"Permanently on the Defense"

Not so long ago, Colombia was held up as a showcase of the Alianza -- relatively rich in resources, increasingly mature in politics, full of hopeful plans for the future. The Andean country is now approaching what Colombians gloomily call "zero hour."

Under President Guillermo Leon Valencia's do-nothing, three-year-old government, the cost of living has risen 60%, Colombia's chronic trade deficit has doubled, business confidence has evaporated and unemployment is soaring. Politically, the ruling Liberal-Conservative National Front is splintering, and Congress is all but immobilized. Last week, with new elections only nine months away, Valencia finally decided that something ought to be done. Invoking emergency powers, he named a new Cabinet and decreed a series of reforms to pull the economy back from the brink.

Overtures to Washington. The reforms--suggested last December by the Agency for International Development, the International Bank for Reconstruction and Development, and the International Monetary Fund--are aimed at preserving Colombia's fading foreign exchange, estimated at $109 million last week. They provide for: 1) preferential exchange rates ranging from 9 to 13.5 pesos per $1 (free rate: 19 pesos per $1) on imported raw materials; 2) a $33 million issue of economic development bonds; 3) a 15% income tax increase for the current year, plus another 5% surcharge for the forced purchase of government bonds; and 4) a tightening of Colombia's notoriously porous tax-collection system.

The man directing the reforms is Finance Minister Joaquin Vallejo, 52, a Pharmaceuticals executive who is well regarded in international banking and finance circles and has Valencia's support "to do whatever is needed to save the nation." From his emergency reforms, Vallejo hopes to bring in an additional $40 million in revenues this year to help pay off the government's projected $87 million deficit. To make up the rest, Vallejo plans to meet with the International Monetary Fund and the World Bank in Washington later this month, and seek additional U.S. aid.

Dark Conspiracies. Until the reforms take hold, Valencia is pleading with labor unions to "give the government a chance to repair the damage wrought by Congress and the last Cabinet." He is getting scant sympathy. More than 92,000 unpaid schoolteachers and clerks and 18,000 employees of Colombia's judiciary system were on strike last week, and 45 major unions have called a general strike for Oct. 1. Many Colombians are simply throwing up their hands. Eugenio GOmez GOmez, a member of Valencia's own party, flatly turned down the President's invitation to be Minister of Public Works in the new Cabinet. "What in the world could I accomplish in the nine months before elections?" he asked. "I'm a serious person." Even the presidential campaign has ground to a halt. Under the seven-year-old Liberal-Conservative coalition, which alternates the presidency every four years, the Liberals are due for office next time around. Four months ago, however, the coalition candidate--Liberal Leader Carlos Lleras Restrepo--withdrew his name after a series of noisy intraparty squabbles. The Liberals have yet to pick another man.

As for Valencia, he sees himself a victim of circumstance. "The political groups, the pressure groups and the conspiracies have not let me govern," he said last week. "I have had to keep myself permanently on the defense."

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