Rafael Correa – Evening Report https://eveningreport.nz Independent Analysis and Reportage Thu, 04 Feb 2021 06:26:12 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.4 https://eveningreport.nz/wp-content/uploads/2026/05/cropped-MIL-round-logo-300-copy-1-32x32.png Rafael Correa – Evening Report https://eveningreport.nz 32 32 All Eyes on Ecuador: Presidential Elections Could Bring Back the Citizens’ Revolution https://eveningreport.nz/2021/02/04/all-eyes-on-ecuador-presidential-elections-could-bring-back-the-citizens-revolution/ Thu, 04 Feb 2021 06:26:12 +0000 https://eveningreport.nz/?p=1064393 Read more]]> Source: Council on Hemispheric Affairs – Analysis-Reportage

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By Danny Shaw
 From New York

On February 7, Ecuador will hold elections for President and for its legislative body, with 137 positions to be decided for the National Assembly. Though 16 presidential candidates participated in the debates, there are three major candidates. Andrés Arauz and his vice presidential candidate, Carlos Rabascall, represent La Unión por la Esperanza (The Union of Hope, UNES), what was Alianza País led by former president Rafael Correa before the party split in 2017. Guayaquil banker Guillermo Lasso and Alfredo Borrero are the candidates for the conservative alliance Creando Oportunidades (Creating Opportunities, CREO). Carlos “Yacu” Pérez is the candidate of the indigenous Pachakutik Party.

Many from the Correa camp have questioned Pérez’s genuine commitment to defend indigenous communities and remember that some factions of the Pachakutik Party have, in the past, opportunistically aligned with the right against Correísmo.[1] The election represents a showdown between ten years of the Revolución Ciudadana (Citizens’ Revolution, 2007-2017) and the past four disastrous years of unfettered neoliberalism. As of now, polls show Arauz, Correa’s candidate, is clearly in the lead, polling at 37% and Lasso at 24%.[2]

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The Advances of La Revolución Ciudadana

Rafael Correa’s presidential victory in 2006 was a key part of the Pink Tide and South American effort to realize Bolívar’s dream of regional economic and political integration and independence from foreign domination. As Minister of Economy and Finance in 2005, Correa distinguished himself from other politicians by calling out the pitfalls of International Monetary Fund (IMF) loans, advocating for social planning and proposing a National Assembly to tap into the power of Ecuador’s diverse working sectors.[3]

It is important to  outline the progressive nature of the Correa administration. During Correa’s two terms, the 17 million people of Ecuador saw increases in the minimum wage and social security benefits, a progressive tax on the rich, and higher investments in education and social programs, all while attaining economic growth.[4] For this reason, traditional interests and their U.S. backers opposed Alianza País and sought to sew internal divisions and solidify alliances with sections of the Confederation of Indigenous Nationalities of Ecuador, CONAIE.

The Story of a “Vendepatria”[5]

The leadership and rank-and-file of Alianza País understood that Lenin Moreno, who had served as Rafael Correa’s vice-president for six years, was best positioned to carry Correísmo forward. Within months of winning the presidency in 2017, however, Moreno reneged on his campaign promises. In one of the great about-faces in the history of South America, Moreno betrayed the movement and embraced a neoliberal model for Ecuador. Under Moreno, Ecuador also withdrew from the Bolivarian Alliance for the Peoples of Our America (ALBA) in 2018 and pulled out of the Union of South American Nations (UNASUR) in 2019, weakening two of the most important instruments of continental unity.[6]

Throughout the ups and downs and contradictions of the entire liberatory project, the leadership of the Citizens’ Revolution has maintained a self-critical posture. After the election of Lenin Moreno, Alianza País split into pro-Moreno and pro-Correa tendencies. This speaks to the reality that some of Alianza País’ functionaries were not guided by principles but were rather attracted to power. Sections of CONAIE have sustained legitimate critiques of Correísmo, including concerns over the environmental impact of resource exploitation and infrastructure projects. These are problems the Correista leadership continues to address and it shows the importance of the ethical and political formation of a new generation of Ecuadoreans.[7]

Ricardo Patiño’s book Construir Poder Transformador. Debate Latinoamericano, lays out the pitfalls of over reliance on Correa’s charisma and indicates some of the challenges that lay ahead (Patiño is the Former Minister of Foreign Affairs under Correa’s Presidency). The grassroots leadership of UNES warns of dependence on one savior and the importance of building an entire movement that can independently defend its interests: “The fundamental problem has been an absence of a solid and profound counter-hegemonic ideology that guides the decisions, practices and relations of the popular sectors as well as political leaders.” [8]

Will the Tide again Turn?

In an example of flipping reality on its head in 2017, the incoming Moreno government immediately accused the Citizens’ Revolution of wanton corruption. Similar to the oligarchies’ attacks demonizing the Pink Tide in Brazil, Paraguay, Venezuela, Bolivia and across the continent, this was a classic case of Lawfare.[9] The neoliberals, fearful of the enormous popularity of Correísmo, waged a war through judicial means. Jorge Glas, former vice-president under Correa, is still in jail on trumped-up charges and recently contracted the coronavirus.[10] Ricardo Patiño and the President of the National Assembly Gabriela Rivadeneira are still in exile in Mexico. Correa himself is banned from his homeland and faces years in jail on  highly dubious charges of corruption.

An Arauz victory would open the country back up to those who put human life in community before private accumulation and carry forth an agenda that targets the real culprits of corruption.[11]

Again, most polls have Andrés Arauz, the UNES candidate, in the lead.[12] Alarmed at another potential loss of ground in the continental struggle for power between an independent left-wing, anti-imperialist movement, the old order beholden to U.S. interests is scrambling to prevent Arauz’s electoral victory. There is good reason to be concerned. In November 2019, the U.S.-dominated Organization of American States (OAS) backed a coup in Bolivia to prevent an electoral victory by MAS candidate and incumbent president Evo Morales, and it took a year for the popular movements to restore their democracy.  Concerned about a renewed attempt to sabotage democratic institutions in Ecuador, former Ecuadorian president Rafael Correa has warned that Moreno’s meeting with  OAS Secretary General Luis Almagro this week in Washington DC may be a prelude to a similar attempt at OAS subversion.[13] The corporate-dominated media has provided the disinformation for this by publishing material which constitutes scare tactics and red-baiting against Arauz, claiming that his intention is to turn Ecuador into “another Venezuela.”[14] There are allegations of vote-tampering, and UNES has warned the population to be ready for any type of chicanery.[15]

Another key issue in the election are the IMF loans that the current administration negotiated with western banks that force austerity on an already beleaguered people. IMF loans to the region and exploited countries have long been a neocolonial tactic for extracting wealth from developing countries. As the old proverb goes: “those who lend, command.” Under the guise of humanitarian help with the raging pandemic, the IMF issued  loans to an all too willing Moreno administration to the tune of 6.5 billion dollars just before the close of 2020.[16] As is customary, the IMF stipulated austerity, the deregulation of the Central Bank and sale of gasoline and diesel without subsidies and at world market prices. Lasso has indicated that if elected president, he would not disavow the IMF agreement, drawing a stark contrast between himself and Arauz, who said he will renegotiate the country’s deal.[17]

One of Trump’s 11th hour actions before leaving office was to oversee a U.S. Development Corporation loan to Ecuador for 3.5 billion dollars that requires the government to privatize a major oil refinery and parts of the country’s electrical grid, and to exclude China from its telecommunications development.[18] Washington is alarmed at the growing Chinese influence across South America and the Global South and sees Ecuador as an important beachhead to prosecute this “New Cold War” through the Growth in the Americas (CRECE) program. Moreno was more than happy to be a major U.S. client in the region along with Iván Duque and Laurentino Cortizo, the presidents of Colombia and Panama respectively. Vijay Prashad evaluates how the two global powers treated Ecuador in the context of waning U.S. hegemony: “Chinese banks lent money for the construction projects. These funds came with no conditions. The U.S. government money, on the other hand, came with substantial claims on the government of Ecuador’s policy orientation.” The result is the Ecuadorian people suffer, as they now have a debt totalling $52 billion.[19]

What’s at Stake

In October 2019, a massive protest movement rocked the country. The world watched with bated breath as a grassroots movement opposed to austerity measures occupied Quito and nearly toppled the Moreno government. The government attempted to crush the protests, leaving at least ten dead, more than 1,000 people arrested and more than 1,300 injured.[20] When repression failed to quell the protests, Moreno rescinded on an International Monetary Fund-backed program, known as Decree 883, that raised fuel prices, proving again the power of a united, mobilized people.

The year 2020 ushered in a new tragedy for Ecuador. The Moreno government failed to respond adequately to the COVID-19 pandemic in any serious, unified way. Abandoned bodies lined the streets of Guayaquil last April putting on tragic display before the entire world, the misleadership of Ecuador’s largest city, long governed by neoliberal politicians.[21] These dehumanizing images encapsulated what three years of Lenin’s economic and political agenda has meant for everyday people. On January 26, 2021, Ecuador’s Parliament began the process of impeaching Health Minister Juan Zavallos for mismanaging the COVID-19 vaccination program, and a few days later Ecuador’s chief prosecutor began an investigation into Zavallos for alleged influence peddling.[22] On January 29, police in Quito shut down a clinic for giving out 70,000 fake vaccines.[23] TV presenter Efraín Ruales, who had reported on corruption in the current administration, was gunned down and murdered on January 27.[24] As of now, there are 249,779 coronavirus cases in Ecuador and 14,851 deaths.[25]

This is the backdrop for this week’s election, not just for the 17 million people of Ecuador and hundreds of thousands of others in the diaspora, but for the future of the Pink Tide in Latin America. Will Ecuador continue down the road of subordination to neoliberal imperatives of the IMF and Washington, or will it resume the Citizens’ Revolution and rejoin the movement towards regional integration and independence? This decisive election will determine Ecuador’s direction for the next four years and beyond.

Danny Shaw teaches Latin American and Caribbean Studies at John Jay College of Criminal Justice and Hostos College, and is a Senior Research fellow at COHA.

Sources

[1] “In Defense of Rafael Correa Interview with Guillaume Long”, https://www.jacobinmag.com/2015/09/ecuador-rafael-correa-alianza-pais-quito-conaie-peoples-strike-protest

[2] “Injerencia estadunidense en los comicios ecuatorianos”, https://www.jornada.com.mx/notas/2021/01/30/politica/injerencia-estadunidense-en-los-comicios-ecuatorianos/?s=09

[3] Patiño, Ricardo. Construir Poder Transformador. Debate Latinoamericano.

[4] “In Defense of Rafael Correa”, https://www.jacobinmag.com/2015/09/ecuador-rafael-correa-alianza-pais-quito-conaie-peoples-strike-protest

[5] A sell-out

[6] “ALBA Boss Chastizes Ecuador For Abandoning Regional Bloc”, https://www.telesurenglish.net/news/ALBA-Boss-Chastizes-Ecuador-For-Abandoning-Regional-Bloc-20180824-0022.html, and “Ecuador pulls out of South American regional group Unasur”, https://www.upi.com/Top_News/World-News/2019/03/14/Ecuador-pulls-out-of-South-American-regional-group-Unasur/8621552588693/

[7] Sigfrido Reyes Tweet. https://twitter.com/sigfridoreyes/status/1334309069201543172

[8] “The fundamental problem has been the absence of a counter hegemonic ideology, solid and deep, that guides the decisions, practices and relationships of popular sectors and also political leadership,” from Patiño, Ricardo. Construir Poder Transformador. Debate Latinoamericano.

[9] “La Guerra Judicial en Latinoamérica – Lawfare In the Backyard”, https://www.youtube.com/watch?v=Oi5fEkK77ok&t=2262s

[10] Correo del Alba, https://twitter.com/correodelalba/status/1355217023769452558?s=08

[11] “Combate a la corrupción: un reto de la perspectiva de los DDHH”, https://desalineados.com/2021/01/combate-a-la-corrupcion-un-reto-desde-la-perspectiva-de-ddhh/1018/

[12] “Encuesta local en Ecuador muestra a Andrés Arauz como favorito”, https://www.telesurtv.net/news/define-intencion-voto-casi–mitad-ecuatorianos-20210122-0014.html

[13] “Injerencia estadunidense en los comicios ecuatorianos”, https://www.jornada.com.mx/notas/2021/01/30/politica/injerencia-estadunidense-en-los-comicios-ecuatorianos/?s=09

[14] “Opinión: Ecuador y la tradición latinoamericana de votar por el mal menor”, https://www.washingtonpost.com/es/post-opinion/2021/01/18/ecuador-elecciones-2021-candidatos-miedo/

[15] Union por la Esperanza https://twitter.com/UNESECUADOR/status/1355570489373184001?s=20

[16] “IMF Executive Board Approves 27-month US$6.5 billion Extended Fund Facility for Ecuador”, https://www.imf.org/en/News/Articles/2020/10/01/pr20302-ecuador-imf-executive-board-approves-27-month-extended-fund-facility

[17] “Ecuador’s Lasso said he would not disavow IMF deal if elected”, https://www.nasdaq.com/articles/ecuadors-lasso-said-he-would-not-disavow-imf-deal-if-elected-2021-01-27 and “¿Cumplirá el acuerdo firmado con el FMI? Aquí las respuestas de los 16 candidatos a la Presidencia de Ecuador”,

https://www.eluniverso.com/noticias/2021/01/24/nota/9600538/elecciones-presidenciales-ecuador-2021-acuerdo-fmi-propuestas

[18] “Biden needs to reverse Trump’s economic policy in Ecuador”, https://thehill.com/opinion/international/535838-biden-needs-to-reverse-trumps-crony-capitalism-in-ecuador

[19] “US Rescue of Ecuador from Chinese Debt is a Trap”, https://newcoldwar.org/us-rescue-of-ecuador-from-chinese-debt-is-a-trap/

[20] “La defensoría del Pueblo de Ecuador sitúa en una decena los muertos durante las protestas”, https://www.europapress.es/internacional/noticia-defensoria-pueblo-ecuador-situa-decena-muertos-protestas-20191029020538.html

[21] “Bodies are being left in the streets in an overwhelmed Ecuadorian city”, https://www.cnn.com/2020/04/03/americas/guayaquil-ecuador-overwhelmed-coronavirus-intl/index.html

[22] “Ecuador: Lawmakers Dismiss Health Minister Zevallos”, https://www.telesurenglish.net/news/Ecuador-Lawmakers-Dismiss-Health-Minister-Zevallos—20210127-0015.html

[23] “Clinic injects 70,000 people with fake COVID-19 vaccine in Ecuador”, https://inshorts.com/en/news/clinic-injects-70000-people-with-fake-covid19-vaccine-in-ecuador-1611895118563

[24] “Horrifying moment TV presenter, 36, who has previously received death threats for reporting on corruption, is assassinated during a drive-by-shooting in Ecuador”, https://www.dailymail.co.uk/news/article-9198501/TV-presenter-36-received-death-threats-reporting-corruption-assassinated-Ecuador.html

[25] Worldometers, https://www.worldometers.info/coronavirus/country/ecuador/

]]> COHA Webinar: Ecuadorian Presidential Elections and the comeback of the Citizens’ Revolution https://eveningreport.nz/2021/02/04/coha-webinar-ecuadorian-presidential-elections-and-the-comeback-of-the-citizens-revolution/ Thu, 04 Feb 2021 06:26:12 +0000 https://eveningreport.nz/?p=1064399 Read more]]> Source: Council on Hemispheric Affairs – Analysis-Reportage

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COHA Webinar: Ecuadorian Presidential Elections and the comeback of the Citizens’ Revolution

With Ricardo Patiño, former Foreign Affairs Minister of president Rafael Correa (2010 to 2016).

Join COHA to analyze the decisive presidential election taking place this February 7 in Ecuador. 

COHA Senior Research Fellows Alina Duarte and Professor Danny Shaw will interview Ricardo Patiño about the national and regional social, economic, and political implications of the presidential election in Ecuador. 

On February 7, Ecuadoreans will choose between the increasingly unpopular neoliberal path forged by President Lenin Moreno since his surprise pivot to the right in 2017, and a resumption of the Citizens’ Revolution, which had advanced social investment and economic growth under former President Rafael Correa (2007-2017). While under Moreno, Quito has withdrawn from efforts at regional integration, presidential candidate Andrés Arauz (Union of Hope, UNES)  has promised to restore Ecuador’s role in UNASUR, ALBA and CELAC. There is, therefore, a great deal at stake for both Ecuador and the entire region.

Join COHA to analyze the decisive presidential election taking place this February 7 in Ecuador. 

Friday February 5, 2021

8pm EST |  5pm PST

ZOOM Registration: https://zoom.us/webinar/register/WN_msbqrIbDS8qdiJ-gSr0qww

The event will be streamed also through Facebook Live

]]> Ecuador: Lenin Moreno’s government sacrifices the poor to satisfy the IMF https://eveningreport.nz/2019/10/25/ecuador-lenin-morenos-government-sacrifices-the-poor-to-satisfy-the-imf/ Thu, 24 Oct 2019 21:33:25 +0000 https://eveningreport.nz/?p=28624 Read more]]> Source: Council on Hemispheric Affairs – Analysis-Reportage

By Wilma Salgado, PhD

Ecuador’s President Lenin Moreno has been cutting government spending since signing an Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF) in February of this year. This policy has benefited multinational corporations, the banks, and in general, powerful economic groups at the expense of the middle and working classes, who are being pushed toward poverty and extreme poverty.

In the context of the IMF negotiations the administration issued a law ironically called “the Organic Law to Foster Productivity, Attract Investment, and Create Jobs, Stability, and a Balanced Budget,” which has been in force since August of 2018. The law brought neoliberalism back to the country by instituting a policy to reduce the budget deficit and national debt, which have now become the top priorities. The law contemplates the collection of interest, fines, and other charges for outstanding obligations with several government institutions: the Internal Revenue Service (SRI), decentralized autonomous governments, the Office of the Superintendent of Businesses, the Ecuadorian Institute of Credit for Education and Scholarships, state enterprises, and even the Ecuadorian Social Security Institute (IESS).

On the day that the Law entered into force the private sector owed the government US$4,291,200,00 (almost $4.3 billion)—for unpaid income tax alone—not counting interest. This figure is higher than the total credit granted by the IMF. The IMF loan is for $4.2 billion and will be paid in installments if the country is deemed to be complying with the IMF conditions.

The list of big winners from the new policy is topped by fossil fuel corporations: Andes Petróleum Ecuador LTD , which owed US$396.2 million, of which US$228.3 million would be forgiven; Oleoducto de Crudos Pesados, OCP, which owed US$347.7 million and would be forgiven US$194.4 million; Consorcio Petrolero Bloque 16, which owed US$141.6 million and would be forgiven US$78.7 million; AGIP OIL Ecuador, which owed US$96.1 million and would be forgiven US$61.5 million; Repsol Ecuador S.A. which owed US$93.7 million and would be forgiven US$52.2 million, just to name a few. A second tier of winners includes the offshore phone company OTECEL S.A., which owed US$78.4 million and was forgiven US$38.9 million; Exportadora Bananera Noboa S.A., that owed US$71.1 million and will be forgiven US$41.2 million. There are several private banks, including: Banco Pichincha that owed US$39.6 million and will be forgiven US$18.3 million; Banco de la Producción S.A. Produbanco, which owed US$29.3 million and will be forgiven US$14.9 million; Banco de Guayaquil which owed US$6.3 million and will be forgiven US$3.9 million. It bears mention that this list of beneficiaries only includes income tax debt. ODEBRECHT is also on the list, owing US$11.8 million of which US$4.5 million will be forgiven. And Mr. Alex Bravo, former manager of Petroecuador, who is known to still have accounts in offshore tax havens even though he is in prison, owes US$6.3 million and would be forgiven US$3.9 million. [1]We should also remember the acts of corruption associated with Odebrecht operations, for which Ecuadoran beneficiaries and accomplices have yet to stand trial. This stands in stark contrast with how this was handled in other countries, such as Peru.

The protests in Ecuador against the government of Lenin Moreno have left five dead and hundreds wounded and arrested.  The photos in this article cover the large funeral procession of Inocencio Tucumbi, Indigenous leader assassinated during the confrontations between protesters and the police forces of the government. (Photo credit: Santiago Villacis)

Once these debts were collected, the SRI reported that US$1.25 billion[2] had been taken in. However, it did not explain what happened with the rest of the US$3 billion, which is twice the amount that the government estimates it will save from the fuel subsidies it eliminated as of October 1, 2019—US$1.3 billion[3].

The total amount of debt collected by other public entities included in the aforementioned law is not known, nor is there any information on how much the many tax exemptions included in the law cost the government. There has been an utter lack of transparency in both the approval of the law and its true scope.

The legislature passed this law without requesting even the basic information outlined above. It did so with the votes of Alianza País (the movement started by former President Rafael Correa, with only the votes of the Moreno supporters in the Assembly after the defection of all of Correa’s supporters), and with the Social Christian Party.

While the most powerful economic interests in the country have been enjoying debt reduction and tax exemptions, the current administration has been punishing the middle and working classes by cutting government spending under the agreement signed with the IMF.

IMF CONDITIONALITY IN MOU AND LETTER OF INTENT

The Memorandum on Economic and Financial Policy gives details about “the public policy program for the next three years,” which includes targets for reducing the fiscal deficit and national debt. These are much more drastic than the targets the IMF set for Argentina.

Target for reducing the debt to GDP ratio:

  • In Argentina debt was to be reduced to 55.8% of GDP over three years, that is by 2021;[4]
  • In Ecuador debt is to be reduced to 40% of GDP over three years, by 2022; in 2018 debt was close to 60% of GDP.[5]

Target for reducing the budget deficit:

  • In Argentina the primary fiscal deficit for 2018 was 2.7% of GDP, and the country was given two years to eliminate it, which meant a 1.35% reduction per year;
  • In Ecuador the primary fiscal deficit was estimated at 7% of GDP in 2018 (at the time of the IMF negotiations) and is to be eliminated over three years, which means a 2.3% reduction each year.

In order to reduce the debt burden and budget deficit, under its agreement with the IMF the government has been cutting spending by laying-off government workers, eliminating subsidies, and drastically cutting programs. Cumulative reductions since 2016 amount to 75%, from US$6,1 billion[6] in 2016 to US$773 million as of July 2019, which amounts to approximately US$1.5 billion in 2019.

The last package announced by President Moreno on October 1, 2019 included the elimination of gasoline and diesel subsidies, causing their prices to go up 24% for gasoline (from $1.85 to $2.30), while premium diesel went up 119% (from $1.037/gallon to $2.27/gallon)[7]. The government expects this measure to bring in additional funds of $1.3 billion/year.

In addition to the elimination of these fuel subsidies, the announced package includes a broad array of measures, including: new tariff reductions on raw materials and capital goods imports for the agricultural and industrial sectors; reduced import taxes on vehicles priced under US$32,000; elimination of advance payment of income taxes by companies; elimination of taxes on technology imports (cell phones, computers, and tablets); 50% tax cut on foreign exchange being used to import raw materials and capital goods; 20% cut in compensation for government employees; increase in the number of beneficiaries of the human development bonus; and loans at 4.99% interest under the Own Your Own Home plan—just to mention some of the bigger programs[8].

Elimination of the fuel subsidies is what is hitting the poor the hardest. Ecuadorians have already been impacted by a stagnant economy and competition from imported goods, especially from neighboring Colombia and Peru whose currencies have been devalued in recent months. The border provinces, particularly El Carchi on the border with Colombia, have been clamoring for government relief from a deep economic crisis, even resorting to ad hoc measures sometimes.

People’s reaction to the IMF austerity package was immediate, particularly in the organized social movements: transport workers, the indigenous movement, workers’ organizations, and social movements in general.

The IMF agreement also includes the following elements:

  • The transfer of profitable businesses from the Ecuadoran State to the private sector, resulting in decapitalization and the loss of future revenue, which harms public finances;
  • The opening of markets with Ecuador joining the Pacific Alliance, and the negotiation of free trade agreements with the United States and even with China;
  • Extensive labor reform to make employment and the labor market more precarious;
  • Tax reform to increase excise taxes that punish the most vulnerable sectors of society and make taxation even more regressive, instead of correcting it by increasing income taxes on the wealthy; and
  • Greater financial deregulation by eliminating taxes on foreign exchange leaving the country, which has allowed interest rates to reach their currently usurious levels. Interest rates are set by the monetary authority at almost 25% annually for loans to microenterprises, despite the fact that the economy is dollarized and there is no risk of inflation or devaluation. For every 1% of interest collected by the financial system, US$422 million is extracted from the economy as a whole, considering the balance of credit to the private sector as of July 31, 2019[9]. This means that with a 3% interest rate, banks extract $US1.266 billion, which is close to the US$1.3 billion that the government estimates the fuel subsidies cost. A 4% reduction in interest rates would be like injecting US$1.688 billion into the economy. Or a tax on the excessive fees charged by financial intermediaries could give the government more revenue than the US$1.3 billion it expects to save by eliminating the fuel subsidies.

Meanwhile, government spending on agricultural development in the first half of 2019 was a paltry US$53 million, or US$106 million annually—just a quarter of the US$422 million the financial system collects for every 1% of interest it charges customers. This is surprising given that the agricultural sector is such an important source of employment, accounting for 28.3% of jobs in the country.

Ecuador is in dire need of far-reaching financial reforms, including drastic cuts in interest rates—rates which everywhere else in the world go down when there is a need to stimulate the economy and boost production.

The policies the government has implemented under the IMF agreement have brought the economy to a standstill. The IMF itself predicts a 0.5% reduction in GDP this year[10]. Unemployment has continued to rise (only 37.9% of the economically active population has adequate employment[11], that is, with salaries above minimum wage and benefits, as of June 2019). The poverty rate has risen from 35.3% of the population in December 2014 (5.6 million poor people in a total population of 15.9 million), to 43.8%[12] in June 2019—that means 2 million more people have fallen into poverty, for a total of 7.6 million Ecuadorans living in poverty out of a total population of 17.3 million people.

The IMF policies are still geared toward serving the interests of creditor countries and toward reducing the national debt. The objectives are as follows:

  • Generate surpluses in the debtor countries and transfer them to the creditor countries through deficit reduction policies and by reducing the debt to GDP ratio at the expense of the middle and working classes;
  • Expand profitable business options for foreign capital and for national capital allied with foreign capital by privatizing profitable state enterprises and assets;
  • Expand export markets for the developed countries that are the IMF’s biggest contributors by opening markets while giving nothing in return, putting sectors and businesses that cannot compete with exports at risk of collapse. Many of these imports are highly subsidized or come from countries that have devalued their currency, while Ecuador’s economy is dollarized.

The policies adopted under IMF austerity packages do not resolve fiscal crises. Rather, they heighten them, forcing privatizations and the opening of the economy to foreign capital. Meanwhile, the structural problems in the intervened countries grow worse. The labor market becomes precarious, poverty and extreme poverty rise, there is a greater concentration of wealth, and the economy de-industrializes and reverts to raw materials. This encourages an intensification of mining and fossil fuel extraction—extractivism—with its multiple harmful impacts on the environment and a deterioration of the living conditions of the people living in countries where these policies are imposed.

In the case of Ecuador, the economic policies implemented by the government of Lenin Moreno are in perfect conformity with the IMF’s neoliberal recipe. This context explains the huge social mobilization this past week, especially of Indigenous groups and other sectors impacted by the elimination of gas and other energy subsidies and the government’s repressive response to the civil outcry. President Moreno’s approval rating has reached a historic low of 30%[13], and as this article goes to press, the political repression of the State security forces has resulted in egregious social costs, with five deaths[14], hundreds of wounded and almost five hundred persons arrested[15].

Wilma Salgado holds a Doctorate in Economics, is former Minister of Economic Affairs of Ecuador and an expert on fiscal affairs under various administrations.

Translated from the original Spanish version by Jill Clark-Gollub.

[1] “Trole 3. 50 beneficiario de la remisión tributaria: hacer más ricos a los más ricos”. Observatorio de la dolarización. En https://dolarizacion.ec/2018/06/21/trole-3-50-beneficiarios-de-la-remision-tributaria-hacer-mas-ricos-a-los-mas-ricos/
[2] “SRI recaudó más del doble de lo esperado por remisión tributaria”, Enero 15 del 2019. https://www.sri.gob.ec/web/guest/detalle-noticias?idnoticia=616&marquesina=1
[3] “Eliminación de subsidio a gasolina y diésel, entre medidas económicas del Gobierno de Ecuador”. 1 de octubre 2009. eluniverso.com
[4] Salgado Tamayo Wilma. “Paquetazo para toda una vida” Ley orgánica para el fomento productivo. En Revista ECUADOR DEBATE NO. 104, Quito/Ecuador/Agosto 2018.
[5] Carta del Ministro de Finanzas y la Gerente del Banco Central a la Directora Gerente del Fondo Monetario Internacional del 1 de marzo 2019 y Memorando de Políticas Económicas y Financieras. https://bit.ly/2YnejCi
[6] Información Estadística Mensual del Banco Central del Ecuador, No. 2010, Agosto 2019, Cuadro 2.2.1 Operaciones del Presupuesto General del Estado, millones de dólares.
[7] “El nuevo precio de las gasolinas extra y eco país es USD 2,39; el diésel 2 y Premium costará USD 2,30”, Diario El Comercio, 3 de octubre 2019, elcomercio.com
[8] “Lenin Moreno anuncia 6 medidas económicas y 13 propuestas de reforma”, Diario El Comercio, 1 de octubre de 2019, elcomercio.com
[9] Fuente: Información Estadística Mensual del Banco Central del Ecuador, No. 2010, Agosto 2019, Cuadro 1.1.2 Captaciones y crédito del panorama financiero por sectores, millones de dólares (al final del período). Crédito al sector privado, al 31 de Julio 2019, 42.216.4 millones de dólares.
[10] “FMI prevé decrecimiento en Ecuador de 0.5% en 2019 y subida de 0.2% en 2020”, La República, 9 de abril 2019, larepublica.ec
[11] Fuente: Instituto Nacional de Estadísticas y Censos, INEC, Boletín Técnico No. 03-2019-ENEMDU. ENCUESTA Nacional de Empleo, Desempleo y Subempleo (ENEMDU), Junio 20191, 4 Componentes del empleo. 1.4.1 Empleo adecuado
[12] Acosta Alberto. “Ajuste del FMI: Cuentas sin cuadrar y una caja de pandora”. https://ecuadortoday.media/2019/08/19/ajuste
[13] Cuesta: “Distintas encuestadoras demuestran que el Presidente tenía una aceptación del 70%, que ha caído al 30%”. http://www.ecuadorchequea.com/2018/10/02/lourdescuesta-encuestas-aceptacion-leninmoreno-ecuador/
[14] Las protestas contra Lenín Moreno en Ecuador dejan al menos cinco civiles muertos https://www.france24.com/es/20191010-ecuador-protestas-lenin-moreno-civiles-muertos
[15] “Cifra de arrestados por protestas en Ecuador sube a 477 personas: ministra Interior” https://lta.reuters.com/articulo/ecuador-protestas-detenidos-idLTAKBN1WM1EJ-OUSLT
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