COLOMBIA ELECTION MAY BENEFIT WORLD

THERE WAS good news out of Colombia over the weekend.

Voters there chose for president a reformer unconnected to the former
regime - which had won office with the help of millions of dollars from the
Cali cocaine cartel.

Why is a political event in a far-away land important to business people in
this country?

Well, it's not because the election of Andres Pastrana as president of
Colombia will stop the flow of cocaine from that country to this. Colombia
isn't the villain here. It's the victim of our desire for illegal drugs .
The drug trade is so profitable that nothing will stop it. Just look at how
it has corrupted hundreds of U.S. law enforcement people in the past few
decades.

Pastrana's election is important because of his pledge to try to end the
low-level leftist insurgency in his country. And to strengthen the rule of
law and to fight internal crime. The more successful he is at that task, the
better Colombia's economy. A more prosperous Colombia - or almost any other
country - means a more prosperous United States.

Economies - in any one area or around the world - aren't zero-sum games. If
you make more, it doesn't necessarily mean I must make less. Wealth isn't
discovered. It's created. While resources are finite, human ingenuity is
infinite. If you make more, you expand your wealth. And you can buy more
from me.

It's why this country bailed out Mexico financially a couple of years ago
with billions in loans - which incidentally have all been paid back.
Prosperity is good for everyone.

Prosperity in Latin America is especially good for this country. We are the
world champion traders. The more money in Latin America, the more they will
buy from us. Houston, especially, benefits from trade with nearby countries
to the south.

Overwhelming crime

The greatest obstacle to that prosperity is not lack of resources, education
or investments - although all of those are in short supply. Instead, it's
crime rates many times higher than that of this country and inefficient
judicial systems.

Latin America must have investments from around the world. And it offers an
increasing number of business opportunities, says Joachim Bamrud,
editor-in-chief of Latin Trade magazine.

But the growing lack of personal safety threatens to undermine that
attraction, Bamrud wrote in the magazine's July edition. "Why set up shop,
(foreign investors) reason, if they or their family members run a
better-than-even risk of being burglarized, mugged, kidnapped, raped or
killed?"

Latin America - with exceptions here and there - long has had a police
problem. First, most don't have the tools - everything from sophisticated
computer systems to track crime to the most basic ones, such as police cars.

Second is the fact most police officers are not paid a living wage. As a
result, throughout Latin America police officers have a reputation for
corruption. They are part of the problem, not part of the solution.

In Mexico, for example, there have been many instances of police officers in
uniform committing crimes of violence. In several cases, elite squads
dedicated to stopping kidnapping instead have been abducting people for
ransom.

But why not? There is a disrespect for law at all levels of society.

Inefficient punishment

That attitude is amplified by a judiciary that is usually understaffed and
always inefficient. Frequently, judges are appointed for short terms by the
political establishment - meaning they have little independence.

Most Latin countries are burdened by an inquisitorial system based upon a
seemingly endless exchange of written arguments. Even when justice is done,
its workings are so hidden from the people that trust in the system isn't
built.

A suspicious judicial system also hurts investments. It means that foreign
investors often must give up part of their return to a well-connected
insider if they expect the courts to treat them fairly in any sort of
commercial dispute.

Thankfully, the election in Colombia last Sunday is not unique. We're seeing
signs of change in Latin American judicial systems.

Venezuela, for example, on July 1, 1999, will scrap its plodding system and
change to open trials with civilian juries. In Guatemala they are televising
trials, letting people see for themselves what's going on.

But until all of Latin America adopts the rule of law, countries will be
unable to make the jump to First World economies.