The growing energy needs of Latin America may be a solution for Colombia’s traditional problems of internal security but they have a long way to go in order to surmount the country’ traditional security woes.

Colombia has built a nice niche as an energy provider through the generation of surplus electricity. Over the past decade, Colombia's generating capacity has increased by about 50 percent and almost two-thirds of installed generating capacity is now hydroelectric.

It has ramped up efforts to improve coal and thermal electricity producing capabilities over the next decade but the surplus in generation has provided a tidy niche for the country selling electricity to its energy-strapped neighbors - 1.682 billion kWh in 2004 alone.

The security concerns also are bolstering worries about the country’s economy. The peso has climbed more than 17 percent against the dollar so far this year with increased domestic demand and foreign investment.

That has started exporters worrying about Colombian competitiveness. According to a report by Reuters, traditional exports for the quarter rose just 4.9 percent compared to last year.

And one of the key products exporters are depending on is coal. Colombia is presently the 16th-greatest coal producing country, accounting for about 1% of the world's total annual coal production. Colombia has proven recoverable coal reserves of about 7.4 billion short tons, the majority of which are located in the north of the country.

One mine, Cerrejon Zona Norte, is the largest open pit coal mine in the world with more than a billion tons in reserves of a very desirable tertiary, low-ash, low-sulfur, non-caking bituminous coal. Most of this production is sent to Europe – more than 80 percent of the Cerrejon Zona Norte output is shipped across the Atlantic.

The coal industry in Colombia is aggressively seeking to expand its current exports by 2010 to greater than 70 million short tons. That has drawn investors like London-based Xstrata holding company who purchased one third of Colombia's Cerrejon coal operation last year as part of a flurry of deals to expand its holdings.

But with that aggressive business model has also come the country’s traditional security woes. The government of Alvaro Uribe has prioritized the containment of Colombia’s three main armed groups, the AUC, ELN, and FARC, and military operations launched against all three groups have increased in intensity since he took office.

But the situation is far from safe in many regions and mining companies have had to balance their own security against the uncertainty of the government’s ability to protect them. The worst-case scenario may be Birmingham, Ala.-based Drummond Co., which is fighting a suit in federal court for allegedly being too aggressive on this front.

The American company runs the La Loma and Pribbenow mines in Northern Columbia – a hotbed of guerrilla activity. According to reports, the company’s rail line has been repeatedly bombed by insurgents.

In 2001, three labor leaders were killed by gunmen and the families of the men and the labor unions are suing the Drummond Co., claiming the company paid an armed group to carry out the attacks. Drummond Co. has vigorously denied any involvement with armed groups but Garry Neil Drummond, the president of Drummond Co., is expected to testify in the civil suit next month.

Moreover, the policies of the Uribe administration to contain the insurgent groups may have begun to create their own problems. Since the president’s re-election last year he has faced a number of crises and scandals.

Twelve of Uribe's allies in Colombia's Congress have been jailed on charges of colluding with the paramilitaries to gain office or other favors. The scandals have reached as high as the presidents former domestic security and the country’s foreign minister who stepped down in February after her senator brother was arrested in the scandal on charges including kidnapping.

Last week, the Associated Press uncovered a video of his 2001 campaign that showed him shaking hands with a militia leader who was arrested only weeks later on suspicion of involvement in multiple murders. The military chief is now a fugitive with a price on his head.

That follows a revelation by the news agency that U.S. defense contractors have been the recipients of almost half the funding sent to the South American country to fight the drug problem. In 2006, the AP reported, the State and Defense departments spent about $300 million on private contractors, just under half of the roughly $630 million in U.S. military aid for Colombia.

The findings have raised questions of the Colombian military’s ability to replace the private firms and ensure the security of the country without the assistance of the United States. It’s a key concern for Democratic congressional leaders eyeing the ballooning expense of the War on Drugs.

The amount of aid to Columbia has also strained relations with many of its neighbors, notably Venezuela, whose fiery leader Hugo Chave is a staunch adversary to US involvement in the region.

The border has long been a problem area for both presidents who have bristled at military measures taken by the other in their territory. That’s presented an opportunity for illegal armed groups who cross the boundary to rest and restock supplies, or to raise funds through extortion and kidnapping of wealthy Venezuelans, according to the International Crisis Group.

Added to this is Venezuela's permissive attitude toward rebel groups in its territory. It also poses questions of whether Venezuelan armed forces offer more than passive support in their dealings with Colombian rebels. These concerns recently resurfaced with the discovery of the bodies of two undercover agents of the Colombian Army in a Venezuela dump.

The Los Angeles Times recently reported that the pair had been found out by leftist Colombian rebels operating in Venezuela, who captured, tortured, and killed them.

While these problems may not be sufficient to offset substantial gains made by the current administration – as of 2004, homicides, kidnappings, and terrorist attacks in Colombia decreased by as much as 50% -- their lowest levels in almost twenty years – they still will keep efforts for expansion and investment in the country in check.