Ablood-red track cuts through fields dotted with palms and shimmering in tropical heat. Above the haze, silver wisps of cloud tease the jagged violet peaks of the Andes, and in the back of our pick-up, six heavily armed guerrillas struggle to maintain something of their combative dignity in the teeth of comandante Mauricio's erratic driving. My head makes contact with the roof of the vehicle several times before Mauricio is forced by a roadblock to discover the brake pedal. "Welcome - we are the Farc - people of peace," reads the signboard propped against a sentry box improvised out of bamboo canes and palm leaves. Another bamboo cane stretching across the road constitutes the barrier.

People of peace? The Revolutionary Armed Forces of Colombia, or Farc, is Latin America's most enduring Marxist insurgency - it has spent 40 years in armed conflict with the Colombian state and is infamous, like all the country's armed factions, for casually ruthless violence and milking the drugs trade to finance its killing. Earlier this year, a major nationwide offensive that threatened to spill over into the capital, Bogota, left nearly 200 dead and many more injured.

Anywhere else in Colombia, my voluntary presence in the passenger seat of a Farc pick-up would be considered lunacy - laying myself open to almost certain kidnap or death. But here it is different. Last year, Colombia's centre-right president-elect, Andres Pastrana, offered an olive branch to Farc. Farc chose to accept, and in so doing, many claim, actually won Pastrana the election. In return, Farc received a unique agreement from the state to de-militarise five municipalities in Colombia's southern jungles as a precursor to peace talks. The deal effectively put an area the size of Switzerland under Farc control, albeit temporarily. So here we were approaching the heart of guerrilla territory.

"It's the English journalist," Mauricio grinned to the young woman operating the roadblock. "He's come to stay with us a few days. Let's see if we give him back, eh?"

As she approached to take a closer look, it was clear that being a Marxist revolutionary did not preclude attention to appearance. She wore lipstick, mascara and her hands, holding her automatic rifle, were manicured. "The chickens will peck your legs in those shorts," she remarked as we pulled off.

Behind the banter, Farc members remain solid in their conviction that Colombia's problems - and the continued brutality of the armed conflict - are "the result of the exploitation and extermination of rural communities for the economic gain of a cynical elite". This may sound like rhetoric, but, for Colombia, the analysis is pretty close to the mark: the situation today has roots going back to 1849 (see panel right, giving the historical background to Colombia's turmoil).

More recently, the problems have become acute with the introduction in the 50s of Colombia's new deal, whereby the countryside has been treated as the territory of big business while the rural population has been forcibly removed to the cities as grist for a construction-led economic boom.

Mercedes Perez, who now lives with her six children in the cardboard shanty towns of south Bogota, tells a familiar tale. "The paramilitaries took my husband, tortured him and beheaded him," she says. "It took us two days to find his body. They took everything we had, including 30 cows. As they left the village they fired indiscriminately into houses and burned others down before walking away under the noses of the military."

It is of people such as her that comandante Raul Reyes - Farc's chief negotiator in the current peace effort - is thinking when he says, "Economic development in Colombia has been maintained not by the inclusion of the masses, but by their exclusion and, if necessary, their extermination. The problem we face, and we have always faced, in making peace, is that there are many beneficiaries of war on the government side."

Around us, Farc's new 500-man camp - they move every few weeks to avoid the risk of detection, even within the territory under their control - is being built. Vast quantities of bamboo and plastic sheeting are roped together under the protective canopy of the rainforest as men and women in full combat gear throw up dormitories, canteens, kitchens, latrines and an improvised beauty salon. Space is tight and, as there are no spare beds, I am offered a share with a stocky young rebel, his AK47, two pistols and a handful of scatter grenades. Fortunately, there are plenty of trees from which to string my hammock.

Another group of rebels, stripped to the waist but with automatic rifles still slung over their shoulders, dig a series of channels from the nearby river to supply the camp with drinking and washing water. "Our main concern in the construction, use and dismantling of these camps is to protect the environment as well as our own lives," says comandante Arturo, who is in charge of logistics. "The two things are complementary - when we move on there will be not one shred of evidence that we stopped here."

Farc rebels live their lives like hunted animals. But as fighters, fired by a sense of great and long-lasting social injustice, they have become expert in outwitting the Colombian army, which is largely made up of untrained and unmotivated young men on national service. American know-how and hardware is increasingly piled up against them, but Farc continues to control up to 50% of rural Colombia. A string of humiliating defeats inflicted on the army in recent years has done much to bolster the state's enthusiasm for negotiations - the rebels are currently holding hostage around 350 members of the armed forces, and are looking to trade them off during the peace process.

By nightfall, the camp is up and running and, over a typical rural Colombian meal of sancocho de gallina (broiler chicken broth with potatoes, plantains and yams), a group of young guerrillas relate something of their lives as revolutionaries. Most joined up because they had a feeling of hopelessness in their rural lives, many in direct and sometimes vengeful response to the violence of the right, or state terrorism as they prefer to call it. Juan Pablo has been fighting with Farc since he was 14, when his father, an agricultural union member, was tortured and then shot through the back of the head in front of his family in 1984. "I joined up with my older brother because my father's death proved there was no other way of expressing opposition to our plight," he says. "You feel bad sometimes, because the people we fight against are often young lads - military service recruits - from the same towns and villages. But what can you do if there is no other avenue of protest?"

Two years ago, his brother was also killed in combat, but that has only hardened Juan Pablo's resolve. "It is a very tough life, but it's better than the one I had before. Farc is the only organisation in Colombia able to stand up for ordinary people's rights. I will continue to fight with them until those rights are respected, or until I die, whichever comes first."

Martha echoes Juan Pablo's feelings. She comes from a family with a history of guerrilla links and joined up when her father was forced to leave Farc after losing an arm in combat. She was 15. "I asked my Dad if there were women in the guerrilla, and when he said yes I had no hesitation in joining up," she says. "People think we are all cruel and ruthless, but it is not true. I hate combat and I have been hospitalised twice for panic attacks and trauma. I think most of us would prefer not to fight, prefer not to be here at all, if only we genuinely felt there was an alternative."

Much later, when all except the senior commanders had gone to bed in preparation for a 4.30am rise and six hours of rigorous training, 48-year-old comandante Raul Reyes set out a little of what is behind his 32 years of armed struggle for change in Colombia. The often-quoted accusation that Farc forcibly recruit their fighters is met with a dry laugh. "It might have happened once or twice," he says, "but generally the government has done such a good job of making ordinary people's lives a misery, there has been no need to force anyone to join. Since I took up arms, there has been considerable economic development in Colombia, yet at the same time more social injustice, more unemployment, less education and health, fewer public services and more repression by the state of any form of protest. Left-wing politicians, university lecturers and students, union representatives, their families, the doctors and lawyers and secretaries who work with them, all get gunned down."

Comandante Reyes believes the neo-liberal economic model - the opening up of Colombia to market forces in the early 90s - was forced on a country ill-prepared to respond. The policy has brought greater poverty and unemployment, which has led people in one of two directions - into the coca trade or into the guerrilla groups. "We have been massacred and driven from our homes simply for not agreeing to give up our land for road developments or hydroelectric dams, and for absolutely no return," he continues. "And when a little cash does trickle back to the countryside, it is generally to launder the money or the result of some other corrupt deal." Last year, a spectacular new bridge was built over the Caguan river deep in the southern jungles. Equally spectacular is the lack of any road leading to or from the multi-million-dollar structure.

"We are dedicated to the peace process," he concludes, "but only if it is accompanied by a fundamental restructuring of Colombian society. Otherwise, the armed struggle will continue like never before."

One of the encouraging signs to emerge from Colombia's stumbling peace process is that elements of the ruling class - and to an extent President Pastrana himself - seem prepared for the first time to accept a degree of historical responsibility for Colombia's shattered and near anarchic society. Thus far it has been the government rather than the rebels that has been jumping through political hoops to keep the talks alive.

Colombia's leading economist, Luis Jorge Garay, himself subscribes to the view that the country's dire social and economic condition is not the fault of any one government, but the result of decades of mismanagement. "The country's economic record has been maintained while ignoring the accepted need to create a culture of saving and investment, with minimal long-term credit, and minimal investment in human resources," he says.

Colombia spends less in terms of GDP on public education and training than even Bolivia. "The decline of heavy industry and agriculture might be considered a pre- requisite for a decent development process, but in Colombia there is frighteningly little hi-tech service industry to replace it."

What there is, of course, is the narcotics industry. While the state and rebels exchange accusations about each other's involvement in the drug trade, in reality successive cycles - marijuana in the 70s, cocaine in the 80s and 90s, and most recently heroin - have seen the corrupting power of drug money infiltrate every level and niche of Colombian society. President Pastrana's predecessor, Ernesto Samper, was rocked by revelations that nearly half of his election campaign coffers in 1994 were filled by the now-dismantled Cali cartel; and trafficking has been rife within the armed forces. Colombia's civil war has been largely maintained, and all of its warring factions armed with increasingly sophisticated weaponry, by earnings from the drug trade.

Major civilian traffickers form private - and illegal - paramilitary armies to protect their interests and to carry out some of their smuggling. The guerrillas, in the meantime, protect the peasant growers' interests and run production laboratories hidden deep in the jungle - activities said to have earned them at least US$400 (£265) million last year alone.

"An accord with Farc will not bring peace to Colombia unless it is accompanied by a dismantling of the narcotics industry as a whole," says Garay - an opinion President Pastrana would, in theory, seem to share. He has regularly voiced the opinion that, alongside the peace process, massive investment is needed in the infrastructure and crop-substitution programmes in southern Colombia to wean peasant farmers of coca. But, to push through this central element of the peace agenda, the president will have to win the reluctant support of the Clinton administration. The US has pursued a heads-down charge against Colombia's drug crops without any significant dent being made in cocaine production. Despite military aid to back aerial fumigation, which will run to nearly US$300 million this year, the number of hectares dedicated to coca production has grown steadily during the 90s. Critics of US policy in Colombia point out that at least some of the peasant farmers currently growing coca in Farc-dominated areas would not be there at all had it not been for regional coffee pricing forced through by the US in the early 80s, which drove many small Colombian coffee growers out of business.

More seriously, others accuse American intelligence agencies of hiding a counter-insurgency agenda behind its war on drugs - a strategy that has done nothing to reduce Colombia's narcotics output while fuelling and polarising the country's internal conflict. Even sources within America's Drugs Enforcement Agency (DEA) privately admit that their priorities in Colombia have been sidelined by the geopolitical concerns of cold war cronies in the CIA and the Pentagon - that while aggressive rhetoric and military hardware is aimed at the guerrillas, the US will tolerate drug-running by effective right-wing counter-insurgency forces, even if they happen to be illegal.

This year's military-aid package provides, among other things, for the equipping of the Colombian helicopter fleet with 20mm automatic cannons for use in crop eradication. Previous military aid for anti-narcotics operations had been granted under category 4 by the US defence department - for operations not involving hostilities. But the latest package went through as category 2 - military operations other than war.

Meanwhile, revelations of the armed forces' involvement in drug trafficking and human-rights abuses, along with endless paramilitary atrocities, draw a reluctant rap on the knuckles from the US when things get out of hand, and more aid to fight narcotics. Indeed, many of the army generals responsible for nurturing paramilitary groups in Colombia - and they are usually also the ones with drug-trafficking ties - were trained in counter-insurgency tactics at the controversial School of Americas.

Despite the recent round-up of 30 drug barons, major players in international cocaine and heroin trafficking and paramilitaries continue to operate with relative impunity in the north of Colombia. In the south, where President Pastrana has won partial approval for his peace plan, the US line - dominated by brass hats and the CIA, and keenly supported by the Colombian military - is to prepare for war. And it won't be against narcotics, say US drugs intelligence officials.

Against this backdrop of fudged priorities, conspiracy theorists fear greater hypocrisies may be afoot; the revelation from one DEA source, that his organisation assumes Fidel Castano (the brother of Colombia's most powerful warlord, Carlos Castano) to be alive and operating, adds fuel. Fidel Castano was a pivotal figure in the world of cocaine trafficking and paramilitarism before his supposed death in 1994. He was a close ally of Pablo Escobar, a fellow Colombian and once the country's most notorious drug trafficker. It was Fidel rather than Carlos who first established the vicious reputation of their then fledgling paramilitary army. Though never officially confirmed, his death is widely accepted. But DEA informants have him active over the past four years, most recently establishing links with the Russian mafia.

The fact that Fidel might well be alive begs a question - why should the DEA want, or be obliged, to pretend publicly that their potentially largest enemy in the drugs war is dead? Some point to the Noriega years in Panama and suggest that a similar politics-over-drugs approach may be driving US policy with the Castanos, be they one or two.

According to DEA sources, Manuel Noriega, the fomer Panamanian president, was known by US intelligence to be in league with Escobar for years, but while he was useful to his CIA handlers and the overall US political strategy in central America, he was left alone. Indeed, Noriega became an ally of the DEA in the 80s. He doggedly pursued drug traffickers, though his targets were always his competitors or those of Escobar's Medellin cartel. It was only at the end of the 80s, when the political climate changed, that Noriega was exposed.

Could the same type of policy be in place in Colombia? This year, the US will spend $17.8 billion in its effort to rid the world of the scourge of drugs. It could, according to estimates by its own intelligence services, buy the world's entire projected cocaine production this year for around $6 billion. With such a colossal budget, and so little success, there are two possible explanations: either US enforcers are cynically failing to pursue people such as Fidel Castano, who are useful because of their opposition to guerrilla groups, or, though conducted in good faith, US anti-narcotics policy in Colombia - the world's biggest drug factory - has been hopelessly misguided.

President Pastrana has won limited support from Washington for his peace-making efforts. A small delegation of US congressmen even met with Farc leaders recently in the demilitarised zone to discuss crop-replacement schemes. But such projects will require huge investment from the state and its international allies. After so many generations during which recourse to violence has been perceived as the only way forward, the president is still struggling to instil faith in dialogue as the foundation to repair his country's shattered social fabric.

Many are quick to put down current efforts at peace as hopeless. More than 12 months into his four-year term of office, Pastrana has barely managed to get the warring factions together around the negotiating table, while bloodletting continues.

After nearly five months of deadlock, talks did begin to stumble forward again in October, but nothing short of the dismantling of the drugs trade, plus an economic compromise to please both Marxists and neo-liberals, the shoring-up of a crippled justice system and fundamental social and political reform will see a lasting peace deal signed.

Meanwhile, a ceasefire is nowhere in sight. Despite an estimated 12 million Colombians taking to the streets on the day the peace talks resumed last month to call for an end to the fighting, Farc insists it will not consider laying down its arms until the paramilitaries have done likewise.

Complex it is - more so than the Middle East peace process, according to one experienced UN observer. But Colombians still cling to a thread of hope that peace won't prove impossible. Indeed, the economist Luis Jorge Garay even ventures that, since Colombian disintegration is so complete and Farc so adamantly opposed to neo- liberalism, the opportunity now arises to start a whole new social order: if a deal can be struck, Colombia might just emerge as the breeding ground for a new interpretation of the politics of globalisation, one that would take a leap ahead of the "caring capitalism" of the Third Way in Europe in establishing a more sustainable and socially just economic model.

The alternative - to abandon peace talks - would be to plunge the country into a renewed bloodbath: a pointless all-out war, which both sides acknowledge nobody can win. Earlier this year, that seemed all too possible: following the nationwide offensive by Farc in the summer - and a flurry of allegations that the rebels had been abusing their powers in the demilitarised zone - negotiations were shelved. For the first time since the peace process began, President Pastrana and his ministers had begun to talk about the possibility of war. Though the atmosphere has thawed slightly since then, the return of bellicose rhetoric was welcomed by business leaders and other sectors lined up against Farc.

Among what is left of the rural population, it is fear that predominates when there are rumours of war. In San Vicente del Caguan, a dustbowl town of 20,000 people at the heart of the demilitarised zone, where locals have become accustomed to living in relative peace and tolerance under Farc rule, one restaurant owner sums up such concerns. "If the peace process falls apart, the headcutters will come looking for those who have helped the guerrillas in some way," she says. "They kill people simply for selling a bottle of water - I guess that means, in our case, they will have to massacre the whole town."