Commerce
(ACOC),Arturo Santos, told us that the Amazonas economy is
nascent, due to lack of infrastructure ties with the rest of
continental Colombia and its dependency on river
transportation. There is a road connecting Leticia to
Tabatinga, Brazil, as the cities share an open border, but
the road in Tabatinga meets jungle after 12 miles. Santos
said there are six weekly Bogota-Leticia cargo flights, but
because of the high cost of airfare goods primarily
enter/depart Leticia via two routes: cargo ships from
Cartagena that sail to the mouth of the Amazon in Brazil and
upriver to Leticia; or truck transport from Bogota to
Putamayo, with goods then shipped via river to Leticia.

Commercial Vs. Subsistence Livelihoods
--------------


3. Commercial activity in the Amazonas, which Santos said
amounted to .01 percent of total Colombian GDP in 2006,
exists in Leticia and Puerto Narino. Local experts told us
that rural populations -- especially the forty percent of
indigenous who have subsistence livelihoods based on fishing
and logging -- have few cultivation practices or other
economic activity, and are heavily dependent on GOC financial
assistance. Haroldo Gomez, the deputy to the Amazonas
Governor, said a GOC economic priority is agricultural
development within the rural areas of Amazonas. However, he
was unable to identify specific products with market
potential. Given poor soil conditions and the high costs of
bringing goods to market, non-subsistence agricultural
potential is limited to only the most targeted niche products
or to meet local tourist needs. Unemployment in Amazonas is
high -- estimated between 25 and 28 percent -- but Gomez said
those figures are misleading as many inhabitants have
subsistence livelihoods and are not technically looking for
work. Santos added that many, if not most, indigenous
communities live subsistence lifestyles by choice.

The Foundation Of The Urban
Amazonas Economy
--------------


4. Small-Scale Retail. The Deputy Director of the GOC's
Amazon Research Institute (SINCHI),Daniel Fonseca, said
retail stores of final consumption goods (packaged food,
electrical appliances, clothes, motorcycles, etc.) account
for 65 percent of the economic activity within Leticia, the
heart of the Department's economy. He added that Leticia has
only two factories -- a beverage and energy plant -- and that
the movement of imported goods sustains the Amazonas economy.
Santos said transportation costs prevent the Amazonas from
having an industrial sector, adding that retail stores

comprise 70 percent of the 800 member companies of the ACOC.
Product sales to GOC officials and to inhabitants in towns
such as Tabatinga, Brazil, and Iquitos, Peru, where prices
for goods are higher, enable the survival of the high number
of small businesses. Aside from some companies in the
financial sector, the Decameron Hotel and the airlines, the
remaining businesses in the Amazonas are small, independently
owned operations.


5. Government Employment. The GOC -- federal and regional
branch offices, as well as the military -- is the second
largest employer in the Amazonas. Its officials support the
small-scale retail stores, and the GOC is the principal
source of professional employment in the region. Santos said
government jobs are coveted in Leticia and Puerto Narino,
which are the only two cities with a federal presence, and
that acquiring such positions requires personal ties more
than a sound professional background. Gomez agreed that
neither Leticia nor Puerto Narino could exist without
government employment. He said the strong GOC presence
results from the high number of indigenous communities --
which require management of federal preference programs --
and the city's proximity to neighboring countries. Both the
Colombian Army and Navy have bases in Leticia, although local
experts agreed that diplomatic disputes rarely trickle down
to the area.


6. Tourism Continues To Grow. Tourism, especially
ecotourism, is the primary potential growth sector. The
Manager of AeroRepublica, Javier Delgado, told us that in
2008 AeroRepublica began offering twice-daily flights from
Bogota to Leticia during the December-January holiday season,
as tourist travel had greatly increased over the past few
years. (NOTE: AeroRepublica is a Colombian carrier that
offers daily service into Leticia. Satena, a smaller
Colombian carrier, has flights three times a week. END NOTE.)
Delgado said 75 percent of tourists to Leticia are
Colombian, with 25 percent traveling from overseas. Leticia
received 12,000 tourists during the first half of 2008,
compared to 13,900 during the entire year of 2003.
Representatives from the Governor's Office told us they were
taking steps -- developing strategies to increase
international tourism, constructing a convention center,
outreaching to indigenous communities about the economic
potential of tourism -- to make it the long-term driver of
Leticia's economy.


7. Exports of Fish, Fruit and Artisan Goods. Fishing
products are the primary Amazonas export. According to the
Colombian Institute for Rural Development (INCODER),Leticia
exported 2,500 tons of fish to other parts of Colombia during
the first half of 2008, an 8 percent increase over 2007.
Santos said the majority of fishermen are from Brazil and
Peru, as few live within the urban areas of the Amazonas, but
that Colombians serve as middle-men for foreign products
shipped to Bogota. Fishermen from neighboring countries
prefer to export out of Leticia because Bogota is the nearest
major urban city -- with Manaos being second -- and because
Leticia has the best cold storage facilities. The ACOC is
also striving to develop export industries of unique
Amazonian fruits and artisan products, noting that
transportation costs will still prevent the products from
having a major impact on the area's economic landscape.

Contributions To Broader Economy Minimal
--------------


8. Amazonas contributes less than .05 percent to Colombia's
GDP. Forty percent of Amazonas inhabitants are indigenous,
with ninety-five percent of the Department's territory
federally designated as indigenous reserve, forest reserve or
protected area. Gomez indicated that this land factor
severely limits Amazonas's economic contribution, but
explained that the principal role of the region is to
preserve Colombia's environmental and cultural legacy, a role
that may well benefit Colombia economically in the future.
He added that Amazonas Governor Felix Acosta is most
concerned with promoting sustainable development in the
Department's 26 indigenous communities. Specifically, he is
working toward the incorporation of environmentally sound
cultivation practices in order to limit extractive
activities. The Governor believes that sustainable
preservation of indigenous communities should be the GOC
economic priority, followed by tourism and environmental
research.

Comment: Can Colombia Balance Economic Growth
With Environmental/Cultural Integrity?
--------------


9. With 25 miles of paved roads, surrounded by dense jungle,
and sitting 1200 kilometers from Bogota, it is clear that the
Amazonas will never be an economic hub. This isolation has
certain benefits, as residents told us that guerrilla
activity and drug trafficking have been traditionally minimal
due to the distances and inhospitable conditions in the
interior. However, given its strategic geopolitical location
and vast unemployment, the GOC is looking for means to
incorporate the region more into the economic mainstream.
Tourism is the sector with the most potential to generate
low-impact growth, and the Colombian Amazon should continue
to attract increasing numbers of travelers if overall
security conditions in the country remain stable. However,
not all local communities have embraced its benefits, noting
that creating jobs and growth while maintaining cultural and
environmental integrity is a careful balancing act, and one
that Colombia has not historically managed with aplomb.
BROWNFIELD