Foreign investment flods Colombia’s Pacific

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?

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.

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

Quibdó: an international or a socially exclusive city?

The Chinese in Chocó: refuelling the conflict?

What next for Quibdó?

Coordinating a response

Quibdó: an international or a socially
exclusive city?