By Helen Murphy
CARTAGENA, Colombia (Reuters) - Colombia's President Juan Manuel Santos rejected accusations that leftist FARC guerrillas are making a comeback, describing recent attacks as a last-gasp effort to grab headlines that did not pose a threat to economic prosperity.
In an interview at one of his official residences, in the coastal city of Cartagena, Santos said a surge in violence by the Marxist rebels was an attempt to remain relevant as they faced attacks by government troops that eroded their capacity to fight and demoralized their ranks.
"The weaker these illegal groups are, the more they want to show that they are alive," Santos told Reuters late on Tuesday, dressed in a T-shirt and shorts after being caught in a tropical downpour during a visit to a shantytown.
"And what do they use? Terrorism."
Santos, at the mid-point of his four-year term, has received a constant stream of criticism on Twitter from his predecessor and former ally Alvaro Uribe over the perception that security gains during Uribe's presidency were being reversed.
Snipes from the ex-president have intensified since Uribe pulled out of the ruling coalition this month and became the official opposition, hoping to put his own candidate in the presidential palace in 2014.
Uribe blames Santos for "squandering the inheritance" of security improvements and seeking peace with the FARC at any cost.
"Unfortunately some people want to use this violence and terrorism as a political weapon," said Santos, who served as Uribe's defense minister. "And, in a way, they play into the hands of the terrorists by magnifying the effect."
He vowed to "show the country what we are doing and show that (Uribe) is wrong."
The 60-year old Santos -- who says he won't talk about plans for re-election until next year -- has seen his ratings slide in recent weeks amid allegations of corruption in Congress and complaints that rebels were gaining the upper hand against government troops after hard-fought gains over the last decade.
"Santos will remain politically vulnerable and may see a further drop in his approval ratings if the government does not show progress on improving Colombia's security environment further," risk consultant Eurasia Group said in a research note.
SECURITY - A "NON-ISSUE" FOR INVESTORS
The drug-funded Revolutionary Armed Forces of Colombia, or FARC, which has battled a dozen governments during nearly five decades, has stepped up its attacks on Colombia's economic infrastructure this year, hitting oil pipelines 67 times, more than triple the level during the same period in 2011.
"You must understand that we are starting to explore in areas that were completely off-limits. Nobody thought that was possible - in very deep jungle," said Santos, after spending a day speaking to oil workers at state-run Ecopetrol's Reficar refinery and visiting a near-by slum.
He admitted, however, that extortion cases had increased.
Despite the recent criticism, Santos, a Harvard-educated economist and journalist, is credited with dealing the FARC some of its heaviest blows and battle defeats.
As defense minister and then as president, he orchestrated attacks that killed or captured the group's top commanders and helped cut their fighting force by half to about 8,000 now.
"We are gaining more and more control of territory and we are advancing," said Santos.
"We are winning but we have not won yet."
Speaking in the plush living room of the residence inside a military base, Santos said foreign investors have not been phased by the FARC attacks and are keen to do business with Colombia.
"Investors are now more concerned about legal insecurity than physical insecurity," said Santos, trumpeting that 640 foreign companies have come to Colombia since he took office.
"Security, so far, is a non-issue."
Once an investment pariah as drug-trafficking insurgents kidnapped and killed oil workers and seeded rural areas with bombs, Latin America's No. 4 oil producer has seen a dramatic turnaround, attracting record foreign investment that has fueled the economy and bolstered its capital markets.
Santos won election in 2010 by a landslide, pledging to cut unemployment, continue Uribe's hardline security policies, while fostering economic growth and reducing poverty.
"One of my biggest objectives is to leave this country with less inequality," said Santos, a member of one of Colombia's most influential families who garnered electoral support from Colombia's poor and rural areas.
"A COUPLE" OF RATE CUTS
While much of the world struggles to shore up their fiscal accounts, Colombia's financial management, buoyant economy and security advances were rewarded last year with investment grade from three major credit rating agencies.
"We have not been touched at all by the international financial crisis. We have not seen any signal that anyone is starting to have concerns about Colombia," Santos said.
Still, Colombia's economy is beginning to slow and record foreign investment has made the peso one of the world's strongest currencies, prompting Santos to ask policymakers to take tougher measures. The country's central bank meets on Friday to decide whether to alter the overnight lending rate from 5.25 percent currently.
"Fortunately we have some margin of maneuver," said Santos, who is also a former finance minister. "With the situation as it is right now, I would say a couple of cuts are appropriate."
About $5 billion in oil and mining royalties will flow into the economy over the next few months, he said. That, along with the construction of 100,000 houses for poor families and a housing subsidy for low-income first-time buyers should stimulate the economy.
Santos said he is "crossing his fingers" that an expected recovery of coffee output comes to fruition after three years of low production due to rains, fungus and a crop renovation program.
Santos' ability to drive key legislation through Congress was thrown into question last month after lawmakers tinkered with the final draft of a judicial reform, inserting provisions that could have led to the dismissal of scores of cases against politicians accused of ties to right-wing paramilitary groups.
Santos admitted he had sleepless nights over the fiasco and worried that his majority in Congress might have been eroded.
"The way I was going to consolidate the coalition, that was a big concern," he said. "I can sleep better now."
He would not be drawn into a conversation about whether he would seek re-election in 2014 -- even if a peace process with the FARC was on the cards -- but he emphasized that anything he started, he would finish.
"If I start a (peace) process, I would start it with a high probability of success. I would not start a process to fail, the country does not deserve another failure," said Santos, whose son begins compulsory national service with the army next month.
"(The FARC) has betrayed the Colombian people. They have gone into negotiations simply to strengthen themselves, to take oxygen and continue their war. I will not allow Colombia or myself to be trapped again in that situation."
(Additional reporting by Jack Kimball; Editing by Daniel Wallis and Anthony Boadle)