Colombian Update : Ivan 1st of Colombia Up and Running

UP AND RUNNING

Let’s start the final note of the week in a nice safe space....politics, I jest of course because at this moment in time this aspect of Colombian life is just lacking Billy the Kid for it to turn into the Wild West. On Tuesday President Duque was inaugurated in front of the massed ranks of Uribistas in downtown Bogota and even before he got to make a speech there was controversy. Senate Head Ernesto Macias, who few had heard of previously, from Duque’s own CD party went all Donald Trump during his speech, heavily criticizing the outgoing Government and defending the propriety of his own party - on an occasion which requires no more than “I am honoured to be leading the Senate during these momentous times and look forward to helping lead Colombia forward under the Presidency of Ivan Duque” it appears too much Cool Aid had been partaken of and a spiteful speech was the result. The net result of Speech 1 is that several senators that Duque will need to work with to achieve real change stood up and left before Speech 2 - even the VP appeared to mouth some choice words at the head of the Senate. Even before this ex President Uribe had been busy busy on Twitter promoting a media campaign of the most dubious nature in terms of content and style claiming basically that Santos had left the country in a Dickensian state - of course this is all part of the game but ‘time and a place’. The problem of course was that Ivan I of Colombia made a very conciliatory speech which struck all the right notes in terms of taking the country forward, ending conflict etc, it was on message for the occasion and cannot offended anyone - he reminds me more of permasmile Tony Blair every day. Those mixed messages from three different powerful members of the same party immediately led to a social network frenzy related to who is running the country and those differences continued over the next day or so as the President reiterated from day one his support for the anti-corruption referendum on August 26th and some more broad brushed comments about tackling corruption overall. Again he is not aligned with many of his party including Uribe and people are wondering whether this is a sign of things to come or simply a one off case. It is worth casting our mind back to before when Duque was even a candidate, there were literally members of his party who wanted him out for being too soft on several subjects - I am not suggesting that Duque will follow Santos’s lead and turn his back on Uribe but such dissent within the party is a worrying sign at this juncture. TOUGH POLLS AHEAD ? President Santos according to CNC left office with a 47% approval rating which is the highest in some time, this is perhaps because in the twilight of his Presidency he was less candid and opened up a little more - his communications team who to many have been an Achilles heel for the past eight years have finally come good. There was another poll by RCN which had him at a lower level but that is like asking Bill Reilly to run a vox-pop on Donald Trump. My suspicion is that within twelve months President Duque will be polling below 47%, perhaps well below, and the reason is fairly simple - it is hard to see what he can do over the first few months that will prove universally popular. FinMin Carrasquilla has again been talking about expanding the tax base by millions of people and whilst that is absolutely the right move, in fact all should contribute, it is going to bring a social network firestorm - it should be remember that in Round 1 of the election 60% voted against Duque and that will make the polls tough work. The only feasible way to counterbalance this is via a booming economy with the associated job creation or a major advance in terms of corruption where there is a lot of fat (or even marmalade as they call it here) but which will be a minefield to navigate. The economy is in good shape and again this week we had a very tidy inflation number - we may not get to the Government’s initial estimate of 3% in December but we won’t be far away, the issue of course is that if the economy is expanding where is the demand pressure ? Likewise the stock market is stubbornly refusing to rise, concerns over US rates are troubling emerging markets and with no prospect of rate increases in Colombia traders are watching carefully. Of course to this we have to add in the impact of broadening the tax base, Carrasquilla could delay the move in order to not upset the middle class unduly but he needs to lower corporation taxes and he needs to balance those book. If taxes go up, as we saw with the hike from 16-19% in VAT people will become circumspect about purchasing, at least until they adjust for the lower disposable income. Another worry for the Government will be the recent easing in the oil price, there is a potential dividend boost from Ecopetrol coming in early 2019 but every dollar in the price counts - perhaps a few more drones over the skies of Caracas might help. By the way after this weeks events and the images of fleeing soldiers one wonders if Nicholas the bus driver is sleeping as well as previously ? SUGGESTION So there is some serious juggling to be done over these first months - as previously discussed there are serious challenges ahead in terms of taxes, justice, corruption & education and here is my personal suggestion for an early victory in case Ivan is reading ! Clean up the prison system, remove every official, allow a PPP to rebuild new bigger modern prisons - this would remove the biggest bottle neck in the justice system, stop convicted felons from continuing to operate from behind bars and allow enough space for those who those who are convicted to be sent down and left in the hole they deserve and where they cannot continue causing mayhem on the streets.