By Carlos Carcione
The agreement with the IMF, whose measure of canceling fuel subsidies led to October´s uprising, began last March, but has an older origin that needs to be analyzed.
The Letter of Intent sent to Christine Lagarde on March 1, 2019 (1) was an attempt to reestablish Ecuador´s relationship with the IMF as a lender of last resort, since the country left it in 2009 and Correa had begun the process of returning to international financial organizations in 2014.
After over five years of economic stagnation, the immediate prospect of a recession and the pressure from the local and global capitalists that had become his main political support, led Lenín Moreno to seek IMF support and the implementation of its plans, further advancing down a path that had already begun in the final years of the “Citizen Revolution” government.
Ecuador has an economy without sovereign capacity due to having renounced its own currency and tying its destiny to the dollar. It thus lacked tools to maneuver against the impact of the global capitalist crisis. (2) The dollarization publicly announced in January 2000, and the closing of the cycle of extraordinary oil and raw material prices, led to an economic stagnation that left the relative growth of the previous five-year period behind.
In this context, the question was to decide who would pay for the effects of the country´s crisis. As the Correa government had already done, Moreno’s decided that the costs would be paid by workers, the indigenous peasantry, and other popular sectors. The 2019 agreement with the IMF included the requirement to eliminate fuel subsidies, but that is not the only counter-reform that Moreno proposed. The agreement with the Fund, which was not rejected by the government, despite having withdrawn Decree 883 as a concession to the October rebellion, is one of the fundamental keys that gave rise to that uprising.
Promises and Reality of the “Citizen Revolution”
Correa rose to the government with proposals adapted to the country and the continent´s convulsive reality in the context of the XX century´s last dacade and of the twenty-first century’s first decade. (3) These included denouncing the illegitimacy of the external debt, rejecting the country´s submission to the IMF, ending privatizations and even eliminating labor flexibility, which were written into the new Constitution adopted by the Constituent Assembly of Montecristi in 2008.
Though the government never proposed recovering monetary sovereignty by ending the country´s dollarization and reinstating the national currency, its initiative to audit the public debt generated expectations that were quickly unmet and led to disappointment. This audit is perhaps one of the most emblematic examples of the distance between the promises and the reality of the Correa government. The commission responsible for carrying out the audit demonstrated that the Ecuadorian debt was, in its absolute majority, illegitimate and illegal, and should therefore be rejected. However, the government decided to buy it back (4), legitimizing what had just been proven to be a scam.
The evolution of the Ecuadorian capitalism´s “modernization” initiated by Rafael Correa ranges from ratifying the oil and mining extractivist model to rejecting agrarian reform, reinitiating the privatization of ripe oil deposits, among many other measures that were prohibited or protected by the Constitution of Montecristi and that Correa himself had defined as treason to the homeland in 2005. On the other hand, instead of strengthening the public health care system and making it universal, the state, the country’s main employer, contracted insurance policies from private clinics and hospitals, weakening public health care and facilitating a rising inequality in this basic right. This political course advanced towards the middle of Correa’s third term, when, in response to oil prices beginning to fall in 2014, he took the country back to the IMF, in compliance with international private lenders´ conditions to give Ecuador new loans.
Justified by the falling oil prices, the Correa government also began a policy of fiscal austerity, complementary to the growing external debt. The protection of labor rights was eliminated this way, for example, justifying salary reductions on the basis of reductions in working hours, a measure that benefits private companies; a drastic reduction of raises of the minimum wage; the elimination of the right to severance pay with the excuse of having implemented unemployment insurance. Similarly, the government´s VAT (sales tax) hikes to reduce the fiscal deficit and guarantee payment of the new debt affected the people that live on their salary.
While these austerity measures that lowered the standard of living of Ecuadorians were developed, banks and large corporations obtained multi-million dollar profits. For example, between 2015 and 2018, the top 30 companies recorded profits of $ 4.9 billion and the financial system obtained nearly $ 1.8 billion in profits. This is Correa’s economic legacy: stagnation, growing external debt, falling living standards of workers and the people, and exorbitant gains for the most concentrated capitalist groups.
But there is another legacy that the Correa period leaves and was strengthened by the current government: the repression and persecution of the social sectors that opposed the regressive changes promoted by the “Citizen Revolution”, and the limitation of democratic rights. This change led to the CONAIE (see “What is the CONAIE?”) and other social movements and sectors of the population openly breaking with Correa. These reactionary policies, together with the deterioration of the economy and people´s living standards, explain why Correa´s party was unable to win the 2018 presidential election in the first round and managed to get Lenín Moreno elected by a minimal margin in the second. The same issues also explain the government´s defeat in the popular consultation and referendum of 2018, in which Correa campaigned supporting a “No” vote against Moreno’s position.
Lenín Moreno´s Betrayal
The poor electoral result that led him to the presidency made Lenín Moreno’s government weak from the start. Forced to apply austerity to boost a stagnant economy, pressured by the large capitalist sectors, and by Correa’s own political pressure that cast a long shadow over him, Moreno took a turn: he sought the support of right-wing politicians, like Abdala Bucaram and Nebot, and, taking advantage of his mentor´s eroded base of support, organized a referendum whose objective was to avoid the possibility of Correa returning to government. He jailed his own vice president, Jorge Glas, who was more loyal to Correa, and began a judicial persecution of the former president, forcing him into exile.
In this context, Moreno adopted the two legacies of Correismo to the extreme: economic austerity – now in the hands of the IMF and the US – and a reactionary management of the state, as we saw in the ruthless repression during the October uprising and with the persecution of Correista leaders and then CONAIE leaders and activists.
Austerity Package and Rebellion
The Moreno government´s objective was to access new loans from different international and regional organizations through the IMF, with the promise that, once the loans were received and the brutal austerity the IMF requires applied, the economy would grow again. But, as Alberto Acosta (former minister of Correa´s first term, who broke with him in 2009) reveals, the loans that Moreno sought do not have clear objectives. Acosta says: “Indeed, Lenín Moreno announced that the agreement with the IMF would open the door to new loans for 6.7 billion dollars from the World Bank, the Andean Development Corporation (CAF), the Inter-American Development Bank (IDB), and the Latin American Reserve Fund (FLAR). Of those resources, 4,600 million would be received in 2019, 3,150 million in 2020 and 2,500 million in 2021. Of the total amount to be received, which would reach about 10,200 million dollars, 3,500 million would be for projects (not yet specified), while 6,700 million would be freely available. Neither the conditions nor the characteristics of these loans have yet been explained in detail.”
What we do know is what the austerity measures requested by the IMF for Ecuador to achieve an acceptable fiscal balance and obtain those loans are. It is a typical plan of austerity and surrender of resources, of which the elimination of fuel subsidies was just one measure. Some others are: a reduction of wages and increase of labor flexibility, a raise in the most regressive taxes such as the VAT, the privatization of oil fields, hydroelectric plants, more than 20 electricity distribution companies, refineries and the Pacific Bank. All of this in addition to the usual “austerity” measures to reduce public investment to a minimum, threatening the supply of medicines, for example.
Clearly, this is a plan of integral austerity, of capturing public patrimony, of looting and expanding extractivism, attacking the population’s standard of living, expanding social inequality, and dismantling the social policies carried over from Correa´s first period.
Having Defeated Decree 883, Mobilize and Organize to Defeat Austerity and the Model
The Lenín Moreno government´s retreat from implementing Decree 833, which enabled the elimination of fuel subsidies, to replace it with another decree to be agreed with the CONAIE, has not closed the Ecuadorian people´s period of mobilization and struggle. On the contrary, it raises the possibility that the entire austerity plan will be confronted.
In our opinion, the victory obtained is relative, even contradictory, because – as was demonstrated in the days of struggle in October – there was sufficient strength and conditions to throw out the entire austerity plan, as well as the government itself, and to impose a new constituent process to redesign the whole country in favor of workers, peasants and the indigenous people. Even so, the reversal of the decree and the subsequent withdrawal of the CONAIE from the negotiation with the government can only be read as a triumph of the mass movement, achieved in spite of the fact that the leadership of the process defected, once again.
The indigenous people, the peasants and even the workers who participated in the rebellion are galvanized. That strength can grow and develop if, in the process of assessing the events and the mobilization, new anti-bureaucratic leaders emerge to contest the leadership of the CONAIE and democratize it, to take on the task of reestablishing all trade union and social organizations so they will stop being appendages of power and will once again represent the interests of workers and the people of Ecuador.
The remaining task is to defeat the global agreement with the IMF, but we must strive for more. Natural resources, today in the hands of multinationals that enrich themselves by impoverishing the people and destroying nature, must be recovered. The political caste that contends for state control, but does so at the service of its own interests, must be done away with. We are talking about sovereign economic planning, ignoring the external debt, breaking the bond with the dollar, and of deeply connecting with the continent to advance to a new scheme of solidarity-based integration in the Americas. This orientation is in the perspective of doing away with the dependent capitalist system and moving towards a different, anti-capitalist and socialist model, a model that Correa never sought to build and that Lenín Moreno came to eliminate as a possibility.
For that purpose, it is not possible to trust those who had the opportunity and squandered it for over a decade, opening the door of power to right wing “traitors”. What we need to do is to build, in the heat of the popular mobilization, a new socialist and revolutionary organization capable of organizing the enormous strength that the Ecuadorian people have and to prepare for the battles that are coming in Ecuador, and throughout the continent. The ISL is on that path.
[1] https://www.finanzas.gob.ec/wp-content/uploads/downloads/2019/03/LOI-MEFP-Espa%C3%B1ol.pdf
[2] Uno de estos impactos fue la abrupta caída de los precios del petróleo.
[3] Ver recuadro La rebelión de 2019…
[4] Una vez suspendidos los pagos a la espera de la investigación de la Comisión, Correa recompró la deuda a valores similares a los que renegoció el gobierno de Néstor Kirchner en Argentina.
[5] Préstamos a altísimas tasas de interés y de muy corto plazo de vencimiento.
[6] Cantidad superior a la que Moreno le está pidiendo al FMI.
[7] Acosta, Alberto; Del estancamiento al abismo fondomonetarista, en http://www.rebelion.org/noticia.php?id=258219
The 2019 Rebellion Resumes the Historical Thread of Popular Struggle
The indigenous, peasant and popular rebellion that developed in the first half of October will be remembered as the uprising that finished consolidating the re-entry of the global process of struggle in South America.
In Ecuador, the popular, indigenous, peasant, student and working class movement was the protagonist of a long period of uprisings that overthrew three presidents, and promoted rebellions. The CONAIE was one of the main references among the various social movements that led those struggles. Through the indigenous Pachakutik party, it participated in elections and reached the old parliament, mounted on the ascending process. It integrated a triumvirate government that was overthrown, and participated with ministers in other governments. This process took place from 1990 until the XXI Century, with the arrival of the “Citizen Revolution”, a local expression of the Bolivarian wave that crossed the continent during the first decade of this century.
A brief review of these struggles shows a huge accumulation of experience and, though it was numbed for a period, it reappeared in the 2019 process, resuming the rise of popular struggles. It does so with strengths and weaknesses: with leaderships like those of the CONAIE and other social movements, that repeat their practices of hesitant conciliation, and with a mass movement that ratifies its power, courage and determination to fight and has, on several occasions, replaced leaders in the heat of the struggle.
From the Capture of the Cathedral to the Outlaw Revolution
The first great indigenous and peasant rebellion in modern Ecuador took place in May 1990, when a group of indigenous people occupied the Quito Cathedral, demanding their right to land. Outside, the CONAIE, founded in 1986, called for a general mobilization with road blockades and marches until President Rodrigo Borja summoned a negotiation to deal with the demands. Though these were only partially met, the first major test of strength that led to more than a decade of struggles, popular uprisings and governments falling had been carried out.
The other major movements, on the threshold of the XXI century, went against the policies of the IMF promoted by presidents Abdala Bucaram, Jalil Mahuad and Lucio Gutiérrez.
Bucaram managed to get elected president in 1996, the third time he ran. He won the election by rejecting the local oligarchy, with a speech against traditional politicians and the discredited political system. But as soon as he took office, hiding his measures of submission to the IMF behind the implementation of a popular housing plan, he launched a plan of privatizations and increases of gas and fuel prices by eliminating subsidies for the population´s consumption. At the same time, he sought and received advice from Domingo Cavallo, the former Argentine Economy Minister, to implement a system similar to the convertibility of the peso, which failed. The revolt erupted six months after his inauguration, forcing him to resign. Indigenous people joined the uprising, but it was essentially an urban revolt of students and workers. This uprising was capitalized by traditional parties.
Mahuad, who was elected in 1998 suffered a similar demise. In January 2000, after having implemented the dollarization of the Ecuadorian economy through an agreement with the IMF, he tried to apply an austerity plan and eliminate fuel subsidies. This ended up unleashing a popular uprising involving indigenous people and peasants from the start, together with a sector of the armed forces with a nationalist speech, led by Colonel Lucio Gutierrez.
To lead this process, a triumvirate that integrated the indigenous Pachakutik party was formed. Shortly after, this party left the government, disarticulating the triumvirate, because Gutierrez did not fulfill his commitments to the natives. He was separated from office due to accusations of corruption, but returned to the government two years later, this time to implement the IMF´s plans. A powerful popular rebellion, known as the “Outlaw Revolution”, forced the government to step down. The indigenous movement did not support it politically and did not participate in this rebellion.
The relative
stability achieved during Rafael Correa’s governments was initially supported
by the social movements. However, the indigenous movement clashed several times
with his government over the Water Bill, rejected by the CONAIE as a
privatization. The traditional organizations of the labor movement lost
strength, and some sectors were co-opted, while others, such as the teachers’
unions, were divided and weakened by Correa’s policies. The relative social
advances achieved during the “Citizen Revolution”, the co-optation by the state
of sectors of the social movements, and the persecution of others, resulted in
the appearance of privileged layers in the trade union movement and popular
sectors, which limited and weakened the process of organization and struggle.
The CONAIE, at odds with Correa, supported the
Lenín Moreno government at first. But that support eroded, until the uprising
in response to the elimination of the fuel subsidy. Beyond the hesitations of
its leadership, the repeal of Decree 883 opened a new stage in which the mass
movement recovers its tradition of social and political struggle, and raises
new opportunities to renew the leaderships of the labor and social movements.
Above all, it is more favorable for the construction of a revolutionary
anti-capitalist and socialist political organization.
Brutal Repression and Persecution of Opponents
The repression
and authoritarianism of Lenín Moreno’s government during the October
mobilizations left a high cost: more than 20 dead, according to different
sources, 1,340 injured and 1,152 detained, all accused of terrorism. Health
care professionals were persecuted and public and maternity hospitals were
attacked. As we can see, the repression exercised was brutal, and, if there is
any terrorism, it is the terrorism of the state making excessive use of its
force.
After the October protests, persecution of the
rebellion leaders continued, and the government seized the opportunity to
selectively attack some Correist leaders, such as the prefect of Pichincha,
Paola Pabón, the former president of the National Assembly, Gabriela
Rivadeneira, and the former assemblyman Virgilio Hernández, who join the long-standing
detention of former Vice President, Jorge Glas.
From the ISL, we demand the cessation of the
attacks on the Ecuadorian people and an independent commission to investigate
the murders and detentions.
Likewise, and despite the differences we have often
expressed with Correísmo, we also
demand that the persecution of all political opponents be terminated. We do not
recognize the illegitimate government of Lenín Moreno, or any of its
institutions, any authority to judge anyone. Only popular
organizations will be able to determine what responsibility the different
actors in Ecuadorian politics should assume in the development of the crisis.
Meanwhile, we join the demand for the freedom of
all political prisoners in Ecuador and the cessation of persecution of
opponents and fighters.