VZCZCXYZ0000
RR RUEHWEB

DE RUEHBO #0900/01 0382328
ZNR UUUUU ZZH
R 072328Z FEB 07
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 2543
INFO RUEHBR/AMEMBASSY BRASILIA 7388
RUEHCV/AMEMBASSY CARACAS 8659
RUEHLP/AMEMBASSY LA PAZ FEB LIMA 4727
RUEHZP/AMEMBASSY PANAMA 9963
RUEHQT/AMEMBASSY QUITO 5382
RUEAIIA/CIA WASHDC

UNCLAS BOGOTA 000900 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PTER PGOV PREL ECON CO PHUM PREF
SUBJECT: URIBE COMMITTED TO POVERTY REDUCTION BUT SUCCESS 
WILL BE CHALLENGING 
 
 
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Summary 
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¶1.  Colombia's poverty rate of 49 percent -- which reaches 
almost 70 percent in rural areas -- exacerbates the 
urban-rural divide and feeds social conflict.  President 
Uribe has boosted social spending, and improved economic 
growth and targeted social programs have cut poverty rates. 
Still, Uribe's public emphasis on security, coupled with the 
magnitude of the poverty problem and a high level of 
inequality, means he receives little public credit for his 
anti-poverty efforts.  The GOC's new "Strategy for 
Strengthening Democracy and Social Development" links 
increased social spending to the GOC's security policy and 
the Free Trade Agreement with the U.S.  Progress on all three 
will be needed if the GOC is to achieve its goal of reducing 
the poverty rate by at least ten percent by 2010.  End Summary 
 
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Half the Country in Poverty 
--------------------------- 
 
¶2.  Approximately 22 million Colombians live under the 
poverty line, with over 6.5 million in extreme poverty. 
Poverty is defined as an individual living on less than USD 
100 per month, and extreme poverty is USD 40 or less per 
month.  Between 1970 and 1995, sustained economic growth led 
to the poverty rate dropping from 69 percent to 49 percent. 
In 1996, the economy started to slow and poverty began to 
rise.  By 1999, Colombia was in the throes of its worst 
recession in seventy years:  GDP plummeted by 4.2 percent and 
a decade's progress fighting poverty evaporated.  By 2005, 
steady economic growth and strong anti-poverty programs 
brought the poverty rate back to 1995 levels.  Colombia's 
poverty rate is historically higher and more variable than 
the regional average:  between 1997 and 2005 Latin America 
poverty gradually dropped from 43.5 percent to about 41 
percent. 
 
Poverty Rates in Colombia 
 
Year  Poverty Rate  Extreme Poverty 
 
1995     49.5            15.5 
1996     50.9            17.2 
1997     52.7            18.5 
1998     55.3            20.8 
1999     57.5            25.4 
2000     55.0            19.0 
2001     55.2            18.7 
2002     57.0            20.7 
2003     50.7            15.8 
2004     52.7            17.4 
2005     49.2            14.7 
 
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Income Distribution and the "Two Colombias" 
------------------------------------------- 
 
¶3.  Income distribution in Colombia is among the worst in the 
world.  Colombia's Gini index (which measures income 
inequality) was 56.0 in 1995, rose to 60.0 in 1999 and 
dropped back to 55.3 by 2005.  It is now similar to that of 
Brazil and Peru.  Poverty is more acute in rural Colombia 
than in urban areas.  Over 68 percent of the approximately 12 
million people living in rural areas in 2005 were 
impoverished, versus 40 percent in the cities.  The extreme 
poverty rate is less than five per cent in Bogota, but it is 
almost 50 percent in rural departments like Choco.  The 
number of rural poor is less now then it was in the late 
1990's, but it stayed relatively flat between 2003-2005. 
 
¶4.  Pervasive rural poverty creates what Santiago Rojas, 
director of the Foundation for Good Government, calls the 
"Two Colombias."  Former Minister of Economic Development 
Mauricio Cardenas says Colombia's sharpest divisions, rural 
vs. urban, poor vs. non-poor, and strong state presence vs. 
weak state presence, largely coincide.  Moreover, Colombia's 
income inequality means economic growth trickles down slowly 
to the poorest segment of the population.  He estimates that 
only half of recent poverty reduction reflects growth:  the 
other half comes from programs targeting the poor. Cardenas 
said the key to bridging all three divides is to achieve 
sufficient state capacity to deliver quality education and 
 
health care to the rural poor.  Cardenas and Rojas said 
poverty, inequality and the rural-urban divide fuel 
Colombia's social conflict and impede growth. 
 
--------------------------------------------- --- 
Security Efforts Eclipse Social Welfare Programs 
--------------------------------------------- --- 
 
¶5.  The public sees President Uribe as weak on poverty. 
Gallup polling in late 2006 showed Uribe's approval rating 
exceeded 60 percent on all issues but one: his handling of 
poverty where a majority disapproved of his policy. Andres 
Davila, Director of Security Issues at the National Planning 
Department, said he worries that the emphasis on security 
creates the appearance that other issues do not matter.  A 
recent editorial in "El Tiempo," Bogota's leading daily 
newspaper claimed Uribe's focus on security suggests he does 
not care about poverty. 
 
¶6.  Despite the negative public view, Uribe has boosted 
spending on social programs from just over 7 percent of GDP 
in 2002 to almost 8 percent of GDP in 2006.  Fabio Sanchez, 
director of the Center for Economic Development, said most of 
the increase was on education: during this period the number 
of primary and secondary public school graduates went up by 
almost 20 percent and the number of college graduates 
increased by 30 percent.  Similarly, the number of people 
receiving health subsidies increased by over 70 percent, 
rising from 10.7 million in 2002 to 18.6 million in 2006. 
Increased spending on Internally Displaced People (IDPs) was 
especially dramatic:  while the government spent less than 
USD 300 million on IDPs from 1995-2003, it spent over USD 800 
million between 2003-2006.  Throughout the period, social 
spending substantially exceeded security expenditures. 
 
¶7.  "Families in Action," the GOC's flagship 
poverty-reduction program, began in 2001 under President 
Pastrana with about 80,000 families participating.  The 
number of families increased under Uribe to 500,000 families, 
or 20 percent of all families in extreme poverty, by 2005. 
The program gives conditional cash subsidies to the poor and 
is widely credited with contributing to the sharp fall in 
poverty and extreme poverty between 2002 and 2003.  Subsidies 
are discontinued if children do not attend school and or fail 
to have regular health check-ups.  The program has been a 
notable success:  school attendance and child height, weight, 
and vaccination rates all increased, while child labor and 
birth rate statistics decreased. 
 
-------------------- 
Spotlight on Poverty 
-------------------- 
 
¶8.  In mid-November President Uribe announced a new 
development plan that envisions reducing the poverty level to 
39 percent in four years and to 15 percent by 2019.  The plan 
contemplates a billion dollars per year of new funding for 
health, education and poverty reduction programs.  Money has 
not yet been budgeted for the plan which will be considered 
in a special session of congress starting in the first week 
of February.  The plan is incorporated into the 
administration's draft "Strategy for Strengthening Democracy 
and Social Development" which focuses on social welfare 
programs and poverty reduction.  A major component of the 
strategy is to strengthen the economy through structural 
reforms and trade liberalization.  The strategy links a 
U.S.-Colombia Trade Promotion Agreement to GDP growth, job 
creation and poverty reduction. 
 
¶9.  Families in Action will be the "axis of intervention" for 
poverty reduction under the new development plan according to 
Juan Pablo Franco of Accion Social (which manages the 
Families in Action program).  The number of families included 
would rise to 1.5 million, or about five million persons by 
¶2010.  Local governments would hire approximately 30,000 
social workers to help poor families meet specific 
anti-poverty benchmarks.  Benchmarks include, obtaining 
government-issued identification documents which are key to 
employment and access to social programs, going to school, 
and establishing clear title to land. 
 
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Comment 
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¶10. Colombia's poverty rate has fallen over the past four 
years due to strong GDP growth and effective social programs. 
 Unfortunately, the recent gains in poverty reduction and 
income equality have only returned Colombia to its 
pre-recession level of 1995.  The GOC's plan to reduce 
poverty to between 35-39 percent by 2010 will test historic 
limits of Colombia's social development, and may not be 
attainable given the current disparity in urban vs. rural 
incomes.  Social programs alone are unlikely to reduce 
poverty to the targeted levels.  Continued improvement in the 
poverty rate and income distribution level will also require 
consolidation of recent security gains and further structural 
economic reforms, including those that would flow from the 
entry into force of the U.S.-Colombia Trade Promotion 
Agreement. 
DRUCKER