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Ecuador’s politics of expectation

Guy Hedgecoe
1 February 2008

The president of Ecuador, Rafael Correa, delivered his state-of-the-nation address on 15 January 2008 in the coastal city of Ciudad Alfaro. At the same time some 500 kilometres inland, terrified local people were fleeing from Tungurahua, a 5,000-metre volcano whose eruption had spewed ash and toxic fumes across a wide territory. Correa's speech may have surprised observers with its moderate tone, but Tungurahua's violent activity is an apt symbol of the turbulent condition of Ecuadorian politics one year into the president's term.

Guy Hedgecoe is editor of the English-language edition of El Pais. He founded and edited the Ecuador Focus weekly bulletin, and reported the Andean region from Ecuador for CNN, National Public Radio, the Miami Herald and the Financial Times

Also by Guy Hedgecoe:

"Losing Ecuador" (26 April 2005)

"Ecuador's energy-fuelled politics" (28 June 2006)

"Ecuador's election surprise" (17 October 2006)

"Ecuador: protest and power" (28 November 2006)

When he took office in January 2007, many expected Correa's star to fade as swiftly as it had risen. A "leftist Christian" economist who was trained in Chicago and Brussels, he had been finance minister for a short spell in 2005 and boasted of a close friendship with Venezuela's Hugo Chávez. From this ideologically mixed (and still relatively obscure) background, Correa catapulted to victory in the November 2006 election by reinventing himself as an aggressive nationalist who pledged in particular to create a constituent assembly. His Alianza País movement presented no candidates for the parallel congressional elections, since he had scorned the institution as corrupt and inept.

Indeed, it was the failure to control congress which had hamstrung - or in several cases led to the removal of - several previous Ecuadorian presidents. Correa learned something from the tactical mistakes of his predecessors, for a series of breathtaking (or underhand, say his critics) political moves saw him outmanoeuvre the hostile chamber - and effectively take control not only of that institution but also many of the country's courts.

The most notable result of these developments was that the new government was able to get its self-styled "civic revolution" underway by calling a referendum in April 2007, in which Ecuadorian voters overwhelmingly backed the creation of the constituent assembly and the closure of congress. The assembly, established in November, is currently (in a pattern that echoes developments in Bolivia) rewriting the constitution, in a process due for completion in May 2008.

It has, in short, been a whirlwind first year - a political triumph for Correa, even questionable to some from a constitutional and legal point of view. Moreover, is likely that the assembly will call new presidential elections during 2008, which Correa - whose regular 60%-70% approval ratings have only recently slipped - is almost certain to win.

"Correa has a great ability when it comes to interpreting the political climate and defining the political agenda", says Simon Pachano, an analyst at the Facultad Latino Americana de Ciencias Socialies (Flacso) in Quito. Pachano also admits that luck has played its part in the president's rise: "He arrived just when the traditional parties and leaders were disappearing."

The election of the constituent assembly has helped hasten the process of dissolution of Ecuador's old political forces. Alianza País, in coalition with other pro-Correa groups, holds the majority of the assembly's seats, leaving the previously dominant parties virtually without representation. The chagrin of the vanquished when they contemplate the new political landscape has been compounded by Correa's abrasive and at times outright hostile style. The rightwing political and economic elites of the coastal city of Guayaquil are currently among the main targets of his attacks; he recently called the city's mayor Jaime Nebot "a neighbourhood bully". Two mass demonstrations in Guayaquil in late January - one celebrating a year of Correa, the other aggressively against him - typify a condition of mutual enmity. More worryingly for many, Correa's has also directed his scorn against the media; denouncing journalists as "savage beasts" and (notoriously) one female reporter as a gordita horrorosa ("horrible little fatty") has not endeared the president to the nation's press and broadcasters.

But it is more than the president's unusual barrage of epithets which is unsettling those who oppose him. Critics voice the suspicion that his main aim is to concentrate state power - and not only in the executive, but in one man. They point to the closure of congress to make way for the new constituent assembly as just one instance of a growing authoritarianism. Correa has also found it difficult to resist the temptation to interfere in the assembly's work. This seems unnecessary from the view of his own political interests, since a body favourable to him appears unlikely to face the kind of political stalemate which in 2007 temporarily blocked Bolivia's own attempts to rewrite its constitution; on the contrary, it is widely expected that the institution will on time produce a charter made-to-measure for Ecuador's current president.

The justice road

But for the millions of Ecuadorians who still back Correa, the legality of his "civic revolution" is merely academic - they want results. The last decade in Ecuadorian politics has been tumultuous: there has been a series of military-sanctioned popular uprisings, and seven presidents have left office before completing their allotted four-year term amid charges of corruption (three of whom were ousted directly by congress). Each of that ill-fated trio - as well as the other mainly lame-duck presidents who have governed in between - failed to push a meaningful agenda through congress or implement deep-rooted reforms, other than unpopular, IMF-subscribed economic packages. Now, at last, a president is both free of the congressional yoke and utterly determined to bring about real change.

In Correa's eyes, this change takes the form of social justice. The central bank anticipates that the economy grew by 2.7% in 2007 (some put that figure as low as 1.8%); in either event, a poor performance compared to the rest of the region. However, when the president was informed that Peru was heading for an annual GDP increase of over 8%, he shot back that the neighbouring country's growth was "of bad quality because inequality is increasing there."

His own government's record certainly has its positive side, in a series of practical measures which have improved the lot of the country's poor. In 2007 it boosted the social budget by 15% and introduced substantial increases to existing subsidies for housing and to discourage child labour. It introduced a sweeping (and controversial) new tax law which hits hard the owners of large tracts of land and big cars; more riskily for the administration, the new income tax also hurts the pockets of the middle classes.

An increase in the minimum wage from $170 to $200 per month has further helped maintain Correa's credibility among the poor. However, Ecuador's rampant unemployment has remained virtually stable over the last year and there have been inordinate price rises on some basic food products; the result, the government insists, of cynical speculation by producers. So far, Correa's revolution has neglected the larger questions of macro-economy.

The main contributor to Ecuador's dollarised economy is oil, representing 20% of GDP. Even before Correa became president, Ecuador had a reputation as an unpredictable host for investors - one reinforced when the previous government expelled United States firm Occidental Petroleum over a legally questionable technical issue in 2006 (see "Ecuador's energy-fuelled politics", 27 June 2006). The Correa government's decree of October 2007, boosting the state's share of windfall oil profits from 50% to 99% (meaning that private firms saw their share drop overnight from 50% to 1%), had the almost instantaneous effect of provoking foreign companies to look elsewhere to invest. Spanish giant Repsol, for example, has slashed its projected investment in Ecuador for 2008 by about 90%.

"Ecuador is the only country in the world where oil companies are actually losing money - in this case, about $6 or $8 per barrel", says former energy minister Fernando Santos. On 26 January 2008, Correa delivered an ultimatum to oil firms: accept the decreed terms by 8 March, or negotiate new contracts.

To compensate for the investment shortfall, Correa is naturally seeking to increase the state's own oil production. He has set Ecuador's navy the epic task of "cleaning out" state firm Petroecuador, which has an international reputation for corruption and inefficiency.

This energy-sector policy, allied to his social-justice mission, confrontational style and well-documented admiration of Hugo Chávez, inevitably lead many observers to the conclusion that Correa is part of the Venezuelan leader's radical alliance - along with Cuba, Bolivia and Nicaragua. The truth is not quite as clear-cut. Even as early as the second round of the 2006 presidential elections Correa seemed to understand that associating too closely with Chávez could backfire (as indeed had been the case for radical nationalist Ollanta Humala in the Peruvian elections of 2006). Since becoming president, Correa has continued to publicly praise his Venezuelan counterpart, but sources within the government have admitted that the Ecuadorian leader has sought to distance himself somewhat from Chávez.

The next test

In November 2007, at the Iberoamerican summit in Chile, Chávez launched a tirade against Spain which famously led King Juan Carlos to tell him to "shut up". As expected, Evo Morales and Daniel Ortega stood by Chávez; but Correa kept out of the dispute, in the same way he refrained from formally signing up to Chávez's Alternativa Bolivariana para las Americas (Alba) coalition. In this respect Ecuador under Rafael Correa is treading a fine line between Latin America's firebrands and its centre-left moderates such as Chile's Michelle Bachelet and Brazil's Lula. For its part, Washington is determined to ensure it does not stray towards the former. The dispute in October 2007 over the US air-base at Manta in Ecuador (whose lease expires in 2009) - which gave Correa another opportunity to wield his sharp tongue - may not have helped to smooth relations; but the US embassy in Quito is reportedly working hard behind the scenes to avoid another strategic setback in the region.

Rafael Correa is therefore proving - so far - to be a singular case among the new generation of Andean leaders: radical in his domestic policy, but more cautious in the region and internationally. With no cohesive opposition on the horizon, his biggest current enemy is the very expectation which - bravely or foolishly - he himself has generated. His immediate predecessors' challenge was merely to survive the length of their term, one they humiliatingly failed. Correa's is far more ambitious: to bring about a deep-rooted change in Ecuador.

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