US embassy cable - 05BOGOTA6450

UNCLAS SECTION 01 OF 02 BOGOTA 006450 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, CO, Elections 
SUBJECT: PRESIDENTIAL CAMPAIGNING AND NEW LOW INCOME 
HOUSING PROGRAM HIGHLIGHTS ANNUAL BANKING CONFERENCE 
 
Sensitive but Unclassified - Please protect accordingly 
 
1.  (SBU) Summary.  The national banking association,s 
(Asobancaria) annual conference served as an opportunity for 
presidential hopefuls to showcase their social agendas.  The 
highlight of the conference was the announcement that banks 
would make over USD 430 million available in GOC-guaranteed 
funds for housing loans to low-income Colombians.  The 
following day, President Uribe announced a GOC guarantee 
program for these loans.  According to Asobancaria officials, 
the loan program came at the request of President Uribe. End 
Summary. 
 
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Political Leaders, Development Plans 
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2.  (U) On the eve of an election year, the Colombian Banking 
Association,s annual conference focused on social 
development issues.  President Uribe and political leaders 
Antonio Navarro Wolff, Enrique Penalosa, and Juan Manuel 
Santos spoke at the conference.  Wolff used the conference as 
a platform to campaign for the presidency.  While there has 
been some talk that Penalosa was planning to run for the 
presidency, his intentions remain unclear.  Santos, on the 
other hand, promoted President Uribe's policies during the 
event. 
 
3.  (U) The four speakers outlined their views on the need to 
improve social equality, territorial transfers, and the tax 
system.  As the talks turned to economic development, Navarro 
Wolff talked about the importance of developing Colombia,s 
domestic economy, while the other candidates discussed the 
benefits of export growth and supported the negotiation of 
the U.S.-Andean Free Trade Agreement. 
 
4.  (U) Each of the speakers had differing views on handling 
the armed conflict.  Navarro Wolff stressed the need to bring 
the armed groups back to the negotiating table, as the 
cheapest and most efficient way of achieving peace. 
Penalosa, a former mayor of Bogota, said that after 40 years 
of conflict, the Colombian people still did not have a clear 
idea of what the guerillas wanted from the government. 
Although Penalosa did not rule out negotiations, he stated 
the GOC should not dismiss the idea of using military force 
to impose order.  Former Treasury Minister Santos suggested 
that the government open a dialogue with the armed groups, 
but he added it shouldn,t be at the expense of democratic 
security.  At the conclusion of the conference, President 
Uribe detailed the successes of his administration in 
restoring security throughout Colombia. 
 
5.  (U) With regard to improving social development, Penalosa 
said access to bilingual education for all Colombians would 
help the country compete in the global economy.  Navarro 
Wolff focused on the need to distribute education, health, 
jobs, services, and technological development across a wider 
range of Colombians.  He proposed that the government fund 
the PhD studies of 3,000 young professionals, including at 
institutions outside of Colombia.  Santos, opposed this idea, 
saying the maintenance of macroeconomic and institutional 
stability was key to sustainable growth.  Other areas could 
not be focused upon.  &What are those 3,000 Ph.Ds going to 
do in Colombia if there are not entities or companies that 
demand their services?  It will only depress their salaries, 
but not increase growth or well-being.8 
 
6.  (U) In his presentation, President Uribe focused on 
inclusion.  He said he was proud the GOC was increasing the 
number of individuals included in the value added tax 
collection.  He also suggested lowering income taxes while 
broadening the tax base.  He stressed that more Colombians 
should have access to credit and suggested facilitating 
credit for agricultural businesses. 
 
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Low-income Housing Pledge 
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7.  (U) On the final day of the conference, Asobancaria,s 
president, Patricia Cardenas, announced that beginning July, 
2005, Colombia,s banks pledged one trillion Colombian pesos 
(over USD 431 million) for new housing loans over the next 
year, available only to the poorest Colombians.  President 
Uribe immediately applauded Asobancaria,s gesture.  He 
assured the banking industry that FOGAFIN (The Financial 
Institutions Guarantees Fund), the governmental organization 
that protects banks against defaults on loans, would protect 
all of these loans (to the apparent surprise of the director 
of FOGAFIN).  Low-income individuals can only apply for 
housing loans, and these loans must be no more than 26.7 
million pesos (USD 11,500) in value.  Regardless of the 
requirements, it is estimated that 52,000 families will 
benefit from this new loan program. 
 
8.  (U) On Friday, July 24th, Uribe made good on his promise 
by allocating 20 billion Colombian pesos (USD 8.6 million) to 
pay for credit insurance on the newly pledged high-risk 
loans. In addition to identifying the resources for the 
program, the GOC is waiving FOGAFIN,s rigorous 15-step loan 
qualification procedure for these high-risk individuals. 
9.  (SBU)  Comment.  On the margins of the conference, an 
Asobancaria official explained that the Association,s pledge 
to increase low-income housing loans was not as spontaneous 
as it appeared.  According to the official, Cardenas received 
a phone call from Uribe on the first day of the conference 
urging the banking industry to make such a pledge the 
following day.  Although no threats were made, the official 
said Uribe made it clear the banking industry would regret 
not doing so.  Cardenas hurriedly contacted the heads of all 
28 banks associated within Asobancaria (all of Colombia's 
large banks) to explain the situation and ask that they 
participate in the low-income loan program.  The following 
day, Cardenas had a private conference call with Uribe 
indicating the banks agreed to the plan.  According to 
banking officials, few of the foreign banks will participate 
directly in the program, although some have offered to help 
the GOC design a low-income housing policy.  End comment. 
WOOD