The road to darkness
Witnessing U.S. President Donald Trump accuse President Gustavo Petro of being an “illegal drug trafficker,” and Petro retort that he should help depose Trump, we might wonder – as a former Colombian president did in the early 1960s, at a minister’s suggestion that Colombia declare war on the United States -- is this a dangerous bet, or just plain stupidity? Such aggressive rhetoric is meaningful, given the current situation, with the U.S. Navy’s presence in the Venezuelan Caribbean. If, as rumor has it, the United States could attack cocaine-related land targets in Venezuela, that would dramatically change the prospects for Colombia, since most industrial cocaine processing is located here.
Petro’s wild rhetoric could be attributed to the fact that his government could mark the end of Colombia’s short-lived progressive era, as he still lacks a convincing successor candidate, and the strategy of debilitating right-wing politicians by incarcerating their hero ex-president Álvaro Uribe failed, after the High Court of Bogotá found Uribe innocent of all charges. So Petro’s only option for maintaining the political initiative is to create international waves. What could be better for Petro politically than the attention Trump is giving him? It seems completely irrational, yet it is one of the few ways the president can distract public opinion from his many failures —most painfully, the likely failure to elect a progressive Congress in March 2026, and a progressive president in May-June.
Since the tragic assassination of Senator Miguel Uribe Turbay in August, voter support for political parties has been volatile, according to unofficial Pedersen Index measures, reflecting a collapse of party coherence. There is little consensus over how to interpret the results of the October 26 progressive primary, with leftists calling it a huge success, and those on the right a tremendous failure. Centrists see a major warning, due to the strength shown by the Petro camp. We basically disagree with them all. The results show that the left has the power to cast just over 2 million votes, and 1.5 million for the winner, Senator Iván Cepeda. But what will this mean for the 2026 elections? Cepeda is a poor presidential candidate: too close to the FARC, and a recognized true communist. Hence, the left will keep looking for a candidate. It'll probably be former minister and ambassador Roy Barreras, a don of chameleon politics, and a brilliant Fouche-type politician. Barreras also divides the left: the extreme leftists dislike and distrust him, probably with reason. If the left is divided in the first round of the presidential elections, it may lose. Another round of primaries for several party coalitions in March 2026 could be significant, since the leading party candidate then may hold the advantage in the presidential first round, and then be likely to win the runoff.
The government’s proposed reforms to the power sector threaten to undo three decades of regulatory stability, and to achieve the opposite of their stated goals. The bill increases prices for consumers and transfers the so-called Opción Tarifaria to consumers, a huge problem the government didn’t want to solve because it would imply increasing electricity prices (not so popular in the runup to an election year). Furthermore, the decrees further intervene in the operations of the spot market (which Petro regards as greedy and speculative) and force hydro plants to sell their energy almost exclusively via contracts. By concentrating decision-making within the Ministry of Energy and weakening regulatory autonomy, the administration risks reversing the hard-earned progress made since 1994, when blackouts were common, service quality was very low and political discretion dictated market outcomes.
Colombia’s fiscal position is deteriorating, with a widening current account deficit stemming not from private investment, but from expanding government dissaving. Starting in Q3 2024, as growth began to pick up, the CAD began widening; as of Q2 2025, deterioration persists. So the gap between investment and national saving is widening. But new Dane data shows that investment outpacing national saving is quite a localized phenomenon, of the kind one would not like to see during an economic “recovery.” Our conclusion is obvious: the central government is a vortex sucking up saving from everyone else. Excess government consumption is not a solid foundation for a development strategy. Concerns around this situation should eventually prompt COP weakening. Since inflation continues to resist slowing, the Central Bank cannot lower intervention rates to help the private sector. The fiscal maelstrom created by the Petro administration is growing dangerously voracious.
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