Via Financial Times

Seven days of nationwide protests have severely weakened Colombia’s president Iván Duque, crippling his efforts to pass tax and pension reforms.

Tens of thousands of Colombians filled the streets of Bogotá on Wednesday as part of a second national strike against Mr Duque’s centre-right government. The tumult has led to night curfews in two of the largest cities, border closings, and thousands of soldiers deployed in the capital.

Mr Duque, a former Washington-based bank official who lacks a strong political base, has pledged a national dialogue with the protesters but has so far failed to reach agreement with the ad hoc strike committee on a format for talks, amid an atmosphere of mutual mistrust.

Demonstrators have copied the tactics of protests sweeping other Latin American nations, organising via social media and beating pots and pans to press their demands. Night-time looting and vandalism after the protests have caused more than $11m in damage in Bogotá alone, according to the city’s mayor.

The protests gained fresh impetus after Dilan Cruz, an 18-year-old struck in the head by a tear gas canister fired by riot police, died in hospital on Monday, prompting accusations of excessive police force.

Music students from the National University of Colombia play their instruments during protests in Bogotá
Music students from the National University of Colombia play their instruments during protests in Bogotá © Guillermo Legaria/Getty

Dismantling the riot police is one of 13 demands from the national strike committee, which is also pressing for Mr Duque to drop mooted tax, labour and pension reforms.

“The risks for Colombia are still considerable,” said Maria Luisa Puig, who follows the country for the consultancy Eurasia. “Similar to other countries in the region, Colombia is suffering the after-effects of the commodities supercycle . . . and fiscal constraints are limiting the ability of [the government] to keep up with rising demands for more social spending from an enlarged middle class.”

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While the committee of union leaders and students has been pressing for talks with the government, the protests resemble those in Ecuador and Chile in that they have been loosely organised and are not led by traditional political parties, which are seen as discredited and out of touch.

Mr Duque has offered a three-day annual sales tax holiday, measures to tackle high youth unemployment and reimbursement of sales tax to the poorest fifth of the population but this package has failed to quell popular anger.

The turmoil has alarmed investors, who fear that tax and pensions reforms needed to put government finances on a sounder footing will now be shelved, and raised the prospect of a credit rating downgrade for one of Latin America’s most stable countries.

“We think the main casualty of the ongoing commotion will be the financing law,” said Alberto Bernal of XP Investments in Miami in a client note. “We believe that if the reform is not approved, rating agencies are likely to be more inclined to take negative action on the sovereign rating front in the coming months.”

The peso has been hit, extending its fall over the past week to hit an all-time low of 3,509 against the dollar on Wednesday, down nearly 4 per cent this month.

The week of protest has surprised some observers, given that Colombia has one of Latin America’s best-performing economies, with growth expected to top 3 per cent this year, and has long been relatively stable compared with its neighbours.

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A man waves a national flag atop a statue of Simón Bolívar who led the independence of Colombia and other South American nations
A man waves a national flag atop a statue of Simón Bolívar who led the independence of Colombia and other South American nations © Juan Barreto/AFP/Getty

Jorge Galindo, a sociologist and columnist at El País newspaper, said corruption, unemployment and the faltering implementation of peace accords with Marxist guerrilla groups have been catalysts for the unrest.

“High-profile cases of corruption have been featured in the media recently and it gives the feeling of a political and economic elite using state institutions for their own benefit,” he explained.

“Everything would be OK here, but the problem is corruption that holds us back. They steal everything and leave crumbs behind for the people,” demonstrator Jurany Hincapie, 20, said on Wednesday while marching towards Bogotá’s central square.

Mr Duque’s ratings have dropped to about 30 per cent in recent months amid cabinet divisions and a failure to form a solid working relationship with Congress. Despite the economic growth, unemployment has spiked under his 15-month-old government, reaching its highest levels in almost a decade.