Colombians Yank The Welcome Mat

Issue 09-11-17   |   Reviewer:   Duane Helleloid, Ph.D.
Sectors:


Abstract

In Arbeláez, Colombia, residents voted 4,312 to 38 against allowing Toronto-listed Canacol Energy Ltd. to drill exploratory oil wells. Residents were concerned that the drilling could impact the water supply and would not provide jobs for local residents. The area produces tomatos, peas, blackberries, and other food for larger cities.

There have been more than 40 similar referendums, or popular consultations, in Colombia. As this level of local democracy is enshrined in the national constitution, there is little the federal government can do, even though it could use the foreign direct investment and export earnings. While existing oil and mining operations can not be stopped, any new projects can rejected by local residents. This uncertainty whether a project will or will not go ahead increases the risk for foreign firms interested in investing in Colombia.





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