The first president elected in the post-National Front period, López Michelsen (1974-78), faced difficult situations in three areas: the economy, the guerrilla movement, and the drug trade. Subsequent governments inherited these same problems. The influx of foreign exchange from the coffee boom and the illicit drug trade created a glut of money in the financial sector that increased the rate of inflation. To counteract this, López Michelsen immediately instituted a stabilization program that included austere measures, such as cutting back on public investment and social welfare programs and tightening credit and raising the interest rate. By declaring a state of economic emergency, López Michelsen was able to pass unpopular yet necessary economic measures without legislative action.

Another key component of López Michelsen's economic policy was designed to improve income distribution. The cornerstone of this effort was the "To Close the Gap" program. This program addressed the rural sector by proposing to increase productivity and employment in the countryside and integrate the rural sector into the monetary market with the support of the Integrated Rural Development program.

The "To Close the Gap" plan had its greatest impact, however temporary, in the tax reform of 1974. The tax reform, instituted two months after López Michelsen took office, made changes in the sales tax, export taxes and incentives, import surcharges, the tax treatment of government agencies, and personal and corporate income taxes. The reform had four general goals: to make the tax system more progressive, to reduce the distorting effects of the tax system on resource allocation, to promote economic stability by increasing revenues on a one-time basis and by enhancing the built- in response of the tax system to growth in the national income, and to simplify tax administration and compliance and thereby reduce evasion and increase yields. The government recorded a short-term fiscal improvement; nevertheless, inflation and a failure to improve administrative procedures allowed for continued large-scale tax evasion and an ultimate drop in revenues.

The austerity that the López Michelsen administration forced on the country had unpopular consequences. Inflation outstripped wage increases, nontraditional exports faced unfavorable trade conditions, and the industrial sector entered into a slump. Students and labor groups engaged in periodic protests and strikes. In October 1976, López Michelsen imposed a state of siege following two months of strikes by social security employees. The continuing discontent with the government erupted again in September 1977 when the four major labor unions joined in a strike to protest the high cost of living. Under the state of siege measures still in effect, the administration declared the strike illegal. Riots following the government's attempt to suppress the strike resulted in twenty deaths. Several cabinet ministers resigned in protest over the way the strike had been handled.

Guerrilla activity resurged during the López Michelsen administration, although some groups actually became less active. The FARC was the most active, operating in rural areas in the departments of Antioquia, Tolima, Magdalena, Boyacá, Caquetá, and Meta. The M-19 kidnapped and held more than 400 people for ransom. The ELN, especially active in southern Bolívar Department, kidnapped several prominent people and ambushed army patrols. The EPL, however, declined in importance after the death of its founder, Pedro León Arboleda, in 1975.

Although López Michelsen did not view drug trafficking as a serious threat at the beginning of his administration, by 1978 he recognized the ruinous impact that the drug industry was having on the political and economic structure of Colombian society. Corruption financed by the drug rings permeated all levels of the political system. Those in office or campaigning for office who spoke out against the major drug traffickers rightfully feared for their lives. In some areas, prominent drug traffickers were so powerful that they were able to get themselves elected to local or state offices.

Although the narcotics industry contributed to a foreign exchange surplus and generated employment, its overall impact was detrimental to the national economy. The influx of dollars contributed to the increase in the money supply and the creation of a parallel economy that competed with the official economy for financial resources. The industry created "boom towns" in rural Colombia that rose and fell within short periods of time. The income provided by the drug industry was used primarily for conspicuous consumption rather than for productive investment. The slash-and-burn method of cultivating marijuana destroyed fertile land that could have been used for legal food production, resulting in both a damaged environment and a national need to import food. The parallel economy contaminated the official economy through the laundering of narcodollars, often through the "side windows" of government banks and the real estate industry. Drug traffickers also purchased legitimate businesses, such as banks, textile mills, and sports teams. The drug traffickers' control over a large portion of the illicit economy and a significant amount of the official economy undercut government efforts at national economic planning. In addition, government efforts to combat drug trafficking drained funds that could have been used more productively elsewhere.

In late 1977, observers mistakenly predicted that the Conservative Belisario Betancur Cuartas would win the 1978 presidential election because of the division of the PL into rival factions that supported Lleras Restrepo and Julio César Turbay Ayala. Turbay became the nominee of the PL after his faction won the most seats in the February 1978 congressional elections. The presidential campaign was largely personalistic in that neither candidate took specific positions on major issues. The candidates differed, however, in their reliance on partisan machinery. Turbay stressed the party connection, whereas Betancur, representing the minority party, claimed to be a candidate of its National Movement (Movimiento Nacional), which joined together Conservatives, dissident Liberals, remnants of Anapo, and members of the Christian Social Democratic Party (Partido Social Democrática Cristiano-- PSDC). Turbay won the presidential election by a narrow margin; approximately 60 percent of all voters abstained.

The Turbay administration (1978-82) inherited a slightly improved financial situation because the austerity measures instituted under López Michelsen and declining coffee revenues had produced a lower rate of inflation by 1978. Turbay focused his economic policy on reducing unemployment and avoiding an impending recession. A main goal was the decentralization of fiscal resources and the promotion of regional autonomy, which made public investment in infrastructure a priority. His National Integration Plan (Plan de Integración Nacional--PIN) of 1979-82 foresaw growth in public investment to reach 19 percent in real terms. Because government revenues from coffee exports were declining at this time, Turbay had to finance the growth in public spending by turning to foreign loans. The increased public spending thus contributed both to a renewed rise in inflation and to a massive increase in foreign debt. Attempting to avoid a recession, Turbay also encouraged foreign investment in Colombia and promoted domestic investment in labor-intensive industries to reduce high urban unemployment. In spite of increased government spending, Colombia experienced a recession caused by tight credit and high interest rates, a reduction in protectionist tariffs, grants of import licenses for industrial goods, smuggled imports, and a decreased world demand for industrial goods produced in Colombia.

Shortly after taking office, Turbay gave top priority to combating guerrilla activity and narcotics trafficking. Although designed ostensibly to counteract drug trafficking, the institution of a state of siege and the National Security Statute of 1978 substantially enhanced the government's ability to act against guerrillas.

Critics charged that the military and police forces used the security statute to detain indiscriminately "cultural subversives"- -including prominent journalists, artists, and scholars--who were suspected of being associated with left-wing elements. Threats to invoke the security statute in nonpolitical cases, such as protests for a better water supply, suppressed popular unrest. Persons arrested on political charges alleged that the armed forces had resorted to torture during interrogation. Although the government claimed that tough measures were needed to counter leftist subversion, critics asserted that repression resulted from the worsening economic situation. The deteriorating human rights situation drew criticism from leaders of both parties and from international organizations such as Amnesty International. Turbay lifted the state of siege and nullified the security statute in June 1982, shortly before leaving office.

Despite the severe measures taken against leftist subversion, guerrilla activity increased and reached a peak during the Turbay administration. Although the ELN was less active than during the López Michelsen administration, the FARC expanded its operations, especially in Cauca and Caldas departments.

The M-19 emerged as the most active guerrilla group during this period. In January 1979, members of the M-19 tunneled into a military arsenal in Bogotá and took 5,000 guns. Within a few weeks, however, most of the weapons were recovered, and many of the participants were arrested. In October 1979, more than 200 accused M-19 members were brought to trial in Bogotá. The delay of other military trials of M-19 members probably led to the movement's takeover of the embassy of the Dominican Republic in February 1980, in which fourteen diplomats, including the ambassador of the United States, were held hostage. The seizure ended peacefully when the kidnappers received safe conduct out of the city and a promise that the Inter-American Human Rights Commission would be permitted to investigate allegations of human rights abuses. By the end of 1981, the M-19 had shifted from purely urban to mostly rural operations and had formed a tenuous union with the other three guerrilla groups. In March of that year, Turbay proposed--and the Senate approved--a limited four-month amnesty for those guerrillas already detained if a sufficient number in the field were to lay down their arms. A second limited amnesty for those guerrillas who surrendered peacefully was approved for the period from February to June 1982.

Turbay also took a strong stance against drug traffickers. In 1978 the president gave the army a key role in the main operation to control drug trafficking and marijuana cultivation in the department of La Guajira, including allowing a military occupation of the region. Two years later, the government transferred responsibility for the antidrug campaign in La Guajira to units of the National Police. Combined efforts with the United States produced some success; for example, the joint Operation Tiburón, which began in December 1980, resulted in the seizure of more than 2,700 tons of marijuana. Despite some impressive victories, however, the drug traffickers continued to wield increasing economic and political power in the country.

In the early 1980s, evidence came to the fore linking some Colombian drug traffickers with both Cuba and the M-19. In 1982 a federal grand jury in Miami indicted four close aides of Cuban president Fidel Castro Ruz on charges of smuggling narcotics into the United States. According to the indictment, the aides assisted the operations of Colombia drug trafficker Jaime Guillot Lara, who, in turn, funneled arms and money on Cuba's behalf to the M-19.

A contradictory episode in the relationship between the guerrillas and the drug trade was the December 1981 founding of the right-wing "paramilitary" group Death to Kidnappers (Muerte a Secuestradores--MAS) by prominent drug lords Carlos Ledher Rivas and Jorge Luis Ochoa Vásquez. MAS apparently was established to intimidate and punish those guerrilla groups, especially the M-19, that had engaged in the ransom of key members of the drug community in order to finance their operations. MAS subsequently became a death squad, targeting left-wing politicians, students, and party members.

The post-National Front Liberal presidencies proved unable to stem the growth in guerrilla activity and narcotics trafficking. A divided PL thus lost support and the presidency to the PC, effecting a peaceful alternation of power between the two parties. In 1982 the PL presented López Michelsen for reelection, supported by the Turbay faction of the party. Opposing him from the LP was Luis Carlos Galán Sarmiento, a member of the Lleras Restrepo faction. In 1979 Galán had formed the New Liberalism Movement (Movimiento Nuevo Liberalismo--MNL) and accused the Turbay-López Michelsen forces of opportunism, clientelism, and corruption. The PC coalesced again behind Betancur and his National Movement. López Michelsen employed the partisan campaign style that Turbay had used in the previous election, counting on the Liberal majority to remain loyal to the party. Betancur retained his minority strategy of stressing coalition over party affiliation and received endorsements from Gloria Eliécer Gaitán, daughter of Jorge Gaitán, and from María Eugenia Rojas. With the voter abstention rate reduced to 54 percent, Betancur won a decisive victory, receiving support from some traditionally Liberal areas. The election represented the first peaceful exchange of power between the two parties since the end of the National Front.

Upon taking office, Betancur confronted the economic and social conditions bequeathed by his predecessors: economic recession, fiscal deficit, foreign debt, inflation, and unemployment. The parallel economy remained a major concern, as did the growing strength of drug traffickers. On the social front, Betancur sought to negotiate a peace with the guerrillas, offering them unconditional amnesty and legitimate participation in the political system.

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Source: U.S. Library of Congress