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Neoliberal Nightmare in Ecuador


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On November 24, 2020, the National Assembly of Ecuador dismissed the minister of government, María Paula Romo, from her position for allowing the use of expired tear gas canisters against protesters during the October 2019 demonstrations and the authorization of police violence inside the humanitarian aid centers set up at some universities where the agitators were staying. Data from the Ecuadorean Ombudsman’s Office revealed that there was excessive use of force in the context of the protests and at least 11 were killed, 1,340 people were injured, and over a thousand were detained. The impeachment of Paulo Romo followed demonstrations organized by the Federation of University Students of Ecuador (FEUE) outside the National Assembly. 

The removal of the government minister is an important victory for the Ecuadorian popular classes since it deals a blow to President Lenin Moreno’s vision of neoliberal authoritarianism. Riding on the back of former leftist President Rafael Correa’s support base, Moreno took office on May 24, 2017. Having served as vice president (2007-2013) in Correa’s government, he was expected to continue the former’s progressive agenda of a strong welfare state. Instead, Moreno chose to comprehensively break away from the previous paradigm of anti-neoliberalism, persecuting Correa and his supporters. 

Correa’s Socialist Policies 

In 2007, Correa won the election after defeating Álvaro Noboa Pontón, a banana tycoon and one of the richest men in the country, in the presidential runoff. In a referendum called by Correa, the population voted to engage in the process of writing a new constitution. A Constituent Assembly was formed through general elections, with only a few members representing economic elites or their parties. 

The new Constitution, adopted by referendum in 2008, weakened the economic clout of the bourgeoisie and tried to de-corporatize the state. Article 312, for instance, prohibits banks, bankers, and all owners of bank assets from simultaneously holding assets in mass media. The government thereby forced the country’s main conglomerate, Banco Pichincha, to sell its stocks in the television channel Teleamazonas.  

Economic elites were troubled by the pro-people ideology of Correa’s party Alliance of the Proud and Sovereign Fatherland (PAIS Alliance) which disallowed them from freely accumulating wealth and impoverishing the majority. Several representatives of big businesses complained that the government was using fiscal reforms and tax reviews to regulate their activities. They reported undergoing numerous tax audits for previous year which threatened their companies with penalties and retroactive payments. 

Through tax reforms, the Correa government forced a more thorough disclosure of information about company ownership in order to properly assess and control the economy. Since 2007, the tax agency Internal Revenue Service (SRI) has published a yearly compilation of all economic groups identified through investigations of tax reports and data from state agencies. 

In opposition to imperialist globalization, Correa’s government initially withdrew from trade deal negotiations with the European Union and imposed a tax on currency outflows to limit capital flight. It imposed tariffs to control international trade, promote a selective substitution of imports and restrict the trade imbalance resulting from the overconsumption of imported products. 

Correa’s coming to power consolidated the capacity of the state to implement agricultural and other programs. New investments were channeled through the Ministry of Agriculture, Ministry of Agriculture, Livestock, Aquaculture and Fisheries (MAGAP) and the Institute for the Popular and Solidarity Economy (IEPS). In the first years of the government, different programs were implemented including a subsidized nitrogen fertilizer program. MAGAP increased investments in extension services through a new program Schools of the Agrarian Revolution (ERAs), aimed at smallholders. The ERAs evolved into the program “Shoulder to Shoulder”, allowing agronomists to have an office in rural communities. The government also invested heavily in the High Yield Seed Program which provided producers owning less than 20 hectares of land with subsidized kits of improved seed varieties, fertilizers and pesticides. 

The wide-ranging transformation occurring under Correa’s administration was a part of the broader Citizen’s Revolution – a hopeful process of social rejuvenation comprising of many changes: the approval of a constitution that enriched the conception rights and laid out democratic guarantees, an audit of the external public debt, a reaffirmation of new labor rights, an effort to build up publicly owned business in the provision of social services and in strategic areas of the economy, an expansion of social spending, and an increase in taxes on the highest incomes.

According to René Ramírez Gallegos, Ecuador’s former Secretary of Higher Education, Science, Technology and Innovation during the period 2011 to 2017, there are five components of the social model instituted by Correa: “The first is the change from anthropocentrism to biocentrism. The second change is to move from a capitalist economy to a social and solidarity economy. The third is to move from patriarchy to feminism…The fourth is to move from colonialism to a plurinational and intercultural state and society. And the last is to move from a purely representative democracy to a participatory and deliberative democracy”. 

Neoliberalism Redux 

Moreno has done away with any pretences of being socialist – trying to re-institute neoliberalism through state repression. To re-establish relationships with the bourgeoisie, he summoned an Advisory Council on Production and Taxes whose leading committee was composed of seven state officials and six representatives of the private sector designated by the president. The Council organized a large gathering of about 1,600 businesspeople where Richard Martínez, a businessman with a large public profile, presented the plans of the capitalist sector to the government. In May 2018, Martínez was appointed as the new minister of economy and finance, representing the culmination of the Ecuadorian state’s re-subordination to neoliberalism. By inviting Martínez to join the government, Moreno integrated one of the main leaders and unifiers of the business class into his cabinet. 

The new administration also re-oriented itself in terms of foreign policy and jumped on the bandwagon of neo-imperialist globalization. Moreno has taken Ecuador out of the Union of South American Nations and the Bolivarian Alliance of the Peoples of Our America – regional groupings which had advocated for a broadly progressive agenda of social re-construction.  Instead of tying up with administrations which work for the people, Moreno has joined the Lima Group – set up in Peru in 2017 to overthrow Venezuela’s Bolivarian government – with a view to participating in the Pacific Alliance. The imperialist subjugation of Ecuador has naturally resulted in major internal crises of legitimacy. 

On September 27, 2019, Ecuador’s Vice-president Otto Sonnenholzner announced economic measures that would be difficult for many and had to be accepted as a “major sacrifice”. These euphemisms referred to the upcoming onslaught of a slew of economic reforms sponsored by the International Monetary Fund (IMF) – a neocolonial institution which Moreno’s government happily embraced. 

In 2019, Moreno had signed a framework agreement with the IMF. The measures agreed upon with the IMF signaled the arrival of full-throated neoliberalism: an increase in fuel costs, greater ease in hiring and firing, the removal of restrictions on capital flows, privatization, reduction of public sector workers’ holidays by half and an end to the financing of the state budget by the Central Bank. 

On October 1 of the same year, news arrived that Ecuador’s government would remove long-standing fuel subsidies and introduce other measures aimed at increasing the precarity of workers. The cost of a gallon of gasoline would rise from US$1.85 to $2.39 (29%) and the gallon of diesel was set to increase from US$1.03 to $2.30 (123%).

On October 2, at a press conference, the National Unitary Collective of Workers, the Confederation of Indigenous Nationalities of Ecuador (CONAIE), the United Workers’ Front (FUT) and other social organizations announced mobilizations throughout the country. Jaime Vargas, president of CONAIE, called “18 peoples, 14 indigenous nationalities, and social organizations from all over the country to the great national mobilization in favor of a dignified life for Ecuadorians.” By the next day, the country was paralyzed by road blockages, large local demonstrations and takeovers of municipal buildings.

In the heat of the class uprising, CONAIE declared: “With the unity of the people in active resistance, we will not allow the imposition of the economic policies of the IMF, nor privatization, nor labor flexibility and deregulation, nor any economic measure that affects and impoverishes the Ecuadorian people… All together to face the neoliberal package, we call peasants, workers, citizens, exploited from the countryside and the city, to join forces in forceful actions and confront in unity the treacherous government of Lenin Moreno.”

The rebellion of October 2019 was primarily led by the CONAIE, with its three regional members Kichwa Confederation of Ecuador (ECUARUNARI), Confederation of Indigenous Nationalities of the Ecuadorian Coast (CONAICE) and Confederation of Indigenous Nationalities of the Ecuadorian Amazon (CONFENIAE). National Confederation of Peasant, Indigenous and Black Organizations (FENOCIN) and Council of Evangelic Indigenous Peoples and Organizations of Ecuador (FEINE) also participated in the demonstrations. 

A Socialist Potential

Ecuador is currently in a period characterized by immense class tensions – the ruling dispensation’s brutal project of neoliberalism has embarked on a path to make everyday life unbearable for the masses. In 2017, poverty and extreme poverty afflicted 21.5% and 7.9% of the population, respectively. In a short span of two years, both the figures rose to 25% and 8.9%, reflecting the sheer destructiveness of Moreno’s policies. The existential degradation unleashed by Moreno has significantly increased the electoral appeal of the leftist presidential candidate Andrés Arauz – an economist and former minister in Correa’s government who will lead the ticket for the Union for Hope coalition in the 2021 election. As Ecuador continues to go down the rabbit hole of neoliberalism, the possibility of a new socialist future will keep rising. 

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