Reasons For Ecuador Unrest Lie Much Deeper Than Fuel Subsidies Abolition – Analysis


The Ministry of Energy and Non-Renewable Natural Resources of Ecuador announced the release of a number of oil facilities seized by protesters in early October, and the country’s recovery of its oil production.

“After resuming operations in the oil fields of Amazon region, the ministry reports that national oil production has recovered, reaching today 527.459 barrels of oil per day,” says the statement.

According to foreign observers, the protest and the unrest it was followed in a number of cities left an extremely deep imprint on the country, becoming unprecedented in the number of participants, the damage done and the number of victims among the population.

The government decree 883 abolishing state subsidies for fuel, signed by Lenin Moreno on October 1, was the catalyst for mass protests in Ecuador. As a result, diesel and gasoline prices rose by more than 120%, which caused discontent among people.

About two weeks later, on October 14, the head of state, under pressure from the protesters, annulled his decree, and the demonstrators promised to stop the protests. However, many analysts share the view that the real causes of popular unrest go far beyond the decree.

Analyzing the current situation in Ecuador, Diego Sánchez-Ancochea, Head of Department, Oxford Department of International Development, University of Oxford, said that it is important to take a long term perspective.

“Before Rafael Correa became president, the situation in Ecuador was rather unstable and presidential changes common. The combination of a strong president and high commodity prices changed things. However, a weaker president together with an attempt to introduce structural reforms led to the protests. The government’s poor response using too much violence clearly made things worse,” the expert told PenzaNews.

In his opinion, the protests have increased the mistrust between social movements and the government, which can lead to new protests in the future.

“The economic situation in Ecuador is difficult and the government has adopted a very orthodox approach to policymaking. It wrongly thought that the government would be able to control any potential protest because social movements were too weak. Yet they just failed to understand the strength of anti-neoliberal sentiment in the country and how unpopular the IMF, the World Bank and structural adjustment is there,” Diego Sánchez-Ancochea explained.

From his point of view, the protests were not just about the specific reduction in oil subsidies but were a clear demonstration of how little support neoliberal ideas have there.

Answering the question about measures that would help prevent a new crisis, the analyst, in particular, noted that the government should be very selective in its programs, build more communication with social movements and try to strengthen the state and adopt more progressive economic and social policies. However, he stressed that “all of this is easier said than done.”

In turn, Guillaume Long, Senior Research Fellow at CEPR, who served as Ecuador’s Foreign Minister in 2016–2017, said these protests were the most intense in the modern history of the country.

According to him, suppressing public unrest, the authorities acted extremely harshly.

“Ecuador is not used to political violence. […] I think Ecuador is shocked with what happened during these days. We don’t know exactly how many people died during the protests, over 1,200 people were detained, hundreds of people were wounded, some of them very seriously. […] During the protests you had a crackdown on protesters but what you have now is a crackdown on political opponents. So a number of people who have been arrested are political opponents, particularly, people who are members of the Citizens Revolution Movement, which is a political party close to former president Rafael Correa. The authorities detained Pichincha Prefect Paola Pabon, who was elected in March by the people in elections with universal suffrage. Now she’s been charged for armed rebellion,” ex-Foreign Minister of Ecuador said.

“The government moved towards a kind of a national security doctrine that really resembles the national security doctrine of the cold war, when we had military governments and dictatorships ruling. There is always a small minority of people – in every country – that behave inappropriately or violently during the demonstrations. But to talk of armed rebellion, the definition of which is clearly established in the constitution, and arrest political opponents is clearly an authoritarian move,” Guillaume Long said, adding that several members of the National Assembly had to seek a refuge at the Mexican Embassy in Quito.

At the same time, the expert shared the opinion that the protests were only the tip of the iceberg.

“The current government has been moving away from its electoral promises. Moreno was elected on the platform of continuation of the Correa’s Citizens Revolution. However, within the few weeks after his election he made it clear that he was not going to continue with those policies,” the former Ecuadorian diplomat stressed, noting that Moreno “betrayed his electoral promises and his electoral program.”

In addition to economic reforms, serious changes are taking place in the field of geopolitics: Ecuador began its realignment in the US sphere of interests, he said.

“The country left UNASUR, put an end to Julian Assange’s asylum, granted an airstrip in Galapagos Islands to the US military. Ecuador is definitely becoming very close to Trump administration,” Guillaume Long said.

“Moreno signed the decree abolishing subsidies for fuel, and that resulted in mass protests, […] however, it is important to bear in mind that even before the protests Moreno had 14 percent of approval ratings in the polls,” the former foreign minister said, stressing that Moreno is the least popular president in recent Ecuadorian history.

Meanwhile, in his opinion, considerable public discontent is caused by the policy recommended by the International Monetary Fund.

“I would seriously questioned Moreno’s competency. Initially, the protests were against the economic package but it is true that swiftly they became of a political transition, especially when a repression kicked in and people were beaten up in the streets by the police. A lot of people started changing their slogans asking for Moreno’s resignation. In fact Moreno and his government have to flee the capital and to seek refuge in the other big city in Ecuador, they were unable to rule and govern from the presidential palace. Moreno had survived these protests by large thanks to the support of the military, and even if he finishes his mandate in 2021 he’s going to be very weak and unpopular until the end of his mandate,” Guillaume Long said.

Meanwhile, Richard Lapper, Associate Fellow, Global Economy and Finance Department and US and the Americas Program, Chatham House, pointed to deep problems within the country.

“Rafael Correa’s presidency ended in 2017. He was a very good president for Ecuador, he did a lot of investment in infrastructure and the country grew. But the problem with the model that he adopted was that it was quite corrupt. A lot of work has been done but its quality was criticized. In fact those policies were unsustainable because Ecuador built up quite a lot of debt,” the expert explained.

Moreover, in his opinion, Ecuador was very badly hit by the fall in oil prices as oil is quite important part of Ecuador’s external balance, currency account and its tax revenues.

“Under Moreno they had to try to adjust their accounts to get back to the level of stability. So they came to an agreement with IMF to get some support, but the condition of that support was that they make adjustments to the government spending. One of the very expensive policies in Ecuador is the subsidy of domestic gasoline prices. However, the decision to reduce subsidies sparked social unrest particularly from the indigenous communities living around Quito. It ultimately led to Moreno backing down from his decision. So now the government thinking will be how to raise the funds that they need to raise if they’re not going to reduce the subsidies. They’ve got to balance the books in a different way and what they are talking about doing is raising taxes on the petrol in particular,” Richard Lapper said.

In his opinion, any government in Ecuador, whoever was in power, was going to face up the difficulties in the fiscal account.

“The governments spend a lot more money that they get in. If they keep doing it they are going to build up more debt which is too expensive to borrow. […] I don’t think it is the question of credibility or competence of government. There aren’t any easy answers to this situation. The problems that they are facing are very tough,” the analyst stressed.

He also suggested that the situation could become so difficult because Moreno took action against Rafael Correa and many other politicians who “were guilty of corruption in the previous regime.”

“There is a bit of political battle now between his supporters and the supporters of Correa. The suspicion is that Correa has been stimulating the opposition movement. […] The situation is tense across the whole region. We see a broad resistant towards adjustment policies in Latin America. People are not prepared to put up with the cost of paying for economic adjustment,” the British expert added.

Mark Jones, Fellow in political science at the Baker Institute, the Joseph D. Jamail Chair in Latin American Studies and Professor in the Department of Political Science at Rice University, also drew attention to the deeper reasons for the protests that hit Ecuador in October.

“It was Moreno’s ongoing conflict with former Present Rafael Correa who had handpicked Moreno as his successor along with pent up tensions among indigenous groups that caused an initial protest over a decree to bring the country to a stand-till with large-scale protests over a dozen day period,” the analyst said.

He reminded that Lenin Moreno was able to end the protest by repealing the decree and promising to work with the country’s principal indigenous advocacy group CONAIE to draft new legislation.

“It would end the fuel subsidy but at the same time provide protections for the poor and working class so that their purchasing power was not adversely affected by a future end to subsidies needed to reduce Ecuador’s budget deficit as part of its credit agreement with the IMF,” Mark Jones said.

In his opinion, one advantage Moreno has is that the two principal threats to his authority, Correa and his supporters and CONAIE, are longstanding enemies.

“CONAIE in particular is unlikely to try and oust Moreno if they believe Correa would be there to fill the vacuum. Moreno retains control of the country for now, but given the political challenges represented by Correa and CONAIE as well as Ecuador’s current economic crisis, he still has a long way to go if he is to make it to the end of his term in 2021 and resist pressure by Correa and others to call early presidential elections,” the political analyst concluded.


Penza News

News agency PenzaNews is Russian independent information project, which supplies a steady stream of news. The website is constantly updated to bring the top stories from the city of Penza and the Penza region. The Analysis center of the agency covers important political, economic, cultural and other significant events in Russia and abroad.

Leave a Reply

Your email address will not be published. Required fields are marked *