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Bust of Colombia's Cali Cartel Makes City's Economy Go Bust

Fall of drug lords brings rise in unemployment, crime rates

Until the middle of last year, the sky was the limit in Cali. While the Cali drug cartel was in business, young men in expensive suits raced down the boulevards in fancy cars. They bought everything: Harley Davidsons, Jacuzzis for their luxury apartments - some say they even bought the presidency for Colombian leader Ernesto Samper Pizano with a $6 million contribution to his campaign.

Now the cartel bosses and much of their wealth rest in the hands of the authorities, thanks to a crackdown that was due largely to US pressure.

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So why aren't people in Cali smiling? The city has mixed feelings about its new condition. No one longs for the return of the cartel, but many lament the huge economic vacuum left by the crime machine.

"We've had to pay a price for getting rid of this problem, " says Rodrigo Lloreda, director of Cali's major newspaper, El Pas, "But it's the price that cities have to pay to live in real life and not in the influence of crime."

Colombia's economy is poor, but Cali has been hardest hit. While political problems and business cycles can be blamed for a nationwide recession, experts see Cali's situation directly linked to the fall of the cartel. The citizens of Cali find themselves in a contradictory position: They regret the capture of the drug lords.

Abandoned farm is case in point

A farm about 60 miles north of Cali encapsulates the contradiction. The fields lie fallow; the custom-tiled swimming pool, the billiard table, and the mansion sit unused in the shadow of majestic mountains. Peacocks and geese roam the grounds. Grazing peacefully in the pasture beside the cows and horses is an African zebra.

The expansive farm belonged to Henry Loaiza, "The Scorpion," No. 7 in the Cali cartel and a gruesome killer. He is now in jail and his farm in the hands of the state. No one in Cali wants him back, but this farm once employed a few hundred workers at generous salaries. Now a lone caretaker watches over the grounds.

"Drug trafficking had an unparalleled capacity for redistributing wealth in society," says Gustavo Alvarez Gardeazabal, a noted Colombian author and former mayor of Tulu, a town near Cali.

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The Cali cartel often appeared preferable to the infamous Medelln cartel of Pablo Escobar Gaviria. The Cali bosses had a reputation for being reasonable men who always favored a clean bribe to a messy bomb. Unlike the impulsive spender Mr. Escobar, the Cali bosses put their money into local business.

The bosses employed thousands of people to build their mansions and country homes, and hundreds more to manage and protect the property. Investment, generous loans, and cheap goods provided by money laundering allowed residents to start their own businesses.

"The car was $15,000, and I only had 5,000," says Pacho Juarez, a taxi driver. "They [cartel figures] said 'Okay, pay the rest as you can' and I drove away."

But this blessing has become Cali's curse, according to Hernan Collodo, president of tiremaker Goodyear Colombia in Cali.

"We've lost 20 percent of our sales since the crackdown," says Mr. Collodo, "Here in Cali a lot of our legal businesses were related to the cartel for years."

Ironically, the fall of the cartel has exacerbated another problem: crime. The fighting inside the cartel that sent 10 bodies floating down the Cauca River every day is thankfully in the past. But the unemployment problem also includes many of the cartel's henchmen.

Col. Benjamin Nuez Nuez is the head of the antidrug task force that is credited with taking down the cartel's kingpins. While he is content with the progress against drugs, he acknowledges Cali's problems.

"There is a problem because these people are without work and they don't have many other skills, so they have turned to common crime," he says. Car theft, burglary, and murder have all risen since the cartel leaders were put away.

To make matters worse, some sources deny that the cartel has shut down. A Cali cartel associate notes that the price of cocaine in the US hasn't risen as it would in a shortage.

US says bosses still in business

The US Drug Enforcement Agency asserts that the cartel bosses are still doing business from their comfortable prison cells, though Colonel Nuez maintains that drug activity is shifting away from Cali.

While some in Cali see a bleak future, as many are optimistic that the worst of the recession has hit, and that the economy will soon normalize.

Others point out that while the cocaine trade's cash capital is fleeing, there was a boost to the Cali economy that has effected permanent changes.

"Some have gone bankrupt and stopped spending, but others will continue at the same level," says former Mayor Alvarez. "The campesino [peasant] who bought an air-conditioned tractor to plow his fields, he still has that tractor."

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