A Conversation with Juan Manuel Santos Calderón

DONNA HRINAK: Well, good morning, everyone, and welcome -- today's Council on Foreign Relations meeting. I'm Donna Hrinak, and before I introduce our distinguished guest, there are a few administrative issues which -- I need to make reminders. First of all, I'd like to remind all members that this meeting is on the record. We are being joined by video conference with our members in Washington. They'll be joining us, directly participating in the question-and-answer session later in the day -- later in the morning.

But as you are straightening your ties or combing your hair or whatever, please keep in mind that there is video conference going on.

Because of that video conference link, we ask you to please turn off all of your wireless devices -- cell phones, BlackBerrys -- not just put them on vibrate. They do interfere with the sound system.

It is a real pleasure to introduce to you Juan Manuel Santos Calderon, the president of the Republic of Colombia. President Santos assumed his office on the 7th of August of this year, which means he has been president for less than two months. And so I think, Mr. President, that congratulations still are in order.

For those of us who have worked with Latin America for many years, President Santos has been better known as Minister Santos. He has occupied what I think are the three most important positions in his government's Cabinet. He was Colombia's first minister of foreign trade, was finance minister, more recently minister of national defense, where he was responsible for implementing the country's democratic security policy.

President Santos has also worked as a journalist, a columnist and deputy director of the well-respected and very courageous newspaper El Tiempo. There he was awarded the King of Spain prize. He was elected president of the Committee on Freedom of Expression of the Inter American Press Association.

He's also published several books. One of them, "Check on Terror," relates actions which he took as minister of defense to combat terrorist forces in Colombia. And I understand we have, Mr. President a very successful action which just occurred in recent days, which I'm sure you'll be telling us about, we can add to that list.

President Santos won his election on June 20th with 9 million votes. That is the highest number of votes obtained by any candidate in the history of Colombian democracy. The core of his platform was his commitment to move the country from democratic security to democratic prosperity. And as the father of three children, he has a personal investment in Colombia's future.

Colombia has had a past, difficult at times, more hopeful, recently. Mr. President, we look forward to your telling us about Colombia's future.

Members, please join me in welcoming President Juan Manuel Santos. (Applause.)

PRESIDENT JUAN MANUEL SANTOS CALDERON: Thank you. Thank you very much for this introduction and thank you very much for having me here on this very busy week. I understand and I'm honored that I'm the only Latin American who's going to be present in this very prestigious floor during this week, and that -- for that I say thank you.

I was told to make a short introduction of how I see the future of my country under my government -- that -- it's not a very objective view, but it's going to be, I hope, a realistic one -- and then open the floor to questions. So that's what I'm going to try to do in the next few minutes.

The country -- we -- this year we are celebrating our 200th anniversary as a -- as a republic, as an independent country, and we are probably going through one of the most interesting times of our history, of our history in those 200 years.

For almost 40 years, we've been struggling against drug traffickers, against guerrillas, against paramilitaries, and that has been (some of the ?) the actions of our -- all our policies.

But in the recent past, the last few years, we changed the emphasis of our priorities and concentrated in one very basic concept. We need security. We need to recuperate our country, which we had lost, in order to be able to progress. And with that in mind, we put in place what President Uribe at that time called the policy of democratic security.

The word "democratic" had two meanings. First, security for every Colombian, no matter where he came from -- the opposition, pro- government -- provided he was within the rule of law. And the other meaning, which was very important, is that -- for democratic security, is that "democratic" also meant putting in place a security policy following very strictly the rule of law, our constitution, which is a very advanced and ambitious constitution in terms of protecting fundamental rights of the people, and going about doing this -- or implementing this security policy by the law.

Even if it's harder, this would be much more legitimate. And it has been more difficult, but it has been more legitimate. And the success of this policy has helped very much to change the agenda in Colombia. For 40 years, we only talked about recuperating our security, our territory, and the fight against the drug traffickers, the fight against the paramilitary, the fight against the guerrillas. But now we can change the agenda, and that's what we're doing. And my government, as was said here, is concentrated in jumping from democratic security to democratic prosperity, and putting the social development of the country as the priority.

And we can now do this because we have advanced very, very much in security in our country. When President Clinton visited Colombia back in the year 2000 -- I was then minister of finance -- we were a failed state. We did not control more than two-thirds of our territory. One-third was controlled by guerrillas, the other third was controlled by paramilitaries, and the state was on the defensive.

It was almost impossible for people to even seek minimum justice, because the justice was administered by either paramilitaries or guerrillas on their own terms.

And in 10 years, the situation has changed dramatically, I would say 180 degrees. Today, Colombia is a democracy that -- I would say it's an example in the region. The institutions are working.

The -- we respect very much the independence and separations of powers -- some people say too much. We are now in a problem. We have a difficulty of reestablishing the equilibrium between the three powers -- the judiciary, the legislative power and the executive power. There's a clash between the powers.

But the respect for the independence of each power is something that we feel is sacred, and that has put the democracy in a -- in a very vibrant tone to strengthen our institutions and feel that they are -- the fundamental liberties, the fundamental rights of the people are respected.

And we have a democracy that is delivering for the first time on the social side. And that's what my objective is, is to increase that -- to -- that emphasis on the social side, make that a high priority, without lowering our guard on the security, which we have said we are winning, but we have not won yet.

We still have drug trafficking. Unfortunately, as long as the -- and I say this with due respect -- as long as the yuppies in Fifth Avenue snort coke, there will be coke being exported from Colombia. And that has been the source of many of our problems for many, many years.

But we have to continue fighting the drug traffickers, because for us it's a problem of national security. The violent groups, the terrorist groups today live because they are able to finance themselves from the drug trafficking -- still live, still maintain a presence in some remote areas because of the drug trafficking.

Fortunately, in that respect, we have made tremendous advances. Colombia is, I would say, a secure country. The state is now present in every single municipality. People go to the most remote areas with no fear. This was unthinkable some years ago.

And the best way to promote ourselves is to invite people to go to Colombia. That's why we -- we have a -- an advertising that says the only risk of going to Colombia is wanting to stay -- (soft laughter) -- which is working. There's a lot of people -- I will give you one indication. The country where the most amount of diplomats, when they retire, choose -- chose -- choose to stay there, in the whole world, now is Colombia. And that is an indicator of how things have changed in our country.

In the security -- in the security aspect, we made a tremendous progress 48 hours ago. When I left Bogota, I authorized an operation in the middle of the jungle against the most important military commander of the FARC. He was sort of a myth.

And I was told yesterday morning -- I was jogging in Central Park and somebody was trying to catch up with me, and said, "You have a very urgent call." That urgent call was the strike was successful. And that was -- in Colombia is extremely, extremely important.

Yesterday people were going on the streets saying how marvelous that that happened, because this person is like -- I compare it to a situation whereby I came to New York and said -- even it's for us more important, but I came to New York and said that Osama bin Laden was struck, was killed. And that is the comparison to how important this person was for us.

But not only that. It's not only -- always even it's the worst bandit or terrorist, it's human life, but the important thing about this strike was that it was the heart or the headquarters of the FARC.

And some of you remember that when we struck another of these leaders, we found three computers that gave us very valuable information that helped us weaken this terrorist organization very much.

There were three computers at that time and 10 USBs that we found in the other strike. In this one, we found 14 computers and 60 USBs. So the information is -- all the information of the FARC was there.

So I think this is a strike that will break the center of gravity of the FARC, and that after 40 years I am confident that we can now see the future also with great optimism in achieving peace, peace after so many years of violence in Colombia. And that is a complement of -- a complement to our main objective, is a big push of achieving democratic prosperity.

Colombia is going through a good economic cycle. We're putting in place sound economic policies. We want to achieve sustainable, high growth. Colombia has been probably the most stable country in terms of prudent economic management in Latin America for many decades.

The way we sold ourselves was we are stable; we don't have those hyperinflations, we don't have that volatility. But we were stable at a very mediocre -- with a very mediocre performance. Growth was slow, and the necessities of the people were increasing at a high rate.

So what we want to do now is to uplift, upgrade the objective of growth and distribution of that growth. And that is what we're putting in place, with a big margin of governance, because we managed to create a -- what we call a national unity government.

Major parties are all part of this -- of the national unity government, and we have today more than 80 percent of congress with us. And that will facilitate the approval of major reforms that are necessary for us to be able to achieve that high growth, and also to distribute better that high growth.

We are putting -- we are presenting to congress some very audacious legislation. For example, in terms of the rural properties, we want all the peasants that were displaced by the violent people to come back. And we need fast-track procedures, legal fast-track procedures, to be able to implement that at a high -- at a high speed with effectiveness.

We are presenting a law to repair the victims of the violence -- the first country, I think, in the world that is doing that with a comprehensive reparation, where we are respecting the rights and repairing the victims.

We are changing the way we distribute the royalties. This is one of the -- in every country, one of the most difficult reforms. Yesterday, it was approved in the first committee, 14 to 3, which makes me very optimistic that it's going to pass. And if we pass these legislations, then we will have the instruments to achieve that high growth and distribute better that growth among the Colombian population.

We have a lot of challenges, of course. But the good thing is that we now can concentrate on the social development of the country, and in our agenda with our neighbors, with which we made peace very recently. And I think that's been a very good step forward with Venezuela. We are reestablishing our relations with Ecuador. We are reestablishing relations.

We want to exercise leadership in -- in the region -- a region that is more and more looked upon as the region of the future, because Latin America, South America has what the world is looking for: energy, biodiversity, water, capacity to increase food production. What all the big trends in the world is -- (say ?) what does the world need more and more, South America is emerging as the country that can supply them.

And within South America, within Latin American, Colombia is a -- in a(n) ideal position. For example, in the biodiversity discussion, the climate change, Colombia, many people don't realize, is the most -- the richest country in the world in terms of biodiversity per square kilometer. There's -- we are the third-richest country in the world in terms of water. We have ample land that, without destroying rain forests, we can start to increase our food production.

So there is a tremendous opportunity. We have put in place a development plan, a coherent development plan that will hopefully take us to this high-growth path that will give us the opportunity to then bring prosperity to our people.

And there are challenges that every country has. We need to improve the quality of education. We need to improve the quality of our health system.

We're going through a major health reform. But we have achieved -- and this is a real revolution -- in the last -- in the recent years have achieved universal coverage. What you did here, what President Obama did here with the health system, we did it already in Colombia some years ago. Of course we go -- the system is going bankrupt -- (scattered laughter) -- and there's many problems. That's the reform that we're doing. But we have today universal coverage. This is a big -- a big step forward in our social development.

We need to enhance our infrastructure very much. We lag behind countries that have our -- the same level of development.

We need to give much more housing to the people. There's a big deficit of families that want to buy a house and they can't. They don't have either the means or the supply.

But the good thing is that Colombia is now having the normal problems of any other country, and that is a big, big change in our country.

Our human capital is considered fortunately as one of the best human capitals in the whole region. Foreign investors all say that the quality of our managers or the quality of our laborers is exceptional, which is probably our biggest asset -- our people.

And we are very optimistic.

And for those of you who haven't been in Colombia lately, or the ones who have never been, you go to Colombia and you see a country full of optimism, a country -- and this is a big indicator for any country -- a country where people think that by working harder they will leave a better country to their children, that their children will have a better future. That -- you go to other regions of the world, and that's not so normal today. You go to some countries in Europe, there's tremendous pessimism. Some states here in the U.S., there's pessimism.

Colombia is full of optimism, and that's what I hope to build on. We have a good team, good government. And I'm going to work very hard to achieve those objectives, hopefully, with the comprehension and understanding of institutions like the Council on Foreign Relations. Here you have been sometimes, and with good reason, very critic -- very critical of things that have happened in Colombia.

Human rights has been one of the (aspects ?) that have been very -- very much criticized. It's a problem that we have never neglected. When we were a failed state, the violation of human rights in Colombia were simply appalling. It was not a state policy, but you saw violations from the guerrillas, from the paramilitaries, and many times, by omission, to the state itself.

But we have made a great effort in trying to improve that aspect. The democratic security policy in itself is a policy of -- or human rights policy.

You see the indicators of homicides, of kidnappings. And many of the violations of fundamental rights of the people have gone down tremendously.

We still have a long way to go. I met yesterday the high commissioner for Human Rights for the United Nations. I said, I'm going to extend your mandate, but what I -- what I really want is out -- I want you out of there, because I want you out of there because we're -- the issue of human rights I hope will disappear, become a nonissue, and be a normal country also in that respect.

But we made tremendous progress, which I hope that you can recognize. And we're struggling. We're working hard. And I think we're going in the right direction, hopefully with your help. Thank you. (Applause.)

HRINAK: Well, thank you, Mr. President. And you've certainly given us a lot of issues that we can talk about.

I'd like to begin with a remark you made in which you said that -- talked about the continued presence of terrorist groups in remote areas. And yet in the last several weeks we've seen incidents of urban violence once again, in Bogota, in Medellin. Do you feel your new government is being tested, and how do you plan to respond to these urban threats?

SANTOS: Well, the urban violence is a consequence of the success that we have had in the rural areas.

In every country that has gone through a process that we have gone through, be it in South Africa, the Central American countries, in Eastern Europe, there is always a percentage of the people who demobilize that will go back to criminal activity. That's like a standard procedure. They say between 10, 15 percent of the people who demobilize, who unarm, go back to criminal activity.

And the problem that we have is that we still have drug trafficking business still there. We have diminished it. We have -- we have defeated the big cartels that had our democracy to its knees. But the business is still there and they recruit these criminals and they continue to do criminal activity.

But it's not the same activity that they did before. For as the paramilitary disappeared, in the sense that they had a -- if you wanted to put an objective of countering the guerrillas, now guerrillas and these criminal bands work together to do their business of drug trafficking. So it's an evolution of the insecurity, which we have to approach with a more law-and-order approach. And that's what we're doing.

But there is a false perception, because when you get the indicators of homicides, of the different criminal activities that affect the day-to-day lives of people, you will see that there has not been an increase; on the contrary, the trends continue to go down.

There has been some pockets of difficulties in some areas -- in Medellin, where the drug bands fight among themselves for the drug business. But it's not out of the ordinary, and it's not a resurgence of the type of violence we had before.

HRINAK: You also made a point of talking about human rights, and as you well know, this is a very important issue for many sectors, many people here in the United States, as well as in Colombia.

Last week the State Department certified that Colombia was meeting the conditions required to continue to receive U.S. military assistance. And despite progress that I think we can all recognize, about 30 high-ranking military officers who have been dismissed from their positions have not yet been charged with the crimes of which -- for which those dismissals took place. Can we expect progress in those kinds of cases? How do you get that prosecution of particularly high-ranking military back on track and end that culture of impunity?

SANTOS: Well, I dismissed them. I was the one who dismissed them. But I dismissed them because they were in the commanding posts where these appalling crimes were committed. So in a way, they should have been much more careful for them not -- for these not to happen.

But I did not accuse them of being responsible for this policy. And I said the justice system should investigate, and if there is any responsibility, they should be accused and condemned.

The justice system is working. There are indeed hundreds of military who are now in jail because of the so-called false positives. What I've said is we need to support the justice system in every way possible for the justice to do its job, and strives to investigate, try them, and condemn the guilty and declare innocent the innocent people, because there has been also a lot of false accusations. There is -- some of the groups that have had seen this as a way to hit the center of gravity of our military, which is their legitimacy. And there's a lot of false accusations that have been sort of planted in the process.

This is a big challenge for the justice system. We're giving all the support we can. We are opening the doors for the justice system to investigate.

We have a problem with the justice system in general. It's a very slow, very inefficient system. But people are being tried and people are being condemned. And what I hope will happen is that we can clear this as soon as possible and close this chapter, which for me was probably the most difficult moment, when I discovered that this was happening. Today, the -- what do you call it? -- the denunciations about false positive practically has disappeared and the problem disappeared.

But we need to do this, for the guilty people that did this in the past, for them to be tried and condemned.

HRINAK: Before we open it for questions from our members, I'd like to ask you about relations with your neighbor Venezuela. What do you expect from the Colombia-Venezuela relationship in terms of commercial ties, exports, collaboration and security?

SANTOS: What do I expect. Well, we were in the worst of all possible scenarios when I was in my campaign for president. We had no diplomatic relations, no dialogue whatsoever, no trade. And we were talking about -- or some people were talking about the possibility of war, which is for me inconceivable, war between Colombia and Venezuela. For me, it's not in my dictionary. So I said, what could be worse? A war.

But the situation was very bad, so I decided to make an appeal for common sense to come into the scenario. And I said, listen, Mr. Chavez and myself, we are very different. We are very, very different. He thinks one way -- (laughter) -- and I think another way. But -- but if we respect our differences, we can have good relations. You can have a very different view from your neighbor, but if you respect that you will not destroy his garden and he will not destroy your garden, you can have good relations and your kids might play together.

So I said, if we respect our differences, we can have a normal relation, a good relation, and this will be in the benefit of the Venezuelans and the Colombians because we've both suffering from this absurd situation.

Well, Mr. Chavez responded finally positively, because in the beginning he was very critical, and he said that if I was elected there will be war. But then he realized that I was going to be elected, and then he changed -- (laughter) -- he changed his -- and we had a very -- a very good meeting, a very frank meeting. We sat down, like you and I are sitting here, and we started saying some truths.

And I said to him, listen, first, let's don't convince each other to think like the other. You're not going to convince me to think like you and I'm not going -- certainly to convince you to think like this. But respect our differences and we can get together. Don't try to impose a peace process in Colombia. The peace -- if ever there's a peace process, this will be a Colombian decision, it will be my decision, and I don't want you pressing internationally or for whatever reason for us to start a peace process. And third, please respect my former president. If you started talking bad about Mr. Uribe, I will simply stand up and go.

And he understood very well. And he said: Fair enough, I like your frankness.

And we had a very rich and constructive conversation. We established a procedure with different commissions to normalize trade, normalize investment, to see what infrastructure we could -- would go together, to work on the border and to work together on the security situation.

And I must say that he has delivered, and that the relations are going in the correct path. And I think it's going to be for the benefit of the Venezuelans, the Colombians, the region and the U.S., because a region that is -- where there is turmoil is not good for anybody. And so I hope that this will slowly consolidate.

I've told my exporters this has been a very good market for us. Venezuela is our number-one market in manufactured goods. And I, myself, negotiated a free-trade agreement back in the early '90s with Venezuela. At that time, we had three -- $200 million in bilateral trade. It went up to 7 billion (dollars). And it is a very important market for us.

I told the exporters, you can very readily -- it's easy to reconquer, but don't get overexcited. Do it slowly, and do it like a windfall profit, more than simply depending again on -- only on Venezuela. And we're diversifying our markets, but Venezuela certainly is a very important market. And I'm optimistic that this relation will be -- will last.

We'll see what is going to happen in the elections on this Sunday. But I hope that this -- this is not some -- some people say that this has been simply manipulation of my good will for electoral purposes. I (disagree ?); that's not the case. I think Venezuela realized, as we realized, that it's in their own interest, as it is in our interest, to have good relations; and the same thing with Ecuador.

HRINAK: Presidente, I know we have members with questions in the -- begin here in New York. I ask when you're called on, please stand, wait for the microphone to reach you so you can be recorded and state your name and affiliation.

Here in the center, please.

QUESTIONER: Hi. I'm Joel Motley of Public Capital Advisers.

Colombia is particularly advanced among emerging-market countries in enabling municipalities to build infrastructure. And setting aside federal revenues to help that happen is a big step in that direction. Can you talk about your own view of infrastructure and how that balances between control from the center and empowering the municipalities to do this on their own?

SANTOS: You know, we're -- we have -- we have identified five -- what we call five locomotives that are going to be the engines of growth. One of those locomotives is infrastructure, where Colombia, by every indicator, has lagged behind other countries of the same level of development. So simply by catching up to be a normal country in terms of infrastructure, we need to do a big effort, investment. And what we're doing is changing the institutionality that has to do with infrastructure, which was very poor.

One of the big problems we had was that we offered the projects without structuring the projects correctly. And that created many problems and that meant that many of the roads were left in the middle of the road, that were not made well. Structuring the projects correctly is a fundamental aspect of our building good infrastructure. And so we're doing that.

And we need to have a different approach that would make the development of the infrastructure a coherent -- a coherent process, because when municipalities did whatever they wanted to do by themselves, and that was not integrated to the state or the national plans, then you had all kinds of contradictions or all kinds of clashes. So we're fixing that.

And the way we're fixing that is by -- or one of the ways is by restructuring the way that the royalties that we're going to start to receive -- we are going to be receiving quite a bit of royalties because we're in a mini-bonanza of - oil and minerals in Colombia are booming. This is another locomotive, but that one is already growing at more than 12 percent per year.

That is going to give us a lot of royalties, and we must administer those royalties correctly in order to avoid the Dutch disease and invest what can be invested in a correct way.

So we are doing an effort to restructure the institutional part of the administration of infrastructure to be able to deliver on the infrastructure front that we need very, very badly in order to be a competitive economy.

We are going -- we're putting in some benchmarks that are very ambitious for us. We want to be members of the OECD. The OECD is a club of what do you -- would call of better practices, and they have benchmarks for you to come in. You need to have your public policies with a minimum of quality, and that will force us to put in place good policies. And that's -- one objective I have is to become a member of the OECD in the next two or three years.

We want investment grade. I think we -- if we approve these reforms in congress, we'll get investment grade. The cost of our -- of our debt in the international market is as if we had investment grade. It's -- people are very confident in Colombia today.

And so yes, in the infrastructure we need to do some reforms, what -- and we're doing them.

HRINAK: We'll take another question from here. Yes. Woman on this side -- gentleman on this side. Mm-hmm.

QUESTIONER: Hello. I'm Ken Roth from Human Rights Watch. I wanted to come back to the issue of paramilitaries. And the justice and peace process clearly has made some significant progress.

There have been, you know, many people who have gone through the demobilization process. The kingpins have been extradited to the United States and are now serving significant sentences.

But there's considerable evidence, as I think you alluded to, that the paramilitaries themselves are still running strong. And I wanted to ask you about what steps you'll take to move to the next stage of genuinely dismantling the paramilitaries. Part of the problem up until now has been that prosecutorial authorities really have been hamstrung by efforts to constrain their independence, particularly when they looked too closely at connections between the paramilitaries and certain political forces, including some close to the former president. And I'm wondering what you'll do to ensure the genuine independence of the judiciary and the prosecutors, the resources they need to pursue this, and an effective dismantling process with respect to the paramilitaries.

SANTOS: Well, again, first of all, the word "paramilitary" we turn discussion -- do we still have paramilitary? I think -- I think not. I mean, what did the paramilitary do? They wanted to put groups to control territory and to fight the guerrillas. That type of groups have been dismantled and their leaders are in jail, most of them here in the U.S.

Why are they here in the U.S.? Because they continued to do what they were doing before, especially in the drug trafficking, and maintain whatever their violent groups in some areas.

So we have done a tremendous effort to dismantle the paramilitary groups and their leaders, to put them in jail. They say that we betrayed them because a deal had been struck with them -- I don't know if somebody struck a deal; I didn't -- and they're, most of them, here in the U.S.

Some people say, oh, you extradited them, or the -- (inaudible) -- community extradited them, because you don't -- you didn't want the truth to come out. And this argument is a bit weak because you -- if they say that we betrayed them, then they will be much more stimulated to single out whatever truth people were interested in knowing. They had no commitment to hide the truth. If they tell the truth, their sentences would be reduced. So there is, on the contrary, an incentive for them. And that's what we -- I've said: Please tell the truth, the whole truth and nothing but the truth. Go ahead. We want the truth. But they are stumbling. They're trying to -- I don't know what they're seeking. Hopefully, they will say some truth.

And the judiciary system is working, with all its faults, but there is no country in the world can -- no country in the world that has a third of its members of Congress in jail because of links with the paramilitaries. Think -- this is a demonstration that the democracy in Colombia is working, and that the judicial system is working, and there is -- and there is independence in the judicial system.

That not all that are guilty are there? Maybe not. Some of them have -- some of them have been shrewd enough to avoid justice. But most of them are. Most of them are paying what they did. And if you get the whole picture, tell me a country -- one country in the world -- where a third of the members of Congress have been put in jail and are serving jail because of links to illegal groups.

This is an example, I think, of the maturity of our democracy.

Of course, we have accusations that the speed of the -- of the condemnation's not fast enough. We have charges -- and again, I repeat we have a problem of, like, an old elephant in the justice system, that it doesn't -- is not agile enough. But things are working and there is confidence.

Sometimes people are saying that the judicial system is going too far and that they're really doing too much of a harsh job, and that the clash between the powers is going to increase and that it's bad for democracy. I think not. I think each power does its own job independently.

What I want to do in Colombia is to reestablish the harmony between the powers. And I use a phrase that I read about President Roosevelt, that he used when he had a clash with the Supreme Court, with the New Deal, that democracy is like a -- what do you call that in English, an "arado" -- like a -- a plow, with three ox that pull the plow. The three ox are three independent powers. They have to be more or less of the same size. And they have to walk in the same direction; otherwise, you can't plow.

A democracy will not work if the powers -- one sleeps and the other walks. Then you cannot plow. This is what I want to restore, harmony between three powers, but respecting the independence of each power.

And I think it's working, with difficulties, with -- you can signal defects, but overall, again, I repeat, no country in the world -- in the world -- has done what we've done to put in jail members of Congress who somewhere or another have had relations with illegal groups.

HRINAK: President Santos, we had questions from Washington as well.

Chris (sp), members in Washington, do you have a question?

MODERATOR: Yes. Thank you, Donna, and good morning from Washington.

Steve?

QUESTIONER: Good morning, Mr. President, and thank you. This is Stephen Donehoo from McLarty Associates.

First, congratulations to your intelligence and armed forces and police folks for the tremendous operation and for other operations like Jaque where they had such a historic effect on -- in the case of military history.

The United States has a very carefully thought-out legal strategy on extratoriterrial (sic; extraterritorial) attacks against terrorists that we've seen in places like Somalia, Yemen and Pakistan. Is this a policy to which Colombia subscribes?

SANTOS: Do you have an easier question? (Laughter.)

HRINAK: Yes or no would be fine. (Laughter.)

SANTOS: Listen, this is a very interesting question, because there is a theory that in Latin America this has not been even a subject of discussion, because we always are 100 years behind the world trend in terms of territoriality and sovereignty.

We still have that 19th century paradigm that sovereignty is sacred and nobody can break it.

But what is sovereignty? If you have a terrorist group that is attacking you permanently from a third country, and that third country does nothing, do you have a right to strike? That was, in a way, the argument that we used when we struck against this terror group in Ecuador. This brought out all kinds of problems.

And it's a theory that is being -- it's going to be increasingly discussed because terrorism is not a local, it's a transnational problem. Like the drug business, this is an approach that should be discussed multilaterally by many countries. And we would surely subscribe to that thesis in a multilateral environment because fight against terrorism is a transnational fight, and we would be willing to accept the theory when it is discussed in whatever instance or whatever arena it should be discussed.

So we are not against that theory. We would subscribe it. But we would need to have a multilateral approach.

HRINAK: (Inaudible) -- coming up in what I know is your very busy schedule, so I would like to -- Chris, if you have another question from Washington, take one more question in Washington, two quick questions here.

And perhaps you could respond to all of them in a -- in a final intervention.

Chris (sp)?

MODERATOR: Thanks. Thanks, Donna. Our next question is from Lauri.

QUESTIONER: I'm Lauri Fitz-Pegado, with the Livingston Group.

Mr. President, thank you. And although Colombia is an important partner with the U.S., clearly, in the war against narcoterrorism, defense exports are often caught up in red tape, and many U.S. export licenses are delayed or denied, causing the U.S. firms to face fines and penalties, and often, of course, affecting lives in Colombia because of those delays or denials.

In the past, Colombia -- what Colombia has done is to put the burden on the U.S. exporter to solve this issue. And given that it's about $9 billion in sales from the U.S., and Colombia is the second- largest spender on -- in Latin America, after Brazil, is there something that you're looking at in terms of the bilateral relationship and a government-to-government approach, given discussions opening up on export controls in this country?

HRINAK: Can we take two questions here in New York, please?

Yes, here in the center.

QUESTIONER: Mr. President, my name is Roland Paul.

In your very successful campaign against the guerrillas, if you had to list one or two of the most important factors that contributed to that success, what would they be?

HRINAK: Okay, and one more? Yes, here.

QUESTIONER: Sergio Galvis, from Sullivan and Cromwell.

In the context of addressing Venezuela, you mentioned the importance of export -- I mean, exporters diversifying their markets. Could you comment on two aspects of that? Aspect one is the effect of the currency relationship between the peso and the dollar; and secondly, the effect, or noneffect, of the absence of Google -- the free-trade agreement between the two countries.

HRINAK: Perhaps you'd like to answer this. So it can be --

SANTOS: Sure.

HRINAK: -- that one and the -- and the Washington one together, since they were commercial, and then we'll leave the guerrillas to the end.

SANTOS: Okay. The free-trade agreement, the commercial relationship between the U.S. and Colombia, whatever difficulty exporters are having, I can assure you it's not against any particular country. It probably is a matter of bureaucratic obstacles that you find everywhere. There's no (singling ?) of any country in terms of making their life difficult. What we want is to have free trade with U.S. -- a free-trade agreement.

And this makes a lot of sense more to the U.S. at this moment than to Colombia, because we have access with no tariffs to the U.S. market because of the Andean preference act, the -- called APTA, and you have to pay tariffs when you go -- when you export to our country. We are called a strategic partner and best friend, and we hug each other -- (scattered laughter) -- but no free-trade agreements. And the people in Colombia say, well, what kind of friends are you, do you have if they call you strategic, but they're signing free-trade agreements with other countries and not with you.

What's the importance for us of a free-trade agreement? It's the importance -- more than access to your markets, it's stable rules of the game, investors.

We -- if there's a word that I want to project to the investor community, it's that Colombia would want -- wants to be predictable. We want to have clear rules of the game, for the investors to know what they're getting into. And a free trade agreement with the U.S. will give U.S. investors a predictable scenario. And that's THE most important thing on the free trade agreement. I think that the more -- the more you prolong this, the less investors will come to Colombia and will choose other areas where they have stable rules of the game. That's the urgency.

I'm meeting President Obama later today, and I hope we'll have a very frank discussion. And I am optimistic that after the elections here the free trade agreement will be approved. I think that's what makes sense. We want the relations with the U.S. to evolve into a real partnership. I think we can play a role in many aspects that will be of mutual benefit.

For example, for example, Central America and the Caribbeans (sic) hare having an increasing problem with drug traffickers, not to speak about Mexico, that -- you know what is happening there. We have learned -- we have accumulated tremendous amount of knowledge, of experience that we can -- we want to share and we're starting to share with these countries. And we can work together, because it's in our interest, U.S. and Colombia, to provide more help to these -- to the region in their problems.

So I am looking forward for an increasing -- a more mature relationship. We don't want to be seen as simply aid receptors. We want to really be seen as equal partners. And I think in areas like, for example, climate change, biodiversity, social progress, education, the region in general, we can work with the U.S. in a -- in a more productive and mature way.

We've had very good relations with the U.S. We value those relations very much. For us, the U.S. is a -- is really a strategic partner. The help that you have given us -- for example, in our fight against the terrorist groups or the drug traffickers -- has been very valuable. And I would say, and I repeat it here, the Plan Colombia, when President Clinton -- and we were discussing that day before yesterday -- when President Clinton went, back in the year 2000, to Cartagena to launch Plan Colombia, he went with today-Vice President Biden, who was at that time chairman of Foreign Relations Committee. He went with Speaker Hastert, who, as a Republican, at that time controlled the House. And they launched a bipartisan foreign policy initiative which, in the view of many, has been the most successful bipartisan foreign policy initiative that the U.S. has launched in many, many years. And the proof is there. We were a failed state 10 years ago. Today, we're a vibrant and dynamic democracy.

And to answer your question about what has been the key, or two factors to being successful in our security policy and the fight against the guerrillas, the most important thing is intelligence.

Intelligence -- you need intelligence; you'd be -- need -- you need to be sophisticated.

That's what we did -- when I went into the Ministry of Defense, we had inherited an American way of handling the intelligence. And why do I say "American"? Because your intelligence agencies are very independent of each other. They don't share information. And in our case, that was stupid. (Laughter.)

And I said -- I said: Listen, get together. I mean, the -- you have information. If the navy has -- in their intelligence has 50 percent information about this target, that 50 percent by itself means nothing, and maybe the army or the police has the other 50 percent, that by itself means nothing. But if you get together and put the intelligence together, then you have very good intelligence. And that made a tremendous change.

And yesterday's blow was probably an example of all the forces, even with the police -- with the army, the air force, the navy and the police working together -- and we were very successful.

When we had the kidnapped people rescued, the Operacion Jaque, which was -- well, you remember the three Americans that were rescued and Ingrid Betancourt? That was also intelligence. And I told the intelligence community in a meeting like this: Get out of the -- of your personal paradigms. Think the unthinkable.

Think the unthinkable because that's the way you get good intelligence. And the Operation Jaque emerged from a very, very low level of -- there were three women, humble women, who had been working for the military intelligence for many, many years. And they had been hearing the interception of the FARC for many years. They knew the FARC by heart. They knew who talked, their names, how they talked, and what are the codes, everything.

And when they heard "think the unthinkable," they had discussed among themselves that it would be relatively easy, if the technology was present, to come into the communications of the FARC and replace the persons that were speaking. And that's how the operation was made. It came from down up, from very humble women, very intelligent. And that's probably THE factor.

The second factor is coordination between the forces. For example, yesterday's operation: air force, special forces, and intelligence by the police. If you coordinate, you're much more effective. What had happened before is the jealousy between the forces. I was in the marines. I was in the navy. And I remember when I was a cadet, the competition between the forces developed as sort of a culture of being like the competition with -- it was the enemy, and you don't share information, you don't work together. The army is the army, the navy is the navy, the air force is the air force, the police is the police.

Well, that is the old type of approach. I take the new approach.

And that has been another factor of our success, is working as a team.

HRINAK: Thank you, Presidente. (Applause.)

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THIS IS A RUSH TRANSCRIPT.

DONNA HRINAK: Well, good morning, everyone, and welcome -- today's Council on Foreign Relations meeting. I'm Donna Hrinak, and before I introduce our distinguished guest, there are a few administrative issues which -- I need to make reminders. First of all, I'd like to remind all members that this meeting is on the record. We are being joined by video conference with our members in Washington. They'll be joining us, directly participating in the question-and-answer session later in the day -- later in the morning.

But as you are straightening your ties or combing your hair or whatever, please keep in mind that there is video conference going on.

Because of that video conference link, we ask you to please turn off all of your wireless devices -- cell phones, BlackBerrys -- not just put them on vibrate. They do interfere with the sound system.

It is a real pleasure to introduce to you Juan Manuel Santos Calderon, the president of the Republic of Colombia. President Santos assumed his office on the 7th of August of this year, which means he has been president for less than two months. And so I think, Mr. President, that congratulations still are in order.

For those of us who have worked with Latin America for many years, President Santos has been better known as Minister Santos. He has occupied what I think are the three most important positions in his government's Cabinet. He was Colombia's first minister of foreign trade, was finance minister, more recently minister of national defense, where he was responsible for implementing the country's democratic security policy.

President Santos has also worked as a journalist, a columnist and deputy director of the well-respected and very courageous newspaper El Tiempo. There he was awarded the King of Spain prize. He was elected president of the Committee on Freedom of Expression of the Inter American Press Association.

He's also published several books. One of them, "Check on Terror," relates actions which he took as minister of defense to combat terrorist forces in Colombia. And I understand we have, Mr. President a very successful action which just occurred in recent days, which I'm sure you'll be telling us about, we can add to that list.

President Santos won his election on June 20th with 9 million votes. That is the highest number of votes obtained by any candidate in the history of Colombian democracy. The core of his platform was his commitment to move the country from democratic security to democratic prosperity. And as the father of three children, he has a personal investment in Colombia's future.

Colombia has had a past, difficult at times, more hopeful, recently. Mr. President, we look forward to your telling us about Colombia's future.

Members, please join me in welcoming President Juan Manuel Santos. (Applause.)

PRESIDENT JUAN MANUEL SANTOS CALDERON: Thank you. Thank you very much for this introduction and thank you very much for having me here on this very busy week. I understand and I'm honored that I'm the only Latin American who's going to be present in this very prestigious floor during this week, and that -- for that I say thank you.

I was told to make a short introduction of how I see the future of my country under my government -- that -- it's not a very objective view, but it's going to be, I hope, a realistic one -- and then open the floor to questions. So that's what I'm going to try to do in the next few minutes.

The country -- we -- this year we are celebrating our 200th anniversary as a -- as a republic, as an independent country, and we are probably going through one of the most interesting times of our history, of our history in those 200 years.

For almost 40 years, we've been struggling against drug traffickers, against guerrillas, against paramilitaries, and that has been (some of the ?) the actions of our -- all our policies.

But in the recent past, the last few years, we changed the emphasis of our priorities and concentrated in one very basic concept. We need security. We need to recuperate our country, which we had lost, in order to be able to progress. And with that in mind, we put in place what President Uribe at that time called the policy of democratic security.

The word "democratic" had two meanings. First, security for every Colombian, no matter where he came from -- the opposition, pro- government -- provided he was within the rule of law. And the other meaning, which was very important, is that -- for democratic security, is that "democratic" also meant putting in place a security policy following very strictly the rule of law, our constitution, which is a very advanced and ambitious constitution in terms of protecting fundamental rights of the people, and going about doing this -- or implementing this security policy by the law.

Even if it's harder, this would be much more legitimate. And it has been more difficult, but it has been more legitimate. And the success of this policy has helped very much to change the agenda in Colombia. For 40 years, we only talked about recuperating our security, our territory, and the fight against the drug traffickers, the fight against the paramilitary, the fight against the guerrillas. But now we can change the agenda, and that's what we're doing. And my government, as was said here, is concentrated in jumping from democratic security to democratic prosperity, and putting the social development of the country as the priority.

And we can now do this because we have advanced very, very much in security in our country. When President Clinton visited Colombia back in the year 2000 -- I was then minister of finance -- we were a failed state. We did not control more than two-thirds of our territory. One-third was controlled by guerrillas, the other third was controlled by paramilitaries, and the state was on the defensive.

It was almost impossible for people to even seek minimum justice, because the justice was administered by either paramilitaries or guerrillas on their own terms.

And in 10 years, the situation has changed dramatically, I would say 180 degrees. Today, Colombia is a democracy that -- I would say it's an example in the region. The institutions are working.

The -- we respect very much the independence and separations of powers -- some people say too much. We are now in a problem. We have a difficulty of reestablishing the equilibrium between the three powers -- the judiciary, the legislative power and the executive power. There's a clash between the powers.

But the respect for the independence of each power is something that we feel is sacred, and that has put the democracy in a -- in a very vibrant tone to strengthen our institutions and feel that they are -- the fundamental liberties, the fundamental rights of the people are respected.

And we have a democracy that is delivering for the first time on the social side. And that's what my objective is, is to increase that -- to -- that emphasis on the social side, make that a high priority, without lowering our guard on the security, which we have said we are winning, but we have not won yet.

We still have drug trafficking. Unfortunately, as long as the -- and I say this with due respect -- as long as the yuppies in Fifth Avenue snort coke, there will be coke being exported from Colombia. And that has been the source of many of our problems for many, many years.

But we have to continue fighting the drug traffickers, because for us it's a problem of national security. The violent groups, the terrorist groups today live because they are able to finance themselves from the drug trafficking -- still live, still maintain a presence in some remote areas because of the drug trafficking.

Fortunately, in that respect, we have made tremendous advances. Colombia is, I would say, a secure country. The state is now present in every single municipality. People go to the most remote areas with no fear. This was unthinkable some years ago.

And the best way to promote ourselves is to invite people to go to Colombia. That's why we -- we have a -- an advertising that says the only risk of going to Colombia is wanting to stay -- (soft laughter) -- which is working. There's a lot of people -- I will give you one indication. The country where the most amount of diplomats, when they retire, choose -- chose -- choose to stay there, in the whole world, now is Colombia. And that is an indicator of how things have changed in our country.

In the security -- in the security aspect, we made a tremendous progress 48 hours ago. When I left Bogota, I authorized an operation in the middle of the jungle against the most important military commander of the FARC. He was sort of a myth.

And I was told yesterday morning -- I was jogging in Central Park and somebody was trying to catch up with me, and said, "You have a very urgent call." That urgent call was the strike was successful. And that was -- in Colombia is extremely, extremely important.

Yesterday people were going on the streets saying how marvelous that that happened, because this person is like -- I compare it to a situation whereby I came to New York and said -- even it's for us more important, but I came to New York and said that Osama bin Laden was struck, was killed. And that is the comparison to how important this person was for us.

But not only that. It's not only -- always even it's the worst bandit or terrorist, it's human life, but the important thing about this strike was that it was the heart or the headquarters of the FARC.

And some of you remember that when we struck another of these leaders, we found three computers that gave us very valuable information that helped us weaken this terrorist organization very much.

There were three computers at that time and 10 USBs that we found in the other strike. In this one, we found 14 computers and 60 USBs. So the information is -- all the information of the FARC was there.

So I think this is a strike that will break the center of gravity of the FARC, and that after 40 years I am confident that we can now see the future also with great optimism in achieving peace, peace after so many years of violence in Colombia. And that is a complement of -- a complement to our main objective, is a big push of achieving democratic prosperity.

Colombia is going through a good economic cycle. We're putting in place sound economic policies. We want to achieve sustainable, high growth. Colombia has been probably the most stable country in terms of prudent economic management in Latin America for many decades.

The way we sold ourselves was we are stable; we don't have those hyperinflations, we don't have that volatility. But we were stable at a very mediocre -- with a very mediocre performance. Growth was slow, and the necessities of the people were increasing at a high rate.

So what we want to do now is to uplift, upgrade the objective of growth and distribution of that growth. And that is what we're putting in place, with a big margin of governance, because we managed to create a -- what we call a national unity government.

Major parties are all part of this -- of the national unity government, and we have today more than 80 percent of congress with us. And that will facilitate the approval of major reforms that are necessary for us to be able to achieve that high growth, and also to distribute better that high growth.

We are putting -- we are presenting to congress some very audacious legislation. For example, in terms of the rural properties, we want all the peasants that were displaced by the violent people to come back. And we need fast-track procedures, legal fast-track procedures, to be able to implement that at a high -- at a high speed with effectiveness.

We are presenting a law to repair the victims of the violence -- the first country, I think, in the world that is doing that with a comprehensive reparation, where we are respecting the rights and repairing the victims.

We are changing the way we distribute the royalties. This is one of the -- in every country, one of the most difficult reforms. Yesterday, it was approved in the first committee, 14 to 3, which makes me very optimistic that it's going to pass. And if we pass these legislations, then we will have the instruments to achieve that high growth and distribute better that growth among the Colombian population.

We have a lot of challenges, of course. But the good thing is that we now can concentrate on the social development of the country, and in our agenda with our neighbors, with which we made peace very recently. And I think that's been a very good step forward with Venezuela. We are reestablishing our relations with Ecuador. We are reestablishing relations.

We want to exercise leadership in -- in the region -- a region that is more and more looked upon as the region of the future, because Latin America, South America has what the world is looking for: energy, biodiversity, water, capacity to increase food production. What all the big trends in the world is -- (say ?) what does the world need more and more, South America is emerging as the country that can supply them.

And within South America, within Latin American, Colombia is a -- in a(n) ideal position. For example, in the biodiversity discussion, the climate change, Colombia, many people don't realize, is the most -- the richest country in the world in terms of biodiversity per square kilometer. There's -- we are the third-richest country in the world in terms of water. We have ample land that, without destroying rain forests, we can start to increase our food production.

So there is a tremendous opportunity. We have put in place a development plan, a coherent development plan that will hopefully take us to this high-growth path that will give us the opportunity to then bring prosperity to our people.

And there are challenges that every country has. We need to improve the quality of education. We need to improve the quality of our health system.

We're going through a major health reform. But we have achieved -- and this is a real revolution -- in the last -- in the recent years have achieved universal coverage. What you did here, what President Obama did here with the health system, we did it already in Colombia some years ago. Of course we go -- the system is going bankrupt -- (scattered laughter) -- and there's many problems. That's the reform that we're doing. But we have today universal coverage. This is a big -- a big step forward in our social development.

We need to enhance our infrastructure very much. We lag behind countries that have our -- the same level of development.

We need to give much more housing to the people. There's a big deficit of families that want to buy a house and they can't. They don't have either the means or the supply.

But the good thing is that Colombia is now having the normal problems of any other country, and that is a big, big change in our country.

Our human capital is considered fortunately as one of the best human capitals in the whole region. Foreign investors all say that the quality of our managers or the quality of our laborers is exceptional, which is probably our biggest asset -- our people.

And we are very optimistic.

And for those of you who haven't been in Colombia lately, or the ones who have never been, you go to Colombia and you see a country full of optimism, a country -- and this is a big indicator for any country -- a country where people think that by working harder they will leave a better country to their children, that their children will have a better future. That -- you go to other regions of the world, and that's not so normal today. You go to some countries in Europe, there's tremendous pessimism. Some states here in the U.S., there's pessimism.

Colombia is full of optimism, and that's what I hope to build on. We have a good team, good government. And I'm going to work very hard to achieve those objectives, hopefully, with the comprehension and understanding of institutions like the Council on Foreign Relations. Here you have been sometimes, and with good reason, very critic -- very critical of things that have happened in Colombia.

Human rights has been one of the (aspects ?) that have been very -- very much criticized. It's a problem that we have never neglected. When we were a failed state, the violation of human rights in Colombia were simply appalling. It was not a state policy, but you saw violations from the guerrillas, from the paramilitaries, and many times, by omission, to the state itself.

But we have made a great effort in trying to improve that aspect. The democratic security policy in itself is a policy of -- or human rights policy.

You see the indicators of homicides, of kidnappings. And many of the violations of fundamental rights of the people have gone down tremendously.

We still have a long way to go. I met yesterday the high commissioner for Human Rights for the United Nations. I said, I'm going to extend your mandate, but what I -- what I really want is out -- I want you out of there, because I want you out of there because we're -- the issue of human rights I hope will disappear, become a nonissue, and be a normal country also in that respect.

But we made tremendous progress, which I hope that you can recognize. And we're struggling. We're working hard. And I think we're going in the right direction, hopefully with your help. Thank you. (Applause.)

HRINAK: Well, thank you, Mr. President. And you've certainly given us a lot of issues that we can talk about.

I'd like to begin with a remark you made in which you said that -- talked about the continued presence of terrorist groups in remote areas. And yet in the last several weeks we've seen incidents of urban violence once again, in Bogota, in Medellin. Do you feel your new government is being tested, and how do you plan to respond to these urban threats?

SANTOS: Well, the urban violence is a consequence of the success that we have had in the rural areas.

In every country that has gone through a process that we have gone through, be it in South Africa, the Central American countries, in Eastern Europe, there is always a percentage of the people who demobilize that will go back to criminal activity. That's like a standard procedure. They say between 10, 15 percent of the people who demobilize, who unarm, go back to criminal activity.

And the problem that we have is that we still have drug trafficking business still there. We have diminished it. We have -- we have defeated the big cartels that had our democracy to its knees. But the business is still there and they recruit these criminals and they continue to do criminal activity.

But it's not the same activity that they did before. For as the paramilitary disappeared, in the sense that they had a -- if you wanted to put an objective of countering the guerrillas, now guerrillas and these criminal bands work together to do their business of drug trafficking. So it's an evolution of the insecurity, which we have to approach with a more law-and-order approach. And that's what we're doing.

But there is a false perception, because when you get the indicators of homicides, of the different criminal activities that affect the day-to-day lives of people, you will see that there has not been an increase; on the contrary, the trends continue to go down.

There has been some pockets of difficulties in some areas -- in Medellin, where the drug bands fight among themselves for the drug business. But it's not out of the ordinary, and it's not a resurgence of the type of violence we had before.

HRINAK: You also made a point of talking about human rights, and as you well know, this is a very important issue for many sectors, many people here in the United States, as well as in Colombia.

Last week the State Department certified that Colombia was meeting the conditions required to continue to receive U.S. military assistance. And despite progress that I think we can all recognize, about 30 high-ranking military officers who have been dismissed from their positions have not yet been charged with the crimes of which -- for which those dismissals took place. Can we expect progress in those kinds of cases? How do you get that prosecution of particularly high-ranking military back on track and end that culture of impunity?

SANTOS: Well, I dismissed them. I was the one who dismissed them. But I dismissed them because they were in the commanding posts where these appalling crimes were committed. So in a way, they should have been much more careful for them not -- for these not to happen.

But I did not accuse them of being responsible for this policy. And I said the justice system should investigate, and if there is any responsibility, they should be accused and condemned.

The justice system is working. There are indeed hundreds of military who are now in jail because of the so-called false positives. What I've said is we need to support the justice system in every way possible for the justice to do its job, and strives to investigate, try them, and condemn the guilty and declare innocent the innocent people, because there has been also a lot of false accusations. There is -- some of the groups that have had seen this as a way to hit the center of gravity of our military, which is their legitimacy. And there's a lot of false accusations that have been sort of planted in the process.

This is a big challenge for the justice system. We're giving all the support we can. We are opening the doors for the justice system to investigate.

We have a problem with the justice system in general. It's a very slow, very inefficient system. But people are being tried and people are being condemned. And what I hope will happen is that we can clear this as soon as possible and close this chapter, which for me was probably the most difficult moment, when I discovered that this was happening. Today, the -- what do you call it? -- the denunciations about false positive practically has disappeared and the problem disappeared.

But we need to do this, for the guilty people that did this in the past, for them to be tried and condemned.

HRINAK: Before we open it for questions from our members, I'd like to ask you about relations with your neighbor Venezuela. What do you expect from the Colombia-Venezuela relationship in terms of commercial ties, exports, collaboration and security?

SANTOS: What do I expect. Well, we were in the worst of all possible scenarios when I was in my campaign for president. We had no diplomatic relations, no dialogue whatsoever, no trade. And we were talking about -- or some people were talking about the possibility of war, which is for me inconceivable, war between Colombia and Venezuela. For me, it's not in my dictionary. So I said, what could be worse? A war.

But the situation was very bad, so I decided to make an appeal for common sense to come into the scenario. And I said, listen, Mr. Chavez and myself, we are very different. We are very, very different. He thinks one way -- (laughter) -- and I think another way. But -- but if we respect our differences, we can have good relations. You can have a very different view from your neighbor, but if you respect that you will not destroy his garden and he will not destroy your garden, you can have good relations and your kids might play together.

So I said, if we respect our differences, we can have a normal relation, a good relation, and this will be in the benefit of the Venezuelans and the Colombians because we've both suffering from this absurd situation.

Well, Mr. Chavez responded finally positively, because in the beginning he was very critical, and he said that if I was elected there will be war. But then he realized that I was going to be elected, and then he changed -- (laughter) -- he changed his -- and we had a very -- a very good meeting, a very frank meeting. We sat down, like you and I are sitting here, and we started saying some truths.

And I said to him, listen, first, let's don't convince each other to think like the other. You're not going to convince me to think like you and I'm not going -- certainly to convince you to think like this. But respect our differences and we can get together. Don't try to impose a peace process in Colombia. The peace -- if ever there's a peace process, this will be a Colombian decision, it will be my decision, and I don't want you pressing internationally or for whatever reason for us to start a peace process. And third, please respect my former president. If you started talking bad about Mr. Uribe, I will simply stand up and go.

And he understood very well. And he said: Fair enough, I like your frankness.

And we had a very rich and constructive conversation. We established a procedure with different commissions to normalize trade, normalize investment, to see what infrastructure we could -- would go together, to work on the border and to work together on the security situation.

And I must say that he has delivered, and that the relations are going in the correct path. And I think it's going to be for the benefit of the Venezuelans, the Colombians, the region and the U.S., because a region that is -- where there is turmoil is not good for anybody. And so I hope that this will slowly consolidate.

I've told my exporters this has been a very good market for us. Venezuela is our number-one market in manufactured goods. And I, myself, negotiated a free-trade agreement back in the early '90s with Venezuela. At that time, we had three -- $200 million in bilateral trade. It went up to 7 billion (dollars). And it is a very important market for us.

I told the exporters, you can very readily -- it's easy to reconquer, but don't get overexcited. Do it slowly, and do it like a windfall profit, more than simply depending again on -- only on Venezuela. And we're diversifying our markets, but Venezuela certainly is a very important market. And I'm optimistic that this relation will be -- will last.

We'll see what is going to happen in the elections on this Sunday. But I hope that this -- this is not some -- some people say that this has been simply manipulation of my good will for electoral purposes. I (disagree ?); that's not the case. I think Venezuela realized, as we realized, that it's in their own interest, as it is in our interest, to have good relations; and the same thing with Ecuador.

HRINAK: Presidente, I know we have members with questions in the -- begin here in New York. I ask when you're called on, please stand, wait for the microphone to reach you so you can be recorded and state your name and affiliation.

Here in the center, please.

QUESTIONER: Hi. I'm Joel Motley of Public Capital Advisers.

Colombia is particularly advanced among emerging-market countries in enabling municipalities to build infrastructure. And setting aside federal revenues to help that happen is a big step in that direction. Can you talk about your own view of infrastructure and how that balances between control from the center and empowering the municipalities to do this on their own?

SANTOS: You know, we're -- we have -- we have identified five -- what we call five locomotives that are going to be the engines of growth. One of those locomotives is infrastructure, where Colombia, by every indicator, has lagged behind other countries of the same level of development. So simply by catching up to be a normal country in terms of infrastructure, we need to do a big effort, investment. And what we're doing is changing the institutionality that has to do with infrastructure, which was very poor.

One of the big problems we had was that we offered the projects without structuring the projects correctly. And that created many problems and that meant that many of the roads were left in the middle of the road, that were not made well. Structuring the projects correctly is a fundamental aspect of our building good infrastructure. And so we're doing that.

And we need to have a different approach that would make the development of the infrastructure a coherent -- a coherent process, because when municipalities did whatever they wanted to do by themselves, and that was not integrated to the state or the national plans, then you had all kinds of contradictions or all kinds of clashes. So we're fixing that.

And the way we're fixing that is by -- or one of the ways is by restructuring the way that the royalties that we're going to start to receive -- we are going to be receiving quite a bit of royalties because we're in a mini-bonanza of - oil and minerals in Colombia are booming. This is another locomotive, but that one is already growing at more than 12 percent per year.

That is going to give us a lot of royalties, and we must administer those royalties correctly in order to avoid the Dutch disease and invest what can be invested in a correct way.

So we are doing an effort to restructure the institutional part of the administration of infrastructure to be able to deliver on the infrastructure front that we need very, very badly in order to be a competitive economy.

We are going -- we're putting in some benchmarks that are very ambitious for us. We want to be members of the OECD. The OECD is a club of what do you -- would call of better practices, and they have benchmarks for you to come in. You need to have your public policies with a minimum of quality, and that will force us to put in place good policies. And that's -- one objective I have is to become a member of the OECD in the next two or three years.

We want investment grade. I think we -- if we approve these reforms in congress, we'll get investment grade. The cost of our -- of our debt in the international market is as if we had investment grade. It's -- people are very confident in Colombia today.

And so yes, in the infrastructure we need to do some reforms, what -- and we're doing them.

HRINAK: We'll take another question from here. Yes. Woman on this side -- gentleman on this side. Mm-hmm.

QUESTIONER: Hello. I'm Ken Roth from Human Rights Watch. I wanted to come back to the issue of paramilitaries. And the justice and peace process clearly has made some significant progress.

There have been, you know, many people who have gone through the demobilization process. The kingpins have been extradited to the United States and are now serving significant sentences.

But there's considerable evidence, as I think you alluded to, that the paramilitaries themselves are still running strong. And I wanted to ask you about what steps you'll take to move to the next stage of genuinely dismantling the paramilitaries. Part of the problem up until now has been that prosecutorial authorities really have been hamstrung by efforts to constrain their independence, particularly when they looked too closely at connections between the paramilitaries and certain political forces, including some close to the former president. And I'm wondering what you'll do to ensure the genuine independence of the judiciary and the prosecutors, the resources they need to pursue this, and an effective dismantling process with respect to the paramilitaries.

SANTOS: Well, again, first of all, the word "paramilitary" we turn discussion -- do we still have paramilitary? I think -- I think not. I mean, what did the paramilitary do? They wanted to put groups to control territory and to fight the guerrillas. That type of groups have been dismantled and their leaders are in jail, most of them here in the U.S.

Why are they here in the U.S.? Because they continued to do what they were doing before, especially in the drug trafficking, and maintain whatever their violent groups in some areas.

So we have done a tremendous effort to dismantle the paramilitary groups and their leaders, to put them in jail. They say that we betrayed them because a deal had been struck with them -- I don't know if somebody struck a deal; I didn't -- and they're, most of them, here in the U.S.

Some people say, oh, you extradited them, or the -- (inaudible) -- community extradited them, because you don't -- you didn't want the truth to come out. And this argument is a bit weak because you -- if they say that we betrayed them, then they will be much more stimulated to single out whatever truth people were interested in knowing. They had no commitment to hide the truth. If they tell the truth, their sentences would be reduced. So there is, on the contrary, an incentive for them. And that's what we -- I've said: Please tell the truth, the whole truth and nothing but the truth. Go ahead. We want the truth. But they are stumbling. They're trying to -- I don't know what they're seeking. Hopefully, they will say some truth.

And the judiciary system is working, with all its faults, but there is no country in the world can -- no country in the world that has a third of its members of Congress in jail because of links with the paramilitaries. Think -- this is a demonstration that the democracy in Colombia is working, and that the judicial system is working, and there is -- and there is independence in the judicial system.

That not all that are guilty are there? Maybe not. Some of them have -- some of them have been shrewd enough to avoid justice. But most of them are. Most of them are paying what they did. And if you get the whole picture, tell me a country -- one country in the world -- where a third of the members of Congress have been put in jail and are serving jail because of links to illegal groups.

This is an example, I think, of the maturity of our democracy.

Of course, we have accusations that the speed of the -- of the condemnation's not fast enough. We have charges -- and again, I repeat we have a problem of, like, an old elephant in the justice system, that it doesn't -- is not agile enough. But things are working and there is confidence.

Sometimes people are saying that the judicial system is going too far and that they're really doing too much of a harsh job, and that the clash between the powers is going to increase and that it's bad for democracy. I think not. I think each power does its own job independently.

What I want to do in Colombia is to reestablish the harmony between the powers. And I use a phrase that I read about President Roosevelt, that he used when he had a clash with the Supreme Court, with the New Deal, that democracy is like a -- what do you call that in English, an "arado" -- like a -- a plow, with three ox that pull the plow. The three ox are three independent powers. They have to be more or less of the same size. And they have to walk in the same direction; otherwise, you can't plow.

A democracy will not work if the powers -- one sleeps and the other walks. Then you cannot plow. This is what I want to restore, harmony between three powers, but respecting the independence of each power.

And I think it's working, with difficulties, with -- you can signal defects, but overall, again, I repeat, no country in the world -- in the world -- has done what we've done to put in jail members of Congress who somewhere or another have had relations with illegal groups.

HRINAK: President Santos, we had questions from Washington as well.

Chris (sp), members in Washington, do you have a question?

MODERATOR: Yes. Thank you, Donna, and good morning from Washington.

Steve?

QUESTIONER: Good morning, Mr. President, and thank you. This is Stephen Donehoo from McLarty Associates.

First, congratulations to your intelligence and armed forces and police folks for the tremendous operation and for other operations like Jaque where they had such a historic effect on -- in the case of military history.

The United States has a very carefully thought-out legal strategy on extratoriterrial (sic; extraterritorial) attacks against terrorists that we've seen in places like Somalia, Yemen and Pakistan. Is this a policy to which Colombia subscribes?

SANTOS: Do you have an easier question? (Laughter.)

HRINAK: Yes or no would be fine. (Laughter.)

SANTOS: Listen, this is a very interesting question, because there is a theory that in Latin America this has not been even a subject of discussion, because we always are 100 years behind the world trend in terms of territoriality and sovereignty.

We still have that 19th century paradigm that sovereignty is sacred and nobody can break it.

But what is sovereignty? If you have a terrorist group that is attacking you permanently from a third country, and that third country does nothing, do you have a right to strike? That was, in a way, the argument that we used when we struck against this terror group in Ecuador. This brought out all kinds of problems.

And it's a theory that is being -- it's going to be increasingly discussed because terrorism is not a local, it's a transnational problem. Like the drug business, this is an approach that should be discussed multilaterally by many countries. And we would surely subscribe to that thesis in a multilateral environment because fight against terrorism is a transnational fight, and we would be willing to accept the theory when it is discussed in whatever instance or whatever arena it should be discussed.

So we are not against that theory. We would subscribe it. But we would need to have a multilateral approach.

HRINAK: (Inaudible) -- coming up in what I know is your very busy schedule, so I would like to -- Chris, if you have another question from Washington, take one more question in Washington, two quick questions here.

And perhaps you could respond to all of them in a -- in a final intervention.

Chris (sp)?

MODERATOR: Thanks. Thanks, Donna. Our next question is from Lauri.

QUESTIONER: I'm Lauri Fitz-Pegado, with the Livingston Group.

Mr. President, thank you. And although Colombia is an important partner with the U.S., clearly, in the war against narcoterrorism, defense exports are often caught up in red tape, and many U.S. export licenses are delayed or denied, causing the U.S. firms to face fines and penalties, and often, of course, affecting lives in Colombia because of those delays or denials.

In the past, Colombia -- what Colombia has done is to put the burden on the U.S. exporter to solve this issue. And given that it's about $9 billion in sales from the U.S., and Colombia is the second- largest spender on -- in Latin America, after Brazil, is there something that you're looking at in terms of the bilateral relationship and a government-to-government approach, given discussions opening up on export controls in this country?

HRINAK: Can we take two questions here in New York, please?

Yes, here in the center.

QUESTIONER: Mr. President, my name is Roland Paul.

In your very successful campaign against the guerrillas, if you had to list one or two of the most important factors that contributed to that success, what would they be?

HRINAK: Okay, and one more? Yes, here.

QUESTIONER: Sergio Galvis, from Sullivan and Cromwell.

In the context of addressing Venezuela, you mentioned the importance of export -- I mean, exporters diversifying their markets. Could you comment on two aspects of that? Aspect one is the effect of the currency relationship between the peso and the dollar; and secondly, the effect, or noneffect, of the absence of Google -- the free-trade agreement between the two countries.

HRINAK: Perhaps you'd like to answer this. So it can be --

SANTOS: Sure.

HRINAK: -- that one and the -- and the Washington one together, since they were commercial, and then we'll leave the guerrillas to the end.

SANTOS: Okay. The free-trade agreement, the commercial relationship between the U.S. and Colombia, whatever difficulty exporters are having, I can assure you it's not against any particular country. It probably is a matter of bureaucratic obstacles that you find everywhere. There's no (singling ?) of any country in terms of making their life difficult. What we want is to have free trade with U.S. -- a free-trade agreement.

And this makes a lot of sense more to the U.S. at this moment than to Colombia, because we have access with no tariffs to the U.S. market because of the Andean preference act, the -- called APTA, and you have to pay tariffs when you go -- when you export to our country. We are called a strategic partner and best friend, and we hug each other -- (scattered laughter) -- but no free-trade agreements. And the people in Colombia say, well, what kind of friends are you, do you have if they call you strategic, but they're signing free-trade agreements with other countries and not with you.

What's the importance for us of a free-trade agreement? It's the importance -- more than access to your markets, it's stable rules of the game, investors.

We -- if there's a word that I want to project to the investor community, it's that Colombia would want -- wants to be predictable. We want to have clear rules of the game, for the investors to know what they're getting into. And a free trade agreement with the U.S. will give U.S. investors a predictable scenario. And that's THE most important thing on the free trade agreement. I think that the more -- the more you prolong this, the less investors will come to Colombia and will choose other areas where they have stable rules of the game. That's the urgency.

I'm meeting President Obama later today, and I hope we'll have a very frank discussion. And I am optimistic that after the elections here the free trade agreement will be approved. I think that's what makes sense. We want the relations with the U.S. to evolve into a real partnership. I think we can play a role in many aspects that will be of mutual benefit.

For example, for example, Central America and the Caribbeans (sic) hare having an increasing problem with drug traffickers, not to speak about Mexico, that -- you know what is happening there. We have learned -- we have accumulated tremendous amount of knowledge, of experience that we can -- we want to share and we're starting to share with these countries. And we can work together, because it's in our interest, U.S. and Colombia, to provide more help to these -- to the region in their problems.

So I am looking forward for an increasing -- a more mature relationship. We don't want to be seen as simply aid receptors. We want to really be seen as equal partners. And I think in areas like, for example, climate change, biodiversity, social progress, education, the region in general, we can work with the U.S. in a -- in a more productive and mature way.

We've had very good relations with the U.S. We value those relations very much. For us, the U.S. is a -- is really a strategic partner. The help that you have given us -- for example, in our fight against the terrorist groups or the drug traffickers -- has been very valuable. And I would say, and I repeat it here, the Plan Colombia, when President Clinton -- and we were discussing that day before yesterday -- when President Clinton went, back in the year 2000, to Cartagena to launch Plan Colombia, he went with today-Vice President Biden, who was at that time chairman of Foreign Relations Committee. He went with Speaker Hastert, who, as a Republican, at that time controlled the House. And they launched a bipartisan foreign policy initiative which, in the view of many, has been the most successful bipartisan foreign policy initiative that the U.S. has launched in many, many years. And the proof is there. We were a failed state 10 years ago. Today, we're a vibrant and dynamic democracy.

And to answer your question about what has been the key, or two factors to being successful in our security policy and the fight against the guerrillas, the most important thing is intelligence.

Intelligence -- you need intelligence; you'd be -- need -- you need to be sophisticated.

That's what we did -- when I went into the Ministry of Defense, we had inherited an American way of handling the intelligence. And why do I say "American"? Because your intelligence agencies are very independent of each other. They don't share information. And in our case, that was stupid. (Laughter.)

And I said -- I said: Listen, get together. I mean, the -- you have information. If the navy has -- in their intelligence has 50 percent information about this target, that 50 percent by itself means nothing, and maybe the army or the police has the other 50 percent, that by itself means nothing. But if you get together and put the intelligence together, then you have very good intelligence. And that made a tremendous change.

And yesterday's blow was probably an example of all the forces, even with the police -- with the army, the air force, the navy and the police working together -- and we were very successful.

When we had the kidnapped people rescued, the Operacion Jaque, which was -- well, you remember the three Americans that were rescued and Ingrid Betancourt? That was also intelligence. And I told the intelligence community in a meeting like this: Get out of the -- of your personal paradigms. Think the unthinkable.

Think the unthinkable because that's the way you get good intelligence. And the Operation Jaque emerged from a very, very low level of -- there were three women, humble women, who had been working for the military intelligence for many, many years. And they had been hearing the interception of the FARC for many years. They knew the FARC by heart. They knew who talked, their names, how they talked, and what are the codes, everything.

And when they heard "think the unthinkable," they had discussed among themselves that it would be relatively easy, if the technology was present, to come into the communications of the FARC and replace the persons that were speaking. And that's how the operation was made. It came from down up, from very humble women, very intelligent. And that's probably THE factor.

The second factor is coordination between the forces. For example, yesterday's operation: air force, special forces, and intelligence by the police. If you coordinate, you're much more effective. What had happened before is the jealousy between the forces. I was in the marines. I was in the navy. And I remember when I was a cadet, the competition between the forces developed as sort of a culture of being like the competition with -- it was the enemy, and you don't share information, you don't work together. The army is the army, the navy is the navy, the air force is the air force, the police is the police.

Well, that is the old type of approach. I take the new approach.

And that has been another factor of our success, is working as a team.

HRINAK: Thank you, Presidente. (Applause.)

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THIS IS A RUSH TRANSCRIPT.

DONNA HRINAK: Well, good morning, everyone, and welcome -- today's Council on Foreign Relations meeting. I'm Donna Hrinak, and before I introduce our distinguished guest, there are a few administrative issues which -- I need to make reminders. First of all, I'd like to remind all members that this meeting is on the record. We are being joined by video conference with our members in Washington. They'll be joining us, directly participating in the question-and-answer session later in the day -- later in the morning.

But as you are straightening your ties or combing your hair or whatever, please keep in mind that there is video conference going on.

Because of that video conference link, we ask you to please turn off all of your wireless devices -- cell phones, BlackBerrys -- not just put them on vibrate. They do interfere with the sound system.

It is a real pleasure to introduce to you Juan Manuel Santos Calderon, the president of the Republic of Colombia. President Santos assumed his office on the 7th of August of this year, which means he has been president for less than two months. And so I think, Mr. President, that congratulations still are in order.

For those of us who have worked with Latin America for many years, President Santos has been better known as Minister Santos. He has occupied what I think are the three most important positions in his government's Cabinet. He was Colombia's first minister of foreign trade, was finance minister, more recently minister of national defense, where he was responsible for implementing the country's democratic security policy.

President Santos has also worked as a journalist, a columnist and deputy director of the well-respected and very courageous newspaper El Tiempo. There he was awarded the King of Spain prize. He was elected president of the Committee on Freedom of Expression of the Inter American Press Association.

He's also published several books. One of them, "Check on Terror," relates actions which he took as minister of defense to combat terrorist forces in Colombia. And I understand we have, Mr. President a very successful action which just occurred in recent days, which I'm sure you'll be telling us about, we can add to that list.

President Santos won his election on June 20th with 9 million votes. That is the highest number of votes obtained by any candidate in the history of Colombian democracy. The core of his platform was his commitment to move the country from democratic security to democratic prosperity. And as the father of three children, he has a personal investment in Colombia's future.

Colombia has had a past, difficult at times, more hopeful, recently. Mr. President, we look forward to your telling us about Colombia's future.

Members, please join me in welcoming President Juan Manuel Santos. (Applause.)

PRESIDENT JUAN MANUEL SANTOS CALDERON: Thank you. Thank you very much for this introduction and thank you very much for having me here on this very busy week. I understand and I'm honored that I'm the only Latin American who's going to be present in this very prestigious floor during this week, and that -- for that I say thank you.

I was told to make a short introduction of how I see the future of my country under my government -- that -- it's not a very objective view, but it's going to be, I hope, a realistic one -- and then open the floor to questions. So that's what I'm going to try to do in the next few minutes.

The country -- we -- this year we are celebrating our 200th anniversary as a -- as a republic, as an independent country, and we are probably going through one of the most interesting times of our history, of our history in those 200 years.

For almost 40 years, we've been struggling against drug traffickers, against guerrillas, against paramilitaries, and that has been (some of the ?) the actions of our -- all our policies.

But in the recent past, the last few years, we changed the emphasis of our priorities and concentrated in one very basic concept. We need security. We need to recuperate our country, which we had lost, in order to be able to progress. And with that in mind, we put in place what President Uribe at that time called the policy of democratic security.

The word "democratic" had two meanings. First, security for every Colombian, no matter where he came from -- the opposition, pro- government -- provided he was within the rule of law. And the other meaning, which was very important, is that -- for democratic security, is that "democratic" also meant putting in place a security policy following very strictly the rule of law, our constitution, which is a very advanced and ambitious constitution in terms of protecting fundamental rights of the people, and going about doing this -- or implementing this security policy by the law.

Even if it's harder, this would be much more legitimate. And it has been more difficult, but it has been more legitimate. And the success of this policy has helped very much to change the agenda in Colombia. For 40 years, we only talked about recuperating our security, our territory, and the fight against the drug traffickers, the fight against the paramilitary, the fight against the guerrillas. But now we can change the agenda, and that's what we're doing. And my government, as was said here, is concentrated in jumping from democratic security to democratic prosperity, and putting the social development of the country as the priority.

And we can now do this because we have advanced very, very much in security in our country. When President Clinton visited Colombia back in the year 2000 -- I was then minister of finance -- we were a failed state. We did not control more than two-thirds of our territory. One-third was controlled by guerrillas, the other third was controlled by paramilitaries, and the state was on the defensive.

It was almost impossible for people to even seek minimum justice, because the justice was administered by either paramilitaries or guerrillas on their own terms.

And in 10 years, the situation has changed dramatically, I would say 180 degrees. Today, Colombia is a democracy that -- I would say it's an example in the region. The institutions are working.

The -- we respect very much the independence and separations of powers -- some people say too much. We are now in a problem. We have a difficulty of reestablishing the equilibrium between the three powers -- the judiciary, the legislative power and the executive power. There's a clash between the powers.

But the respect for the independence of each power is something that we feel is sacred, and that has put the democracy in a -- in a very vibrant tone to strengthen our institutions and feel that they are -- the fundamental liberties, the fundamental rights of the people are respected.

And we have a democracy that is delivering for the first time on the social side. And that's what my objective is, is to increase that -- to -- that emphasis on the social side, make that a high priority, without lowering our guard on the security, which we have said we are winning, but we have not won yet.

We still have drug trafficking. Unfortunately, as long as the -- and I say this with due respect -- as long as the yuppies in Fifth Avenue snort coke, there will be coke being exported from Colombia. And that has been the source of many of our problems for many, many years.

But we have to continue fighting the drug traffickers, because for us it's a problem of national security. The violent groups, the terrorist groups today live because they are able to finance themselves from the drug trafficking -- still live, still maintain a presence in some remote areas because of the drug trafficking.

Fortunately, in that respect, we have made tremendous advances. Colombia is, I would say, a secure country. The state is now present in every single municipality. People go to the most remote areas with no fear. This was unthinkable some years ago.

And the best way to promote ourselves is to invite people to go to Colombia. That's why we -- we have a -- an advertising that says the only risk of going to Colombia is wanting to stay -- (soft laughter) -- which is working. There's a lot of people -- I will give you one indication. The country where the most amount of diplomats, when they retire, choose -- chose -- choose to stay there, in the whole world, now is Colombia. And that is an indicator of how things have changed in our country.

In the security -- in the security aspect, we made a tremendous progress 48 hours ago. When I left Bogota, I authorized an operation in the middle of the jungle against the most important military commander of the FARC. He was sort of a myth.

And I was told yesterday morning -- I was jogging in Central Park and somebody was trying to catch up with me, and said, "You have a very urgent call." That urgent call was the strike was successful. And that was -- in Colombia is extremely, extremely important.

Yesterday people were going on the streets saying how marvelous that that happened, because this person is like -- I compare it to a situation whereby I came to New York and said -- even it's for us more important, but I came to New York and said that Osama bin Laden was struck, was killed. And that is the comparison to how important this person was for us.

But not only that. It's not only -- always even it's the worst bandit or terrorist, it's human life, but the important thing about this strike was that it was the heart or the headquarters of the FARC.

And some of you remember that when we struck another of these leaders, we found three computers that gave us very valuable information that helped us weaken this terrorist organization very much.

There were three computers at that time and 10 USBs that we found in the other strike. In this one, we found 14 computers and 60 USBs. So the information is -- all the information of the FARC was there.

So I think this is a strike that will break the center of gravity of the FARC, and that after 40 years I am confident that we can now see the future also with great optimism in achieving peace, peace after so many years of violence in Colombia. And that is a complement of -- a complement to our main objective, is a big push of achieving democratic prosperity.

Colombia is going through a good economic cycle. We're putting in place sound economic policies. We want to achieve sustainable, high growth. Colombia has been probably the most stable country in terms of prudent economic management in Latin America for many decades.

The way we sold ourselves was we are stable; we don't have those hyperinflations, we don't have that volatility. But we were stable at a very mediocre -- with a very mediocre performance. Growth was slow, and the necessities of the people were increasing at a high rate.

So what we want to do now is to uplift, upgrade the objective of growth and distribution of that growth. And that is what we're putting in place, with a big margin of governance, because we managed to create a -- what we call a national unity government.

Major parties are all part of this -- of the national unity government, and we have today more than 80 percent of congress with us. And that will facilitate the approval of major reforms that are necessary for us to be able to achieve that high growth, and also to distribute better that high growth.

We are putting -- we are presenting to congress some very audacious legislation. For example, in terms of the rural properties, we want all the peasants that were displaced by the violent people to come back. And we need fast-track procedures, legal fast-track procedures, to be able to implement that at a high -- at a high speed with effectiveness.

We are presenting a law to repair the victims of the violence -- the first country, I think, in the world that is doing that with a comprehensive reparation, where we are respecting the rights and repairing the victims.

We are changing the way we distribute the royalties. This is one of the -- in every country, one of the most difficult reforms. Yesterday, it was approved in the first committee, 14 to 3, which makes me very optimistic that it's going to pass. And if we pass these legislations, then we will have the instruments to achieve that high growth and distribute better that growth among the Colombian population.

We have a lot of challenges, of course. But the good thing is that we now can concentrate on the social development of the country, and in our agenda with our neighbors, with which we made peace very recently. And I think that's been a very good step forward with Venezuela. We are reestablishing our relations with Ecuador. We are reestablishing relations.

We want to exercise leadership in -- in the region -- a region that is more and more looked upon as the region of the future, because Latin America, South America has what the world is looking for: energy, biodiversity, water, capacity to increase food production. What all the big trends in the world is -- (say ?) what does the world need more and more, South America is emerging as the country that can supply them.

And within South America, within Latin American, Colombia is a -- in a(n) ideal position. For example, in the biodiversity discussion, the climate change, Colombia, many people don't realize, is the most -- the richest country in the world in terms of biodiversity per square kilometer. There's -- we are the third-richest country in the world in terms of water. We have ample land that, without destroying rain forests, we can start to increase our food production.

So there is a tremendous opportunity. We have put in place a development plan, a coherent development plan that will hopefully take us to this high-growth path that will give us the opportunity to then bring prosperity to our people.

And there are challenges that every country has. We need to improve the quality of education. We need to improve the quality of our health system.

We're going through a major health reform. But we have achieved -- and this is a real revolution -- in the last -- in the recent years have achieved universal coverage. What you did here, what President Obama did here with the health system, we did it already in Colombia some years ago. Of course we go -- the system is going bankrupt -- (scattered laughter) -- and there's many problems. That's the reform that we're doing. But we have today universal coverage. This is a big -- a big step forward in our social development.

We need to enhance our infrastructure very much. We lag behind countries that have our -- the same level of development.

We need to give much more housing to the people. There's a big deficit of families that want to buy a house and they can't. They don't have either the means or the supply.

But the good thing is that Colombia is now having the normal problems of any other country, and that is a big, big change in our country.

Our human capital is considered fortunately as one of the best human capitals in the whole region. Foreign investors all say that the quality of our managers or the quality of our laborers is exceptional, which is probably our biggest asset -- our people.

And we are very optimistic.

And for those of you who haven't been in Colombia lately, or the ones who have never been, you go to Colombia and you see a country full of optimism, a country -- and this is a big indicator for any country -- a country where people think that by working harder they will leave a better country to their children, that their children will have a better future. That -- you go to other regions of the world, and that's not so normal today. You go to some countries in Europe, there's tremendous pessimism. Some states here in the U.S., there's pessimism.

Colombia is full of optimism, and that's what I hope to build on. We have a good team, good government. And I'm going to work very hard to achieve those objectives, hopefully, with the comprehension and understanding of institutions like the Council on Foreign Relations. Here you have been sometimes, and with good reason, very critic -- very critical of things that have happened in Colombia.

Human rights has been one of the (aspects ?) that have been very -- very much criticized. It's a problem that we have never neglected. When we were a failed state, the violation of human rights in Colombia were simply appalling. It was not a state policy, but you saw violations from the guerrillas, from the paramilitaries, and many times, by omission, to the state itself.

But we have made a great effort in trying to improve that aspect. The democratic security policy in itself is a policy of -- or human rights policy.

You see the indicators of homicides, of kidnappings. And many of the violations of fundamental rights of the people have gone down tremendously.

We still have a long way to go. I met yesterday the high commissioner for Human Rights for the United Nations. I said, I'm going to extend your mandate, but what I -- what I really want is out -- I want you out of there, because I want you out of there because we're -- the issue of human rights I hope will disappear, become a nonissue, and be a normal country also in that respect.

But we made tremendous progress, which I hope that you can recognize. And we're struggling. We're working hard. And I think we're going in the right direction, hopefully with your help. Thank you. (Applause.)

HRINAK: Well, thank you, Mr. President. And you've certainly given us a lot of issues that we can talk about.

I'd like to begin with a remark you made in which you said that -- talked about the continued presence of terrorist groups in remote areas. And yet in the last several weeks we've seen incidents of urban violence once again, in Bogota, in Medellin. Do you feel your new government is being tested, and how do you plan to respond to these urban threats?

SANTOS: Well, the urban violence is a consequence of the success that we have had in the rural areas.

In every country that has gone through a process that we have gone through, be it in South Africa, the Central American countries, in Eastern Europe, there is always a percentage of the people who demobilize that will go back to criminal activity. That's like a standard procedure. They say between 10, 15 percent of the people who demobilize, who unarm, go back to criminal activity.

And the problem that we have is that we still have drug trafficking business still there. We have diminished it. We have -- we have defeated the big cartels that had our democracy to its knees. But the business is still there and they recruit these criminals and they continue to do criminal activity.

But it's not the same activity that they did before. For as the paramilitary disappeared, in the sense that they had a -- if you wanted to put an objective of countering the guerrillas, now guerrillas and these criminal bands work together to do their business of drug trafficking. So it's an evolution of the insecurity, which we have to approach with a more law-and-order approach. And that's what we're doing.

But there is a false perception, because when you get the indicators of homicides, of the different criminal activities that affect the day-to-day lives of people, you will see that there has not been an increase; on the contrary, the trends continue to go down.

There has been some pockets of difficulties in some areas -- in Medellin, where the drug bands fight among themselves for the drug business. But it's not out of the ordinary, and it's not a resurgence of the type of violence we had before.

HRINAK: You also made a point of talking about human rights, and as you well know, this is a very important issue for many sectors, many people here in the United States, as well as in Colombia.

Last week the State Department certified that Colombia was meeting the conditions required to continue to receive U.S. military assistance. And despite progress that I think we can all recognize, about 30 high-ranking military officers who have been dismissed from their positions have not yet been charged with the crimes of which -- for which those dismissals took place. Can we expect progress in those kinds of cases? How do you get that prosecution of particularly high-ranking military back on track and end that culture of impunity?

SANTOS: Well, I dismissed them. I was the one who dismissed them. But I dismissed them because they were in the commanding posts where these appalling crimes were committed. So in a way, they should have been much more careful for them not -- for these not to happen.

But I did not accuse them of being responsible for this policy. And I said the justice system should investigate, and if there is any responsibility, they should be accused and condemned.

The justice system is working. There are indeed hundreds of military who are now in jail because of the so-called false positives. What I've said is we need to support the justice system in every way possible for the justice to do its job, and strives to investigate, try them, and condemn the guilty and declare innocent the innocent people, because there has been also a lot of false accusations. There is -- some of the groups that have had seen this as a way to hit the center of gravity of our military, which is their legitimacy. And there's a lot of false accusations that have been sort of planted in the process.

This is a big challenge for the justice system. We're giving all the support we can. We are opening the doors for the justice system to investigate.

We have a problem with the justice system in general. It's a very slow, very inefficient system. But people are being tried and people are being condemned. And what I hope will happen is that we can clear this as soon as possible and close this chapter, which for me was probably the most difficult moment, when I discovered that this was happening. Today, the -- what do you call it? -- the denunciations about false positive practically has disappeared and the problem disappeared.

But we need to do this, for the guilty people that did this in the past, for them to be tried and condemned.

HRINAK: Before we open it for questions from our members, I'd like to ask you about relations with your neighbor Venezuela. What do you expect from the Colombia-Venezuela relationship in terms of commercial ties, exports, collaboration and security?

SANTOS: What do I expect. Well, we were in the worst of all possible scenarios when I was in my campaign for president. We had no diplomatic relations, no dialogue whatsoever, no trade. And we were talking about -- or some people were talking about the possibility of war, which is for me inconceivable, war between Colombia and Venezuela. For me, it's not in my dictionary. So I said, what could be worse? A war.

But the situation was very bad, so I decided to make an appeal for common sense to come into the scenario. And I said, listen, Mr. Chavez and myself, we are very different. We are very, very different. He thinks one way -- (laughter) -- and I think another way. But -- but if we respect our differences, we can have good relations. You can have a very different view from your neighbor, but if you respect that you will not destroy his garden and he will not destroy your garden, you can have good relations and your kids might play together.

So I said, if we respect our differences, we can have a normal relation, a good relation, and this will be in the benefit of the Venezuelans and the Colombians because we've both suffering from this absurd situation.

Well, Mr. Chavez responded finally positively, because in the beginning he was very critical, and he said that if I was elected there will be war. But then he realized that I was going to be elected, and then he changed -- (laughter) -- he changed his -- and we had a very -- a very good meeting, a very frank meeting. We sat down, like you and I are sitting here, and we started saying some truths.

And I said to him, listen, first, let's don't convince each other to think like the other. You're not going to convince me to think like you and I'm not going -- certainly to convince you to think like this. But respect our differences and we can get together. Don't try to impose a peace process in Colombia. The peace -- if ever there's a peace process, this will be a Colombian decision, it will be my decision, and I don't want you pressing internationally or for whatever reason for us to start a peace process. And third, please respect my former president. If you started talking bad about Mr. Uribe, I will simply stand up and go.

And he understood very well. And he said: Fair enough, I like your frankness.

And we had a very rich and constructive conversation. We established a procedure with different commissions to normalize trade, normalize investment, to see what infrastructure we could -- would go together, to work on the border and to work together on the security situation.

And I must say that he has delivered, and that the relations are going in the correct path. And I think it's going to be for the benefit of the Venezuelans, the Colombians, the region and the U.S., because a region that is -- where there is turmoil is not good for anybody. And so I hope that this will slowly consolidate.

I've told my exporters this has been a very good market for us. Venezuela is our number-one market in manufactured goods. And I, myself, negotiated a free-trade agreement back in the early '90s with Venezuela. At that time, we had three -- $200 million in bilateral trade. It went up to 7 billion (dollars). And it is a very important market for us.

I told the exporters, you can very readily -- it's easy to reconquer, but don't get overexcited. Do it slowly, and do it like a windfall profit, more than simply depending again on -- only on Venezuela. And we're diversifying our markets, but Venezuela certainly is a very important market. And I'm optimistic that this relation will be -- will last.

We'll see what is going to happen in the elections on this Sunday. But I hope that this -- this is not some -- some people say that this has been simply manipulation of my good will for electoral purposes. I (disagree ?); that's not the case. I think Venezuela realized, as we realized, that it's in their own interest, as it is in our interest, to have good relations; and the same thing with Ecuador.

HRINAK: Presidente, I know we have members with questions in the -- begin here in New York. I ask when you're called on, please stand, wait for the microphone to reach you so you can be recorded and state your name and affiliation.

Here in the center, please.

QUESTIONER: Hi. I'm Joel Motley of Public Capital Advisers.

Colombia is particularly advanced among emerging-market countries in enabling municipalities to build infrastructure. And setting aside federal revenues to help that happen is a big step in that direction. Can you talk about your own view of infrastructure and how that balances between control from the center and empowering the municipalities to do this on their own?

SANTOS: You know, we're -- we have -- we have identified five -- what we call five locomotives that are going to be the engines of growth. One of those locomotives is infrastructure, where Colombia, by every indicator, has lagged behind other countries of the same level of development. So simply by catching up to be a normal country in terms of infrastructure, we need to do a big effort, investment. And what we're doing is changing the institutionality that has to do with infrastructure, which was very poor.

One of the big problems we had was that we offered the projects without structuring the projects correctly. And that created many problems and that meant that many of the roads were left in the middle of the road, that were not made well. Structuring the projects correctly is a fundamental aspect of our building good infrastructure. And so we're doing that.

And we need to have a different approach that would make the development of the infrastructure a coherent -- a coherent process, because when municipalities did whatever they wanted to do by themselves, and that was not integrated to the state or the national plans, then you had all kinds of contradictions or all kinds of clashes. So we're fixing that.

And the way we're fixing that is by -- or one of the ways is by restructuring the way that the royalties that we're going to start to receive -- we are going to be receiving quite a bit of royalties because we're in a mini-bonanza of - oil and minerals in Colombia are booming. This is another locomotive, but that one is already growing at more than 12 percent per year.

That is going to give us a lot of royalties, and we must administer those royalties correctly in order to avoid the Dutch disease and invest what can be invested in a correct way.

So we are doing an effort to restructure the institutional part of the administration of infrastructure to be able to deliver on the infrastructure front that we need very, very badly in order to be a competitive economy.

We are going -- we're putting in some benchmarks that are very ambitious for us. We want to be members of the OECD. The OECD is a club of what do you -- would call of better practices, and they have benchmarks for you to come in. You need to have your public policies with a minimum of quality, and that will force us to put in place good policies. And that's -- one objective I have is to become a member of the OECD in the next two or three years.

We want investment grade. I think we -- if we approve these reforms in congress, we'll get investment grade. The cost of our -- of our debt in the international market is as if we had investment grade. It's -- people are very confident in Colombia today.

And so yes, in the infrastructure we need to do some reforms, what -- and we're doing them.

HRINAK: We'll take another question from here. Yes. Woman on this side -- gentleman on this side. Mm-hmm.

QUESTIONER: Hello. I'm Ken Roth from Human Rights Watch. I wanted to come back to the issue of paramilitaries. And the justice and peace process clearly has made some significant progress.

There have been, you know, many people who have gone through the demobilization process. The kingpins have been extradited to the United States and are now serving significant sentences.

But there's considerable evidence, as I think you alluded to, that the paramilitaries themselves are still running strong. And I wanted to ask you about what steps you'll take to move to the next stage of genuinely dismantling the paramilitaries. Part of the problem up until now has been that prosecutorial authorities really have been hamstrung by efforts to constrain their independence, particularly when they looked too closely at connections between the paramilitaries and certain political forces, including some close to the former president. And I'm wondering what you'll do to ensure the genuine independence of the judiciary and the prosecutors, the resources they need to pursue this, and an effective dismantling process with respect to the paramilitaries.

SANTOS: Well, again, first of all, the word "paramilitary" we turn discussion -- do we still have paramilitary? I think -- I think not. I mean, what did the paramilitary do? They wanted to put groups to control territory and to fight the guerrillas. That type of groups have been dismantled and their leaders are in jail, most of them here in the U.S.

Why are they here in the U.S.? Because they continued to do what they were doing before, especially in the drug trafficking, and maintain whatever their violent groups in some areas.

So we have done a tremendous effort to dismantle the paramilitary groups and their leaders, to put them in jail. They say that we betrayed them because a deal had been struck with them -- I don't know if somebody struck a deal; I didn't -- and they're, most of them, here in the U.S.

Some people say, oh, you extradited them, or the -- (inaudible) -- community extradited them, because you don't -- you didn't want the truth to come out. And this argument is a bit weak because you -- if they say that we betrayed them, then they will be much more stimulated to single out whatever truth people were interested in knowing. They had no commitment to hide the truth. If they tell the truth, their sentences would be reduced. So there is, on the contrary, an incentive for them. And that's what we -- I've said: Please tell the truth, the whole truth and nothing but the truth. Go ahead. We want the truth. But they are stumbling. They're trying to -- I don't know what they're seeking. Hopefully, they will say some truth.

And the judiciary system is working, with all its faults, but there is no country in the world can -- no country in the world that has a third of its members of Congress in jail because of links with the paramilitaries. Think -- this is a demonstration that the democracy in Colombia is working, and that the judicial system is working, and there is -- and there is independence in the judicial system.

That not all that are guilty are there? Maybe not. Some of them have -- some of them have been shrewd enough to avoid justice. But most of them are. Most of them are paying what they did. And if you get the whole picture, tell me a country -- one country in the world -- where a third of the members of Congress have been put in jail and are serving jail because of links to illegal groups.

This is an example, I think, of the maturity of our democracy.

Of course, we have accusations that the speed of the -- of the condemnation's not fast enough. We have charges -- and again, I repeat we have a problem of, like, an old elephant in the justice system, that it doesn't -- is not agile enough. But things are working and there is confidence.

Sometimes people are saying that the judicial system is going too far and that they're really doing too much of a harsh job, and that the clash between the powers is going to increase and that it's bad for democracy. I think not. I think each power does its own job independently.

What I want to do in Colombia is to reestablish the harmony between the powers. And I use a phrase that I read about President Roosevelt, that he used when he had a clash with the Supreme Court, with the New Deal, that democracy is like a -- what do you call that in English, an "arado" -- like a -- a plow, with three ox that pull the plow. The three ox are three independent powers. They have to be more or less of the same size. And they have to walk in the same direction; otherwise, you can't plow.

A democracy will not work if the powers -- one sleeps and the other walks. Then you cannot plow. This is what I want to restore, harmony between three powers, but respecting the independence of each power.

And I think it's working, with difficulties, with -- you can signal defects, but overall, again, I repeat, no country in the world -- in the world -- has done what we've done to put in jail members of Congress who somewhere or another have had relations with illegal groups.

HRINAK: President Santos, we had questions from Washington as well.

Chris (sp), members in Washington, do you have a question?

MODERATOR: Yes. Thank you, Donna, and good morning from Washington.

Steve?

QUESTIONER: Good morning, Mr. President, and thank you. This is Stephen Donehoo from McLarty Associates.

First, congratulations to your intelligence and armed forces and police folks for the tremendous operation and for other operations like Jaque where they had such a historic effect on -- in the case of military history.

The United States has a very carefully thought-out legal strategy on extratoriterrial (sic; extraterritorial) attacks against terrorists that we've seen in places like Somalia, Yemen and Pakistan. Is this a policy to which Colombia subscribes?

SANTOS: Do you have an easier question? (Laughter.)

HRINAK: Yes or no would be fine. (Laughter.)

SANTOS: Listen, this is a very interesting question, because there is a theory that in Latin America this has not been even a subject of discussion, because we always are 100 years behind the world trend in terms of territoriality and sovereignty.

We still have that 19th century paradigm that sovereignty is sacred and nobody can break it.

But what is sovereignty? If you have a terrorist group that is attacking you permanently from a third country, and that third country does nothing, do you have a right to strike? That was, in a way, the argument that we used when we struck against this terror group in Ecuador. This brought out all kinds of problems.

And it's a theory that is being -- it's going to be increasingly discussed because terrorism is not a local, it's a transnational problem. Like the drug business, this is an approach that should be discussed multilaterally by many countries. And we would surely subscribe to that thesis in a multilateral environment because fight against terrorism is a transnational fight, and we would be willing to accept the theory when it is discussed in whatever instance or whatever arena it should be discussed.

So we are not against that theory. We would subscribe it. But we would need to have a multilateral approach.

HRINAK: (Inaudible) -- coming up in what I know is your very busy schedule, so I would like to -- Chris, if you have another question from Washington, take one more question in Washington, two quick questions here.

And perhaps you could respond to all of them in a -- in a final intervention.

Chris (sp)?

MODERATOR: Thanks. Thanks, Donna. Our next question is from Lauri.

QUESTIONER: I'm Lauri Fitz-Pegado, with the Livingston Group.

Mr. President, thank you. And although Colombia is an important partner with the U.S., clearly, in the war against narcoterrorism, defense exports are often caught up in red tape, and many U.S. export licenses are delayed or denied, causing the U.S. firms to face fines and penalties, and often, of course, affecting lives in Colombia because of those delays or denials.

In the past, Colombia -- what Colombia has done is to put the burden on the U.S. exporter to solve this issue. And given that it's about $9 billion in sales from the U.S., and Colombia is the second- largest spender on -- in Latin America, after Brazil, is there something that you're looking at in terms of the bilateral relationship and a government-to-government approach, given discussions opening up on export controls in this country?

HRINAK: Can we take two questions here in New York, please?

Yes, here in the center.

QUESTIONER: Mr. President, my name is Roland Paul.

In your very successful campaign against the guerrillas, if you had to list one or two of the most important factors that contributed to that success, what would they be?

HRINAK: Okay, and one more? Yes, here.

QUESTIONER: Sergio Galvis, from Sullivan and Cromwell.

In the context of addressing Venezuela, you mentioned the importance of export -- I mean, exporters diversifying their markets. Could you comment on two aspects of that? Aspect one is the effect of the currency relationship between the peso and the dollar; and secondly, the effect, or noneffect, of the absence of Google -- the free-trade agreement between the two countries.

HRINAK: Perhaps you'd like to answer this. So it can be --

SANTOS: Sure.

HRINAK: -- that one and the -- and the Washington one together, since they were commercial, and then we'll leave the guerrillas to the end.

SANTOS: Okay. The free-trade agreement, the commercial relationship between the U.S. and Colombia, whatever difficulty exporters are having, I can assure you it's not against any particular country. It probably is a matter of bureaucratic obstacles that you find everywhere. There's no (singling ?) of any country in terms of making their life difficult. What we want is to have free trade with U.S. -- a free-trade agreement.

And this makes a lot of sense more to the U.S. at this moment than to Colombia, because we have access with no tariffs to the U.S. market because of the Andean preference act, the -- called APTA, and you have to pay tariffs when you go -- when you export to our country. We are called a strategic partner and best friend, and we hug each other -- (scattered laughter) -- but no free-trade agreements. And the people in Colombia say, well, what kind of friends are you, do you have if they call you strategic, but they're signing free-trade agreements with other countries and not with you.

What's the importance for us of a free-trade agreement? It's the importance -- more than access to your markets, it's stable rules of the game, investors.

We -- if there's a word that I want to project to the investor community, it's that Colombia would want -- wants to be predictable. We want to have clear rules of the game, for the investors to know what they're getting into. And a free trade agreement with the U.S. will give U.S. investors a predictable scenario. And that's THE most important thing on the free trade agreement. I think that the more -- the more you prolong this, the less investors will come to Colombia and will choose other areas where they have stable rules of the game. That's the urgency.

I'm meeting President Obama later today, and I hope we'll have a very frank discussion. And I am optimistic that after the elections here the free trade agreement will be approved. I think that's what makes sense. We want the relations with the U.S. to evolve into a real partnership. I think we can play a role in many aspects that will be of mutual benefit.

For example, for example, Central America and the Caribbeans (sic) hare having an increasing problem with drug traffickers, not to speak about Mexico, that -- you know what is happening there. We have learned -- we have accumulated tremendous amount of knowledge, of experience that we can -- we want to share and we're starting to share with these countries. And we can work together, because it's in our interest, U.S. and Colombia, to provide more help to these -- to the region in their problems.

So I am looking forward for an increasing -- a more mature relationship. We don't want to be seen as simply aid receptors. We want to really be seen as equal partners. And I think in areas like, for example, climate change, biodiversity, social progress, education, the region in general, we can work with the U.S. in a -- in a more productive and mature way.

We've had very good relations with the U.S. We value those relations very much. For us, the U.S. is a -- is really a strategic partner. The help that you have given us -- for example, in our fight against the terrorist groups or the drug traffickers -- has been very valuable. And I would say, and I repeat it here, the Plan Colombia, when President Clinton -- and we were discussing that day before yesterday -- when President Clinton went, back in the year 2000, to Cartagena to launch Plan Colombia, he went with today-Vice President Biden, who was at that time chairman of Foreign Relations Committee. He went with Speaker Hastert, who, as a Republican, at that time controlled the House. And they launched a bipartisan foreign policy initiative which, in the view of many, has been the most successful bipartisan foreign policy initiative that the U.S. has launched in many, many years. And the proof is there. We were a failed state 10 years ago. Today, we're a vibrant and dynamic democracy.

And to answer your question about what has been the key, or two factors to being successful in our security policy and the fight against the guerrillas, the most important thing is intelligence.

Intelligence -- you need intelligence; you'd be -- need -- you need to be sophisticated.

That's what we did -- when I went into the Ministry of Defense, we had inherited an American way of handling the intelligence. And why do I say "American"? Because your intelligence agencies are very independent of each other. They don't share information. And in our case, that was stupid. (Laughter.)

And I said -- I said: Listen, get together. I mean, the -- you have information. If the navy has -- in their intelligence has 50 percent information about this target, that 50 percent by itself means nothing, and maybe the army or the police has the other 50 percent, that by itself means nothing. But if you get together and put the intelligence together, then you have very good intelligence. And that made a tremendous change.

And yesterday's blow was probably an example of all the forces, even with the police -- with the army, the air force, the navy and the police working together -- and we were very successful.

When we had the kidnapped people rescued, the Operacion Jaque, which was -- well, you remember the three Americans that were rescued and Ingrid Betancourt? That was also intelligence. And I told the intelligence community in a meeting like this: Get out of the -- of your personal paradigms. Think the unthinkable.

Think the unthinkable because that's the way you get good intelligence. And the Operation Jaque emerged from a very, very low level of -- there were three women, humble women, who had been working for the military intelligence for many, many years. And they had been hearing the interception of the FARC for many years. They knew the FARC by heart. They knew who talked, their names, how they talked, and what are the codes, everything.

And when they heard "think the unthinkable," they had discussed among themselves that it would be relatively easy, if the technology was present, to come into the communications of the FARC and replace the persons that were speaking. And that's how the operation was made. It came from down up, from very humble women, very intelligent. And that's probably THE factor.

The second factor is coordination between the forces. For example, yesterday's operation: air force, special forces, and intelligence by the police. If you coordinate, you're much more effective. What had happened before is the jealousy between the forces. I was in the marines. I was in the navy. And I remember when I was a cadet, the competition between the forces developed as sort of a culture of being like the competition with -- it was the enemy, and you don't share information, you don't work together. The army is the army, the navy is the navy, the air force is the air force, the police is the police.

Well, that is the old type of approach. I take the new approach.

And that has been another factor of our success, is working as a team.

HRINAK: Thank you, Presidente. (Applause.)

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THIS IS A RUSH TRANSCRIPT.

DONNA HRINAK: Well, good morning, everyone, and welcome -- today's Council on Foreign Relations meeting. I'm Donna Hrinak, and before I introduce our distinguished guest, there are a few administrative issues which -- I need to make reminders. First of all, I'd like to remind all members that this meeting is on the record. We are being joined by video conference with our members in Washington. They'll be joining us, directly participating in the question-and-answer session later in the day -- later in the morning.

But as you are straightening your ties or combing your hair or whatever, please keep in mind that there is video conference going on.

Because of that video conference link, we ask you to please turn off all of your wireless devices -- cell phones, BlackBerrys -- not just put them on vibrate. They do interfere with the sound system.

It is a real pleasure to introduce to you Juan Manuel Santos Calderon, the president of the Republic of Colombia. President Santos assumed his office on the 7th of August of this year, which means he has been president for less than two months. And so I think, Mr. President, that congratulations still are in order.

For those of us who have worked with Latin America for many years, President Santos has been better known as Minister Santos. He has occupied what I think are the three most important positions in his government's Cabinet. He was Colombia's first minister of foreign trade, was finance minister, more recently minister of national defense, where he was responsible for implementing the country's democratic security policy.

President Santos has also worked as a journalist, a columnist and deputy director of the well-respected and very courageous newspaper El Tiempo. There he was awarded the King of Spain prize. He was elected president of the Committee on Freedom of Expression of the Inter American Press Association.

He's also published several books. One of them, "Check on Terror," relates actions which he took as minister of defense to combat terrorist forces in Colombia. And I understand we have, Mr. President a very successful action which just occurred in recent days, which I'm sure you'll be telling us about, we can add to that list.

President Santos won his election on June 20th with 9 million votes. That is the highest number of votes obtained by any candidate in the history of Colombian democracy. The core of his platform was his commitment to move the country from democratic security to democratic prosperity. And as the father of three children, he has a personal investment in Colombia's future.

Colombia has had a past, difficult at times, more hopeful, recently. Mr. President, we look forward to your telling us about Colombia's future.

Members, please join me in welcoming President Juan Manuel Santos. (Applause.)

PRESIDENT JUAN MANUEL SANTOS CALDERON: Thank you. Thank you very much for this introduction and thank you very much for having me here on this very busy week. I understand and I'm honored that I'm the only Latin American who's going to be present in this very prestigious floor during this week, and that -- for that I say thank you.

I was told to make a short introduction of how I see the future of my country under my government -- that -- it's not a very objective view, but it's going to be, I hope, a realistic one -- and then open the floor to questions. So that's what I'm going to try to do in the next few minutes.

The country -- we -- this year we are celebrating our 200th anniversary as a -- as a republic, as an independent country, and we are probably going through one of the most interesting times of our history, of our history in those 200 years.

For almost 40 years, we've been struggling against drug traffickers, against guerrillas, against paramilitaries, and that has been (some of the ?) the actions of our -- all our policies.

But in the recent past, the last few years, we changed the emphasis of our priorities and concentrated in one very basic concept. We need security. We need to recuperate our country, which we had lost, in order to be able to progress. And with that in mind, we put in place what President Uribe at that time called the policy of democratic security.

The word "democratic" had two meanings. First, security for every Colombian, no matter where he came from -- the opposition, pro- government -- provided he was within the rule of law. And the other meaning, which was very important, is that -- for democratic security, is that "democratic" also meant putting in place a security policy following very strictly the rule of law, our constitution, which is a very advanced and ambitious constitution in terms of protecting fundamental rights of the people, and going about doing this -- or implementing this security policy by the law.

Even if it's harder, this would be much more legitimate. And it has been more difficult, but it has been more legitimate. And the success of this policy has helped very much to change the agenda in Colombia. For 40 years, we only talked about recuperating our security, our territory, and the fight against the drug traffickers, the fight against the paramilitary, the fight against the guerrillas. But now we can change the agenda, and that's what we're doing. And my government, as was said here, is concentrated in jumping from democratic security to democratic prosperity, and putting the social development of the country as the priority.

And we can now do this because we have advanced very, very much in security in our country. When President Clinton visited Colombia back in the year 2000 -- I was then minister of finance -- we were a failed state. We did not control more than two-thirds of our territory. One-third was controlled by guerrillas, the other third was controlled by paramilitaries, and the state was on the defensive.

It was almost impossible for people to even seek minimum justice, because the justice was administered by either paramilitaries or guerrillas on their own terms.

And in 10 years, the situation has changed dramatically, I would say 180 degrees. Today, Colombia is a democracy that -- I would say it's an example in the region. The institutions are working.

The -- we respect very much the independence and separations of powers -- some people say too much. We are now in a problem. We have a difficulty of reestablishing the equilibrium between the three powers -- the judiciary, the legislative power and the executive power. There's a clash between the powers.

But the respect for the independence of each power is something that we feel is sacred, and that has put the democracy in a -- in a very vibrant tone to strengthen our institutions and feel that they are -- the fundamental liberties, the fundamental rights of the people are respected.

And we have a democracy that is delivering for the first time on the social side. And that's what my objective is, is to increase that -- to -- that emphasis on the social side, make that a high priority, without lowering our guard on the security, which we have said we are winning, but we have not won yet.

We still have drug trafficking. Unfortunately, as long as the -- and I say this with due respect -- as long as the yuppies in Fifth Avenue snort coke, there will be coke being exported from Colombia. And that has been the source of many of our problems for many, many years.

But we have to continue fighting the drug traffickers, because for us it's a problem of national security. The violent groups, the terrorist groups today live because they are able to finance themselves from the drug trafficking -- still live, still maintain a presence in some remote areas because of the drug trafficking.

Fortunately, in that respect, we have made tremendous advances. Colombia is, I would say, a secure country. The state is now present in every single municipality. People go to the most remote areas with no fear. This was unthinkable some years ago.

And the best way to promote ourselves is to invite people to go to Colombia. That's why we -- we have a -- an advertising that says the only risk of going to Colombia is wanting to stay -- (soft laughter) -- which is working. There's a lot of people -- I will give you one indication. The country where the most amount of diplomats, when they retire, choose -- chose -- choose to stay there, in the whole world, now is Colombia. And that is an indicator of how things have changed in our country.

In the security -- in the security aspect, we made a tremendous progress 48 hours ago. When I left Bogota, I authorized an operation in the middle of the jungle against the most important military commander of the FARC. He was sort of a myth.

And I was told yesterday morning -- I was jogging in Central Park and somebody was trying to catch up with me, and said, "You have a very urgent call." That urgent call was the strike was successful. And that was -- in Colombia is extremely, extremely important.

Yesterday people were going on the streets saying how marvelous that that happened, because this person is like -- I compare it to a situation whereby I came to New York and said -- even it's for us more important, but I came to New York and said that Osama bin Laden was struck, was killed. And that is the comparison to how important this person was for us.

But not only that. It's not only -- always even it's the worst bandit or terrorist, it's human life, but the important thing about this strike was that it was the heart or the headquarters of the FARC.

And some of you remember that when we struck another of these leaders, we found three computers that gave us very valuable information that helped us weaken this terrorist organization very much.

There were three computers at that time and 10 USBs that we found in the other strike. In this one, we found 14 computers and 60 USBs. So the information is -- all the information of the FARC was there.

So I think this is a strike that will break the center of gravity of the FARC, and that after 40 years I am confident that we can now see the future also with great optimism in achieving peace, peace after so many years of violence in Colombia. And that is a complement of -- a complement to our main objective, is a big push of achieving democratic prosperity.

Colombia is going through a good economic cycle. We're putting in place sound economic policies. We want to achieve sustainable, high growth. Colombia has been probably the most stable country in terms of prudent economic management in Latin America for many decades.

The way we sold ourselves was we are stable; we don't have those hyperinflations, we don't have that volatility. But we were stable at a very mediocre -- with a very mediocre performance. Growth was slow, and the necessities of the people were increasing at a high rate.

So what we want to do now is to uplift, upgrade the objective of growth and distribution of that growth. And that is what we're putting in place, with a big margin of governance, because we managed to create a -- what we call a national unity government.

Major parties are all part of this -- of the national unity government, and we have today more than 80 percent of congress with us. And that will facilitate the approval of major reforms that are necessary for us to be able to achieve that high growth, and also to distribute better that high growth.

We are putting -- we are presenting to congress some very audacious legislation. For example, in terms of the rural properties, we want all the peasants that were displaced by the violent people to come back. And we need fast-track procedures, legal fast-track procedures, to be able to implement that at a high -- at a high speed with effectiveness.

We are presenting a law to repair the victims of the violence -- the first country, I think, in the world that is doing that with a comprehensive reparation, where we are respecting the rights and repairing the victims.

We are changing the way we distribute the royalties. This is one of the -- in every country, one of the most difficult reforms. Yesterday, it was approved in the first committee, 14 to 3, which makes me very optimistic that it's going to pass. And if we pass these legislations, then we will have the instruments to achieve that high growth and distribute better that growth among the Colombian population.

We have a lot of challenges, of course. But the good thing is that we now can concentrate on the social development of the country, and in our agenda with our neighbors, with which we made peace very recently. And I think that's been a very good step forward with Venezuela. We are reestablishing our relations with Ecuador. We are reestablishing relations.

We want to exercise leadership in -- in the region -- a region that is more and more looked upon as the region of the future, because Latin America, South America has what the world is looking for: energy, biodiversity, water, capacity to increase food production. What all the big trends in the world is -- (say ?) what does the world need more and more, South America is emerging as the country that can supply them.

And within South America, within Latin American, Colombia is a -- in a(n) ideal position. For example, in the biodiversity discussion, the climate change, Colombia, many people don't realize, is the most -- the richest country in the world in terms of biodiversity per square kilometer. There's -- we are the third-richest country in the world in terms of water. We have ample land that, without destroying rain forests, we can start to increase our food production.

So there is a tremendous opportunity. We have put in place a development plan, a coherent development plan that will hopefully take us to this high-growth path that will give us the opportunity to then bring prosperity to our people.

And there are challenges that every country has. We need to improve the quality of education. We need to improve the quality of our health system.

We're going through a major health reform. But we have achieved -- and this is a real revolution -- in the last -- in the recent years have achieved universal coverage. What you did here, what President Obama did here with the health system, we did it already in Colombia some years ago. Of course we go -- the system is going bankrupt -- (scattered laughter) -- and there's many problems. That's the reform that we're doing. But we have today universal coverage. This is a big -- a big step forward in our social development.

We need to enhance our infrastructure very much. We lag behind countries that have our -- the same level of development.

We need to give much more housing to the people. There's a big deficit of families that want to buy a house and they can't. They don't have either the means or the supply.

But the good thing is that Colombia is now having the normal problems of any other country, and that is a big, big change in our country.

Our human capital is considered fortunately as one of the best human capitals in the whole region. Foreign investors all say that the quality of our managers or the quality of our laborers is exceptional, which is probably our biggest asset -- our people.

And we are very optimistic.

And for those of you who haven't been in Colombia lately, or the ones who have never been, you go to Colombia and you see a country full of optimism, a country -- and this is a big indicator for any country -- a country where people think that by working harder they will leave a better country to their children, that their children will have a better future. That -- you go to other regions of the world, and that's not so normal today. You go to some countries in Europe, there's tremendous pessimism. Some states here in the U.S., there's pessimism.

Colombia is full of optimism, and that's what I hope to build on. We have a good team, good government. And I'm going to work very hard to achieve those objectives, hopefully, with the comprehension and understanding of institutions like the Council on Foreign Relations. Here you have been sometimes, and with good reason, very critic -- very critical of things that have happened in Colombia.

Human rights has been one of the (aspects ?) that have been very -- very much criticized. It's a problem that we have never neglected. When we were a failed state, the violation of human rights in Colombia were simply appalling. It was not a state policy, but you saw violations from the guerrillas, from the paramilitaries, and many times, by omission, to the state itself.

But we have made a great effort in trying to improve that aspect. The democratic security policy in itself is a policy of -- or human rights policy.

You see the indicators of homicides, of kidnappings. And many of the violations of fundamental rights of the people have gone down tremendously.

We still have a long way to go. I met yesterday the high commissioner for Human Rights for the United Nations. I said, I'm going to extend your mandate, but what I -- what I really want is out -- I want you out of there, because I want you out of there because we're -- the issue of human rights I hope will disappear, become a nonissue, and be a normal country also in that respect.

But we made tremendous progress, which I hope that you can recognize. And we're struggling. We're working hard. And I think we're going in the right direction, hopefully with your help. Thank you. (Applause.)

HRINAK: Well, thank you, Mr. President. And you've certainly given us a lot of issues that we can talk about.

I'd like to begin with a remark you made in which you said that -- talked about the continued presence of terrorist groups in remote areas. And yet in the last several weeks we've seen incidents of urban violence once again, in Bogota, in Medellin. Do you feel your new government is being tested, and how do you plan to respond to these urban threats?

SANTOS: Well, the urban violence is a consequence of the success that we have had in the rural areas.

In every country that has gone through a process that we have gone through, be it in South Africa, the Central American countries, in Eastern Europe, there is always a percentage of the people who demobilize that will go back to criminal activity. That's like a standard procedure. They say between 10, 15 percent of the people who demobilize, who unarm, go back to criminal activity.

And the problem that we have is that we still have drug trafficking business still there. We have diminished it. We have -- we have defeated the big cartels that had our democracy to its knees. But the business is still there and they recruit these criminals and they continue to do criminal activity.

But it's not the same activity that they did before. For as the paramilitary disappeared, in the sense that they had a -- if you wanted to put an objective of countering the guerrillas, now guerrillas and these criminal bands work together to do their business of drug trafficking. So it's an evolution of the insecurity, which we have to approach with a more law-and-order approach. And that's what we're doing.

But there is a false perception, because when you get the indicators of homicides, of the different criminal activities that affect the day-to-day lives of people, you will see that there has not been an increase; on the contrary, the trends continue to go down.

There has been some pockets of difficulties in some areas -- in Medellin, where the drug bands fight among themselves for the drug business. But it's not out of the ordinary, and it's not a resurgence of the type of violence we had before.

HRINAK: You also made a point of talking about human rights, and as you well know, this is a very important issue for many sectors, many people here in the United States, as well as in Colombia.

Last week the State Department certified that Colombia was meeting the conditions required to continue to receive U.S. military assistance. And despite progress that I think we can all recognize, about 30 high-ranking military officers who have been dismissed from their positions have not yet been charged with the crimes of which -- for which those dismissals took place. Can we expect progress in those kinds of cases? How do you get that prosecution of particularly high-ranking military back on track and end that culture of impunity?

SANTOS: Well, I dismissed them. I was the one who dismissed them. But I dismissed them because they were in the commanding posts where these appalling crimes were committed. So in a way, they should have been much more careful for them not -- for these not to happen.

But I did not accuse them of being responsible for this policy. And I said the justice system should investigate, and if there is any responsibility, they should be accused and condemned.

The justice system is working. There are indeed hundreds of military who are now in jail because of the so-called false positives. What I've said is we need to support the justice system in every way possible for the justice to do its job, and strives to investigate, try them, and condemn the guilty and declare innocent the innocent people, because there has been also a lot of false accusations. There is -- some of the groups that have had seen this as a way to hit the center of gravity of our military, which is their legitimacy. And there's a lot of false accusations that have been sort of planted in the process.

This is a big challenge for the justice system. We're giving all the support we can. We are opening the doors for the justice system to investigate.

We have a problem with the justice system in general. It's a very slow, very inefficient system. But people are being tried and people are being condemned. And what I hope will happen is that we can clear this as soon as possible and close this chapter, which for me was probably the most difficult moment, when I discovered that this was happening. Today, the -- what do you call it? -- the denunciations about false positive practically has disappeared and the problem disappeared.

But we need to do this, for the guilty people that did this in the past, for them to be tried and condemned.

HRINAK: Before we open it for questions from our members, I'd like to ask you about relations with your neighbor Venezuela. What do you expect from the Colombia-Venezuela relationship in terms of commercial ties, exports, collaboration and security?

SANTOS: What do I expect. Well, we were in the worst of all possible scenarios when I was in my campaign for president. We had no diplomatic relations, no dialogue whatsoever, no trade. And we were talking about -- or some people were talking about the possibility of war, which is for me inconceivable, war between Colombia and Venezuela. For me, it's not in my dictionary. So I said, what could be worse? A war.

But the situation was very bad, so I decided to make an appeal for common sense to come into the scenario. And I said, listen, Mr. Chavez and myself, we are very different. We are very, very different. He thinks one way -- (laughter) -- and I think another way. But -- but if we respect our differences, we can have good relations. You can have a very different view from your neighbor, but if you respect that you will not destroy his garden and he will not destroy your garden, you can have good relations and your kids might play together.

So I said, if we respect our differences, we can have a normal relation, a good relation, and this will be in the benefit of the Venezuelans and the Colombians because we've both suffering from this absurd situation.

Well, Mr. Chavez responded finally positively, because in the beginning he was very critical, and he said that if I was elected there will be war. But then he realized that I was going to be elected, and then he changed -- (laughter) -- he changed his -- and we had a very -- a very good meeting, a very frank meeting. We sat down, like you and I are sitting here, and we started saying some truths.

And I said to him, listen, first, let's don't convince each other to think like the other. You're not going to convince me to think like you and I'm not going -- certainly to convince you to think like this. But respect our differences and we can get together. Don't try to impose a peace process in Colombia. The peace -- if ever there's a peace process, this will be a Colombian decision, it will be my decision, and I don't want you pressing internationally or for whatever reason for us to start a peace process. And third, please respect my former president. If you started talking bad about Mr. Uribe, I will simply stand up and go.

And he understood very well. And he said: Fair enough, I like your frankness.

And we had a very rich and constructive conversation. We established a procedure with different commissions to normalize trade, normalize investment, to see what infrastructure we could -- would go together, to work on the border and to work together on the security situation.

And I must say that he has delivered, and that the relations are going in the correct path. And I think it's going to be for the benefit of the Venezuelans, the Colombians, the region and the U.S., because a region that is -- where there is turmoil is not good for anybody. And so I hope that this will slowly consolidate.

I've told my exporters this has been a very good market for us. Venezuela is our number-one market in manufactured goods. And I, myself, negotiated a free-trade agreement back in the early '90s with Venezuela. At that time, we had three -- $200 million in bilateral trade. It went up to 7 billion (dollars). And it is a very important market for us.

I told the exporters, you can very readily -- it's easy to reconquer, but don't get overexcited. Do it slowly, and do it like a windfall profit, more than simply depending again on -- only on Venezuela. And we're diversifying our markets, but Venezuela certainly is a very important market. And I'm optimistic that this relation will be -- will last.

We'll see what is going to happen in the elections on this Sunday. But I hope that this -- this is not some -- some people say that this has been simply manipulation of my good will for electoral purposes. I (disagree ?); that's not the case. I think Venezuela realized, as we realized, that it's in their own interest, as it is in our interest, to have good relations; and the same thing with Ecuador.

HRINAK: Presidente, I know we have members with questions in the -- begin here in New York. I ask when you're called on, please stand, wait for the microphone to reach you so you can be recorded and state your name and affiliation.

Here in the center, please.

QUESTIONER: Hi. I'm Joel Motley of Public Capital Advisers.

Colombia is particularly advanced among emerging-market countries in enabling municipalities to build infrastructure. And setting aside federal revenues to help that happen is a big step in that direction. Can you talk about your own view of infrastructure and how that balances between control from the center and empowering the municipalities to do this on their own?

SANTOS: You know, we're -- we have -- we have identified five -- what we call five locomotives that are going to be the engines of growth. One of those locomotives is infrastructure, where Colombia, by every indicator, has lagged behind other countries of the same level of development. So simply by catching up to be a normal country in terms of infrastructure, we need to do a big effort, investment. And what we're doing is changing the institutionality that has to do with infrastructure, which was very poor.

One of the big problems we had was that we offered the projects without structuring the projects correctly. And that created many problems and that meant that many of the roads were left in the middle of the road, that were not made well. Structuring the projects correctly is a fundamental aspect of our building good infrastructure. And so we're doing that.

And we need to have a different approach that would make the development of the infrastructure a coherent -- a coherent process, because when municipalities did whatever they wanted to do by themselves, and that was not integrated to the state or the national plans, then you had all kinds of contradictions or all kinds of clashes. So we're fixing that.

And the way we're fixing that is by -- or one of the ways is by restructuring the way that the royalties that we're going to start to receive -- we are going to be receiving quite a bit of royalties because we're in a mini-bonanza of - oil and minerals in Colombia are booming. This is another locomotive, but that one is already growing at more than 12 percent per year.

That is going to give us a lot of royalties, and we must administer those royalties correctly in order to avoid the Dutch disease and invest what can be invested in a correct way.

So we are doing an effort to restructure the institutional part of the administration of infrastructure to be able to deliver on the infrastructure front that we need very, very badly in order to be a competitive economy.

We are going -- we're putting in some benchmarks that are very ambitious for us. We want to be members of the OECD. The OECD is a club of what do you -- would call of better practices, and they have benchmarks for you to come in. You need to have your public policies with a minimum of quality, and that will force us to put in place good policies. And that's -- one objective I have is to become a member of the OECD in the next two or three years.

We want investment grade. I think we -- if we approve these reforms in congress, we'll get investment grade. The cost of our -- of our debt in the international market is as if we had investment grade. It's -- people are very confident in Colombia today.

And so yes, in the infrastructure we need to do some reforms, what -- and we're doing them.

HRINAK: We'll take another question from here. Yes. Woman on this side -- gentleman on this side. Mm-hmm.

QUESTIONER: Hello. I'm Ken Roth from Human Rights Watch. I wanted to come back to the issue of paramilitaries. And the justice and peace process clearly has made some significant progress.

There have been, you know, many people who have gone through the demobilization process. The kingpins have been extradited to the United States and are now serving significant sentences.

But there's considerable evidence, as I think you alluded to, that the paramilitaries themselves are still running strong. And I wanted to ask you about what steps you'll take to move to the next stage of genuinely dismantling the paramilitaries. Part of the problem up until now has been that prosecutorial authorities really have been hamstrung by efforts to constrain their independence, particularly when they looked too closely at connections between the paramilitaries and certain political forces, including some close to the former president. And I'm wondering what you'll do to ensure the genuine independence of the judiciary and the prosecutors, the resources they need to pursue this, and an effective dismantling process with respect to the paramilitaries.

SANTOS: Well, again, first of all, the word "paramilitary" we turn discussion -- do we still have paramilitary? I think -- I think not. I mean, what did the paramilitary do? They wanted to put groups to control territory and to fight the guerrillas. That type of groups have been dismantled and their leaders are in jail, most of them here in the U.S.

Why are they here in the U.S.? Because they continued to do what they were doing before, especially in the drug trafficking, and maintain whatever their violent groups in some areas.

So we have done a tremendous effort to dismantle the paramilitary groups and their leaders, to put them in jail. They say that we betrayed them because a deal had been struck with them -- I don't know if somebody struck a deal; I didn't -- and they're, most of them, here in the U.S.

Some people say, oh, you extradited them, or the -- (inaudible) -- community extradited them, because you don't -- you didn't want the truth to come out. And this argument is a bit weak because you -- if they say that we betrayed them, then they will be much more stimulated to single out whatever truth people were interested in knowing. They had no commitment to hide the truth. If they tell the truth, their sentences would be reduced. So there is, on the contrary, an incentive for them. And that's what we -- I've said: Please tell the truth, the whole truth and nothing but the truth. Go ahead. We want the truth. But they are stumbling. They're trying to -- I don't know what they're seeking. Hopefully, they will say some truth.

And the judiciary system is working, with all its faults, but there is no country in the world can -- no country in the world that has a third of its members of Congress in jail because of links with the paramilitaries. Think -- this is a demonstration that the democracy in Colombia is working, and that the judicial system is working, and there is -- and there is independence in the judicial system.

That not all that are guilty are there? Maybe not. Some of them have -- some of them have been shrewd enough to avoid justice. But most of them are. Most of them are paying what they did. And if you get the whole picture, tell me a country -- one country in the world -- where a third of the members of Congress have been put in jail and are serving jail because of links to illegal groups.

This is an example, I think, of the maturity of our democracy.

Of course, we have accusations that the speed of the -- of the condemnation's not fast enough. We have charges -- and again, I repeat we have a problem of, like, an old elephant in the justice system, that it doesn't -- is not agile enough. But things are working and there is confidence.

Sometimes people are saying that the judicial system is going too far and that they're really doing too much of a harsh job, and that the clash between the powers is going to increase and that it's bad for democracy. I think not. I think each power does its own job independently.

What I want to do in Colombia is to reestablish the harmony between the powers. And I use a phrase that I read about President Roosevelt, that he used when he had a clash with the Supreme Court, with the New Deal, that democracy is like a -- what do you call that in English, an "arado" -- like a -- a plow, with three ox that pull the plow. The three ox are three independent powers. They have to be more or less of the same size. And they have to walk in the same direction; otherwise, you can't plow.

A democracy will not work if the powers -- one sleeps and the other walks. Then you cannot plow. This is what I want to restore, harmony between three powers, but respecting the independence of each power.

And I think it's working, with difficulties, with -- you can signal defects, but overall, again, I repeat, no country in the world -- in the world -- has done what we've done to put in jail members of Congress who somewhere or another have had relations with illegal groups.

HRINAK: President Santos, we had questions from Washington as well.

Chris (sp), members in Washington, do you have a question?

MODERATOR: Yes. Thank you, Donna, and good morning from Washington.

Steve?

QUESTIONER: Good morning, Mr. President, and thank you. This is Stephen Donehoo from McLarty Associates.

First, congratulations to your intelligence and armed forces and police folks for the tremendous operation and for other operations like Jaque where they had such a historic effect on -- in the case of military history.

The United States has a very carefully thought-out legal strategy on extratoriterrial (sic; extraterritorial) attacks against terrorists that we've seen in places like Somalia, Yemen and Pakistan. Is this a policy to which Colombia subscribes?

SANTOS: Do you have an easier question? (Laughter.)

HRINAK: Yes or no would be fine. (Laughter.)

SANTOS: Listen, this is a very interesting question, because there is a theory that in Latin America this has not been even a subject of discussion, because we always are 100 years behind the world trend in terms of territoriality and sovereignty.

We still have that 19th century paradigm that sovereignty is sacred and nobody can break it.

But what is sovereignty? If you have a terrorist group that is attacking you permanently from a third country, and that third country does nothing, do you have a right to strike? That was, in a way, the argument that we used when we struck against this terror group in Ecuador. This brought out all kinds of problems.

And it's a theory that is being -- it's going to be increasingly discussed because terrorism is not a local, it's a transnational problem. Like the drug business, this is an approach that should be discussed multilaterally by many countries. And we would surely subscribe to that thesis in a multilateral environment because fight against terrorism is a transnational fight, and we would be willing to accept the theory when it is discussed in whatever instance or whatever arena it should be discussed.

So we are not against that theory. We would subscribe it. But we would need to have a multilateral approach.

HRINAK: (Inaudible) -- coming up in what I know is your very busy schedule, so I would like to -- Chris, if you have another question from Washington, take one more question in Washington, two quick questions here.

And perhaps you could respond to all of them in a -- in a final intervention.

Chris (sp)?

MODERATOR: Thanks. Thanks, Donna. Our next question is from Lauri.

QUESTIONER: I'm Lauri Fitz-Pegado, with the Livingston Group.

Mr. President, thank you. And although Colombia is an important partner with the U.S., clearly, in the war against narcoterrorism, defense exports are often caught up in red tape, and many U.S. export licenses are delayed or denied, causing the U.S. firms to face fines and penalties, and often, of course, affecting lives in Colombia because of those delays or denials.

In the past, Colombia -- what Colombia has done is to put the burden on the U.S. exporter to solve this issue. And given that it's about $9 billion in sales from the U.S., and Colombia is the second- largest spender on -- in Latin America, after Brazil, is there something that you're looking at in terms of the bilateral relationship and a government-to-government approach, given discussions opening up on export controls in this country?

HRINAK: Can we take two questions here in New York, please?

Yes, here in the center.

QUESTIONER: Mr. President, my name is Roland Paul.

In your very successful campaign against the guerrillas, if you had to list one or two of the most important factors that contributed to that success, what would they be?

HRINAK: Okay, and one more? Yes, here.

QUESTIONER: Sergio Galvis, from Sullivan and Cromwell.

In the context of addressing Venezuela, you mentioned the importance of export -- I mean, exporters diversifying their markets. Could you comment on two aspects of that? Aspect one is the effect of the currency relationship between the peso and the dollar; and secondly, the effect, or noneffect, of the absence of Google -- the free-trade agreement between the two countries.

HRINAK: Perhaps you'd like to answer this. So it can be --

SANTOS: Sure.

HRINAK: -- that one and the -- and the Washington one together, since they were commercial, and then we'll leave the guerrillas to the end.

SANTOS: Okay. The free-trade agreement, the commercial relationship between the U.S. and Colombia, whatever difficulty exporters are having, I can assure you it's not against any particular country. It probably is a matter of bureaucratic obstacles that you find everywhere. There's no (singling ?) of any country in terms of making their life difficult. What we want is to have free trade with U.S. -- a free-trade agreement.

And this makes a lot of sense more to the U.S. at this moment than to Colombia, because we have access with no tariffs to the U.S. market because of the Andean preference act, the -- called APTA, and you have to pay tariffs when you go -- when you export to our country. We are called a strategic partner and best friend, and we hug each other -- (scattered laughter) -- but no free-trade agreements. And the people in Colombia say, well, what kind of friends are you, do you have if they call you strategic, but they're signing free-trade agreements with other countries and not with you.

What's the importance for us of a free-trade agreement? It's the importance -- more than access to your markets, it's stable rules of the game, investors.

We -- if there's a word that I want to project to the investor community, it's that Colombia would want -- wants to be predictable. We want to have clear rules of the game, for the investors to know what they're getting into. And a free trade agreement with the U.S. will give U.S. investors a predictable scenario. And that's THE most important thing on the free trade agreement. I think that the more -- the more you prolong this, the less investors will come to Colombia and will choose other areas where they have stable rules of the game. That's the urgency.

I'm meeting President Obama later today, and I hope we'll have a very frank discussion. And I am optimistic that after the elections here the free trade agreement will be approved. I think that's what makes sense. We want the relations with the U.S. to evolve into a real partnership. I think we can play a role in many aspects that will be of mutual benefit.

For example, for example, Central America and the Caribbeans (sic) hare having an increasing problem with drug traffickers, not to speak about Mexico, that -- you know what is happening there. We have learned -- we have accumulated tremendous amount of knowledge, of experience that we can -- we want to share and we're starting to share with these countries. And we can work together, because it's in our interest, U.S. and Colombia, to provide more help to these -- to the region in their problems.

So I am looking forward for an increasing -- a more mature relationship. We don't want to be seen as simply aid receptors. We want to really be seen as equal partners. And I think in areas like, for example, climate change, biodiversity, social progress, education, the region in general, we can work with the U.S. in a -- in a more productive and mature way.

We've had very good relations with the U.S. We value those relations very much. For us, the U.S. is a -- is really a strategic partner. The help that you have given us -- for example, in our fight against the terrorist groups or the drug traffickers -- has been very valuable. And I would say, and I repeat it here, the Plan Colombia, when President Clinton -- and we were discussing that day before yesterday -- when President Clinton went, back in the year 2000, to Cartagena to launch Plan Colombia, he went with today-Vice President Biden, who was at that time chairman of Foreign Relations Committee. He went with Speaker Hastert, who, as a Republican, at that time controlled the House. And they launched a bipartisan foreign policy initiative which, in the view of many, has been the most successful bipartisan foreign policy initiative that the U.S. has launched in many, many years. And the proof is there. We were a failed state 10 years ago. Today, we're a vibrant and dynamic democracy.

And to answer your question about what has been the key, or two factors to being successful in our security policy and the fight against the guerrillas, the most important thing is intelligence.

Intelligence -- you need intelligence; you'd be -- need -- you need to be sophisticated.

That's what we did -- when I went into the Ministry of Defense, we had inherited an American way of handling the intelligence. And why do I say "American"? Because your intelligence agencies are very independent of each other. They don't share information. And in our case, that was stupid. (Laughter.)

And I said -- I said: Listen, get together. I mean, the -- you have information. If the navy has -- in their intelligence has 50 percent information about this target, that 50 percent by itself means nothing, and maybe the army or the police has the other 50 percent, that by itself means nothing. But if you get together and put the intelligence together, then you have very good intelligence. And that made a tremendous change.

And yesterday's blow was probably an example of all the forces, even with the police -- with the army, the air force, the navy and the police working together -- and we were very successful.

When we had the kidnapped people rescued, the Operacion Jaque, which was -- well, you remember the three Americans that were rescued and Ingrid Betancourt? That was also intelligence. And I told the intelligence community in a meeting like this: Get out of the -- of your personal paradigms. Think the unthinkable.

Think the unthinkable because that's the way you get good intelligence. And the Operation Jaque emerged from a very, very low level of -- there were three women, humble women, who had been working for the military intelligence for many, many years. And they had been hearing the interception of the FARC for many years. They knew the FARC by heart. They knew who talked, their names, how they talked, and what are the codes, everything.

And when they heard "think the unthinkable," they had discussed among themselves that it would be relatively easy, if the technology was present, to come into the communications of the FARC and replace the persons that were speaking. And that's how the operation was made. It came from down up, from very humble women, very intelligent. And that's probably THE factor.

The second factor is coordination between the forces. For example, yesterday's operation: air force, special forces, and intelligence by the police. If you coordinate, you're much more effective. What had happened before is the jealousy between the forces. I was in the marines. I was in the navy. And I remember when I was a cadet, the competition between the forces developed as sort of a culture of being like the competition with -- it was the enemy, and you don't share information, you don't work together. The army is the army, the navy is the navy, the air force is the air force, the police is the police.

Well, that is the old type of approach. I take the new approach.

And that has been another factor of our success, is working as a team.

HRINAK: Thank you, Presidente. (Applause.)

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