By Nelson Bocanegra, Julia Symmes Cobb and Luis Jaime Acosta
BOGOTA/CALI, Aug 7 (Reuters) - Colombia's new right-wing President Abelardo De La Espriella was sworn in on Friday, using his inaugural speech to pledge a vigorous fight against drug trafficking, as well as austerity measures to restore confidence in the economy.
De La Espriella, 48, won June's runoff on promises to crack down on armed groups, shrink the state by as much as 40% and revive the oil and gas sector. An ally of U.S. President Donald Trump, he represented people with ties to right-wing paramilitaries during his time as a lawyer. De La Espriella has never before held elected office.
"I have come to close a long chapter of national resignation and, together with the people, embark on the most profound transformation of our destiny," De La Espriella said at the Pichincha Battalion military base in Cali, after being sworn in at a nearby university auditorium with dignitaries and officials. "I send a firm message to the Colombian people: the time has come to restore order, authority, and freedom."
ELECTION PART OF RIGHTWARD SHIFT IN LATIN AMERICA
"Members of criminal gangs and narco-terrorist groups have two choices: submit to the rule of law or face the determined response of the Colombian state and its security forces," the new president told assembled troops at the base during a 75-minute speech, adding the option of peace talks with armed groups had been "completely exhausted."
De La Espriella's election was part of a rightward shift rippling across Latin America. In Peru, Argentina, Chile, Ecuador, Bolivia and Panama, weak economies and rising crime have reshaped voter priorities, allowing once-fringe hard-right candidates to gain traction by promising crackdowns amid a global rise of right-wing nationalism.
De La Espriella could push through some of his policies via decree, but analysts say many of his proposals will require backing from a divided congress and could be watered down in negotiations.
The new president vowed to "definitively eradicate the scourge of illicit crops," saying he would use aerial herbicides that do not harm human health or the environment to destroy coca, the plant used to make cocaine.
In one of his first acts as president, Colombia will join the Shield of the Americas program founded by Trump, he said.
He pledged to freeze public spending and pursue tax reform to simplify the country's payment regime and boost investment and employment, while preserving popular social programs, some put in place by his predecessor, leftist Gustavo Petro.
"I want to tell Colombia’s business leaders — large, medium-sized and small — that this government will be your partner in investing in Colombia. Once again, it will be a safe and profitable decision for you," De La Espriella said.
He pledged to expand oil and gas exploration, including through "the development of responsible and sustainable fracking".
"We cannot resign ourselves to having proven oil reserves that will last only a few more years, nor can we accept the decline of our gas reserves," he said, adding his government will work to strengthen state-run oil company Ecopetrol.
De La Espriella was the first Colombian president in modern history to be sworn in at a location other than the country's congressional building in the capital Bogota.
MARKET-FRIENDLY, FISCALLY CONSTRAINED
Before the ceremony, he held bilateral meetings with the king of Spain and the presidents of Argentina, Ecuador, Chile, Paraguay and Panama. Also attending was Gianni Infantino, the embattled head of soccer's world governing body FIFA, while the U.S. sent a delegation headed by acting Attorney General Todd Blanche.
De La Espriella has blamed Petro, who has not recognized the new president's victory, for an expansion of armed groups, and narrowly defeated Petro ally, leftist Senator Ivan Cepeda, in the runoff. Cepeda led a morning march in Barranquilla on Friday, where he told demonstrators that the country's opposition will work to defend democracy and called for peaceful civil disobedience.
Investors have welcomed De La Espriella's market-friendly agenda, but expectations for rapid change are tempered by fiscal constraints and high public debt.
The head of the stock exchange has called for simpler participation by foreign and retail investors, lower transaction costs, eliminating dividend taxes and increasing Ecopetrol's publicly traded shares to 20%. Oil and mining guilds are optimistic but say changes must come quickly if Colombia is to ramp up gas production and meet other pressing needs.
The new administration is likely to focus its first 100 days on steps that De La Espriella can take directly, consulting firm Colombia Risk Analysis said in a report on Thursday.
"Security and anti-corruption efforts will likely serve as the most visible pillars of early momentum, though largely through workarounds and partial measures rather than full-scale execution," the report said. "Markets are likely to respond favorably in the short term (reflected in peso appreciation), but tax simplification and wealth tax elimination will likely reduce state revenue just as new spending needs emerge, especially if Colombians believe there's a rollback of benefits from the Petro administration."
De La Espriella has leaned heavily on Vice President-elect Jose Manuel Restrepo, a former finance minister who traveled to Washington to meet with Secretary of State Marco Rubio.
Other cabinet picks include Omar Bula, a former World Food Program official turned United Nations critic, as foreign minister; retired Major General Jorge Eduardo Mora as defense minister; electrical engineer Maria Arboleda as energy minister; and Miguel Gomez as finance minister.
Gomez has said the fiscal deficit stands at 7% to 8% of GDP, above outgoing government figures, and that the new administration will present a growth-focused tax reform.
(Reporting by Nelson Bocanegra, Julia Symmes Cobb and Luis Jaime Acosta; Editing by Will Dunham and William Mallard)
