When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

x
EL ESPECTADOR

Coronavirus: Why The Crisis In Colombia Could Be Colossal

With its oil-dependent economy and mostly privatized healthcare system, Colombia is particularly ill prepared for the pandemic.

Empty streets during the Coronavirus lockdown in Cali, Colombia
Empty streets during the Coronavirus lockdown in Cali, Colombia
Salomón Kalmanovitz

-Analysis-

BOGOTÁ — The world economy is facing two enormous challenges. One is the pandemic, which can only be confronted by confining the populations of each country for a cautious period and will entail tremendous wealth loss as extreme therapeutic measures are taken. The second is the recent, brutal rupture of the quotas pact in OPEC, the Organization of Petroleum Exporting Countries.

China, South Korea and possibly Italy are stabilizing the contagion and will thus be able to start recovering their previous production levels. The United States and the rest of Europe, meanwhile, must go through the storm of controlling the coronavirus, so difficult to detect, trace and quantify. The underdeveloped world, with its lesser defenses, is awaiting its turn. Everywhere, a pandemic-induced recession is in sight.

In the United States, the private healthcare system makes its population highly vulnerable to the pandemic: 28 million people with no medical insurance, 11 million illegal migrants and 25% of the workforce without access to paid sick leave. This population is a breeding ground for spreading the virus and hampering the ability to fight it effectively. The great nation has become even more vulnerable since the Trump administration cut funding for public heath and medical research centers.

The struggle between Saudi Arabia and Russia for a greater share of the oil market, and Vladimir Putin's intention of pummeling U.S. producers behind the costly fracking system, were the last straw for the market's fragile equilibrium, sending prices tumbling from around $65 a barrel to some $30 now. U.S. crude is said to require more than $45 a barrel just to cover production costs.

Citizens making purchases before returning to lockdown in Cali, Colombia — Photo: Nano Calvo/VM/ZUMA

Colombia is highly exposed to both these crises. Its health system is mostly private, which means a precarious state of health for the large part of the population — approximately 52% — that lives and works in informal conditions. The shantytowns that surround metropolitan zones not only favor viral contagion, they also hinder its detection. We do not have a central command system that would coordinate efforts to fight the pandemic.

Complicating things even more is Colombia's over-reliance on oil, which constitutes 61% of its exports. The fall in crude prices is depriving the government of some 6.5 trillion pesos (nearly $2 billion) in Ecopetrol dividends and similar sums in reduced taxes. Finance Minister Carrasquilla trusted oil prices would remain stable and cut corporate taxes by 12 trillion pesos this year. Between the two, the public deficit will rise to 2.5% of the GDP and force gigantic public spending cuts on the government.

The public debt exceeds 56% of the GDP and global markets are currently not prepared to risk extending more credit to a government that has been fiddling with deficit figures and fiscal rules. The U.S. dollar is trading at around 4,000 pesos, which will affect inflation seeing as we are more dependent on imports now, especially of food.

The government has no tax savings, furthermore, to make up for the sharp fall in demand being provoked by falling crude prices and rising forex prices. Nor does it have enough fiscal capacity to confront the pandemic should it invade the country with the viciousness it has in poor countries like Iran. Let us hope it does not come crashing our way.

Keep reading... Show less
You've reached your monthly limit of free articles.
To read the full article, please subscribe.
Get unlimited access. Support Worldcrunch's unique mission:
  • Exclusive coverage from the world's top sources, in English for the first time.
  • Stories from the best international journalists.
  • Insights from the widest range of perspectives, languages and countries
Already a subscriber? Log in

When the world gets closer, we help you see farther

Sign up to our expressly international daily newsletter!
Geopolitics

The Days After: What Would Happen If Putin Opts For A Tactical Nuclear Strike

The risk of the Kremlin launching a tactical nuclear weapon on Ukraine is small but not impossible. The Western response would itself set off a counter-response, which might contain or spiral to the worst-case scenario.

An anti-nuclear activist impersonates Vladimir Putin at a rally in Berlin.

Yves Bourdillon

-Analysis-

PARISVladimir Putin could “go nuclear” in Ukraine. Yes, this expression, which metaphorically means “taking the extreme, drastic action,” is now literally considered a possibility as well. Cornered and humiliated by a now plausible military defeat, experts say the Kremlin could launch a tactical nuclear bomb on a Ukrainian site in a desperate attempt to turn the tables.

Stay up-to-date with the latest on the Russia-Ukraine war, with our exclusive international coverage.

Sign up to our free daily newsletter.

In any case, this is what Putin — who put Russia's nuclear forces on alert just after the start of the invasion in late February — is aiming to achieve: to terrorize populations in Western countries to push their leaders to let go of Ukraine.

Keep reading... Show less

When the world gets closer, we help you see farther

Sign up to our expressly international daily newsletter!
You've reached your monthly limit of free articles.
To read the full article, please subscribe.
Get unlimited access. Support Worldcrunch's unique mission:
  • Exclusive coverage from the world's top sources, in English for the first time.
  • Stories from the best international journalists.
  • Insights from the widest range of perspectives, languages and countries
Already a subscriber? Log in
THE LATEST
FOCUS
TRENDING TOPICS

Central to the tragic absurdity of this war is the question of language. Vladimir Putin has repeated that protecting ethnic Russians and the Russian-speaking populations of Ukraine was a driving motivation for his invasion.

Yet one month on, a quick look at the map shows that many of the worst-hit cities are those where Russian is the predominant language: Kharkiv, Odesa, Kherson.

Watch Video Show less
MOST READ