Wall Street's Least-Favorite Candidate Tops Colombia Polls

(Bloomberg) -- Colombian presidential elections used to be about defending the country from leftists, not bringing them to the threshold of power.

Next year’s vote, the first since the end of a five-decade civil war, may be different. Ahead in recent opinion polls is Gustavo Petro, ex-mayor of the capital Bogota and a former guerrilla who’s promising to tax wealthy landowners and stock investors. He’s battling for pole position with two pro-business candidates, while other left-wingers also feature among the early frontrunners.

Wall Street's Least-Favorite Candidate Tops Colombia Polls

Colombia is the only major South American country that’s never had a leftist government. And as migrants from socialist Venezuela become a common sight begging for money on Bogota buses, now might seem an odd time to think about relinquishing that title.

The problem for establishment politicians is that as Colombia’s long war wound down, voter priorities changed. Security used to be a top concern, when guerrillas from the Revolutionary Armed Forces of Colombia, or FARC, were setting up roadblocks outside major cities and kidnapping thousands of people every year. 

Memories of Violence

Now that the rebels have been successfully disarmed, Colombians are more focused on issues like unemployment and health care. The oil-exporting economy has been squeezed since 2014 as crude prices slumped, and the government turned to austerity to shore up its finances. The central bank forecasts 1.6 percent growth this year, the worst since the global financial crisis.

As the guns fall silent, the left’s ideas are becoming “an option like any other,” according to Sandra Borda, dean of the Social Sciences Department at Bogota’s Jorge Tadeo Lozano University. The space for politicians like Petro will only expand in the years ahead as memories of violence slowly fade, she said.

What’s more, Colombia’s left was a target for violence as well as a perpetrator, and now its leaders are no longer getting singled out for assassination as they once were. A party formed by the guerrillas in the 1980s, an era marked by high-profile political killings, had two of its presidential candidates murdered. At a local level, violence is still common -- more than 70 activists and human-rights workers have been killed this year -- but assassinations of nationally-known figures have become a rarity.

Petro has long since made the transition to mainstream politics, quitting the urban guerrilla outfit M19 some three decades ago. In an interview at his Bogota office, he takes pains to distance himself from the free-spending ways that contributed to the disaster afflicting neighboring Venezuela.

Oil, Coal, Cocaine

More than most of its regional peers, Colombia has traditionally sealed off economic policy making from politics. Petro says he supports the pillars of that system: Central-bank independence, inflation-targeting, and a “fiscal rule” limiting the amount the government can borrow.

As mayor of the capital from 2012 to 2016, Petro boosted subsidies for water consumption and bus fares for the poorer residents from whom he drew most of his support, as well as banning bullfighting. Yet he also kept the city’s finances under control.

Venezuela’s leftist leaders Hugo Chavez and Nicolas Maduro relied on oil revenue to finance their projects. Petro, an enthusiastic environmentalist, says that’s not an option for Colombia, with its dwindling reserves; he predicts that the state oil company is headed for bankruptcy anyway, and says he’ll begin a transformation of the economy away from energy and mining.

“Over the last 30 years, Colombia has exported oil, coal and cocaine,” he said. “I don’t see how this benefits humanity. I want to export food and knowledge-intensive industrial products.”


Petro’s vision of an agricultural revival does echo the early Chavez era, though. The Venezuelan leader promised to “repopulate the countryside” and ramp up agricultural output by turning over farmland to the poor, a failed policy that his critics say contributed to the current economic crisis.

Petro points to millions of acres of farmland in Colombia that was bought up by cocaine traffickers over the decades, and used to launder money rather than produce food. He’s outlined a plan to tax the unused land, and eventually buy it up for cultivation by small farmers. A charge on stock dividends introduced this year should also be increased, Petro said.

When the former mayor invokes policies that have succeeded in other countries, it’s notable that Colombia’s left-leaning neighbors aren’t among his main examples. Petro said he’s an admirer of Denmark’s social policies. He said Colombia can learn from Norway about managing its energy revenues, and from Vietnam and Baltic states when it comes to improving its education system. Costa Rica gets a nod for its environmental policies.

A poll by research firm Datexco conducted early this month showed Petro ahead with 11.2 percent support; others have him sharing the lead with Sergio Fajardo, the business-friendly ex-mayor of Medellin, or with former Vice President German Vargas.

The Green Party’s Claudia Lopez and the leftwing economist Clara Lopez, who aren’t related to each other, also feature on some lists. Allies of incumbent President Juan Manuel Santos and his predecessor Alvaro Uribe, who between them have dominated the political scene for more than a decade, are nowhere to be seen.

Guns and Roses

Colombia’s opinion polls aren’t a reliable guide, especially at this stage in the contest with the field of candidates not yet clear. Petro has handicaps which will make it tough for him to go all the way to the presidential palace, said Jorge Restrepo, director of the political research center CERAC. He doesn’t have an established party backing him, and lacks the electoral machinery needed to get out the vote, Restrepo said.

Still, if Petro can stay in contention as May’s first round of voting nears, his plans might start to worry investors.

“The specter of a socialist candidate is certainly alarming,” Charle Gamba, chief executive of Canadian energy company Canacol, which has most of its operations in Colombia, said in an interview last month. Mario Castro, a strategist at Nomura Holdings Inc., foresees a “very negative” market reaction if there’s strong public backing for Petro -- or for the political party launched last month by the FARC. Where the guerrillas used a map of the country superimposed with rifles as their emblem, the new party has adopted a voter-friendly red rose.

Under the peace deal, the FARC party will have a guaranteed minimum of 10 seats in Congress through 2026. And, after decades of being widely disliked, the ex-guerrillas appear to be slowly gaining support. A Gallup poll in August found that 12 percent of Colombians now have a favorable opinion of the FARC -- higher than the 10 percent rating for the country’s traditional political parties.

So however far Petro gets next year, his vision -- of redistributing wealth in one of the world’s most unequal societies -- is starting to look like a vote-winner.