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Foreign investment flods Colombia’s Pacific

Colombia’s Pacific is a neglected part of the country. Foreign investment is now heading there, fostering a type of development which breeds inequality and brings little benefit to the locals. Español

Quibdó airport. Source: Diálogo Chino. All rights reserved.

When Ivan Duque, the winner of the first round of the elections in Colombia on May 27, refused to participate in the third presidential debate in the Pacific port city of Buenaventura last month, critics interpreted it as a sign of the Colombian elites’ historic neglect of a desperately impoverished part of the country.

Chinese investors, however, have been looking to make significant investments in the Chocó region. In doing so, they will exacerbate an unequal form of economic development based on the extraction of natural resources that brings little benefit to the local population.

Capital Airports Holdings Company (CAH), a company owned by the Civil Aviation Administration of China (CAAC), plans to invest almost 2 million dollars in modernising and expanding the airport facilities of the regional capital, Quibdó, a city almost isolated due to its challenging geographical conditions and unsafe road connections.

Now, the possibility of establishing international flights to and from Quibdó could connect the city to global markets.

The deal with CAH includes a 15-25 year concession to operate the airport and an increase of its cargo capacity, which will enable China to secure its monopoly on exports from the region’s agriculture, forestry and mining sectors, the share of which has already grown from just 2% a decade ago to 93% last year, according to data from Colombia’s Central Bank.

Quibdó is so underdeveloped that it lacks water pipelines or a proper sewage system. It has one of the highest rates of poverty in the country, with poor access to healthcare services, low levels of education and recreation infrastructures, and high levels of corruption.

With this in mind, it is difficult to argue that the investment in modernising and extending the airport is a priority for the local community. So who stands to benefit?

Pelenque neighbourhood in Quibdó and an improvised soccer field next to the Atrato River. Source: Diálogo Chino. All rights reserved.

Quibdó: an international or a socially exclusive city?

Quibdo’s local inhabitants (including local academics) speak proudly of the forthcoming internationalisation of the city and the progress that this project will bring to the region.

However, an important consequence of the foreign direct investment (FDI) is that improved transport infrastructures will pull in more foreign investment and facilitate the expansion of extractive activities in El Chocó.

In the last decade, extractive industries such as gold mining have developed and expanded in El Chocó with enormous environmental and social consequences.

This new investment is already tangible in Quibdó. In 2017, a private real estate company began constructing a new shopping complex with cinemas and a casino and playgrounds.

And a private international consortium is promoting a business and residential complex with high-rise luxury towers which include a hotel, offices and apartments meeting ‘high international standards’.

So far, however, the activity in the mining and real estate sectors has brought few benefits for the city dwellers and it is difficult to argue that new projects like the above mentioned will guarantee a more prosperous future, considering that the properties and luxury facilities are absolutely out of reach for them.

A billboard promoting El Cabí shopping mall and a flyer promoting the Borde Balay residential and business complex. Source: Diálogo Chino. All Rights Reserved.

The Chinese in Chocó: refuelling the conflict?

In the last decade, extractive industries such as gold mining have developed and expanded in El Chocó with enormous environmental and social consequences.

According to national newspaper El Tiempo, by 2001 gold mining activities had destroyed 302 hectares of rainforest; by 2014 the hectares destroyed were 36.185.

The situation becomes even more complex when one takes into consideration that, in many cases, the production of commodities in the region is managed by illegal armed groups, which also control coca production and drug trafficking.

Therefore, extractive economies in El Chocó are not only environmentally destructive but also non-inclusive for they benefit only a small group of local elites.

According to the latest report by the Organisation for Economic Co-operation and Development (OECD), the profits from illegal mining in Chocó are laundered locally in sectors such as real estate.

Between 2010 and 2014, Quibdó’s construction sector recorded the highest rate of economic growth (13%) of any sector, followed by real estate and financial services (8,2%), according to the Colombian Central Bank’s annual Regional Economic Report (ICER 2015).

These economic activities have a direct impact on the urban environment and land use in cities such as Quibdó, and give an illusory impression of economic development.

That is, new construction developments are emerging which do not respond to a real growing demand for housing or leisure. Quibdó lacks the necessary State presence to ensure that at least some of the benefits are redistributed locally, or a resilient enough local economy to withstand a boom of this kind, driven by global trade and China’s demand for raw materials.

According to the latest report by the Organisation for Economic Co-operation and Development (OECD), the profits from illegal mining in Chocó are laundered locally in sectors such as real estate.

Data from Colombia’s Central Bank shows that since 2012 exports have become highly concentrated in the Chinese market. China’s huge growth in metal imports for construction materials began in the 1990s and reached a peak between 2003-2011.

According to David Harvey, rapid urbanisation and construction in China in this period enabled it to stimulate economic activity and overcome the global recession of 2008.

Metal imports for construction decreased after 2012, but this does not hold true for precious metals such as gold, which is an important element in high-technology manufactured goods such as smart phones, to which China’s economy has shifted attention in recent years. 

What next for Quibdó?

The airport concession to CAH promotes development in a “neoliberal” perspective, as a “compensation” for Colombia’s historic neglect of the Chocó region.

Moreover, the State is taking advantage of the fact that this incoming foreign direct investment (FDI) is perceived as positive for the development of Chocó, large parts of which were for many years controlled by the FARC.

The problem, as geographers Peck and Tickell point out, is that “local institutions and actors are now being given responsibility without power, while international institutions and actors are gaining power without responsibility”.

FDI in large infrastructure projects in Quibdó is transforming the city. Despite new real estate projects, shopping malls and casinos springing up and being marketed as a part of a modern, luxury playground, such a level of wealth is wholly unthinkable for the vast majority of its inhabitants.

They are the result of foreign investors putting pressure on nation-states with weak administrations and regions with high strategic resource value, that have few alternatives to opening themselves wide to global economic activity. 

Coordinating a response

Interest in developing “marginalised” Colombia’s Pacific comes not only from China and Colombia. Neighbouring Latin American countries also aim to benefit from its greater connectivity.

The Pacific Alliance economic bloc, which was created in 2011 and includes Colombia, Chile, Mexico, and Peru, explicitly seeks to “form a regional trading bloc and forge stronger economic ties with the Asia-Pacific region’.

Local institutions and actors are now being given responsibility without power, while international institutions and actors are gaining power without responsibility.

China’s investment agenda in El Chocó presents yet another challenge for Colombia in the post-peace agreement era, for the impacts of this growth in trade must now take into account not only the effects on social inequality but also the environmental degradation.

The response to China in El Chocó must come as a result of processes of participation and open consultation.

Many areas affected by mining are located in well-organised, collective afro-descendant and indigenous territories – grouped in the High Community Council of the Comprehensive Rural Association (COCOMACIA).

Ignoring these communities by granting mining licenses in their territory without prior consultation would be a violation of their territorial rights.

FDI should guarantee the benefit of both the investor and the local community, allow the transfer of technology and build local capacity.

With closer monitoring by the government in partnership with local communities, Chinese investment could act as a catalyst for the economic inclusion of local communities and the sustainable development of El Chocó, thus contributing to the peace building process. 

This article was previously published by Diálogo chino and can be read here

About the author

Edwar Calderón es un investigador colombiano en temas de desarrollo urbano y de usos del suelo en la Universidad de Edimburgo. 

Edwar Calderón is a Colombian postdoctoral researcher in urban development and land use change at the University of Edinburgh.


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