Colombia: Cracks in the Showcase

"Colombia is still the showcase of the Alianza," says a longtime U.S. resident in Bogotá. "But it is a flyspecked showcase." Under the uncertain leadership of President Guillermo León Valencia, Colombia's chronic trade deficit has doubled, reaching a perilous $750 million; the cost of living has soared a staggering 45% ; and more than 10% of the labor force is unemployed. To top those troubles, Colombia's ruling National Front is falling apart.

Colombia's economic woes are not entirely of its own making. Its main problem is that world prices for coffee, the...