The end of Latin America’s left turn? Ecuador may disappoint you

Beyond the current shift of the economic cycle, and the huge opposition its government has met, Ecuador’s success story shows how the region’s “pink tide” is far from over. Português. Español.

Guillaume Long
12 November 2015

Rafael Correa and Evo Morales. Flickr/Cancillería del Ecuador. Some rights reserved.

Argentina’s close vote in the first round of its presidential election on October 25 unleashed yet another wave of frenzied headlines proclaiming the demise of Latin America's left governments. The "pink tide's" die hard detractors are impatiently awaiting events that they hope will prove that they were right all along.

The economic landscape, after a sudden shift in 2015 in the international terms of trade, has certainly transformed dramatically. Chinese demand has fallen, oil and mineral prices have collapsed with no sign of recovery in the short term, the dollar has appreciated and credit is hard to come by. In October, the UN's Economic Commission for Latin America and the Caribbean downgraded growth figures for the region, concluding that the continent's economy would contract by -0.3% in 2015 and only grow 0.7% in 2016.

So, after getting it wrong for so many years, and predicting imminent disaster for every political decision that has gone against the neoliberal order, many critics finally see light at the end of the tunnel: the global economic slowdown has reached Latin America’s shores.

This latest wave of conservative euphoria in the face of Latin America's economic travails is just the most recent chapter in an ongoing campaign to undermine and delegitimize the region's leftist governments. Barring rare exceptions, the coverage of the Latin American left turn by both the conservative press (which was to be expected) and the liberal media (where one would have hoped for more objective coverage) has been abysmally biased. But the negativity and pessimism was never innocent. Downbeat coverage was always an attempt at a self-fulfilling prophecy. Margaret Thatcher's perverse “There is no alternative” is so deeply ingrained in the worldview of analysts and journalists that any demonstration that another developmental paradigm is possible had to be denied from the outset.

Such disproportionate and often inaccurate criticism of progressive governments boosts an already emboldened rightwing, weakens the Left and its call for alternatives and dissuades people from daring to stray from the path that financial capital has set for our societies. This is why refuting the false charges and dispelling the myths are increasingly important tasks for progressives and an essential part of the intensifying global struggle for a better world.

The case of Ecuador, which has faced particularly strong hostility from the corporate media, perhaps because of its very success, is illustrative. Three recurrent themes have been used to undermine Ecuador's Citizens' Revolution.

Beyond “populism”

The first is the "populist-authoritarian" argument. Here “populism” is intended as a slur rather than as the emancipatory definition provided, for example, by Ernesto Laclau and it seeks to tarnish the legitimacy of the Ecuadorian political process. The word "populism" is never really explained, but its suggestive associations with strong leadership, and with all the planet's dictators, past and present, give it an alarming ring for the western onlooker. It is so loose that it applies to pretty much anyone that the media intends us to dislike; not unlike the label "communist" during the heyday of McCarthyism and his Cold War heirs, when anything threatening the status quo, from Christian democrats to Marxist revolutionaries, fell into this category.

One recent Open Democracy piece defined populism in the Latin American context “as soft political authoritarianism given democratic legitimacy by elections". As a criticism of the Citizens' Revolution this is both contrived and inaccurate. Ecuador has had 10 general elections in 9 years, including plebiscites where people have had a say about laws, policies and fundamental societal questions, beyond merely giving "legitimacy" to their rulers. The politicization of people has been a constant feature of recent years, which critics have decried as fostering polarization. The "authoritarian democracy" oxymoron is, in fact, an attack on "too much democracy" and the whole populism fixation stems from an ingrained fear of popular government, radical democracy and the estrangement from power of the traditional elite.

It also smacks of neocolonialism. Many articles articulate the notion of populism with the conjuring of an imagery of the colorful Third World. Charismatic "tropical" leaders and their badly translated and decontextualised quotes become the raw material for a good chuckle and entrench the overall process of delegitimisation.

This democratic-populist denigration is also ironic given that one of the prime criticisms laid against the revolutionary Left during the Cold War and subsequent years, was its lack of commitment to liberal democracy. For the Left, it has been difficult to operate in the electoral playing fields of the great oligarchs' well funded campaigns, hegemonic political discourse with no space to introduce new concepts, and with the constant blackmail of Big Capital telling the voters that it will boycott the country and that everything will crumble if they irresponsibly choose a leftwing option. It was these impediments that guided the Left towards adopting anti-institutional methods in the first place. And it is in this context that the democratic credentials and successive electoral victories of the Left in Ecuador are both remarkable and praiseworthy.

Perhaps the best rebuttal to attempts to besmirch the health of Latin American democracy is the views of its population itself. The renowned Latinobarómetro annual survey provides some of the best evidence of how populations perceive this era of democracy and the democratic credentials of their respective governments.

In the wide-ranging findings of the 2015 Latinobarómetro survey, the Left is dominant among the countries where support for democracy itself is greatest. Support has increased significantly in Ecuador in recent years and is now the third highest in the continent, whereas the neoliberal democracy of the 1980s and 1990s had significantly eroded citizens' faith in it. Ecuador is now second placed for electoral participation and all top five countries draw from the Left: Uruguay, Ecuador, Bolivia, Argentina and Venezuela, a list that includes those most often labeled as populist. Likewise the Left dominates among those countries with the greatest increase in participation levels, with Ecuador, Bolivia, Venezuela and Nicaragua comprising four of the top five.

Ecuador along with Uruguay, Argentina and Bolivia make up four of the five electorates most satisfied with their democracy. Ecuador is also one of only four countries where more than half of the population believes that their governments act on behalf of all the people. Leftwing Uruguay, Bolivia and Nicaragua make up the others. It is unsurprising then that almost nine years after his first accession to the presidency, President Correa still tops 60% in his approval ratings.

More than a commodities boom

A second recurrent theme of attack seeks to undermine Ecuador's very impressive advances by claiming these are merely the result of a "commodities boom". Critics are quick to belie the successes of Ecuador's leftwing government making the case that anyone would have done well in these conditions.

This attack is understandable. If one wishes to portray the Ecuadorian revolution as a populist shamble then some attempt must be made to put a dampener on its record of achievement. How did Ecuador reduce poverty by a third (lifting 1.3m people out of poverty) and reduce extreme poverty by more than half to 5.7% in just 8 years? How did it become the country in the region (and one of the countries in the world) that most reduced inequality? This in the context of Latin America, still shamefully the most unequal continent in the World, and in desperate need of greater equality if it is to solve the social, political and economic ills stemming from these gross disparities.  Something has to be done to undermine the fact that Ecuador is the country that pays the highest real minimum wage in the region, without forfeiting, as neoliberals always argue, its employment figure. On the contrary, at 4.2%, Ecuadorian unemployment today is half the level bequeathed to Rafael Correa's government on coming to power.

The easy answer is therefore "an oil boom", which incidentally fits nicely with "populism". But the first thing to note is that even if the prices of oil have been, until recently, quite favorable, in real terms and adjusted to inflation, one should not overestimate their impact. Prices in the 1970s and for a good chunk of the 1980s were similar to those in the last 10 years.

The second point is that many governments in the past enjoyed price hikes without the impressive macroeconomic results and remarkable redistribution orchestrated in Ecuador. Growth without redistribution is typically the norm, and there is often a direct correlation between growth and the worsening of the Gini Coefficient (the principal marker of inequality). This makes Ecuador a noteworthy exception.

But most importantly, Ecuador would have not reaped the benefits of higher oil prices were it not for the political decision to renegotiate the oil contracts with foreign oil companies. Without this measure, Ecuador would have merely received a fixed royalty for the extraction of crude, regardless of sale price.

In reality, much of the state income has come from elsewhere. The Ecuadorian government decided to tackle the extremely low level of its tax revenues. It did this primarily by challenging the power of capital and tackling tax evasion. These policies resulted in an extraordinary increase from US$3.5 billion in 2006 to close to US$15 billion in 2014 in tax revenues, a state income significantly above the country's oil revenues. Ecuadorian taxes, at 19% of GDP, are still well below most industrial countries' levels (US taxes are 26% of GDP and the European Union average is 38%), but they have meant an important leap toward the construction of a modern institutionalized state that can better avoid the boom and bust cycles closely associated with the neoliberal past.

Finally, debt restructuring also played a crucial role. President Correa read the market well when in 2008-2009 crisis hit Wall Street and he purchased Ecuadorian bonds at 35% of their nominal value, in what was called "probably the most successful and least fraught debt restructuring in the history of Latin American sovereign defaults". This move plus declaring the illegitimacy of a bunch of dodgy debts acquired through crooked or coercive means, freed more capital for public investment.

It is this very public investment that has been key to Ecuador's success. At 15% of GDP, it is the highest rate in Latin America. The investment has gone into much needed infrastructure, an impressive road network, connectivity, ports and airports and has significantly increased Ecuador's systemic competitiveness, which instead of crowding out private investment will start to have a crowding-in effect in a country that has never really benefited from foreign direct investment outside the oil industry.

Above all, public investment has been redistributive. The construction of 100 brand new hospitals and health centers, over 80 totally new state-of-the-art schools in some of the poorest areas of the country (all state schools now provide free school uniforms, books and breakfasts), the first 70 state nurseries of the hundreds to come, have reduced the historic divide between rich and poor and urban and rural. These are among a long list of public investments that have both stimulated the economy and guaranteed rights for people.

Not a real Left?

The third front of attack, this one stemming from some sections of the Left, is that the Ecuadorian government is not truly leftwing and that beyond the fiery rhetoric there is little substance to the radicalism.

Aside from being dogmatic and often ill-informed, this line of thinking brushes over important variables such as power and its distribution, both internally (in relation to the media, the old oligarchy, hostile institutions) and globally. It ignores hegemony and the ideological penetration of conservative values in the population. It completely overlooks the difficulty in building a state from the ruins of neoliberal lawlessness and the legacy of institutional precariousness.

Take one component of this line of attack, the allegation that Ecuador has failed to radically transform its economy. It is certainly true that Ecuador needs to move away from raw materials and diversify its role in the international division of labour. But this transformation cannot be achieved, as some have demanded, through an abrupt abolition of petroleum and extraction industries. Immediately ceasing these would end any functional role for the state in the economic sphere, returning the country's destiny into the hands of the plantation oligarchs who dominated in the past.

On the contrary, Ecuador needs to use its commodity resources to end its dependency on them and change its production matrix. This is not a contradiction but a policy rooted in the economic realities that Ecuador faces. If the asymmetry in the terms of the trade of the 20th century lay in the exchange of raw materials for manufactured goods, in the 21st century the new asymmetry posits leaves an even greater gap of raw materials versus science and technology. Ecuador has understood this and is investing heavily in the innovation economy. It has become one of the countries in the world with the highest rates of investment in possibly the single area with the greatest impact on production: education. At 2.13% of GDP, Ecuador’s higher education investment, in particular, is one of the highest on the planet and above the OECD average (1.7%). Likewise there has also been much investment into clean energy, another fundamental step in order to change the production matrix. The inauguration of eight new hydroelectric plants will mean that, by 2017, Ecuador's electricity will be almost entirely fossil fuel free, allowing Ecuador to be a net exporter - as opposed to its current status as an importer - of electricity. 

It is no mean feat for Ecuador to have ended the free-market domination; to have regained control over its resources and territory, for example by closing the US' most important South American military base (for which, in all likelihood, it has not been forgiven); and to have re-empowered the state to play an active role in the economy, with the most powerful international forces conspiring against this.

The stridency of the opposition was always clear. Relations with the United States have been rocky and we shouldn't underestimate the risks that this has entailed in the context of a dollarized economy. In 2010, there was an attempted coup by rogue police officers, sections of the military and some politicians. Several people died in a rescue operation to save the President from the hands of the mutinied police.  While earlier this year, two government bills tackling large inheritances and land speculation were met by fierce demonstrations, overwhelmingly led by powerful rightwing politicians and their media allies. Again there were calls, even if conditions were not ripe, to topple the government.

The argument that the Correa government is not radical enough and hence not from the "real Left", completely ignores the fact that revolutions do not happen by decree and are actually - rather unsurprisingly - fiercely opposed by elites. But this truism has not stopped an array of self-proclaimed leftwing analysts to join the list of ill-wishers awaiting the imminent demise of the Ecuadorian spring. Of course, the corollary of the downfall, were it to happen, would be the return of right-wing parties not very different from those that destroyed lives across the continent in the neoliberal devastation of the 1980s and 1990s, and not a currently inexistent leftwing alternative.

Though we have not yet banished capitalism in Ecuador (was this really the expectation after 9 years of government and in this historic and global context?), we have successfully overthrown the neoliberal revolution. This was not an easy struggle. It cost us resistance, attempted coups and foreign hostility. It should make us a beacon of hope for the Left in many parts of the world where neoliberalism still rules.

It is therefore armed with a deepened democracy, a refusal to renege on social justice and a greater economic role for the state that Ecuador will face any coming crisis and the resurgence of the right. We may yet keep pessimists waiting a little longer for our "imminent" demise.

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