By Ronald J. Morgan
After nine years of impressive social progress, Ecuador is facing the upcoming February 19, 2017 presidential election under the pressure of a dramatic economic downturn.
The vote in five months, will also be the first presidential election since 2006, where President Raphael Correa will not be a candidate. Under a recently passed law candidates can run for unlimited reelection but the measure doesn’t go into effect until the 2017 election term. President Correa is expected to leave for an extended stay in Belgium next May. But he could be back as a presidential candidate in future years. An August poll by Pefiles de Opinion showed Correa with 61% approval. 1,2,3
Ecuador will also elect a new 137-member congress. Under Ecuador’s campaign laws the election campaign is held for a 45- day period. Nevertheless, 2016 has already been filled with political activities. Party candidate selection is now under way and is expected to be completed by the end of October. So far, 12 parties and movements are fielding presidential candidates. An estimated 12.8 million persons will be eligible to vote. 4
As of the end of August, the Ecuadoran press was predicting that the offical Alianza Pais party of Raphael Correa will select between Jorge Glas, 46. and Lenin Moreno, 63, as presidential candidates. Due to Moreno doing better in recent opinion polls he is expected to be selected as the candidate during the Alianza Pais Convention, Oct. 2. Moreno served as Vice President under Correa from 2007-2013. He currently is serving as United Nations Special Envoy on Disability and Accessibility. He was left paraplegic by a crime shooting in 1998.
Glas, an engineer, has known Raphael Correa since they served in the boy scouts together. He has served as Coordinating Minister of Strategic Sectors and Minister of Telecommunications and Information Society under Correa. He has been mentioned as a possible vice-president candidate on a Moreno ticket.
Ecuador’s opposition political forces are also selecting their candidates. Numerous political movements making up a traditional right wing business sector and an opposition left and Indigenous sector have been negotiating an eventual set of election alliances.
As of September, Guillermo Lasso, 60, of the CREO Movement party is expected to be a strong vote getter. Lasso finished second in the 2013 presidential election with 22.68% of the vote. Lasso has served as governor of Guayas Province, during the President Jamil Mahuad administration (1998-2000), and later served as Super Minister of the Economy under Mahuad. Lasso is also the largest shareholder in Banco Guayaquil.
Recently, Cynthia Viteri, 50, of the Social Christian Party has emerged as a strong opposition candidate. She is a journalist and member of the 2007-2008 Constitutional Assembly and currently serving as a representative in the congress since 2013. Viteri ran for president previously in 2006, and finished fifth. Recently Viteri was expelled from Venezuela while visiting opposition members in Caracas.
Jaime Nebot,69, who is currently serving as mayor of Guayaquil was expected to be a major opposition candidate but he has announced he will stay out of the race. He remains the head of the Social Christian Party.
An August Pefiles de Opinion poll gave Lenin Moreno the lead in the presidential race with 44% of the vote with Viteri obtaining 16% and Guillermo Lasso 13%. 5
The extent of the current economic downturn and who best can handle it will be a central issue in the campaign. The Central Bank of Ecuador has predicted an economic downturn of -1.7% of GDP for 2016. The recession has produced a drop in inflation to 1.42%. Employment is stable this year at 5.3% in June, but up from 4.5% the same month a year ago. The International Monetary Fund has predicted a sharper drop of -2.3%. The IMF, in a somber assessment, has predicted that the economy will not grow for five years. 6,7
Over the last decade Ecuadorans became accustomed to stability and economic gains. Correa has referred the last nine and a half years as the Decade Won. The president said in his recent, May 24 State of the Nation address, that from 2007 to 2015 Ecuador obtained an average economic growth of 3.9%. The Ecuadoran economy grew from $46 billion to $100 billion in 2016. From 2009 to 2016 1.9 million Ecuadorans left poverty behind. 8, 9
The Ecuadorean recession is the first big economic crisis in 17 years. President Correa has referred to it as “A Perfect Storm”. A dramatic drop in oil prices combined with a strengthening of the U.S. dollar — Ecuador’s currency — has plunged the country into its sharpest downturn since its mega crisis in 1999. In 2015, Ecuadoran exports dropped $7.4 billion. A major 7.8 earthquake April 16, added another $2 billion in recovery costs to the revenue squeeze from falling oil revenues and exports. Ecuador’s worst tragedy in 67 years left 663 persons dead and 28,775 homeless. An adverse legal finding also required Ecuador to pay $1 billion dollars over six months. Economic problems in China and Russia are also affecting Ecuador’s economy.
The downturn forced the Correa government to downsize quickly. From 2015-2016 the government cut government spending by $6 billion. The president has also followed up with a series of tax changes — both increases and incentives — to stabilize Ecuador’s finances. After the earthquake the VAT tax known as IVA was raised 2% to 14%. Despite a signficant worsening of the economic situation early in 2016 when oil prices dropped as low as $20 dollars, (the economy fell 3% in the first six months of 2016) the situation is now stabilizing at mid year with higher oil prices — $45.50 on Sept 8. International Reserves are holding steady at $2.4 billion. The banking system remains solvent. 10,11
The Correa government has also been able to bring on line the Tiputina oil field which will boost oil production by 20,000 barrels a day. The field will bring in $100 million this year. Ecuador has also has had its proven oil reserves in the Yasuni-ITT reserve raised by the analyst firm Rider Scot from 920 million barrels to 1,672 million barrels. 12
The change should allow increased government borrowing to weather the recession. But at the same time the government is approaching a legal debt limit of 40% of GDP. Government debt is now at 38% of GDP. The question is whether congress will increase the debt limit and whether the rising debt will impose restrictions on borrowing during the next presidency. 13
Correa has also moved to cut the number of public entities and transform others. Correa in a move often shunned by left governments, has moved to sell off and concession a number of public firms including TAME airlines, Cementera de Ecuador, FRABEC and Banco de Pacific. Ecuador public news media holdings have also been reorganized. One of the largest privatizations will be the concession for thirty years of the newly constructed Sopladora Hydroelectric generation facility which was recently completed at a cost of $755 million. A number of major government projects have also been halted.
Ecuador’s political opposition has been moving to create an alternative economic plan as part of the upcoming elections. A recent strategy paper sponsored by the Ecuadorean Federation of Chambers of Commerce entitled 11 “Proposals for Debate” calls for a revision of government accounts, efforts to raise the international reserves, creation of a new poverty program, and increased agricultural potential among other ideas.
The opposition has attempted to depict the Correa’s economic strategy as an economic model that has run its course. The astounding success of recent years was based on a dramatic increase in the government’s role in the economy. But rising debt is now making that strategy unsustainable according to recent statements by the opposition. A number of private sector economic forecasts are also more critical than the government as to the current state of economic crisis. 14,15
The Left Opposition is also working to organize resistance to increased oil extraction and mining in the Amazon. They contend the government is over doing it on extractive activities in the jungle and should focus more on promoting tourism. Movimiento de Unidad Plurinacional Pachakutik has selected Lourdes Tiban, 46, as their first woman presidential candidate. Tiban has served in congress since 2009. There has been talk of forming an alliance between the Indigenous Pachakutik movement and Guillermo Lasso of CREO but recently Lasso rejected Tiban as a vice presidential candidate. 16, 17, 18
The opposition also is calling for an end to what they see as nearly a decade of political polarization and authoritarian behaviour by the Correa Administration. Criticism by Human Rights Watch in its 2015 Annual Report on Ecuador includes charges that the government uses excessive force against anti-government protesters and that they implemented a repressive crackdown on nongovernmental organizations critical of the government. The report also criticizes the negative effects of a 2013 Communication Law on press freedom, and it alleges interference with judicial decisions by the president. Human Rights Watch also reported threats and intimidation against human rights activists. 19
1. Encuesta destaca aprobación al trabajo de Rafael Correa
2. Nueve años de Revolución Ciudadana (9RC) http://www.eltelegrafo.com.ec/noticias/columnistas/20/nueve-anos-de-revolucion-ciudadana-9rc
3.Rafael Correa dejará la vida política el 24 de mayo de 2017 http://www.eltelegrafo.com.ec/noticias/politica/2/rafael-correa-dejara-la-vida-politica-el-24-de-mayo-de-2017
4. Elecciones presidenciales de Ecuador de 2017 https://es.wikipedia.org/wiki/Elecciones_presidenciales_de_Ecuador_de_2017#Precandidaturas
4A .Anexo:Evolución de las encuestas de opinión sobre las elecciones presidenciales de Ecuador de 2017 https://es.wikipedia.org/wiki/Anexo:Evoluci%C3%B3n_de_las_encuestas_de_opini%C3%B3n_sobre_las_elecciones_presidenciales_de_Ecuador_de_2017
5. En julio de 2016 Lenin Moreno se perfilaba como ganador con 44% de los votos según la encuestadora Perfiles de Opinión, en dicha encuesta el 16% votaría por Cynthia Viteri y el 13% por ciento por Guillermo Lasso, Source Wikipedia, Elecciones presidenciales de Ecuador.
6. La economía se contraerá por primera vez en 17 años http://www.elcomercio.com/actualidad/economia-ecuador-contraera-bancocentral.html
6a. La economía ecuatoriana recién crecerá en el 2021, según el FMI
7. Desempleo en Ecuador se colocó en 5,3% informa INEC http://www.eluniverso.com/noticias/2016/07/15/nota/5691261/desempleo-ecuador-se-coloco-53-informa-inecTrabajadores y empresarios, preocupados por desempleo en Ecuador http://www.eluniverso.com/noticias/2016/07/19/nota/5698800/trabajadores-empresarios-preocupados-desempleo
8. President Correa’s Last Annual Report to Congress http://www.presidencia.gob.ec/wp-content/uploads/downloads/2016/08/2016.05.24-Discurso-Informe-a-la-Naci%C3%B3n-2016.pdf
9. Ecuador’s Citizens’ Revolution: Retaking Power from the Old Elites http://www.telesurtv.net/english/analysis/Ecuadors-Citizens-Revolution-Transformed-a-Nation–20150113-0022.html
10. Economía de Ecuador en recesión: PIB cayó 3% en primer trimestre de 2016 http://www.elespectador.com/noticias/economia/economia-de-ecuador-recesion-pib-cayo-3-primer-trimestr-articulo-643843
11. “Después de un semestre terrible, se está recuperando la economía”, afirma presidente Correa http://www.andes.info.ec/es/noticias/despues-semestre-terrible-esta-recuperando-economia-afirma-presidente-correa.html
12. Tiputini: 100 millones de ingresos en este año http://www.elcomercio.com/actualidad/tiputini-ingresos-petroleo-explotacion.html.
13.El peso de la deuda pública en la economía saltó hasta el 38% http://www.elcomercio.com/actualidad/peso-deuda-publica-economia-salto.html
14. Ecuador Unsteadied http://www.thedialogue.org/blogs/2016/08/ecuador-unsteadied/
15. Ecuador Economic Outlook http://www.focus-economics.com/countries/ecuador
16. Drilling Towards Disaster: Ecuador’s Aggressive Amazonian Oil Push http://amazonwatch.org/news/2016/0406-drilling-towards-disaster-ecuadors-aggressive-amazonian-oil-push
17, Is Ecuador’s Historic Left Working with the Right Against Correa?http://www.telesurtv.net/english/analysis/Is-Ecuadors-Left-Working-with-the-Right-Against-Correa-20150820-0027.html
18. Ecuador’s Indigenous Peoples See Protest ‘Criminalized’ Under Correa http://www.worldpoliticsreview.com/trend-lines/19661/ecuador-s-indigenous-peoples-see-protest-criminalized-under-correa
19. Ecuador Human Rights Concerns: https://www.hrw.org/world-report/2016/country-chapters/ecuador