Counting the Cost
The economics of peace
As the peace process with Colombia's FARC offers economic hope, we look at the country's potential and challenges.
Last Modified: 27 Oct 2012 09:36

This week on Counting the Cost we look at two countries, two peace processes and the dividends which may follow.

Colombia, aside from the advances it has made with rebel group the FARC, has seen some remarkable growth in the last decade.

In fact, this year $17bn are expected to flood into the economy - most from the mining, oil and gas industries. All told, Colombia is Latin America's third-largest economy, worth some $378bn in 2012.

The country's oil industry is aiming to pump out a million barrels of oil a day by the end of this year. Current oil reserves are in the region of 2.3 billion barrels or, if it continues to extract at that rate, enough for seven years. And Bogota has started selling off shale-gas fields. Crucially these have oil potential too - enough to raise reserves by a further one billion barrels.

Colombia is also the fourth-biggest exporter of coal, and as a nation blessed with mineral wealth, it could be even more prosperous if it was able to successfully conclude peace talks with the FARC rebels.

Up until now, the FARC has not viewed the mining sector or its players with any great affection. In fact, the leader of the group said: "The locomotive of energy and mining is like a demon of social and environmental destruction. Let's put a stop to BHP Billiton, Xstrata and Anglo American." 

Mauricio Cardenas, the Colombian finance minister, sat down with Al Jazeera's Gabriel Elizondo to talk about a possible peace dividend and more.

He says: "We are very open to foreign investment and that has allowed this economy to expand very, very fast .... If we reduce poverty faster and we have a more equal society, Colombia can reach new heights. We are already growing at five per cent per year, we can be growing much faster with more social inclusion .... Our economy is strong, it will be strong no matter the results of the peace process."

The spoils of peace

In the Philippines there has been a peace agreement between the government and the Moro Islamic Liberation Front (MILF), looking to end a decades-long conflict.

And, as in Colombia, there are plenty of spoils to potentially go round.

The country's economy is worth $225bn - smaller than local rivals, but almost triple what it was a decade ago.

Unemployment rates have also improved - currently standing at 6.9 per cent, down from 14 per cent in 2002. But poverty remains the country's most critical problem. According to 2009 statistics from the World Bank, more than one-quarter of the population falls below the poverty line, with almost 42 per cent earning less than $2 a day.

So how does, or could, peace tie into all of this? Can peace make a meaningful difference to the country's economy?

Jamela Alindogan speaks to Cesar Purisima, the Philippines finance secretary, in the wake of the deal signed with the MILF.

Purisima says: "It's important that we do it properly, work on the fundamentals and make sure that we execute it properly to make sure that it is lasting. Given that it's a hard-won peace we have to make sure that it works. Clearly we need to make sure that we invest not only on the economic infrastructure but also in the social infrastructure so that we can prove to everyone that peace is better than war."

Watch each week at the following times GMT: Friday: 2230; Saturday: 0930; Sunday: 0330; Monday: 1630. Click here for more Counting the Cost.

Follow Kamahl Santamaria @KamahlAJE and business editor Abid Ali @abidoliverali


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