Ecuador voters return left-wing president
By Zoe Kenny
On April 26, left-wing Ecuadoran President Rafael Correa was re-elected with the support of 52% of the country’s 10.5 million voters, under a new constitution approved last September by 65% of voters. Correa easily trounced his closest rival, former president Lucio Gutierrez, who scored only 28.4%. Banana magnate Alvaro Noboa, who came second in the 2006 presidential election, received only 11.6% of the vote. On hearing about his huge lead in the first exit polls, Correa declared that his project for a “citizen’s revolution” was “on the march” and was unstoppable.
Correa’s solid victory stands in contrast to Ecuador’s recent history. Over the last decade three presidents have been ousted by mass revolts by the country’s workers and peasants. Since his original election as president in November, 2006 with 56.7% of the vote, Correa has increased government spending on a range of social programs. According to an April 23 Americas Society article, social spending has increased by 71% during Correa’s first two years in office. Some 1.3 million of Ecuador’s poor households now get a government stipend of US$30 a month (since 2000, the US dollar has been Ecuador’s official currency).
The huge increase in social spending has been bankrolled by the recent boom in Ecuador’s oil export revenues. Oil exports accounted for 58% of total export earnings in 2007. However, oil prices have declined from their July 2008 peak of $147 per barrel to around $50 per barrel this year and Ecuador is headed for a trade deficit of at least $2.5 billion this year, according to its central bank. The bank reported on April 14 that Ecuador’s GDP fell by 0.25% in the last quarter of 2008, compared with a 0.77% increase in the previous quarter. The International Monetary Fund (IMF) predicts Ecuador’s economy will contract by 2% this year. Currently unemployment stands at 8.6% of the work force.
Correa has associated himself with the revolutionary socialist governments in Cuba and Venezuela, joining them in declaring that his goal is a “21st century socialism” and “Latin American integration”. However, he has been very cautious in acting on these goals, leading to skepticism among political commentators about his commitment to them. “I don’t think he’s a leftist deep in his heart, but being a leftist pays in Ecuador. He speaks like a leftist, but does not act like one”, Fernando Santos, an Ecuadoran political analyst, told the April 26 Boston-based Christian Science Monitor.
Correa has interpreted “21st century socialism” as being a completely new road to socialism, without class struggle, leading Osvaldo Martinez, the director of Cuba’s Research Centre on World Economy, to comment in a March 14 interview with the Venezuela-based Aporrea website: “Who opposes his project? It is undoubtedly the [landowner] oligarchy and the bourgeoisie. Who can he rely on to support him against the enemy? The workers, the peasants, the indigenous peoples … I do not think Ecuador can complete its project of 21st century socialism with the cooperation of people like [former president] Gustavo Novoa, the Catholic Church or those who try to overthrow Correa.”
So far Correa’s government has refused to become a full member of the Bolivarian Alternative for the Americas (ALBA), the economic association, initiated by Venezuela and Cuba as an alternative to neoliberal “free trade” agreements pushed by Washington. Instead, Ecuador remains a member of the Andean Community of Nations (CAN) and is also an associate member of Mercosur, both of which promote “free trade” agreements throughout Latin America. Correa has tied Ecuador’s membership of ALBA to the precondition that Venezuela rejoin the CAN. Venezuelan President Hugo Chavez withdrew his country from the CAN in April 2006 declaring that the organisation was “dead” after Colombia and Peru signed “free trade” agreements with the US.
Furthermore, while Correa has in the past declined loan offers from Venezuela, his government has continued to borrow from the Washington-based Inter-American Bank for Development (receiving $150 million in 2007), an institution closely associated with the World Bank and IMF, which tie their funding to the adoption of neoliberal economic policies.
Correa severed ties with the IMF in 2007, decalring it exploitative of poor countries like Ecuador. However, the April 28 Washington Post reported that Correa’s “government has quietly resumed talks with IMF officials”, adding: “Economic Policy Minister Diego Borja has met with fund representatives in Washington and held videoconference calls with its officials, according to economists in the capital of Quito who are familiar with the country’s efforts to deal with the crisis.”
While it remains to be seen whether Correa will seek increased funding from the IDB, he is certainly on the look-out for sources of foreign funding. In mid-April, national planning minister Rene Ramirez announced a national job-creation scheme, involving an investment of $200 million to create 80,000 jobs in construction, tourism and agriculture. This scheme will be partially funded by a planned loan of $1 billion from China’s development bank that will be repayed with oil shipments.
Over the last 30 years, Ecuador has spent nearly 70% of its national budget on servicing public debt. In 2007, Ecuador paid $1.75 billion to service its foreign debt, more than the government spent on health care, social welfare, housing, urban development and the environment combined. Last December, Correa announced that his government would default on debt interest payments, describing the international bondholders as “monsters”. He said that at least a third of Ecuador’s $10 billion debt was contracted illegally by previous administrations. However, shortly before the April 26 election, Correa announced that his government intends to buy back $3.9 billion of foreign debt for 30 cents in the dollar, rather than repute this debt outright.
While Correa remains popular with the majority of Ecuadorans, there is increasing concern about his government policies from those who supported his election in 2006. The Federation of Petroecuador Workers has rejected the plans by the state-owned oil company, Petroecuador, to lay off 600 of the company’s 4500 employees in a restructuring move aimed at cutting costs in response to the decline in world oil prices. In 2008, Petroecuador was allocated a $5 billion operating budget, while only $3 billion has been earmarked for 2009.
Over the last year Correa has tightened controls over foreign oil companies operating in Ecuador. These companies produce about half of Ecuador’s 500,000 barrels of oil per day. Correa announced in June last year that foreign companies had reached an out-of-court settlement, agreeing not to sue Ecuador for a windfall tax his government imposed on them in return for a one-year tax cut and longer-lasting concessions. However Correa is still attempting to re-negotiate contracts with the companies, hoping to have Petroecuador market all the crude oil they produce and only pay the foreign oil companies a service fee for operating oil wells.
Many indigenous people, represented by the Confederation of Indigenous Nationalities of Ecuador (CONAIE), and environmentalists are also disenchanted with Correa’s government. In January, the CONAIE organised rallies and marches to protest the passage of a new mining law that allows a number of foreign, mainly Canadian, companies to begin mining large gold, silver and copper deposits they have discovered in southern Ecuador. While the law demands a 5% royalty payment from the mining companies and gives the government significant influence over mining activities, the enactment of the law is regarded by many grassroots organisation and indigenous communities as a significant set-back to their struggle to stop environmentally destructive mining projects.
In March, the Ecuadoran health ministry temporarily shut down one of the country’s best-known environmental organisations, Accion Ecologica, a group that had been involved in the anti-mining law protests. A high-profile campaign succeeded in persuading the government to restore Accion Ecologica’s legal status. Well-known author Naomi Klein wrote a letter to Correa pleading with him to remove the ban, noting that his government was “seemingly using its power to weaken dissent”.