A Conversation with Álvaro Uribe Vélez

MODERATOR: Good afternoon, everybody. Welcome to today's Council on Foreign Relations meeting. Our guest is Alvaro Uribe Velez, the president of the Republic of Colombia. Please note that this meeting is on the record.

President Uribe is halfway through his second term as president of Colombia. He's of course best known for the design and successful implementation of democratic security policy in the country.

His stamina and work ethic are the stuff of legend. He gives new meaning to the term 24/7. And the polls show that he enjoys huge popularity among voters, in Colombia, and that his job approval rating is very high. At the same time, and we'll get into it today, his government, the country and the Andean region as a whole continue to face some significant challenges.

For today's format, President Uribe will give 5 or 10 minutes of opening comments. And then he and I will chat for about 20 minutes. I'll have some questions for him.

President Uribe -- some of you may have seen this -- appeared on Charlie Rose last night. I can assure you, I'm no Charlie Rose. But we've got plenty of good things to talk about, so that will make up for my shortcomings.

After that, President Uribe will engage with our members and take questions and answers from you. When we get to that part, I would be grateful, I think, we all would be if each person asking the question could, one, identify her or himself, two, ask one short question rather than give a speech and three, help us stay focused on the key issues, so that we do not bounce around too much.

One more administrative point: Cellphones and BlackBerrys, please take a moment now -- I've done that already -- to turn them off or silence the cellphones, pagers, BlackBerrys. You don't want your phone to ring or buzz while we're in session. Thank you.

Very well. President Uribe, thank you very much for coming back again to the Council on Foreign Relations. We're delighted to have you come and visit us again and to take the time from your extraordinarily busy schedule to come and speak with our members.

PRESIDENT ALVARO URIBE VELEZ: Thank you -- (name inaudible).

Mr. Haass, president of the Council on Foreign Relations, distinguished ladies and gentlemen, members of our government, my colleagues in government, it is a great honor for us to come back this evening -- (inaudible) -- today's audience. I have had the opportunity to come for several years.

When I was presidential candidate during the first campaign, I asked to university students, "Have you thought to flee Colombia forever at any time?" And the vast majority raised their hands and said yes. For we chose one key word to lead our administration. This word is "confidence."

We compared Colombia to this chart. At the top, we have -- (inaudible) -- confidence to lead, to study, to invest, to find jobs, to enjoy their lives in Colombia. We support confidence upon three pillars: security with democracy, investment confidence, with social responsibility and social cohesion.

With security and investment, it is possible to create an environment of prosperity, what is necessary to advance in social cohesion. And social cohesion, finally, is the validator of security and the validator of investment. We work every day in our administration doing our best to lead Colombia based on these pillars.

I understood that you gave me five minutes for that intro. It's not even much. And I haven't learned how to speak shortly. (Laughter.) Now I will -- I will adapt to your rules.

MODERATOR: Oh, thank you. (Laughter.) I promise I don't have any other rules, so appreciate that. And we're going to get -- I think we're going to get into these topics in greater depth.

Let's start with the question of democratic security, because it's one that is most frequently heard about in this country, but I think there's also a great deal of curiosity and lack of information, because unfortunately not as many of us get to visit the country as frequently as we would like.

Big blows to the FARC over the course of the last six months, culminating with the rescue of Ingrid Betancourt, the three Americans and other hostages -- but what is the current situation and what comes next? Are there choices that your government needs to make, that the Colombian people need to make between negotiation and use of force? And what's the end game on that front?

URIBE: The rescue of Mrs. Betancourt and the other hostages -- we had within the hostages three Americans. And from the beginning, we placed the same emphasis to rescue them, for as it was as important to rescue Ingrid Betancourt, the other Colombian, as to rescue the three Americans. It was not a sudden rescue. We worked for the rescue from the beginning of our administration. We began working to provide Colombians with democratic security at the very beginning of our administration.

We have seen some results, but we need much more. If we add to the official numbers of that kind -- (inaudible) -- during our administration, Colombia has years with 35,000 assassinations. Last year, we still had a high number, 17,400. This year we see, although, a decrease. In kidnapping, Colombia has years with 3,500 cases. Last year we saw 270. This year we see a new decrease of 28 percent. Now kidnapping is located in rural, remote areas of the country. Bogota, the capital city, is the second-safest city in the continent. (Inaudible) -- and the main Colombian cities have advanced a lot in security, but we understand we need much more to do.

We have dismantled the paramilitary organizations. Paramilitaries appear in Colombia as a reaction against FARC. Paramilitaries were tribal criminal organizations created to fight guerrillas. They committed the same crimes. They competed with guerrillas, with the same -- (inaudible). And we have dismantled these organizations. Colombia (has recovered ?) that monopoly to fight criminals and a monopoly to provide justice for our people.

Guerrillas are weakened, but we still have guerrillas with the capacity to create terror in our country, to produce terrorist acts. And although we have extradited to the United States 841 members of the narco-trafficking organizations, we still have many bandits in the business of narco-trafficking in our country.

The balance between negotiation and our policy on democratic security, our policy is a way to get peace. In the '90s Colombia saw the reinsertion of 4,000 members of the guerrilla groups. During our -- and the '90s was a time of peace processes in our country. During our terms in government, we have seen the demobilization of 48,000 members of the terrorist groups. By the beginning of our administration, roughly speaking, Colombia had 50,000 members of these groups. And we (have/haven't ?) provided all the facilities for those who have demobilized, for them to reinsert to the civil society. We are open for peace negotiations. But while FARC can make money from illicit drugs, it will be very difficult for them to (attend ?) negotiations.

For a while, we negotiate one by one. This year we have seen the demobilization of 2,500 members of FARC, and this process is the process to negotiate with one, with other, with the third, et cetera. We are open, but I cannot say when Colombia is going to find good faith in FARC for peaceful negotiations. My guess is that we have to continue with all our determination in our policy on democratic security.

Our policy has completed six years. Terrorist groups are acting in Colombia since the beginning of the '50s.

MODERATOR: So it's a continuing process. The military aspect of it is an important one. I think one of the great insights was capturing the presence of the state in parts where perhaps the state had not been present before.

What other areas does that manifest itself, in terms of health, education, social policies? How are those rolled out across the country, perhaps in areas and to populations that have been underserved in the past?

URIBE: (For ?) we have this combination: Security is accompanied by confidence to invest in our country, by the program we call our program for Colombia to get social cohesion. We have a set of social endeavors.

In basic education, we had 78 percent of coverage. Now we have 94. For the year 2010, our aspiration is to have 100 percent of coverage in basic education. We have gone -- (inaudible) -- to every part of the country with our social tools. In education, for those who are under five, we are beginning to create opportunities for massive core coverage.

MODERATOR: And is the challenge resources? Is it infrastructure? Is it security? What are the biggest obstacles in achieving those objectives?

URIBE: Many, many obstacles, many obstacles, obstacles in our geography, in our infrastructure, in our budget, in our public indebtedness.

Colombia has still 51 percent of its territory in jungles, in rain forest. We have, in rain forest, 578,000 square kilometers. We are a part of the Amazon Basin.

Our budget: At the beginning of our administration, Colombia had a fiscal deficit in the central government of 7.5. Now it is in between 3 and 3.2. It is still very complicated. In public indebtedness, Colombia had 50 percent, the proportion of indebtedness to the GDP. Now it has 27.

Therefore we have fiscal constraints, geographical obstacles, lack of infrastructure. But our administration is working to overcome all kinds of problems. We have advanced a lot in nutrition. Colombia had 3,000,300 children under state programs in nutrition. Now we have 10 million.

In microlending, we have advanced a lot. We have a program we call Families in Action. Through this project, we provide -- (inaudible) -- families with -- (inaudible) -- for them to send their children to schools and to provide their children with -- (inaudible).

We are advancing a lot. However I am speaking to you about the portion of the glass that is filled. But we have a great part of the glass that is, it is still empty. Therefore we have to work every day. And without investment, without investment, it is impossible to make sustainable our policy of security and to make sustainable our policy of social cohesion.

MODERATOR: So on the investment front, there are a couple of components to it. One is policies followed by the government in the country.

Another component of it interestingly is the trade agreement, right? Trade: People always think about the movement of goods and services. But bilateral trade agreements include important investment, pro-investment components to it.

Is that part of the reason why you've been pushing so hard on the trade front and the free trade agreement? And while we're on that topic, perhaps, you can tell us a little bit about your prognosis for what's going to be happening on that front here.

URIBE: We need that free trade agreement.

We are not optimistic that we will increase our exports to the United States in the coming years. But with a free trade agreement approved, many investors from several countries, in the world, will come to make investments in our country. And we think much more in having a high rate of investment than in having a sustainable growth rate in our GDP.

For right now, most important asset is to have a high rate of investment. To promote investment in our country, we are working with several tools.

First, our message: While other countries are -- (inaudible) -- regarding the private sector, Colombia is very -- is very friendly. We give all the guarantees to the private sector to come to our country. We give all the guarantees to domestic and international investors. We request from them social responsibility.

MODERATOR: And what does -- what does that translate into? What --

URIBE: In practical terms, social responsibility from the -- for our government is transparency in the relationship between investors and government, transparency to assign contracts, to solve disputes, transparency in taxation.

Social responsibility is solidarity of investors with communities. There are many important issues: For instance, to produce coal. Colombia is a large producer of coal. It's very important.

Social responsibility is fraternity in the relationship between employers and workers; fraternity as opposition to social class hatred; fraternity as opposition to wide capitalism.

To attract investors to our country, we work every day to improve our (market ?) economic indicators. We have restructured 411 state agencies without dismantling the state. The last one we restructured is ECOPETROL, the agency for oil. Now, it is owned by private shareholders, in one percentage of 10.5 percent. The reform was very difficult. First we introduced the labor reform, second, the pension (report ?), and after we opened the corporation for private shareholders, in the middle of great opposition inside our country and in Latin America because radical ideologies in many countries in Latin America opposes to these kind of reforms.

We are introducing tax incentives for investments in Colombia. Now you have the possibility to enjoy a special economic -- (inaudible) -- to pay only 15 percent in income corporate taxes. The ordinary tariff is 33 (percent). (Inaudible) -- do not pay tariffs for imports nor value-added tax. In Colombia, shareholders do not pay taxes on dividends and you have the right to sign part -- a part of -- (inaudible) -- with the government for 20 years.

In addition to that, we are working to have free trade agreements. We have signed a free trade agreement with Chile, with MERCOSUR, with three Central American countries, with Canada. We are in negotiation with the European Union. We are negotiating agreements of bilateral protection of investments with China, with India. And of course, we are in need to have approval of the free trade agreement with the United States.

We have limitation. For instance, in the infrastructure, we recognize that we have to do -- to make -- to do much more for our country to become much more competitive. But we -- (inaudible) -- during the last two years, the World Bank has scored Colombia as a leading country in reforms to create the best environment for doing business. Last year, we got this score, and this year the same.

Now -- right now, we are beginning to work to try to have the thing that's called "la comunidad."

MODERATOR: Mr. President, before we turn to the audience, there's one other area that I want to spend a few minutes on, which is Colombia in the context of the Andean region. And there are a couple of elements there that are, I think, of interest to our members. One is that there are countries -- Venezuela, Ecuador, Bolivia -- that are taking a, I think it's fair to say, radically different approach than Colombia is. (Laughter.) And --

URIBE: You warned me that this interview is on the record. (Laughter.) I am very prudent -- (laughter) -- to speak about our neighbors on the record.

MODERATOR: I know you are.

URIBE: I (don't ?) need to be much more on the record.

MODERATOR: I know you are. But let's give it a try. (Laughter.) Let's give it a try. There are a couple of topics that I think would be great to hear your views on. One is, a favored term -- there was a speaker here yesterday speaking on the record who referred to it -- a favored term right now is "multilateralism."

And the question is, what is the room for unilateral action and for multilateral action in the context of the challenges in the region -- recent violence in Bolivia, the tensions that arose between Colombia, Ecuador and Venezuela in the context of the Reyes situation?

So that's -- you know, that's sort of an issue of what's your view for unilateral action, multilateral action in the context of the Andean region and some of the organizations that are available to facilitate.

URIBE: Last week the association of South American countries gave support to President Morales because he's a constitutional president, because we support democracy. Colombia, that has suffered violence a lot, has to set the example to reject violence wherever violence appears.

And this morning I had opportunity to speak with President Morales, and he said to us that he is engaged in a dialogue with the regions, with speakers of the regions. We are very hopeful that our brother Bolivia can overcome the current difficulties.

In the case with Ecuador, Ecuador is our brother. We have and we want not to have problems with Ecuador. We have problems with terrorists, with our own terrorists, with FARC, with ELN, with narco-traffickers, with those who were members of the paramilitaries, did not demobilize and are now converted into simple narco-traffickers.

You know that Raul Reyes, a FARC (living ?) figure, killed many people in Colombia. And when we (combat ?) him, he was in the jungle in Ecuador. The world knew (that debate ?), but I, as president of Colombia, should no longer air this debate. In a very constructive approach, what we beg from our neighbors is help to fight terrorist groups. And we have one moral authority: we are a democracy.

In Latin America, there were insurgent groups without illicit drugs fighting dictators. In Colombia, we have a pluralistic democracy challenged -- being challenged by terrorist groups funded with illicit drugs. The reason, that we are a pluralistic democracy with all the freedoms, with international supervision. We are open to NGOs, and they go to Colombia whenever they want. Many times I argue with them, but they enjoy freedom in Colombia. And they say about Colombia whatever they want. We have a system of democratic freedoms. Therefore, we have the moral authority to beg from our neighbors to fight the terrorist groups that hurt my fellow country citizens.

I will not speak about my neighbors. I need to speak about Colombia. We are working for higher standards for our democracy to be better every day. Security for all Colombians, freedoms, social cohesion, a state made up of checks and balances and our fight for transparency. (Inaudible) -- for people to trust in our democratic institutions. One very important point in our country is that Colombians have -- (inaudible) -- institutions. In Colombia, a president cannot choose one investor over the other. Investors depend in Colombia on our institutions. And our institutions are transparent and totally friendly to investors.

One key point you should keep in mind. When you want to remember Colombia, please think of Colombia as a country of trying to do the best to have investment confidence. Maybe Colombia, for its specific realities, reasons, has much more interest in bringing investors to the country than other countries in the region. We are open for (any with ?) investment in our country.

MODERATOR: Thank you.

Let's turn to the members now, and if you could identify yourself. And again, brief questions. We'll start over here.

QUESTIONER: Thank you, Senor President -- (inaudible). My name is Joe Hill (ph). I'm an attorney at (MetLife ?). Given the worldwide credit crunch, could you please comment on the implications you think that has for Colombia's development in the next few years?

URIBE: We have improved a lot. However, this year we suffered an economic slowdown. Our investment rate has passed from 12 to 27.9. Our direct foreign investment has passed from 700 million (dollars) to 10 billion (dollars). We have increased a lot our economic performance.

This year we have suffered an economic slowdown. Our financial sector is better protected than six years ago. Six years ago, that protection against bad loans was (39 percent ?). My government introduced what we call a specific implicit risk for any specific economic sector. And we have increased the protection up to 112.

We are in much better shape to deal with this crisis than before. We have suffered inflation, especially inflation of foods, of agricultural (input ?). But we are working to produce much more. The basic inflation is 3.9, but the inflation in foods have reached 12, 14. Now, we hope that it will begin to go down, to reverse. The inflation rate this year could be in between 7 and 7.5. We have reached (4.4 ?) two years ago.

We face these problems at this moment, but there is good news. One good news is that we have a high investment rate this year in the middle of these economic difficulties. And you can have one of two options. One option is to have these problems without investment confidence. And the other option is to have these problems with investment confidence. Unfortunately, Colombia is having investment this year in the middle of economic difficulties. This year, we have (kept ?) with an investment rate of 27.5 percent, and the minister of (Treasury ?) says that this year he thinks Colombia will get $11 billion of foreign direct investment.

MODERATOR: Yes, please.

QUESTIONER: Senor Presidente, Wendy Luers from the Foundation for a Civil Society. I've done a certain amount of work in your country, and my understanding is, is that Francisco Galan, who was the spokesperson for the ELN, has broken all ties now with the ELN. How are you taking advantage of these kinds of defections that are going on with the (guerrillas ?).

URIBE: First, all the demobilized people are very well treated by our government. Imagine how expensive it is for our bayas (ph) to sustain the reinsertion of 48,000 people. I have spoken many times with Francisco Galan. We gave him conditional release from jail.

AUDIENCE MEMBERS: (Off mike.)

URIBE: Parole. Parole. We gave him parole. We gave him parole before he completed his sentence.

And he has come to see me many times, and I have given him all the authorization to make contacts with ELN. But he has said to me, "Mr. President, I have failed; ELN does not want to advance in peace talks." I have not denied anyone the right to facilitate agreements with terrorist groups, but in this case, Francisco Galan, with all the good faith, has not succeeded yet. Therefore, the only way I have at this moment is to go after the ELN with all the strength of our democratic institutions.

In the last weeks, in our permanent meetings with communities, we conduct two weekly community meetings, one on Monday and the second on Saturday. In Monday's, we examine with communities how our policy of democratic security is going now -- (inaudible). In the last meetings on security, people have come to see us and have said to us, "Pay attention. ELN is in illicit drug businesses," as every terrorist group, because ELN wanted to appear as -- (inaudible), and they are narcotraffickers, as the others. Francisco Galan was not. Francisco Galan belonged to the time of ideological (guerrillas ?). He was Marxist oriented. And right or wrong, he fought for one ideological cause. But his successors in the ELN are (with the illusion ?) of easy money made from illicit drugs.

MODERATOR: All the way in the back, here on the left.

QUESTIONER: Thank you, Mr. President. Jeffrey Gilbert from Pfizer Pharmaceuticals. It strikes me that on the one hand, for some countries in the region the absence of economic reforms has led to the export of its citizenry to the United States, something analogous to what Ireland did in the 18th century, and while on the other hand the U.S. government's policy toward the region has been really one or two-dimensional, focused on free trade agreements and the Millennium Challenge Account.

And so, thinking ahead to the future administration, how would you like to see the United States engage the region beyond the FTAs and the Millennium Challenge Account? Thank you.

URIBE: It is quite difficult to me to say something about the future of this country now when you are in this political debate. But let me speak about -- speak not about the role the United States is playing in the region, but about the needs of our region. Our region, Latin America, needs to find alternative sources of energy. Any industrialized country such as the United States has opportunity to give us support in this way. We need to promote small enterprises. The United States, through the multilateral financial institutions, could give us strong support for the small enterprises.

It is very important. I admire the universal democratic values practiced by the United States. It is very important to insist all over Latin America in the necessity to live with democratic values. It is very important to insist in this way.

Free trade agreements. We should consider free trade agreements as a way to at any moment get the integration of the country, the holistic integration, integration in political dialogue, integration in social cooperation, integration in econmics.

Therefore, I consider the free trade agreement not as an end by itself. It is our need to have much more integration, and it -- and we understand that any free trade agreement needs a social chapter. I mean, the free trade agreement we have already negotiated with the United States that is waiting for approval in Congress, we included a social chapter that is very beneficial for our work.

MODERATOR: Shannon?

QUESTIONER: I'm Shannon O'Neil from the Council on Foreign Relations. I want to ask you a question about institutions. A notable pattern that was seen in the Andean region over the last 10 years is the frequent changing of the political rules of the game -- of the political institutions. So that 10 years ago we saw a new constitution go into effect in Venezuela, and then a year ago referendum for other political changes. In Ecuador and Bolivia, there's new constitutions waiting in the wings, waiting for referendum that are coming up in the next weeks and then months. And then in Colombia, we've seen calls from many people to change the political rules of the game to allow for your reelection for a third term.

And so I would like you to reflect on the benefits of changing some of the rules in the Andean region, in the political rules, for inclusive democracy, but also some of the costs for these frequent changes of the political rules of the game.

URIBE: I cannot (accept that you compare ?) any reform to give the people the right to vote (without ?) reforms that could affect democratic institutions. Colombia is very stable on democratic institutions. Now -- (inaudible) -- investors going to Colombia, or either domestic investors, they have the right to (stand pat ?) on stable rules, with 20 years with the government.

Colombia has suffered terrorism for almost 50 years. And our government has fought terrorism for six years. My generation has not lived one single day in complete peace. We have the right to work for the new generations to enjoy living in Colombia without these risks. I am working for my fellow country citizens to reelect these three policies, not to reelect me.

And I have the obligation to do my best to convince the vast majority of my fellow country citizens that we need long-term policies: policy on security, policy on investment, policy on social cohesion with adjustments. We have many problems, therefore we need adjustments, without abandoning the fundamentals. And these three policies are the fundamentals.

There are reforms bringing limitations and distortions to democracies and there are reforms bringing possibilities for democracies.

MODERATOR: (Inaudible.)

QUESTIONER: Mr. President, Blake Haider from Citi. What's your perspective -- we appreciate it's somewhat out of your hands at the central bank, but on capital controls, even somewhat weakened capital controls for a country trying to attract foreign investment?

URIBE: We need -- we still have a frightening situation. Therefore, we have to be very careful to give our people the rules for them to prosper. My government does not want a hyper-appreciation nor hyper-depreciation, devaluation. We need a stable, competitive exchange rate. Volatility is very dangerous, especially for countries such as Colombia. We have suffered volatility.

This year our exporting sector has suffered a lot because of the huge appreciation. Now, our exporting sector has made significant efforts to improve competitiveness, but with this appreciation, the result in productivity cannot be translated into result into -- in competitiveness.

Therefore, my government was right to introduce differentiation between capitals bringing to the country with long-term vision and capitals coming to the country with the idea of short-term profits for the period of huge appreciation and as you know -- and I suppose you know, because of your first introducing limitations to that short-term capital.

At the moment, we saw the reverse in the appreciation trend. We began to make the limitations. And two weeks ago, we dropped our limitations for those certain capitals coming to the country to intervene in the stock market.

The only limitation we already -- we still have in place is the limitation for short-term capitals to go to looking for fixed rent or papers with fixed rent. The minister of finances is looking very closely the evolution of the economy and our idea is, at the right moment, we will eliminate these limitations as we have done with other limitations.

But these are in -- I -- (inaudible) --with the understanding of Wall Street about it's the worst for private investors is to have political instability in an economy. If we cannot protect the competitiveness of our exporters, we run the risk of political instability, what is a very bad part for investors. What we have done is to preserve political stability in our country.

MODERATOR: Yes, up here.

QUESTIONER: Nancy Kezner (sp) from -- (affiliation inaudible). You spoke of the narcotraffickers being active beginning in the 1960s. Through several administrations, that continued to grow. How did you find the personal fortitude --

QUESTIONER: How did you find the personal fortitude and the courage to do what you did? And were you afraid?

URIBE: If I think in these matters, I will get scared. (Laughter.) And I am afraid to be scared. (Laughs, laughter.)

Apologize. (Laughter.)

MODERATOR: Yes, please.

QUESTIONER: Bill Sherer, Houlihan Lokey. We have a problem here in this country I'd like you to comment on. I think it's linked to some of the challenges you face as well.

To use layperson's words, I think we have an incoherent immigration policy that is not helping the fabric of this society be cohesive or coherent, your third pillar. And while you don't get asked this question often, I guess, I'd like you to share any thoughts you might have had about what we should do, to improve the way we deal with our immigrants. And hopefully that builds a stronger and better bridge to your country.

URIBE: Six years ago, when I was elected for first time, Colombians living here in the States requested Ambassador Barco, who was our first minister of Foreign, first in our administration, requested her on a need to ask the government of the United States for -- (inaudible). We made comments to your government. But you know that during the last time the United States had not granted this status.

When I speak with Colombians living here in the States, they urge us on the necessity to legalize their situation in the States. They work honestly. They have the right. But we understand that the United States, the government, has to be careful to not allow massive immigration.

Therefore we consider that the best combination could be to legalize, in the United States, those working honestly and to work with soft conditions, in this case, with Colombia to help these countries for their people not to go to other countries.

The free trade agreement is one way. It's one of the ways we need for investors to come to our country, to provide our people with opportunities. And the more of our people find opportunities in our country, the less they will want to flee the country.

MODERATOR: Mr. President, there are many questions left. But we have arrived at 7:30 p.m. and we will have to bring this very interesting session to a close. But again on behalf of the Council on Foreign Relations, I want to thank you for your frankness, your energy and your willingness to come and speak with our members.

Thank you again. (Applause.)

.STX

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