Ecuador Shows How Hard It Is to Recover From a Populist Autocrat’s Rule

World Politics Review, 25.02.2020
Simeon Tegel, periodista independiente y analista político con base en Perú 

An anti-government demonstrator waves an Ecuadorian national flag during clashes with police in Quito, Ecuador. (AP/Fernando Vergara).

When it comes to repairing the harm done by populist authoritarian leaders, restoring the independence of democratic institutions is often just the start. The next challenge can be to steer polarized societies through the economic belt-tightening that is required after an autocrat’s spending spree.

That seems to be the message from Ecuador, where President Lenin Moreno won overwhelming support in a 2018 constitutional referendum that overturned much of the political legacy of his predecessor and one-time mentor, the brash leftist Rafael Correa, and also blocked him from returning to office by putting a two-term limit on the presidency. But Moreno then sparked a deadly firestorm of national protests last October after signing a deal with the International Monetary Fund to restructure the debt he inherited from Correa, in part by drastically slashing fuel subsidies.

The austerity package was later shelved to mollify protesters, but with his approval rating still stuck at just under 20 percent, Moreno’s legacy is in doubt. As he enters the final 12 months of his first four-year term, there is deep uncertainty over his ability to win a second term in next year’s presidential election, should he decide to run again.

At stake in that vote could be the durability of Moreno’s reforms, which can be undone if Ecuador turns again to a demagogue disinterested in democratic norms. As a rare recent example of a democratic society trying to recover both politically and economically from a bout of autocracy, the Andean nation’s path forward could offer some important global lessons.

The backdrop remains Ecuador’s stalled economy. Thanks to the protests, it actually shrank slightly last year, and is only expected to grow by 0.7 percent this year. Given that Moreno inherited a fiscal deficit equivalent to 8 percent of GDP, his ability to jumpstart the economy with a stimulus package is limited. More likely, he will need to cut spending, potentially heralding more social strife going forward.

To make matters worse, Ecuador’s economy has been dollarized since 2000, a measure widely viewed at the time as necessary to halt hyperinflation, but which leaves the Moreno administration even less room to maneuver, as it has little control over its own monetary policy.

The IMF package, which included a $10 billion loan at cheap rates, provided a pathway to reducing that fiscal deficit by more than half, to 3 percent of GDP, by 2022. Had the government handled it more sensitively, including through measures to offset the impacts on low-income Ecuadorians, ending the poorly targeted fuel subsidies would have saved the government $1.3 billion a year. Currently, much of that money benefits not just the neediest but also affluent Ecuadorian consumers and even drug traffickers who smuggle the cheap fuel to make cocaine in neighboring Colombia and Peru.

Although canceling the cost-cutting measures averted even worse mayhem in the streets, and possibly saved Moreno’s job, the government has yet to come up with an alternative solution to its ongoing fiscal crisis. At some point, before or after next year’s elections, Ecuador will inevitably have to implement economic reforms that will, at least for some citizens, come with costs. It was also no surprise that Moreno visited the White House last week to try and boost trade and investment ties with the United States.

Moreno, who has been wheelchair-bound since being shot during a botched robbery in the 1990s, has said he will not seek reelection, although many in Ecuador are skeptical of that commitment. Even if he does run for a second and final term, however, his current unpopularity means he would face an uphill struggle to stay in office.

Correa, who now lives in Belgium, where his wife is from, is wanted for arrest in Ecuador over his alleged involvement in the kidnapping of a political opponent in 2012. But his popularity appears to have recovered since the final days of his presidency. One recent poll found his approval rating at nearly 50 percent, so he could try to support a proxy candidate to carry on his policies.

Many Ecuadorians, particularly among the country’s poor, look back fondly on Correa’s decade-long presidency, with its generous social spending, financed by high commodity prices and murky Chinese loans. Even his critics agree that Correa dramatically slashed the poverty rate during his time in office.

Yet while many of Correa’s supporters turned a blind eye to the unsustainability of his economic policies and his authoritarian tendencies, including stacking the judiciary with cronies and creating one of the Western Hemisphere’s most draconian environments for journalists, his alleged corruption may finally be catching up with him. This month, Correa went on trial along with 20 others for orchestrating a bribery scheme to benefit his party, the PAIS Alliance. The former president, who is being tried in absentia, has derided the case as a politically motivated “witchhunt.”

The Ecuadorian right, meanwhile, is split between two potential candidates. Guillermo Lasso, a banker from Guayaquil, Ecuador’s second-largest city and its economic hub, was runner-up in the 2017 election and has announced his intention to make another run next year. Jaime Nebot, a former Guayaquil mayor, is also mulling a presidential bid.

However, that split could be rendered irrelevant by Ecuador’s electoral system, which requires a runoff between the top two candidates if no one wins at least 40 percent of the popular vote with a 10-point lead in the first round. A single conservative candidate could potentially unite the right in the runoff.

The left may be even more divided. In addition to the ongoing feud between loyalists of Moreno and Correa within the PAIS Alliance, another leftist former president, Luciano Gutierrez, has announced he will run, probably leading an alliance of smaller parties. Jaime Vargas, the leader of Ecuador’s powerful indigenous movement CONAIE, which was at the forefront of last October’s protests, is also a potential candidate. Although Vargas remains a long shot, he controls a large enough constituency to make him a potential kingmaker.

Whoever it turns out to be, Ecuador’s next president will be under pressure to either initiate or continue measures to bring spending into line with revenues. A capable, democratic politician might yet be able to gain popular approval for these reforms. But the risk of paralyzing mass protests lingers, as does the threat of a populist leader who avoids that reality by offering spendthrift socioeconomic policies while waging war on the free press.

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