After three weeks of often violent protests, President Ivan Duque continues to struggle with the fallout of his aborted tax reform. Events of the past 24 hours demonstrate how fluid the situation remains while also providing clearer indications of Duque’s assumptions and strategy, both of which are politically risky. The outlook remains highly uncertain.
Duque appears to be betting on protests eventually losing steam, particularly as middle-class sectors grow frustrated with the disruption they are causing. The National Business Association of Colombia (ANDI) reports that some 70% of businesses have experienced some kind of supply chain disruption since the start of the protests on 28 April. Based on calculations by the Finance Ministry, the protests already may have cost close to 1% of GDP. This explains why Duque earlier this week issued an order for security forces to dismantle all roadblocks, while his administration has not acted convincingly to prevent the excessive use of force by police.
In parallel, Duque has held meetings with ex-presidents – most notably Cesar Gaviria (1990-1994), who remains politically active as leader of the Liberals, and who has on occasion been highly critical of Duque – in a bid to secure support for his institutional position. This should help allay fears that Duque’s position itself might be under threat – even if his cabinet looks shaky.
Duque has looked to shore up his position with other parties with two appointments yesterday, 19 May: VP Marta Lucia Ramirez will also now serve as Foreign Minister (a nod to the Conservatives), while the Trade Ministry goes to Ximena Lombana, who is associated with Radical Change (CR). Whether this is enough to stave off a congressional motion of censure against Defense Minister Diego Molano, scheduled for 25 May, remains to be seen. To lose Molano, having already ditched Alberto Carrasquilla as Finance Minister and Claudia Blum as Foreign Minister, would be a major setback. Looking ahead, Ramirez’s move is also significant because it removes one of the Right’s better positioned, possible presidential candidates from the 2022 succession.
A revised tax reform initiative has yet to be presented. Duque is probably waiting until the situation stabilizes. However, if no reform bill is unveiled by next week, the chances of presenting and passing any reform before 20 June, when the current congressional session ends, look remote. The new session beginning from 20 July could offer a final opportunity for a modest fiscal adjustment package, but the issue has become politically toxic. Meanwhile, yesterday’s confirmation by Standard & Poor’s of a ratings downgrade could also remove any lingering sense of urgency driving reforms.
Above all, Duque remains severely weakened. The government’s health reform proposal was sunk in Congress yesterday, and it is not clear that initiatives such as a new government youth employment subsidy are going to move the needle. Public indignation over police abuses is significant; there will be many on the streets who see the collapse of the health and tax reform initiatives as evidence that protests should continue. While talks between the government and National Strike Committee (CNP) continue, there is deep distrust towards the Duque administration, which is widely seen as acting in bad faith. The fact that the CNP does not represent the full range of interests among the heterogeneous protest movement complicates matters. In this context, protests could continue on-and-off for weeks to come.