The Turning Tide: Ecuador’s Impending Crisis

A month ago (13th of August 2015), the biggest political protest of the last eight years passed through the streets of several of Ecuador’s cities. While being in Quito, I saw mostly peaceful marches, but burning car tires, people shouting “Fuera, Correa, Fuera” and minor encounters with the police were headlines of the national eight o’ clock news. The protests were aimed against the policies of the current President Rafael Correa. In the last few months Correa has announced several proposals, which are costing him a lot of his popular support. These included a tax on added value when selling real estate and a change to the constitution, which would make it possible for presidents to be re-elected indefinitely.1

It is important to understand that, up until recently, Correa was one of the most popular presidents in Ecuador’s history.2 He is the country’s first president to fully serve a term in twenty years. With his ‘Citizens Revolution’ (Revolución Ciudadana), he brought much needed stability and economic growth to the poverty stricken country.3 Correa first served as minister of finance and became wildly popular after refusing to sign an unfavorable agreement with International Banks.4 During Correa’s first term, extreme poverty dropped and annual GDP growth outperformed the rest of developing Latin America and the Caribbean.5 He renegotiated Ecuador’s crippling debt arrangements and invested heavily in infrastructure, education and public healthcare using oil money that otherwise went to debt payment. Crude oil has been Ecuador’s main export product since the seventies. Between 2007 and 2013, barrels sold for about 74,09 USD; largely funding the immense economic growth.6

Correa supporter waving an Alianza País flag, © Ruben Peeters

The current drop in oil prices to 39 USD is a hard blow to the state’s budget. Oil is the biggest source of revenue for the government that owns Petroamazonas and Petroecuador, the main oil companies.7 The declining revenue has forced the Ecuadorian government to go through several rounds of budget cuts and on August 19th the government cut another 800 million USD of its 2015 budget.8 Up until last year the increase of oil exports made it possible to keep the values of imports and exports in balance.9 Because Ecuador has no own currency, it depends on exports and tourism for revenue. Fear exists that with the total value of oil exports dropping, US dollars (Ecuador’s official currency since 2000) will flow out of the country, leaving a negative trade balance. A persistent negative trade balance means that the country will be left without cash. With the oil wells drying out and foreign debt rapidly rising, Correa is nervously looking for new sources to fund his Citizens Revolution.

In the midst of this economic crisis, Correa’s style of governance and the immense power his party Alianza País holds over legislative, executive and judiciary branches of the state are turning public opinion against him. Many Ecuadorians I talked to in the protests described Correa as overly arrogant. This arrogance even got him into the international spotlight when comedian John Oliver made fun of him for attacking members of the opposition online. Unsurprisingly Correa responded in his characteristic, insulting manner.10 Guillermo Lasso, leader of the Creating Opportunities Party (CREO), was in the protests last month. He was asking for the President not to resign, but to drop his arrogance and enter into debate with the opposition.11 Correa did not listen to Lasso’s demands; on the contrary, he continued to divide the Ecuadorian people tweeting:”[…] they [the protesters ed.] have no support, legality nor legitimacy, but they seek to generate violence.”12 His supporters, who were reunited on the Plaza de la Independencia, apparently thought the same. I heard them shouting “we are more, many more!” boasting widespread popular support for their beloved Mashi Rafael.

The truth is: Correa’s popularity is waning. The further spreading of protests throughout the country is a clear sign of this. After almost a decade of relative tranquility, Ecuadorians are willing to take to the streets. The Indigenous Movements CONAIE and Pachakutik are leading the protest because of dissension about schooling of indigenous children, water- and mining rights.13 However, the protests are not uniform, but rather an amalgam of discontent. At least twenty civil movements reunited in Quito; all of them with different problems and questions, but united against a common enemy. A much heard concern is the rampant corruption when awarding public infrastructure contracts.14 Back in 2011, two journalists published the book ‘El Gran Hermano’, accusing Correa of favouring his brother’s construction company. In response, Correa sued them and actually won the case due to lack of evidence for corruption. Both authors were convicted to several years in jail and the payment of 1 million USD each for “mental damage”.15 At the same time there was the “Correa vs. El Universo” case where Correa sued the journalist and the newspaper who had called him a dictator in an article called “No a las Mentiras” [No to the lies].16 After Correa also won this case, the media started to self-censor out of fear for being sued by the government or the president in person. For both cases there exists serious doubt about the legality of the verdicts. Several Ecuadorian and international jurists have published critical papers about the cases.17

These allegations reveal the two main problems in Ecuador’s current political situation. One is the poor journalism that fails to serve the interests of common Ecuadorians, the false accusations and a general lack of transparency from the government and opposition. Many protesters I spoke to have questions about millions of dollars that are unaccounted for and Correa’s quickly rising private wealth.18 None of these questions and accusations are discussed in the mainstream media. Much of this information circulates on social media, which makes it very difficult to sift through the imaginary and the real. People are often angry about opposition statements that turn out to be speculative or simply not true. On the other hand, the fact that Correa refuses to answer any of these accusations does not help in his defence.

The other problem is the quasi monopoly Correa possesses on all three branches of the state, thus making it impossible to hold him or even Alianza País accountable. The Constitutional court has given Correa a green light to change the constitution using amendments.19 Lasso and the rest of the opposition, united under the name Colectivo Compromiso Ecuador, are in turn asking for a referendum.20 The Consejo Nacional Electoral (CNE), the government agency responsible for elections, refused the group’s demand to start the procedure for a referendum.21 The case was moved to the Constitutional Court, which ruled in favour of the CNE and declared the demand for a referendum unconstitutional.22 The opposition disputes the legality of the ruling, claiming that it is Correa’s influence over the Constitutional Court that decided the ruling.23 In the meantime Correa claims that he does not need a referendum since he has a majority in the Asamblea Nacional (National Assembly) and so the legal competence to change the constitution. According to the opposition, however, he is afraid of losing the referendum.24 The amendment is expected to pass in November of this year. If Correa clings to his power as he is currently doing, people in the cities will be unlikely to remain peaceful. The situation might escalate and Correa might find himself in a situation similar to his predecessors Jamil Mahuad and Lucio Guttierez.25 Correa seems aware and afraid of this possibility. The Policía Nacional was guarding the streets of the capital for several days during and after the protest to make sure no protesters got to the Palacio Carondolet (the residence of Correa and the government) or to the Asamblea Nacional.

National Police blocking the way to Palacio Carondolet, © Ruben Peeters

In the end, the biggest threat to Ecuador’s stability might not be Correa’s arrogance, but the dropping oil prices. With a rapidly rising foreign debt, declining oil revenues and increasingly malcontent people, ‘being popular’ might be the last thing to keep Correa in power. With that fading as well, Ecuador’s political future looks very uncertain.

 

Additional pictures of the protests can be found in the image carrousel below.

 

Ruben Peeters, correspondent in Quito, Ecuador.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of International Perspective. Please be advised that all works found on International Perspective are protected under copyright, more information in the Terms of Use.

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By | 2017-02-03T23:56:44+00:00 September 21st, 2015|Categories: Insight|Tags: , , |0 Comments

About the Author:

Ruben Peeters
Ruben is a Belgian student of Socio-Economic History. He focuses on geopolitics, history, economy and trade. Ruben also has a passion for Ecuador, Singapore and the US.

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