This article is based on research carried out in three municipalities of the Catatumbo (North Santander department, Colombia) region, and analyzes institutional arrangement dysfunctions that arise from active illegal armed groups and illicit crops, pointing out the effects on the political regime and the exercise of democracy and stating the problems that must be faced by local governments in order to perform their mandate. The article suggests that Government action in this region has been affected by deep failures in legitimacy, efficiency, and effectiveness, which generated critical limitations to governability in that territory. Such failures are related to the factual suppression of the social contract and to the ineffectiveness of a democracy in its least representation. It concludes that in the municipalities under examination, Government failures strongly reduce the settlement costs for illegal armed groups to access territory control and to establish as protection agents in competition with the State. They also lead towards the establishment of a vicious affectation cycle where the cost increase of the public investment required to correct such failures in turn reduces political actors’ interest in solving them, thus creating a chronic trap that reduces governability in the regional level.