Privatising Peace: The Plight of Rural Communities in a Post-Peace Agreement Colombia

By Laura Knöpfel 

26 October 2018

In 2016, following the Peace Agreement, Colombian legislation encouraged private corporations to invest in infrastructure projects in rural communities. (Image credit: Construcción Pan-Americana)

 

In November 2016, the Colombian president and representatives of FARC-EP (Fuerzas Armadas Revolucionarias de Colombia – Ejército del Pueblo), the then largest  guerrilla group of the country, signed a peace agreement to end the decades long war. The war particularly affected rural communities, some of which had been forcefully displaced several times. In its 2017 year-end report on Colombia, the UN Refugee Agency (UNHCR) estimated that 7.6 million people had been internally displaced persons (IDPs). The number of IDPs was the highest compared to any other country (including Syria) and amounted to 15 percent of the population. Notwithstanding the concluded peace deal, 75,000 people were newly displaced in 2017. In addition to forced displacements, rural communities had been severely impacted by the economic and regulatory presence of non-state actors such as the FARC, as well as paramilitary groups. Consistently, the peace agreement emphasises the participation of communities in rural development programmes. As this blog post will argue, post-peace agreement legislation on infrastructure development has ignored the peace agreement’s emphasis on community participation to the benefit of private corporations. Problematically, the privatisation and commercialisation of peace might lead to the continuing presence of non-state actors, this time, however, in the form of corporations.

The peace agreement’s participatory approach to rural development

Considering the conflict’s devastating impact on rural communities, it is only logical that the Colombian Peace Agreement of 2016 introduces in its first chapter a comprehensive rural reform which brings citizen participation to the fore. In specific, the subchapters on infrastructure and land improvement provide for communities’ active participation in the “prioritisation, implementation, monitoring and maintenance” of infrastructure projects. Further, the agreement envisages fast-track infrastructure projects for communities that suffered under the cultivation and trade of illicit drugs. They themselves should evaluate their needs and then prioritise the projects accordingly.

The state’s role would consist of providing technical assistance to and promoting the organisational capabilities of the communities. In the same manner, all the subchapters within the first part of the peace agreement on rural reform integrate the active participation of communities as a guarantee for transparency, citizen oversight and accountability. Infrastructure projects especially should only proceed in cooperation with the intended beneficiaries of the investment: the rural communities. Such a participatory approach is to be applauded.

Problematic privatisations within the implementation of the peace agreement

Embedded within post-peace legislation on infrastructure development in rural areas is the tax reform of December 2016. Section XI of Law 1819 of 2016 introduces two tax incentives for private corporations with the aim to attract investment into those rural communities that have been most affected by the conflict. Those specific communities belong to the 344 municipalities which the Ministry of Finance, the National Planning Department, and the Territorial Renewal Agency had defined as ‘ZOMAC’ (‘zonas más afectadas por el conflicto armado’). The more important of the two tax incentives is called ‘obras por impuestos,’ which could be translated as ‘public work for taxes.’ The second incentive consists of a progressive rate taxation, which severely reduces the income tax for companies that newly establish themselves in the ZOMAC communities.

Under the ‘obras por impuestos’ programme, companies with a gross income equal to or greater than 33,610 tax value units (in 2017 one tax value unit amounted to 31,859 Colombian Pesos[1]) can choose to invest in local infrastructure projects within ZOMAC communities, thereby receiving tax exemptions. The corporations can deduct the sum of investment from their annual income and revenue taxes. In this way, they can directly invest 50 percent of the amount of taxes owed into rural infrastructure projects. The corporations do not only invest but are responsible for all stages of the projects, from planning to maintenance. The executive branch of the affected municipalities can suggest projects which are then listed in an online registry. However, corporations themselves can also propose projects that they would like to sponsor. The projects must be approved by the Territorial Renewal Agency and the National Planning Department. The first round of projects and corporations was chosen in 2017. Thirty companies will invest COL$220.6 billion into 23 projects located in 25 municipalities in 12 different Colombian departments.

Lack of rural communities’ participation

Strikingly, Decree 1915 of 2017, which implements the tax reforms, is silent about active community participation in the infrastructure projects.  The tax programme’s mode of operation excludes the intended local beneficiaries. The neglect of communities’ active involvement in the development of their own region stands in stark contrast to the participatory image painted in the first chapter of the peace agreement. Worryingly, the state has externalised its public function without securing the active participation of the people that had been affected by the conflict and will be impacted by the investments. In the first round of projects, the chosen corporations will invest not only invest into roads (COL$142.1 billion) but also into education (COL$20.1 billion), drinking water and sewerage systems (COL$46.9 billion) and energy infrastructure (COL$11.5 billion).[2] The majority of the corporations chosen in the first round are active in the mining sector. As mining companies, it is at least questionable whether they have particular competences in the construction of roads, education, water and sewage facilities. The Colombian state does therefore not expect the private companies to implement the listed infrastructure project by themselves. Rather, they are allowed to contract third-party operators. The contract between the chosen companies and the third parties are of a private nature.

Contrary to the corporations that successfully proposed an infrastructure project, the third-party operators are not listed on the online registry. Their identity is unknown until they actually appear in the communities to execute the project. The constituting characteristic of the ZOMAC municipalities is how, in the past, they were affected by the armed, economic and regulatory presence of private entities. During decades, non-state actors fulfilled public functions which will most likely again be the case under the ‘obras por impuestos’ programme. The hope remains that the tax programmes are implemented in a way that is consistent with the participatory approach as promised by the peace agreement.


Laura Knöpfel is a Research Fellow and PhD candidate at the Transnational Law Institute of King’s College London. For her thesis on human rights accountability in the extractive industry, she spent several months in the Northern mining region of Colombia. 


[1] As of 23rd October 2018, 1 US Dollar is 3,086 Colombian Pesos.

[2] Editor’s note: These figures have been rounded to the nearest tenth.


Image source: https://www.construccion-pa.com/noticias/colombia-anuncio-primeros-proyectos-obras-impuestos/

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