Twelve years of growing prosperity was made possible by curbing crime and corruption and enforcing laws that made it easier to create and run businesses. As a result of that Colombia is about to surpass Argentina (in GDP) to become the second largest economy (after Brazil) in South America. What could derail this is a return of the traditional bad habits (corruption and violence). In the past, too many businesses and politicians used money and violence, not talent and fair play, to compete. After a period of relative peace and prosperity it's easy to start slipping into the traditional bad habits. That has always led to warlords, anarchy, and poverty for most Colombians. The FARC promised a communist dictatorship and peace back in the 60s. The collapse of European communism in 1989-91 made it clear that a FARC victory would not bring prosperity or freedom. But if the rapacious warlord mentality fueled by corruption and lawlessness returns, the prosperity will disappear. The gangster and gunslinger mentality is still out there, always looking for an opportunity to take over again.
Brazil is increasing its operations against cocaine smugglers operating from neighboring Bolivia, Peru, and Colombia. Brazil has the largest economy and population in South America and is the second largest market (after the United States) for cocaine. Because of intense Colombian military operations, 90 per cent of cocaine enters via Bolivia and Peru.
Venezuela is being forced to import more gasoline and other refined products because the government promised to build more refineries, but has not done so in the last decade. Instead the government seized existing refineries from their owners, fired the management, and installed political appointees who have run the refineries so poorly that production has been declining to the point where not enough refined products are produced to satisfy domestic demand. Another big problem is the smuggling of gasoline (petrol) to Colombia, where it sells for more than fifty times the subsidized price it can be bought for in Venezuela. Corrupt politicians and police in Venezuela have hampered efforts to curb the smuggling.
The corruption and efforts to create a centrally controlled economy in Venezuela has created poverty and political and social chaos is brewing. Price controls have driven many companies out of business. Shortages are handled with imports, using oil revenue. There is not enough oil income to deal with all these problems. The government has borrowed heavily to prop up the economy until after the October 7th presidential elections. Economists and bankers warn that there will be a major recession then, because the price controls make it impossible to produce and sell a lot of goods inside Venezuela and the country has reached the limits of its borrowing. Foreign lenders are worried about the ability to repay loans, especially in light of the decline in the price of oil. The Chavez government is betting on an oil price increase to save them. Chavez has run the national economy into the ground with such gambits and if he survives his cancer and wins another term as president he will have no cash or credit to sustain his ruined (by mismanagement and corruption) economy. His followers are planning a more oppressive police state as a solution, whether their leader survives his cancer or not. Many Chavez supporters are fed up with the empty promises and growing police state tactics and are openly opposing their former socialist hero. It's getting ugly.
August 28, 2012: Police arrested five men and accused them of carrying out a May 15th assassination attempt against the interior minister. The five were apparently part of a criminal gang hired by FARC to carry out the attack that left five dead (two bodyguards and three civilians).
August 27, 2012: In central Colombia a FARC car bomb went off near a police station killing six civilians, including two children. These attacks make FARC more unpopular but the leftist rebels are largely on the defensive and no longer have the manpower to just go in and drive the police out of towns and villages like they used to.
The government announced that an agreement had been reached with FARC over peace negotiations. These talks might go nowhere, but FARC has an incentive to make it work before constant government military and police pressure shrink the leftist rebel organization any more. The government goal has always been an end to FARC as an armed group (using some form of amnesty and access to the growing number of jobs created by the booming economy). The FARC goal (during peace talks) has always been some kind of ceasefire that would enable the rebels to rebuild their strength. The last peace talks were a decade ago and failed because of the FARC efforts to use the ceasefire to rebuild and not negotiate any long-term peace deal. The smaller ELN is also willing to negotiate but refuses government demands that the group halt its criminal activities (mainly kidnapping and extortion) first.
August 21, 2012: An ELN attack on electrical transmission towers shut down the electrical power grid in Arauca province for days. Over 100,000 people were affected in this area along the Venezuelan border.
August 19, 2012: In the southwest (on the Ecuadoran border) FARC blew electricity transmission towers as well as a portion of an oil pipeline. FARC gunmen attacked repair crews and left booby traps at the site of the pipeline break. This left many people in the border area without electricity for over ten days. FARC believes that these attacks will make people angry at the government and more favorably disposed towards the leftist rebels. But the population tends to blame FARC for what the rebels have done to make everyone miserable.
August 14, 2012: In the east, ELN released two women it had kidnapped on July 24th.