The Political Economy of
a Narco-Terror State

Colombia and corporate profits

by Rachel Guevera

The Progressive magazine, October 2002


Colombia is an extreme example of the local oligarchy colluding with multi-national corporations and U.S. militarism to make grotesque profits while the people and environment are devastated. Billions of dollars from the U.S. and the drug cartels are keeping the people from overthrowing the oligarchy, which kills 5,000 to 10,000 people every year. More than half of all legal Colombian exports travel to the U.S.-if you add the value of cocaine and heroin, the percentage goes to 80. Colombia has become a lucrative profit center for the U.S., one based on violence and ecological destruction. The Colombian oligarchy is the business partner for many U.S. corporations and it is the ally of the U.S. and its foreign policy.


CZN and Exxon-Mobil Corporation

This Texas-based mega-corporation is also known as Exxon-Mobil Coal and Minerals, Imperial Oil, ESSO and Monterrey Coal Company, Compania Minera Disputada de Las Condes Limitada (Chile), Intercor (Colombia), and dozens of other companies that produce a wide range of chemicals, plastics, and consumer products. With $1.4 billion in revenues from its Colombian operations in 2000, ExxonMobil was the second largest corporation in Colombia after the state-owned Ecopetrol. It no longer holds that title since it sold the massive Cerrejon Coal mine to CZN and its copper mining operations to Anglo-American this year.

Colombia is the fourth largest exporter of coal. For the last 15 years an average of 15 million tons per year has been extracted from the opencast El Cerrejon Coal Mine under its subsidiary Intercor. It is one of the largest open-pit mines in the world (30 miles long). The CZN Consortium purchased Intercor and Exxon's share in April. The area of the mine is inhabited by the Wayuu Indians who have opposed the mine since 1980. At the start 5,000 Indians were employed, but most of them were dismissed when the mine began operations two years later. In 1988 the last Indians were fired for union activities. Intercor evicted all residents of the indigenous community of Tabaco to make way for the expansion of the mine. Residents are resisting and claim that the relocation arrangements made would break up communities and not give people sufficient funds to buy land to live on. The Colombian army guards the mine and has assisted strike-breaking in the past.

To extract the coal, Exxon sucked up the groundwater, dried up the rivers, and, in the process, denuded the grasslands on which the Wayuu depend for subsistence. Indians have also suffered from respiratory diseases caused by coal dust and heavy noise pollution. An international campaign organized by Greenpeace is targeting Exxon-Mobil as one of the main obstacles to greenhouse gas reductions. Twenty-one percent of stockholders recently voted for Exxon-Mobil to adopt a renewable energy plan. CZN also has mining operations in Cerrejon Central and they are actively pursuing new mining opportunities in Cerrejon Sur. Mine expansions are imminent.


Drummond Inc.

Drummond has fallen from the 318th largest private company in 1999 to a rank of 492. In 2001 it generated revenues of $615 million with 2,800 employees. It mines coal, produces coke, and develops real estate. Drummond's ABC Coke plant in Tarrant, Alabama is the largest single producer of foundry coke in the U.S. Most of Drummond's coal and profits come from the La Loma mine in the Cesar region. Each year Drummond exports about six million tons of coal from Colombia to U.S. electrical utility companies.

Ligia Ines Alzate, a longtime labor activist and general secretary of the Confederation of Trade Unions for the state of Antioquia, toured the U.S. and spoke to groups in Alabama in April. A Colombian union, Sintramienergetica, has sued Drummond Co. in federal court claiming that Drummond hired hit men to kidnap, torture, and murder three men last year for their ties to the union that represents Drummond workers. Alzate said many foreign multinational companies hire paramilitary groups to target union leaders during contract negotiations or when restless workers protest company practices. Coca Cola is also being sued for encouraging death squads to kill union members. The United Mine Workers and the United Steel Workers Unions support the lawsuit against Drummond.


Dole Food Company Inc.

Dole is the leading producer and supplier of fresh fruit and vegetables and a leader in the production of bananas and pineapples (2001 revenues of $4.5 billion). It has been expanding into fresh-cut flower production and markets a growing line of packaged foods. Dole is the largest employer in Colombia and employs 51,000 workers in Latin America on 44,000 hectares of prime farmland. They control banana production in Colombia and in 1998 they bought 25 percent of the flower cultivation industry. Colombia is the second largest exporter of flowers in the world. Two-thirds of fresh-cut flowers sold in the United States come from Colombia. Dole is the largest producer of fresh flowers in Latin America with over 90 percent of production shipped into North America.

The industry has hurt the environment of a central savanna where most of the flowers are grown. Aquifers there have dried up, requiring water to be brought in from Bogota. Toxic residues from pesticides banned in Europe have turned up in groundwater. One-fifth of the chemicals used in the Colombian industry's greenhouses have been restricted in the United States for health reasons (Aldicarb, DDT, Lindane, Aldrin, and Metomil). Studies by local nongovernmental organizations have found that nearly two-thirds of Colombian flower workers suffer from peculiar illnesses, ranging from nausea to miscarriage. Dole employs 11,133 mostly women workers in the Colombian flower industry. Many make less than 60 cents an hour and women who become pregnant are immediately terminated from their jobs. Last year Dole agreed to participate in an environmental standards program, but the government provides no effective monitoring or enforcement of the standards.

The IUF, an international union of agricultural and restaurant workers, has been waging a campaign for a year now against Dole Food. This dispute originated over Dole's treatment of banana workers and subcontracted cooperatives in the Philippines. Dole gets about 40 percent of its bananas from Colombia and Ecuador. In Ecuador Dole is considered the largest employer of child labor and is active in resisting unions and improvements in working conditions. In mid-July Dole agreed to pay $24 million to 3,000 Honduran banana workers exposed to sterility and cancer causing pesticides used on company plantations over the last 30 years.



Colombia's President Alvaro Uribe has named former Ecopetrol board member Isaac Yanovich to head the state oil firm. He replaces outgoing Ecopetrol president, Alberto Calderon. Oil is Colombia's biggest foreign exchange earner and the government's top source of revenue. Calderon has signed 60 exploration agreements with foreign companies in the past 30 months. Oil generates $2 billion in government revenue a year. Colombia's Congress has slashed the amount of royalties oil companies must pay the state on newly discovered oil fields from 16 percent to 5.

Foreign firms say that lower royalties are crucial to continue doing business in Colombia, where kidnappings and attacks on pipelines by guerrillas, who have fought the government for 38 years, drive up operational costs and scare off investment.

The city of Barrancabermeja is home to Colombia's largest oil refinery where 70 percent of oil exports flow down the Magdalena River. Paramilitaries have intensified a terror campaign, murdering hundreds of civilians in the last year. In June, USO oil union workers went on strike to protest the assassination of union officer, Cesar Blanco. Two hundred and one unionists were killed in Colombia in 2001-more than 80 percent of the world total.

An international consortium led by Canadian Occidental Petroleum expects as much as 300 million barrels from a new oil field called Boqueron-the nation's third-largest deposit. Other major investors in Colombian oil have included Exxon, Shell, and Elf Aquitane. They have helped boost oil production 80 percent over the last decade.

Ecopetrol diverts most of its profit to federal and local governments, but Colombians see little benefit. Officials face pressure from guerrillas and right-wing paramilitaries to pay protection money. Many officials steal or squander the money. Arauca, a boomtown about 25 miles from the Cano Limon oil field, has received millions of dollars annually in oil royalties but is ringed by shantytowns. In a petroleum-rich central valley known as the Middle Magdalena, more than 70 percent of the 750,000 inhabitants live in poverty and nearly 40 percent are unemployed, double the official nationwide rate.


BP Amoco (British Petroleum)

Colombia's biggest foreign investor is BP Amoco, formed when British Petroleum merged with Chicago-based Amoco in I 998. The London-based giant controls Colombia's largest oil field, a 1.5-billion-barrel trove called Cusiana Cupiagua in the northeastern province of Casanare. This region produces almost half of Colombia's total crude output of 60O,000 barrels a day. The oil fields are operated by BP, which has a 19 percent share in the project. France's Total-Fina-Elf has 19 percent and Triton Energy of the United States-a subsidiary of Amerada Hess Corp-has I 2 percent, Ecopetrol owns 50 percent of the project. A 444-mile pipeline called Ocensa carries BP Amoco oil to the Caribbean port of Covenas for export.

BP and Ecopetrol are studying whether to spend $130 million on a plant to allow them to sell natural gas from Cusiana-Cupiagua. The Chuchupa field, operated offshore off the Caribbean coast by Chevron-Texaco Corp, has similar reserves to Cusiana-Cupiagua and produces most of Colombia's current gas supply. BP maintains close ties with a number of right-wing paramilitaries who it helped train in the early 1990s.


Occidental (OXY) Petroleum

This Delaware corporation based in Los Angeles and Houston operates the Cano-Limon pipeline in northeastern Colombia. The Cano-Limon is 480 miles long and was bombed 79 times in 1999 by guerrillas (more than 1,000 bombings since it was built in 1986). Oxy claims to have lost $100 million since 1995 because of guerrilla attacks. At Bush and OXY's urging, the U.S. Congress passed a military appropriations bill that includes an additional $98 million to pay for security on the pipeline. The new aid package constitutes a public revelation of Bush's shift from the pretense of fighting the war on drugs to a strategy of counter-insurgency. This aid will save OXY the $30 million a year it has spent protecting the pipeline since the mid-1990s.

Colombia is the 7th largest supplier of oil to the U.S. and has the largest untapped pool of petroleum in the Western Hemisphere. Al Gore controls up to $1 million of family stock in Occidental. Lawrence P. Meriage, Occidental's public-affairs vice president, not only pushed for Plan Colombia last year, but also urged a House subcommittee to extend military aid to the nation's north to "augment security for oil development operations."

They have temporarily pulled out of the disputed U'wa territory because of international publicity and pressure from their main stockholder: Sanford and Bernstein-parent company Alliance Capital. Another big scandal with OXY involved its Florida-based subcontractor AirScan who directed the cluster bomb attack of Santo Domingo near the Cano-Limon pipeline in Colombia. This attack resulted in the deaths of nine children and nine other civilians in 1998. Investigations continue into this massacre.

Across the border in Ecuador, OXY is a partner in the OCP petroleum pipeline-one of the most destructive and potentially catastrophic projects in the Andes. This pipeline cuts through one of the most biologically diverse regions in the world. Mud slides and earthquakes are frequent threats to the area and now there will be crude oil flowing through it.



DynCorp is one of the largest private contractors for the U.S. armed forces with 2001 revenues of $1.8 billion; up 34.5 percent for the year. It has assets of $644 million and 2001 profits of $102 million. DynCorp is the 121st largest private firm in the world and performs technical and consulting services, including aviation maintenance, logistical support, telecommunications, information systems, weapons testing, and management. In 2001 DynCorp received a $600 million contract for Colombian fumigation and $35 million for related services, says senior U.S. official Andy Higginbottom.

Many of the DynCorp executives are former CIA or military personnel, others were formerly of Enron or Citigroup. The coca spraying campaign is directed by Rand Beers, assistant secretary for the department of state's division of International Narcotics and Law Enforcement Affairs and the state department's secretive Air Wing. DynCorp and its contractor, Eagle Aviation Services and Technology (EAST), have made millions of dollars spraying Monsanto's Roundup-Ultra (Glyphosate) over millions of acres of jungle and farmlands in Colombia. UK-based ICI recently pulled their soapy surfactant ingredients out of the spray mixture over concerns about liability and bad publicity. T.D. Allman in Rolling Stone magazine said of DynCorp's subcontractor EAST, "Once upon a time these pilots and crews were called mercenaries. Today they're known as contract personnel. Many come from U.S. involvement in clandestine warfare in Cuba and Central America" (May 8, 2002).

EAST Inc. is headquartered at Patrick Air Force Base, Florida. Here fumigation pilots are trained by the state department's Bureau of Narcotics and International Law Enforcement. EAST is incorporated in several U.S. states, but has refused to discuss its operations in Colombia.

Based out of Landria military base in Colombia, Blackhawk choppers fly cover for fumigation pilots. Despite these escorts, American pilots flying Vietnam-era Bronco DV- I 0s over the FARC-EP-dominated Caqueta Department recently chose to abort their spray mission when they encountered heavy fire from the guerrillas.

DynCorp's contracts with the CIA include covert work in Colombia and Peru, according to James Woolsey, former head of CIA, at Senate hearings. Several DynCorp employees have been investigated for drug trafficking and it is common knowledge in Colombia that these U. S. subcontractors consume hard drugs and are above the law.

EAST has a long history of CIA and clandestine operations. DynCorp has been awarded hundreds of millions of dollars in defense contracts in the U.S. and in Bosnia and scandals follow their every step. The spraying of defoliants has damaged vast areas of food crops and sensitive habitat. The International Labor Rights Fund has filed suit in U. S. federal court on behalf of 10,000 Ecuadorian peasant farmers and Amazonian Indians charging DynCorp with torture, infanticide, and wrongful death for its role in the aerial spraying in the Amazonian jungle, along the border of Ecuador and Colombia.


Military Personnel Resources Inc.

Insiders joke that MPRI has more generals than the Pentagon. This high level mercenary group has over 1,000 elite military and law enforcement leaders on retainer, including General Ed Soyster, former head of the Defense Intelligence Agency, General Frederick Kroesen, former commander of the U.S. Army in Europe and a former assistant director of the FBI. Many of its employees serve on the Council of Foreign Relations. The president, Carl Vuono, was the army chief of staff during the invasion of Panama and the Gulf War. He retired after the war and joined MPRI in 1991. One of his first big jobs was advising the Croatian government when it split from Yugoslavia. He is credited with the victorious military strategy of the lightning armor drives used against the Serbs.

MPRI is a military consultancy and supplies pilots, Special Forces, and elite training and security services worldwide. They recently completed an $800,000 contract to advise the Colombian military.


The Colombian Government Inc.

Every NGO, international agency, and most U.S. State Department and DEA reports agree that an axis of evil has united against the leftist FARC-EP and the poor people of Colombia to maintain the status quo of violence and drug dealing. The U.S. played a decisive role in establishing this nexus when it brought the AUC into the "killer networks" that the U.S. established in 1991. Without massive U. S. financial support the corrupt Colombian government would have fallen to the FARC last year.

The UN Office for Drug Control and Crime Prevention says, " Deforestation caused by coca and opium cultivation is close to 340,000 hectares. Each hectare of coca costs four hectares of Amazon forest." When vegetation is cut on slopes, the water supply downstream is affected, in addition to a loss of some 120-230 tons of topsoil per hectare. Pollution of water sources results from use of herbicides and fertilizers applied to the drug crops, and from solvents and chemicals used in drug refinement "20 million liters of ethyl ether, acetone, ammonia, sulphuric acid and hydrochloric acid are discarded from laboratories into the tributaries that feed the Amazon and Orinoco rivers-endangering 350 Andean floral species, 210 animal species, 600 birds species, 170 reptiles, 100 amphibians, and 600 fish species in the Amazon and Orinoco alone."

A phony drug war has become a bloody large-scale anti-guerrilla campaign that is guaranteed to devastate the flora, fauna, and the peasants, while making Colombia safe for massive, coal, oil, and mineral extraction for U . S. markets. War crimes lawsuits are pending against U.S. barbarity.

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