News
104 Dollars a Month = Middle Class!
0149 days
by Tom Germain
in News
It was just a few days ago that I expressed disbelief that Juan Ricardo Ortega, the director of the DIAN, the Colombian government’s taxation agency, said that if you make more than 4 million pesos a month, or about 2240 US dollars at current exchange rates, you’re rich. Now the DANE, the national statistical bureau, came out with a new formula that establishes what income level makes you poor in this country…
A middle class neighborhood?
If you’re a single person residing in a city, earning more than 187 thousand pesos, roughly 104 dollars, a month, you’re not poor. Conversely, a family of four earning more than 748 thousand pesos collectively isn’t poor. If one isn’t poor, than that would mean that one is middle class! This would also mean that in the worst barrios of Medellin or Bogota, there’s many thousands of middle class folk. The poverty calculations are even lower for people living outside of cities.
I have no idea how the DANE derives its numbers, but it seems rather cynical to claim that someone making just over a hundred dollars a month is anything but poor in a country where most things are far costlier than in the United States. Even with a monthly salary of two million pesos a month, a family of four cannot achieve anything that resembles middle class living.
What these new formulas do is permit the government to claim that there’s been a big drop in poverty levels here to about 37 percent. I don’t doubt that like elsewhere in Latin America there’s been a slight improvement in many people’s quality of life, but if realistic formulas were applied, I doubt even less that the true poverty statistic would be closer to 60 percent.
27,000 Dollars a Year = Rich
0156 days
by Tom Germain
in News
The DIAN, the tax collection branch of the Colombian government, recently said that anybody earning more than four million pesos a month, or about 2244 dollars, is considered rich in this country and should pay more taxes. Really?!
Colombians earning that much consider themselves middle class, which the DIAN scoffs at, saying that only two percent of the workforce earns that or more, which therefore places them in elite company. If that’s true, then it’s more a reflection of the sad state of affairs in this country of 44.7 million than anything else!
Quite frankly, although personally I don’t have any local income, we spend well over 4 million pesos a month here, and I can assure you that my family and I are definitely not living in the lap of luxury. We don’t own our own home or car here and truthfully, a million pesos is quickly spent! The arbitrarly high prices of goods in Colombia, as I’ve said before, do not reflect the true buying power of its people.
However, strange as it may seem, there is lot more visible wealth (as evidenced by skyrocketing real estate prices) here than the DIAN’s statistics imply, so what they’re really saying is that a handful of people control vast fortunes, or that there’s a lot more active dirty money out there than they care to admit!
In any case, I am a millionaire…in pesos!
Corruption: Bigger Problem than Violence?
0195 days
by Tom Germain
in News
Recently the headlines in Colombia have mostly been about newly uncovered multimillion dollar scams deep within government organizations and/or private enterprises which bill governments. Corruption has been sucking public funds for decades, but just now are cases being investigated and the perpetrators brought to justice, thanks to a concerted effort impulsed by president Santos himself.
Santos refers to corruption as the “rotten casserole” (olla podrida), and by all indications, the casserole spans the entire country, at all levels of business and government. The most recent scandal involves the DIAN, the federal tax organism. A former employee, aided and abetted by a cast of many within the organization as well as lawyers in private practices, bilked the system via fictitious companies claiming VAT (known as IVA here) refunds on non-existent exports.
Before that, an elephant was discovered in the emergency room of the public health system: several health providers had systematically been overcharging for services rendered or even totally fabricating invoices and then billing the government for them. The losses accrued by the subsidized health regimen are so severe that many think it may collapse as a result.
Another huge corruption banquet brought down the mayor of Bogota, who improperly assigned major municipal construction contracts to the now infamous Nule brothers, who simply diverted the funds and delivered little in terms of actual public works. Bogota’s road system is in shambles, as the Trans Millenio transit system expansion project makes no advances.
If that wasn’t enough, the agricultural subsidy scandal that had just broken before the last presidential elections, is still making news as now Felipe Arias, formerly referred to as “Uribito” for being Alvaro Uribe‘s knighted successor, is being prosecuted for dispensing subsidies against political favors while at the head of the program.
What I’ve just outlined is just a small part of the rot that plagues Colombia. It will take a long time and a herculean effort for this government to clean the stables, but so far its determination in bringing transparency and thus respectability to the country has been impressive. It had to come from the top down and to everybody’s surprise, Santos turned-out to be the man to set the anti-corruption movement in motion, unlike his predecessor who concentrated his efforts on national security. Could a culture of honesty install itself in Colombia? If so, it will surely influence other Latin American nations in how they deal with their own rotten casseroles, some of which are much more deep and rotted than Colombia’s!
From the perspective of a foreigner living in Colombia, I cannot say I’ve ever had any collisions with corruption in four years. I suppose that if I had a business here, my experience might have been entirely different, but it could not have matched what I endured in Mexico, where I lived in 2001-2002: there, I was expected to pay bribes to get absolutely anything done, even just to get a phone installed!
In closing, I must point out that the biggest motivator behind corruption in Colombia, and indeed in any developing country, are the low wages. Be it a policeman or a judge, salaries are only a small fraction of what people in similar positions earn in the United States or the UK. Bribes become an economic necessity and unless this is addressed, I see no long term solution. Ask yourself how would you react if you earned 300 dollars a month, not enough to live on, and someone offered to triple your wages for a “small” indulgence?
Is Colombia Finally Safe From Hugo Chavez?
0270 days
by Tom Germain
in News
Juan Manuel Santos had barely taken possession of the Casa de Nariňo in Bogota as Colombia’s new president in 2010 and he was already inviting his Venezuelan counterpart to a very public summit in Santa Marta. Was it not Hugo Chavez who had said during Colombia’s elections that if Santos won, there would be war? For years, the strongman in Caracas had made it a sport of insulting and threatening Santos and his predecessor, Alvaro Uribe, whom he often referred to as a mafioso. Why would Colombia extend an olive branch to an unrepentant enemy?
The Santa Marta meeting seemed a farce, Chavez taking the podium for hours, as if it was an episode of his Alo Presidente TV show back home. Santos looked effete. His strategy was obviously to assuage a belligerent foe as well as try to recover some of the estimated 800 million dollars owed by Venezuelan businesses to suppliers in Colombia, already hurting from the Great Recession. It has become almost surreal since then, both leaders referring to each other as best friends, and Santos going as far as saying he now believes Chavez’ claim that there are no FARC terrorist bases in Venezuela despite strong evidence to the contrary, including spy satellite photos of such camps, courtesy of the USA. Mutual gestures of goodwill have come in the form of extraditions, Venezuela sending a FARC ideologue to Colombia, and in turn, Santos ordering drug lord Walid Makled sent to Caracas rather than the United States, its closest ally.
As if that wasn’t enough, the treaty allowing US forces to use bases within Colombia which had so provoked Chavez’ ire has been suspended indefinitely (though there have been claims that it was a sham agreement conjured by Uribe to dissuade Chavez from any thoughts of military intervention). More recently Santos declared that Colombia indeed has an armed insurgency within its borders, departing from Uribe’s policy that all rebel groups in the country are narco-terrorists without any political goals. Previously, it was only Chavez and his acolytes who lent political credo to the FARC and ELN.
Is this all an elaborate subterfuge aimed at buying time? Time to finish the job of eliminating the illegal armed groups still terrorizing large swaths of rural Colombia? Time to upgrade Colombia’s armed forces against any future aggression? Or is this yet another instance of one nation trying to appease a neighboring mad man, a strategy which has never succeeded in all of history? It is difficult to believe that democratic countries could put their trust in a leader such as Chavez, who sees himself as the modern reincarnation of Simon Bolivar, who liberated a large swath of South America by military means in the 19th century, all the while the modern version is destroying all semblance of democracy in his own country. To make matters more worrisome, Chavez has been consistently beefing-up the non-defensive capabilities of his armed forces as well as forging alliances with every blacklisted dictator on the planet, including the currently beleaguered Muammar Gaddafi and Bashar al-Assad.
Let’s hope Santos knows what he’s doing.
The Odds of Chavez Invading Colombia Increase
0552 days
by Tom Germain
in News
The news just came in that Venezuela’s strongman, Hugo Chavez, is preparing for war and has ordered his army to position itself across the length of the border the country shares with Colombia. The pretext for this troop deployment is Chavez’s claim that outgoing Colombian president Alvaro Uribe is capable of anything in his final days in office (his term ends August 7), including launching an attack against Venezuela. Earlier this month, Chavez severed diplomatic ties with Colombia when Uribe announced publicly that he had irrefutable evidence that FARC and ELN, the Colombian rebel groups, have bases deep inside Venezuelan territory, and are aided and abetted by Venezuelan authorities.
Chavez’s exaggerated and irrational grandstanding is nothing new, having called for preparations for war with Colombia repeatedly over the past two years. Chavez has continuously referred to the neighboring nation as the puppet of the “empire”, namely the United States. Every leader in history who traveled the road to dictatorship has needed a scapegoat to justify drastic measures or distract public attention from the failure of his policies. Chavez finds himself at a crossroads on September 26 when parliamentary elections are scheduled*. Chavez currently enjoys an absolute majority in Venezuela’s parliament, as all opposition parties boycotted the previous elections in 2005. Chavez’ s opponents have no intention of sitting this one out, and it’s widely believed that his Bolivarian party will lose badly, a direct result of the hardships endured by common Venezuelans, enraged by the collapsing economy, scores of business and property expropriations on Chavez’s personal orders, massive radio and TV station shutdowns or takeovers, not to mention chronic electricity and food shortages.
It is therefore predictable that he might do anything, to paraphrase Chavez himself, to prevent his power base and his plan to transform Venezuela into a Cuba-like state from being eroded September 26. He could corrupt the vote, jail the opposition on trump charges (his favorite is conspiracy to assassinate him), or , and this is what I fear, fabricate a threat to national security that warrants canceling the election. His stars are currently aligned should he choose to do the latter: Uribe, his arch enemy, is about to be replaced by Santos, who has used a conciliatory tone; the USA, his only real military worry, is perceived as being weak under President Obama and doesn’t have the stomach to intervene militarily in the region, especially since Chavez currently enjoys the support of Russia.
Bearing in mind the considerable efforts Chavez has made to undermine the stability of Colombia over the years, one might get the sense that an eventual expropriation of the neighboring country could be one of his Bolivarian plans. There’s little doubt Chavez shelters, finances, and arms rebel groups on a continuing basis, and has intentionally sabotaged commerce between the countries in order to divide public opinion among Colombians (the strategy worked). He also meddled in Colombia’s presidential elections this year by proclaiming that if Santos won, there would surely be war (it didn’t work, Santos won by a landslide). Venezuelan police also regularly incarcerate ordinary Colombians living in, or visiting Venezuela, accusing them of espionage. Lastly, Chavez has relentlessly vilified and insulted Colombian dignitaries, especially Uribe, both on his daily TV show, Alo Presidente, as well as on the international stage.
This is one time I’m hoping I’m wrong, however even if I am about the timing, I have absolutely no fear of equivocation when I say that Chavez will eventually seek to emulate his imaginary mentor, Simon Bolivar, and “liberate” South America.
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