Colombia Hits Firms That Fund Guerrillas

REINING IN EXTORTION PAYMENTS

EVEN as Colombia hopes for a new boom from the hemisphere's largest oil find in a quarter-century, President Cesar Gaviria Trujillo is taking a tough stand with foreign firms in a bid to win the war against leftist guerrillas.

Included under a state of emergency declared Nov. 8 by Mr. Gaviria are measures to punish foreign companies caught making extortion or other payments to the guerrillas and banks who handle the rebels' accounts. The guerrilla groups - which have fought successive Colombia governments for 35 years in a war that has cost thousands of lives and hundreds of millions of dollars in economic damage - have stepped up attacks against the oil industry in response to a military crackdown.

The government's moves, intended to cut off a major source of financing for the guerrillas, are likely to have the greatest impact on foreign oil and mining firms accused of paying both ransoms for kidnapped employees and extortion fees to operate in rebel-controlled regions.

Gaviria's measures would punish not only extortion payments by foreign companies but also those by local officials who either sympathize with the rebels or cave in to intimidation. Banks who handle rebel accounts also face penalties.

While many foreign executives are publicly praising the president's crackdown, some privately question the strategy.

"Some investors are scared that the measure may be a Trojan horse hiding a new form of government expropriation of private property," says a US-born coal analyst in Bogota. "It could have a chilling effect on foreign investment."

Under the emergency decrees, companies caught giving money to guerrillas for any reason will immediately lose their state contracts. Such companies will also face unspecified economic sanctions.

Government officials have been working hard to calm fears that such sanctions may include huge fines and other forms of expropriation. They insist that foreign capital will not be scared away.

"On the contrary," Finance Minister Rudolf Hommes says, "once better security is achieved ... there will be new stimuli [for foreign investment]."

This argument has convinced many oil and mining executives.

"We've all been trying to coexist with the guerrillas in the countryside, and it hasn't worked," says a Colombian partner of an oil-drilling equipment firm. "Everyone agrees that it's time to fight this problem to eliminate it once and for all."

The test comes at a crucial time for foreign investment, which rose from $91 million in 1990 to $383 million last year. Much of the increase came in the petroleum sector after a foreign consortium led by British Petroleum announced the discovery of a huge oil field in eastern Colombia Oct. 29, the biggest find in the Americas in a quarter-century. But officials and executives say the petroleum sector should brace itself for a short-term surge in rebel violence before the situation improves.

The decree targeting extortion and ransom payments, touted as a break from the military approach of previous crackdowns, was announced with other measures hours after rebels killed 26 police officers guarding a remote oil field Nov. 8.

Other decrees issued Nov. 30 allow the government to claim idle land surrounding mining and oil exploration projects, which often has been occupied by guerrillas.

Last March the government broke off talks with the two main rebel groups, the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN) when they refused to consider demobilizing under government terms. The guerrillas were not impressed by a peace plan used to reach disarmament agreements with five other rebel groups including one known as M-19, which joined the ruling coalition and gained a Cabinet post in Gaviria's government.

EXPERTS say the FARC and the ELN have been able to survive the collapse of Soviet communism by learning to finance themselves instead of depending on aid from Cuba and elsewhere. The Army estimates that the guerrillas earned more than $200 million last year, a figure that would would rank them 13th among businesses in Colombia.

Gaviria and leading Colombian intellectuals say the guerrillas are common criminals more interested in making money than in leading a revolution.

Guerrilla leaders maintain that state corruption and economic injustice require a radical restructuring of the state that can be achieved only through revolution.

In recent weeks, the Army has killed scores of guerrillas. Rebels have responded by attacking the oil industry, including multiple dynamite attacks forcing the closing of the main pipeline running from the eastern Cano Limon field to the Caribbean coast. The armed forces now are offering a reward for the capture - dead or alive - of the leaders of the FARC and ELN, news reports said Sunday.

Hundreds of M-19 officials, including Health Minister Gustavo de Roux, resigned Nov. 24 to protest the government's tough line on the rebel groups. They fear that the presidential decrees restricting civil liberties will lead to human rights abuses by giving the Army too much power.

Recent polls show overwhelming public support for the new measures, and most of Gaviria's critics base their skepticism not on the decision to punish foreign firms but rather on the problems they expect in implementing the plan. Colombian bank secrecy laws and ransom payments made through foreign insurance companies make rebel funds tough to track, they say.

Says a foreign oil company executive in Bogota: "We don't see anything in [the government] measures that would disrupt business as usual."

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