Cocaine Brings Colombia More Revenue Than Oil: What the Country’s Rightward Shift Could Mean

Last month, Iván Cepeda, a Colombian senator and human-rights advocate, lost the country’s presidential election to Abelardo de la Espriella, a criminal defense lawyer. The result is sobering, considering that Cepeda’s father was murdered in 1994 by paramilitary groups with the complicity of state actors, whereas de la Espriella has amassed a fortune defending paramilitary leaders, corrupt officials, and money launderers.

Now, de la Espriella’s transition team says it has been working on a plan it calls “Project Noah’s Ark,” implying a restoration of the good-governance practices supposedly lost under Gustavo Petro, the left-wing president whose term will end on August 7. Yet the hard truth is that the next government will face fiscal problems that cannot be solved by returning to the ways of previous administrations. There is a growing tension between popular demands to fulfill the social rights enshrined in the constitution and a political system that cannot deliver on those promises without freeing itself from the influence of the extractive industries and the illegal economy.

While the incoming administration blames the Colombian government’s growing deficit on Petro’s left-leaning policies, 92% of the national budget goes to non-discretionary spending such as health care, education, pensions, constitutionally mandated transfers to sub-national governments, debt payments, and multiyear spending commitments. Most of these commitments were locked in before Petro, and reducing them would likely require unpopular constitutional amendments. As such, spending will remain higher than current revenue, and the next government will probably close the gap by trying to increase the valued-added tax–a proposal that fueled massive protests in 2021.

It is of course possible to limit socially corrosive, regressive tax increases for basic foodstuffs and other essentials. The Petro administration had achieved the highest general government tax revenue on record (22.1% of GDP), owing partly to higher taxation of the oil and mining sectors. But after the Constitutional Court struck down tax provisions that affected oil and mining interests, revenue fell back to 19.9% of GDP. A government could try to overcome the court’s objections through new legislation targeting those sectors, but that is unlikely to happen under de la Espriella, who campaigned as a champion of both.

Worse, the most obvious solution to the fiscal conundrum, tackling tax evasion and corruption–which could increase fiscal space by over 8% of GDP in the long run–is even less likely to be implemented. As commissioner of the tax and customs administration during the first half of the Petro administration, I started the process of boosting tax compliance by creating more than 10,000 new positions for auditors, engineers, and other employees to train AI systems to shrink the tax gap. I also reformed the agency’s civil-service career system to ensure merit-based hiring.

But these policies are under pressure, because the executive branch routinely uses congressional patronage in civil-service hiring to muster the votes for major legislative initiatives. In the case of de la Espriella, economic policy will be led by the vice president, a former finance minister who is well versed in this transactional politicking. There is no reason to expect that he will act differently than he has in the past.

Similarly, it is an open secret that bespoke procurement contracts are often steered toward congresspeople in exchange for legislative votes. While it is difficult to estimate just how much is lost to such corruption, commentators often put the figure at 3% of GDP, and even that seemingly high number masks the scale of the problem. Since diverting even a small fraction of public resources away from legitimate uses requires obscuring how the entire budget is structured, the public resources that are not stolen tend to be used inefficiently.

Hence, Colombia ranks lower in budget transparency than it did a decade ago, not because it lacks the technical capability to create a detailed, publicly debated, program-based budget, but because those who benefit from opacity have ensured that it continues. By appointing various political old hands to his “Noah’s Ark” transition team and cabinet, de la Espriella is giving Colombians little hope that he will change how the executive branch works with Congress.

On the contrary, his administration will probably appoint officials to satisfy members of Congress who have ties to the drug trade, money laundering, tax evasion, and smuggling. As these criminal interests continue to wield disproportionate influence over the agencies that are supposed to combat their activities, fighting corruption will be a non-starter.

Meanwhile, renewed state support for the oil and mining sectors will stymie climate change-oriented industrial policies and derail progress made toward decarbonizing the economy. A central element of Petro’s economic agenda (including during my tenure as minister of commerce, industry, and tourism) was export-led industrialization focused on meeting current and future global demand for green industrial products (green steel and electric vehicles and parts), as well as support for sustainable tourism. But now, a change in priorities will renew old concerns about Dutch disease (when the strength of one sector drives up the exchange rate, undermining other sectors’ competitiveness).

Overreliance on oil and mining is only part of the problem Colombia is facing. Recent estimates suggest that the income from cocaine exports amounts to 4.4% of GDP–surpassing income from oil exports. Because money laundering occurs partly through smuggling operations that bring cheap manufactured and agricultural products into the country, national production that could create well-paying jobs ultimately suffers.

Colombia’s rightward turn thus represents a return to an alliance between the extractive industries and the political class, which has a high tolerance for the illegal economy and pay-to-play policymaking. At the same time, expect this alliance to enforce “fiscal discipline” by resisting popular demands for a functioning welfare state.

The opposition’s task will be to bring these issues to the fore. It does not help that many of those in Petro’s administration failed to avoid the same practices. Charges of hypocrisy are inevitable. But mutual recrimination will not create a society that resolves its disagreements through a functioning, peaceful, and truly representative political system. Only honesty can do that.

Copyright: Project Syndicate, 2026. www.project-syndicate.org