Border row hits small businesses in Colombia

2nd September 2009

Simon Harding

An international political spat is making life difficult for farmers and small businesses in the Colombian town of Cucuta. Situated on the border with Venezuela, many of Cucuta’s one million inhabitants earn a living by producing and exporting milk, eggs, rice, meat and textiles to its socialist neighbour.

But recently tonnes of perishable goods have been left to rot in the sun as Venezuela closed the border and rescinded import licenses. ‘The cane was cut and we got the export licence, but at that moment there was the dispute between the two presidents and we lost all this’, explains Elidoro Viveros, a sugarcane farmer, gesturing towards his now blackened and unsellable crop, ‘This has happened at least three times to members of our co-operative in the past few weeks.’ Each time the crop is left in the ground the co-operative loses thousands of pounds.

Fernando, a Colombian textile trader, echoes the pessimistic mood: ‘Cucuta is dead’, he says, ‘We bring in fabrics and jeans from Medellin to sell here and we've always done well out of it. But not anymore. I'm taking my family back home where things are a bit better. Business here is over.’
The root of the current quarrel has nothing to do with the quality of Colombian goods or the willingness and ability of Venezuelans buy and pay for them; both sides recognise the benefits of cross-border business: without it Colombia loses valuable markets and Venezuela risks food shortages. It is international political wrangling which lies at the heart of Cucuta’s problems. Alvaro Uribe, Colombia’s conservative President, recently gave permission for the US military to use several bases in the country, a move which irked Venezuela’s charismatic socialist President, Hugo Chavez, who closed the border in retaliation.

Despite a Presidential visit and the promise of reduced sales tax and better links to the rest of Colombia, Cucuta’s business community remains downbeat. Juan Fernando Cristo, a senator for the opposition Liberal Party summed up the prevailing sentiment: ‘President Uribe and the ministers and technocrats from Bogota don't understand this situation,’ he said as he left a meeting with the President and other local business leaders, ‘they don't understand this border region, nor the people, and they don't understand how things work here. They come to Cucuta and talk about budgets and money and infrastructure and social investment. But they don't really have the solutions.’

So little faith is there in the government’s efforts that there is talk amongst Cucuta’s sugarcane farmers of setting up a bio ethanol plant, which would reduce their reliance on the Venezuelan market.  The ramifications of this geopolitical dispute in Cucuta demonstrate the ambivalent role of the state in entrepreneurial activity. The state in developing countries is often implored to provide conditions conducive to small enterprises and the work of microfinance initiatives. This may involve simplifying regulations, opening borders, providing better infrastructure and overseeing freer movement and trade. In Cucuta, this process has been put into reverse as distant governments play out their difference on the ground, threatening the livelihoods of their citizens.

 
Also see:  ‘Smugglers thrive as row hit trade’, Will Grant, BBC NEWS, Available at: http://news.bbc.co.uk/1/hi/world/americas/8219839.stm