Colombia: Peace talks with country’s largest guerilla group have ended for now, likely increasing terrorism in border regions

Event

After a deadly attack on a military base, Colombia’s government ended peace talks with the country’s largest guerrilla group: the National Liberation Army (ELN). This attack is the latest in a string of violent actions involving the ELN in recent months. Violence has escalated since a bilateral ceasefire expired in the beginning of August, though negotiations were already stalling over the past half year.

Impact

In Colombia, it is not uncommon for guerrilla groups to use violent attacks to speed up bilateral negotiations with the government. However, this recent attack appears to have led to a (temporary) cessation of talks rather than providing new momentum. The end of the peace talks will likely lead to increased terrorism, especially near the border with Venezuela where the ELN is based. Colombia already holds the fourth worst place among Latin American countries in the World Bank’s 2022 Political Stability and absence of Violence/Terrorism indicator, following Haiti, Venezuela and Mexico.

Should terrorism and violence significantly worsen across the country (which is not the baseline scenario), it could pressurise the political violence risk (category 5/7). Colombia’s short-term political risk classification remains in category 3/7 with a stable outlook given its adequate level of foreign exchange reserves (7 months of import cover in July 24) and moderate short-term external debt. The country’s medium- to long-term political risk rating is in category 5/7 with a stable outlook as well. This elevated risk rating is mainly explained by three factors: the country’s elevated external debt to current account revenues ratio, its elevated external debt service to current account revenues ratio, and its dependence on oil. Nevertheless, public finances are deemed sustainable while institutions are relatively strong.

Analyst: Jolyn Debuysscher – J.Debuysscher@credendo.com