Rumblings in the Jungle

Colombia’s security situation has improved drastically in recent decades but threats to security persist, both from criminal gangs and disgruntled communities.

By: Luke Taylor

A local film is topping the Colombian box office. Birds of Passage focuses on the lives of indigenous Wayuu clans in northern Colombia in the 1960s and 70s, the time of the Bonanza Marimbera, when the region’s desert airstrips made it the exit point for illegal marijuana cargos.

More artfully than most Colombo-narco titles, the film vividly illustrates the extent to which greed and criminal interests can quickly envelope local communities once they realize the true value of the crop. It’s a timely reminder. Despite the very real security improvements that have made Colombia an up-and- coming tourist destination and led to vastly reduced violent crime rates in major cities, rural areas continue to pose security threats to underprepared enterprises.

Many a grizzled geologist or mining engineer can be found propping up the bar in Toronto or Vancouver with cautionary tales about investing in Colombia. Over the last decade dozens of junior companies left the country. Most due to falling commodity prices and bureaucratic deadlock but a significant minority experienced conflicts with local communities or illegal miners, or extortion from criminal gangs. On rare occasions this spilled over into violent actions such as the incineration of helicopters and even the kidnapping of a miner from hold-out guerrilla groups.

Cannabis investors would do well to be wary. With the illegal routes for selling marijuana as profitable as ever, criminal groups could come to see legal marijuana projects as a new source of revenues. “Cannabis is green gold”, one local company manager told CCI. “It moves thousands of millions of pesos in micro-trafficking, and more at the macro level. Imagine if these gangs knew your harvest was ready, they could easily steal it and sell it in the black market in no time at all.”

The good news is that many security risks can be mitigated by planning properly and avoiding complacency. CCI spoke with entrepreneurs, investors and security analysts to determine the key security threats to the industry, the scale of these threats, and when they are likely to arise.

Cannabis investors would do well to be wary. With the illegal routes for selling marijuana as profitable as ever, criminal groups could come to see legal marijuana projects as a new source of revenues

THREATS: Perhaps victims of sensationalist news or overly dramatic television series, many first time investors in Colombia often have a warped sense of the threats businesses may face when operating in the country. In the last 16 years, under the governments of Alvaro Uribe and Juan Manuel Santos, the security situation across most of the territory has improved dramatically.

The 2016 signing of the peace deal between the Colombian government and the country’s largest guerrilla group, the FARC, earned out-going president Santos a deserved Nobel Peace Prize. Kidnapping and murder rates are at their lowest in 40 years, although the latter, at 23 per 100,000 inhabitants is still far higher than the global average of 5.3. But just as Colombia, over the last two decades at least, has not been as violent as its outside reputation suggested, the end of the conflict with the FARC does not mean that Colombia became Switzerland overnight.

For starters, a second lesser-known guerrilla army, the ELN, is currently engaged in peace talks with the government. Focussed in the border regions near Ecuador and Venezuela, the group makes a lot of noise about its opposition to foreign corporations and has traditionally attacked oil and coal installations. It continues to use kidnap for ransom, a tactic the FARC renounced in 2012.

Whether the ELN remains a continued threat will depend greatly on the current peace talks. New president Ivan Duque stated his intention to pull out of the peace talks during the election campaign. However, since taking office Duque has said he will take 30 days to discuss the matter of the ELN with the United Nations and the Catholic church, two groups that have pushed for continuing dialogue. What threat do the ELN pose to cannabis firms? Potentially a major one, but only if firms are foolish enough to establish cultivation projects in areas close to the guerrilla’s operational capacity. Such areas are so remote as to be unattractive anyway.

A more relevant threat to most foreign investors in the Colombian countryside comes from organized crime. The vacuum left by the disbanding FARC has also led to the creation of splinter groups focused on drug trafficking. Local researchers estimate there are up to 5,000 operatives across 70 criminal groups of which 1200 are former FARC fighters. This is far lower than the FARC’s 1990 peak, when it numbered over 17,000 but the remnants still cause headaches for the government. In April this year a FARC splinter group murdered hostages taken across the border in Ecuador.

“Across the country, the first threats are FARC dissidents, the ELN, and other criminal bands”, says Santiago Gaviria, a former coronel in Colombia’s armed forces. “They are going to want to obtain all this medicinal marijuana and sell it into the recreational market”, he warns. “They are always going to be a threat for the cultivation of cannabis.” Industry stakeholders should monitor progress on two of Duque’s pre- election pledges. Should he take a hard line approach to the ELN – as many of his more conservative supporters want – a breakdown in the peace talks could lead to increase military actions against the group. While this could weaken the group, it would also delay any chance of a peaceful resolution to the conflict, and increase the chances of the ELN returning to attacks on multinational companies.

LOCAL THREATS: A second key proposal is the return of aerial fumigation to combat rising coca production in rural areas. This strategy was banned under the Santos administration and its reinstatement would prove very unpopular in rural areas, increasing the chances of general conflict.

For most cannabis farmers the major security threats facing their businesses come from local the local level. Either from small crime gangs looking to make a quick buck or alienated communities opposed to the entrance of multinational companies. At present most cannabis cultivation licenses have been awarded to projects in the departments of Cundinamarca and Antioquia – which surround the major cities of Bogota and Medellin respectively – as well as Cauca, in the south of the country. A smaller number of licenses have been awarded to projects in the northern department of Santander and in the flat plains of Meta in the east.

“All of those departments have very different community and security environments,” Sergio Guzman, an independent political risk consultant told CCI. “In Santander we see communities demanding a popular consultation on the topic of marijuana cultivation. In Cauca we see more narcotrafficiking groups operating routes to the Pacific ocean.”

Since the beginning of the year Cannavida, a local company with Canadian investment, has been the focus of protests in Barichara, Santander. Some locals say the 17.5 hectare project will threaten water resources and demand a public vote on whether to allow such projects. The region has previous experience in blocking major mining projects.

In other rural areas, local gangs may be the principle threat. “Cannabis—a weed—only generates huge profits when it’s illegal and thus scarce,” says Adam Isaacson, Director of WOLA’s Defense Oversight program, which closely monitors the presence of armed groups in Colombia. “Legal cannabis will have far lower profit margins: it will be a business like any other. The main security challenges that “regular” businesses face in Colombia come from small-scale criminal groups that rob, extort, and assault”.

CCI spoke to Sergio Guzmán, an experienced political risk analyst based in Bogotá, to further understand the most relevant social and security risk areas in the country.

Some of these groups may hold affiliations with national organized-crime networks such as the Clan del Golfo, “but the same is true of the gangs extorting regular businesses”, the analyst says.

This threat of national groups could increase should they adopt a strategy of diverting high-quality medicinal product to the recreational market, or if businesses are forced to deal in large sums of cash due to banking limitations (as is the case in the U.S.), Isaacson warns. Either of these would mean the industry quickly becomes more attractive to larger, national groups.

BE PREPARED: To minimize the threat of criminal groups the government has established formal security requirements for the sector. But whilst several military intelligence experts told CCI the requirements are more than adequate, many operating within the industry remain unconvinced.

Various business have opted to purchase greenhouses guarded by the latest security technology or at least covered cultivation sites as opposed to cheaper open- field cultivation sites. “No amount of security personnel is enough to protect an open field” a lawyer told CCI. It is also becoming quickly apparent that the preferred locations for cultivations sites are within an hour of airports to minimize security risks in transit (SEE MAP). Some firms are reportedly considering utilizing helicopters to transport product, a costly compromise that is out of the reach of small businesses.“One of the things I have been repeating for years is that it’s very difficult to put a blanket rating on Colombia”, says Guzman. “All politics is local and all criminal activity is also local”.

In Cauca, for example, as well the presence of various armed groups, there are many recreational drug plantations who may see legal cultivations as a form of competition that endangers them. Although it offers great cultivation possibilities, “in Cauca everything is a risk”, advises Guzman.

Thus businesses should extensively evaluate the threats in the areas they propose to operate - principally criminal groups, transportation options, local community relations and illegal drug cultivation. While some areas offer great advantages, these advantages could be outweighed by security issues. Investors should be equally vigilant when laying their money on the line.

“I would look where the licenses or project is based”, adds Guzman. “Secondly, look for the papers. Do they have policy, do they have insurance, do they have good relationships with the communities where they operate, and what are their relationships with authorities?”