Crime, corruption and Colombia
Lessons from kidnappings, guerrillas and an economic plan drawn up over dinner
Many people have asked me about crime and corruption, and the best case study I think of is Colombia… Here is the director’s cut of the section in my recent book on Colombia. This was one of my favourite countries to research, in part because I ended up going down a rabbit hole of reading up on kidnappings and drug lords. Not only is it fascinating because of the many similarities to South Africa but it shows a path out of crime and corruption. In short: fix the police and prosecution services.
For the story of how Colombia has changed, we start with two kidnappings.
How else could a story about Colombia start?
The tale of the first kidnapping starts on 14 June 1983.[1] Alberto Uribe was a successful cattle rancher in the Medellin region. He was quietly spending the day with his son and daughter. Suddenly, fifteen members of the Fuerzas Armadas Revolucionarias de Colombia, a notorious drug cartel known better by its acronym, FARC, stormed the ranch to kidnap him. This was part of a series of kidnappings of prominent and wealthy people often used to extort money. Uribe bravely decided to return fire. Santiago, his son, got a bullet in his lung. It turned out that the lover of Pablo Escobar, the notorious drug lord, was Uribe’s helicopter pilot. She organised a rescue helicopter for Santiago. The daughter escaped to the home of a teacher nearby. But Alberto did not survive. The terrorists shot him and he died from his wounds.
Alberto’s one son, Santiago, went on to allegedly create a hit squad called the “Twelve Apostles” dedicated to killing off members of FARC.[2] But Alberto had another son, Álvaro. Álvaro dedicated his life to politics, and eventually became President of Colombia, working to rid Colombia of the criminals who had killed his father.
The story of our second kidnapping involves Andres Pastrana, the son of a former president, Misael Pastrana. Andres had built a successful career as a journalist. He was a news anchor for Noticiero TV Hoy, and ran investigations into the Medellin drug cartel. While a journalist, his support of the crackdown on the drug cartels earned him numerous death threats, particularly from Pablo Escobar. He followed his father into politics, and by 1988 was a councillor on the Bogota City Council.
Then, on 18 January 1988, he found himself kidnapped by Escobar henchmen. Many years later, he described the surreal subsequent six-hour meeting he had with Escobar.[3] At first, Escobar wanted to kill him, but finally, he was assured that his life would be spared provided he didn’t try to escape.
A week later, security forces arrived and freed Pastrano. Escobar escaped into the jungle.
That was January 1988. In March, Pastrana became mayor of Bogota; a decade later he followed in his father’s footsteps, becoming the president of Colombia at the age of 42.
Escobar’s life took a different path; five years after their meeting, he was dead at the age of 44.
But in 1988, at the time of the kidnapping, Escobar was arguably stronger than he had ever been. The economy, riddled with crime and corruption, was in the doldrums. The country was approaching crisis.[4] A year later, in 1989, with a battered and bruised economy, Colombia was forced to borrow money from the IMF.
A group of Colombian economists became increasingly alarmed about the direction of the economy. They started meeting in a restaurant in Bogota, the Club Suizo. This group, led by Rudolf Hommes, pulled together a plan that they published in March 1990 called "An Economic Proposal for the Nineties" (Una Propuesta Económica para los Noventa).[5] It became the basis for the economic reform programme of César Gaviria, who was elected President two months later.
This plan, pulled together around a table in a restaurant, was introduced by Gaviria, and made it through Congress in almost one shot, in the course of eight days in January 1991. The year got even better when the Gaviria government arrested and jailed Escobar.
The plan was comprehensive. [6] Much like in Rwanda, at its heart was a new Constitution, enacted on 5 July 1991. The Constitution replaced the old 1886 Constitution. It strengthened property rights, but importantly balanced these with state ownership of some resources. It also changed the law to allow for the extradition of drug lords – something which had been prevented in the past by congressmen on the take. The reforms opened up the financial sector, and reduced tariffs and import quotas. Also, the government reduced many distortions arising from labour regulation. Reducing exchange controls also allowed the exchange rate to float more freely than it had before. This allowed exports to be more competitive. An important step was also deregulation of the ports.
A further set of policies were implemented in 1992, many of which followed the Constitution: pension and healthcare reform, the independence of the central bank, decentralisation of government, and rolling back the role of the state in other parts of the economy.
The reforms did not immediately create growth. 1992 was President Gavaria’s año horrible, a “horrible year”. An El Nino drought hit. The power system had not been kept up to date and the electricity company was beset with management problems (sound familiar?) Loadshedding hit, and electricity was rationed for up to eight hours a day.
The government quickly dealt with loadshedding through reorganising the way electricity worked.[7]
And then in July, Escobar escaped. He had been living in a jail that he had largely built for himself, and when the police tried to move him, his henchmen sprung him.
That said, despite the bad year in 1992, the 1991 reforms created growth.[8] Between 1991 and 1997, GDP per capita rose 15 per cent.[9] Inflation fell from nearly 30 per cent to the low single digits, with the fastest declines during the 1990s, helped in part by the new foreign exchange policy.[10]
In 1993, the life of one of the most famous Colombians of all time, Pablo Escobar, came to a sudden and gruesome end.[11] Barefoot, he was surrounded by security forces on a lonely rooftop in Medellin, and shot. He had finally been tracked down after being on the run since escaping from prison the year before.
Only 44 years old, he had a fortune estimated at around US$4 billion. In the sixteenth century, the Spanish saw the effects of cocaine; In the eighteenth and nineteenth centuries, the Bolivians might have used it to get their workers to be more productive, but it took Escobar to work out how to become filthy rich from it. It is thought that at one point he single-handedly supplied 80 per cent of the cocaine used in the United States. His was a short but extraordinary life. He had a stint as a parliamentarian and was linked to hundreds of deaths. Perhaps appropriate for someone who started his entrepreneurial career as a seller of tombstones.
And so our story about Colombia is a story about a different type of success. While Bolivia has seen economic growth unlock a significant reduction in inequality, the story of Colombia is that growth brought with it a steady decline in murder rates.
In the early 1990s, the capital Bogota was notorious for being one of the most violent cities in the world. Medellin, the centre of Escobar’s world and the town where his life came to an end, was known worldwide as a place where you could easily be shot on the street.
The years since Escobar’s death have seen a significant change in Colombia. The murder rate is a quarter of what it used to be: it has declined from 84 per 100,000 people in 1993 to 22 in 2020.[12] In comparison, the rate for South Africa is 33 per 100,000 people.[13] Colombia is now considerably safer than South Africa.
Over the same period, between 1994 and 2020, the average income per person in Colombia has jumped 10 times.
And so in the space of just less than thirty years, Colombia has transformed from a poor drug-ridden country into a modern, successful and booming one.
This transformation is largely due to the two presidents – Uribe, who lost his father in an assassination – and Pastrana who was freed from the clutches of a drug lord.
Pastrana became president in 1998, and faced an extraordinary set of challenges. Not only was the country once again overrun by drugs[1] , but its economy was also a mess.
He started negotiations with the drug lords, deciding to meet them on their own territory.[14] Soon after his election, he went on a trip into the jungle. After landing, the pilot and co-pilot of his plane were kidnapped. The president was taken into the heart of the jungle to meet with the leaders of FARC. There, with the most dangerous men in Colombia, in one of the most dangerous countries in the world, they set about negotiating.
Our story of Colombia is thus a story of how getting crime and corruption under control can unlock growth.
Of course, that was the first step. Pastrana implemented a further set of reforms. The exchange rate was allowed to almost free-float in 1999, and full-on inflation-targeting was adopted by the Central Bank in 2001, with a stated long-term target of 3 per cent.
But the Pastrana government never quite got the economy right.
In August 2002, Pastrana was beaten in an election by Álvaro Uribe, the son of Alberto Uribe – the man killed in a botched kidnapping.
Uribe was president for eight years, from 2002 to 2010. His term of office is seen as a period of great reform.[15] He pressed forward on a campaign to improve security and reduce the role of the drug lords. Between 2002 and 2008, GDP rose from 2.5 per cent to 8 per cent. The war against drugs had largely been won by the end of Ulribe’s term; Colombia was no longer the world’s biggest cocaine producer. Murder rates were down 70 per cent and kidnapping by 84 per cent.
In many ways, Uribe’s economic strategy was to drive forward the 1991 reforms. He continued opening up the economy, which raised competitiveness.
By 2006, Colombia was rated higher than Chile, Mexico, and Spain in the rankings brought out by the IMD World Competitiveness Yearbook. The impact on foreign direct investment was significant. It rose from around US$500 million in 2002 to US$8 billion five years later.[16]
The long process to improve peace and security in Colombia led to the Juan Manuel Santos, president from 2010 to 2018 receiving the 2016 Nobel Peace Prize, for ‘bringing the Colombian civil war to an end’.
There were a set of key reforms to deal with violence, crime and corruption. Of course, the one big difference between South Africa and Colombia is that for many years large chunks of Colombia were under the control of paramilitary groups. Some of the things that were done in Colombia include:
Restoring control of large parts of the country that were under control of guerilla groups. This included strengthening the military, better civic engagement, negotiations and a Justice and Peace Law to demobilise paramilitary groups.
Anti-Corruption Measures. Uribe's administration implemented various anti-corruption measures, including strengthening the judiciary by making it more independent and providing enhanced resources and training; giving the office of the attorney general specialised units and technological upgrades,
Transparency Initiatives. Including developing and promoting online platforms for public procurement and government contracting aimed to make these processes more transparent and accessible to the public.
Audit and Control Institutions. The Colombian equivalent of the Auditor General is the Comptroller General, and enhancements were made to thisOffice to improve its ability to audit government spending and detect misuse of public funds. Stricter financial oversight and auditing mechanisms were implemented across various government agencies to prevent and detect corruption.
Legislative Reforms included new laws and amendments to existing ones were passed to strengthen the legal framework against corruption, including harsher penalties for corrupt activities and better protection for whistleblowers.
Conflict of Interest Regulations to prevent conflicts of interest among public officials, including requirements for asset declarations and limitations on post-office employment in related sectors.
Public Sector Reforms included merit-based hiring and promotion practices, were implemented to reduce patronage and political interference and ethics training.
Since 2018, Colombia's journey shows a mix of progress and ongoing challenges. The country continues to navigate complex political, economic, and social landscapes while striving to achieve stability, growth, and equity. Without question, we can learn a lot from a country that has made great strides forward in reducing crime and corruption, and used this to unlock economic success.
[1] The kidnapping is described in detail on YouTube at
[2] https://www.bbc.com/news/world-latin-america-35693440
[3] https://www.bcheights.com/2016/04/24/former-colombian-president-fighting-drug-cartel-leading-country/
[4] Edwards, S., & Steiner, R. (2000). On the crisis hypothesis of economic reform: Colombia 1989-91. Cuadernos de economía, 37(112), 445-493.
[5] Hommes, R. (1990), Una Propuesta Económica para los Noventa. Estrategia Económica y Financiera 141.
[6] Edwards, S. (1996), The Political Economy of Incomplete Market-Oriented Reform: The Case of Colombia. Los Angeles: University of California, Los Angeles and NBER.
[7] IRENA and USAID (2021), Renewable energy auctions in Colombia: Context, design and results, International Renewable Energy Agency, Abu Dhabi. https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2021/March/IRENA_auctions_in_Colombia_2021.pdf
[8] Perez-Reyna, D., & Osorio, D. (2018). The Monetary and Fiscal History of Colombia: 1960-2017. University of Chicago, Becker Friedman Institute for Economics Working Paper, (2018-61).
[9] https://ourworldindata.org/grapher/gdp-per-capita-worldbank?tab=chart&stackMode=relative&time=1991..latest&country=~COL
[10] Perez-Reyna & Osoria (ibid).
[11] https://www.nytimes.com/1993/12/03/world/head-of-medellin-cocaine-cartel-is-killed-by-troops-in-colombia.html
[12] https://www.macrotrends.net/countries/COL/colombia/murder-homicide-rate
[13] https://www.macrotrends.net/countries/ZAF/south-africa/murder-homicide-rate
[14] https://www.bcheights.com/2016/04/24/former-colombian-president-fighting-drug-cartel-leading-country/
[15] https://www.concordia.net/newsroom/blog/an-enduring-legacy-president-uribe-and-latin-americas-reform-agenda/
[16] https://www.nytimes.com/2007/09/06/business/worldbusiness/06iht-wbspot08.1.7408847.html