Don’t fall for beleaguered government’s line: Crisis in Ecuador is just getting started

Appearances can be deceiving. Nowhere does this old adage ring truer than in Ecuador, which is emerging from the rubble created during an 11-day uprising.

The protests that rocked the South American country appear to be over. President Lenin Moreno announced Sunday night that he would repeal an austerity measure that caused tens of thousands of people to take to the streets. Over 1,300 people were injured, over 1,100 people were arrested, and at least seven demonstrators were killed in the protests, which demanded that Decree 883, which cut fuel subsidies in the country, be lifted. 

But the truth is that the political crisis that has gripped Ecuador over the past two weeks is far from over: the IMF agreement that spawned Decree 883 is still firmly in place, and Ecuador’s workers are in for a long road ahead. 

But how did we get here? How did Ecuador go from one of being a global leader in poverty reduction to another third world IMF basket case in just two years? The story is a long one, but it goes something like this:

After a period of 10 years in which they had seven presidents, Ecuador finally achieved political stability in 2007 under the leadership of President Rafael Correa, a fierce critic of the IMF and the US government. A charismatic leader and a doctor in economics, Correa was able to unite social movements in a racially and ethnically diverse –and divided– country through what he and his followers called “The Citizen’s Revolution.” With Correa as President, Ecuador experienced strong, sustainable economic growth, while drastically reducing poverty and inequality.

The revolution achieved great success, undergoing a transition from a neoliberal political economy dependent on the United States to one that emphasized social investment and regional integration. Ecuador virtually abandoned the IMF, and singled that entity out as a major foe to Ecuador’s development. Ecuador also joined the Bolivarian Alliance for the Peoples of Our America (ALBA) in 2007, alongside the socialist bloc of Latin America – Cuba, Bolivia, Nicaragua, and Venezuela. 

Things were going well in Ecuador; one could argue, for the first time since the conquest. So well, in fact, that once Correa’s second term in office was up, his hand-chosen successor, Vice-President Lenin Moreno, easily won the election. Moreno promised to continue the Citizen’s Revolution, just as Correa had. 

But then something changed. Moreno flipped. 

Soon after Moreno took office in 2017, he joined the country’s elites in a witch hunt against supposed corruption within the Correa government. He began cozying up to Washington and pulling away from ALBA. Moreno then signed the deal with the IMF. 

Decree 883, which kickstarted this month’s uprising, was part of a $4.2 billion loan agreement made between Moreno’s government and the IMF. Like all IMF loan contracts in the region, this deal stipulated that Ecuador undergo structural adjustments to supposedly make the country more attractive for foreign investors. That means gutting government programs, cutting social spending, freezing wages, cutting the taxes paid by transnational corporations and shifting the tax burden onto workers. Therefore, the cutting of fuel subsidies, which instantly shot the price of gas up 30 percent at the pump, was just the first domino to fall. 

But not all protesters were content with the simple abolishment of Decree 883. In addition to demanding its repeal, many protesters also called for the IMF agreement itself to be cancelled, and some even demanded Moreno’s resignation. 

These more drastic calls for change were eventually drowned out once the politically moderate, anti-Correa indigenous nations’ group, CONAIE, joined the protests. CONAIE impressively mobilized indigenous groups from across the country to take charge of Quito, but the group had the more modest and practical goal of having Decree 883 lifted.

Now, let’s get back to the ‘lifting’ of Decree 883. It appears here that CONAIE, which in the past has been accused of being too cozy with Moreno’s government, settled for a bad deal, as the decree can only be replaced by a similar measure. 

“The government will substitute decree 883 for a new one that contains mechanisms to focus resources for those that most need it,” Moreno announced via Twitter. What this ‘new’ decree looks like is anyone’s guess, but it’s likely to look a lot like the ‘old’ one, given that the IMF agreement explicitly calls for the cutting of fuel subsidies. 

As a side note, the language Moreno uses in his tweets is eerily identical to the words used in the IMF agreement that his government signed. For example, the IMF states that Ecuador’s “authorities reaffirmed their commitment to strengthening the social safety net to ensure that the most vulnerable households are protected.”

In these examples, both the IMF and Moreno justify the cutting of social spending through the use of clever wordplay. They both state that the poorest of the poor will receive assistance, but this is a tacit admission that the bulk of the poor will not. 

This is austerity. And this is what Correa’s followers will continue to reject. 

Although CONAIE has been quieted, this may not last. And it’s guaranteed that supporters of the Citizen’s Revolution will not stand pat and watch as everything they’ve worked for gets unravelled by Moreno and the IMF. 

The clock is ticking until Moreno’s term is up in 2021, but if he sticks to his IMF guns – as it appears he must – it’s unlikely that he’ll make it that far. 

By Enrique Rivera, Ph.D., a historian of Latin America. 

Think your friends would be interested? Share this story!