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Ecuador President's Neoliberal Economic Reforms Face Broad Opposition

by Harvey Goldberg
Protesters march in Cotapaxi Province in Ecuador
October 27, 2021
Photo credit: Conaie Comunicacion

At issue are the economic policies Ecuador will pursue as it struggles to recover from a deep pandemic related recession and massive unemployment. President Lasso is facing opposition in Ecuador's National Assembly, legal challenges in the courts, and last week, militant protests in the streets. Also at issue is the future of Lasso’s presidency. Ecuador is a country with a history of forcing unpopular Presidents to leave office early.
Ecuador's President Guillermo Lasso’s support has eroded rapidly and he now is confronted by stiff opposition. In office only since May, Lasso's neoliberal capitalist economic policies and proposals are facing determined opposition from diverse social sectors. In addition, a major lawsuit was filed this week to limit a dramatic expansion of mining and petroleum extraction which strikes at the heart of President Lasso's plan for economic recovery.

At issue are the economic policies Ecuador will pursue as it struggles to recover from a deep pandemic related recession and massive unemployment. President Lasso is facing opposition in Ecuador's National Assembly, legal challenges in the courts, and last week, militant protests in the streets. Also at issue is the future of Lasso’s presidency. Ecuador is a country with a history of forcing unpopular Presidents to leave office early.

President Lasso, a right-wing former banker and one of Ecuador’s richest people, had been riding high in opinion polls based on the government's highly successful vaccination campaign which has dramatically brought down hospitalizations and deaths from COVID-19. As public attention has shifted to Lasso's economic policies, Lasso's popularity has sunk rapidly. A poll published by Perfiles de Opinion found that those thinking Lasso was doing a very good or good job fell to 34 percent this month, down from 74 percent in July.
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This week’s discontent with President Lasso's policies boiled over into militant protests. The protests were led by Ecuador's umbrella confederation of Indigenous organizations, CONAIE; the largest union federation, the Unitary Workers Front; the National Union of Educators; the Popular Front, a grouping of fourteen organizations; the National Agricultural Front for Food Sovereignty of Ecuador; the National Confederation of Peasant, Indigenous and Black Organizations; the Federation of University Students, among other grassroots organizations.

A common cause of protest is the increased price of gas, which is driving up prices on all goods. It has also put President Lasso at odds with trucking, bus, and taxi companies which have demanded fuel subsidies and increased fares. Bus services were limited in protest in several cities last week.

While a common concern of protesters, it is simplistic to portray the protests as solely over the price of gas. Last week's protests were called by unions opposing reforms to labor law; farmers and campesinos protesting the prices they are paid for their goods; teachers protesting pay cuts and pension problems; students protesting cuts in the education and increased fees, and doctors protesting the lack of medicines and supplies, as well as working conditions. It is a broad opposition, but it is fractured by persistent divisions which Lasso has sought to take advantage of.

Monday, October 18, saw the first day of protests this month against President Lasso's program. They were called by the National Agricultural Front for Food Sovereignty of Ecuador, led by farmers protesting inadequate prices paid by the government for their crops. Protests broke out in five provinces. The most militant was in the Province of Carchi, along the border with Colombia where protesters blocked a portion of the Pan-American Highway with heavy equipment and burning tires. Highways into Ecuador's main port city of Guayaquil were also blocked in three other provinces. Protesters demanded a freeze on the price of fuel and a fair price for their crops. Cab drivers and truckers also blocked the southern entrance to the city of Tulcán.

On October 20, hundreds of workers from Ecuador's largest union federation, the Unitary Workers Front, marched to the National Assembly in Quito to present their proposal to counter the labor law reforms proposed by President Lasso.

Lasso and hundreds of his supporters also held a rally in front of the Presidency in Quito that day. Lasso urged his supporters to “defend Quito” from those he called “coup plotters.” "This hand will continue to be extended for a democratic dialogue, but if we have to forcefully wield the Constitution to confront the coup plotters we will do it with decision, with spirit and without fear," said Lasso.

In response to protests, President Lasso announced on October 22 that there will be a freeze in further monthly increases in the prices for gas for an unspecified period. The announced freeze is at a higher price than last month and it didn't end the protests.

On October 26 and 27, the number of protests and road blockades increased from five to nine provinces. Protests were largest in the north and along Ecuador's Pacific coastal region. Protesters blockaded major roads in nine provinces, and demonstrations were held in cities. The Pan-American highway north of the Capital Quito and highways into Ecuador's central port city of Guayaquil were among those blockaded by protesters with trees, rocks, burning tires, and sometimes heavy vehicles. In some areas protesters reportedly played cat and mouse with army troops that dismantled barricades, only to see them re-established.

Imbabura Province, north of Quito, was again a center of the protests. Imbabura had also been the center of protests and road blockades in 2019 which paralyzed the country for eleven days and forced then President Lenin Moreno to temporarily back down from fuel price hikes. In October of 2019, thousands of Indigenous protesters played a key role when they marched from Imbabura into Quito to join thousands of other protesters.

This time, the main roads into many towns in Imbabura Province were blockaded. From October 26 through the 27, the number of protesters manning the blockades grew. There were reports of entire communities voting to join the Paro (paralysis/strike). Then, as the protests appeared to be gathering strength, on October 28, the leaders suddenly proclaimed the protests a success. Leading organizations announced that the protests will be temporarily suspended as Ecuador heads into a five day holiday weekend.

Leaders called upon the government to negotiate with them or face renewed protests. “We believe we have delivered our message to the government and we await their response...if we do not receive satisfaction we will consider calling a national strike after the holiday,” said Angel Sanchez, President of the Unitary Workers Front, reported the web site CuencaHighLife. A major meeting of leading organizations at which further action will be decided upon has been scheduled for November 10.

The suspension of protests will provide the opportunity for negotiations. These protests have demonstrated that the opposition has power in the streets to go along with votes in the National Assembly. President Lasso has indicated some capacity to compromise on his neoliberal agenda. He has entered into negotiations regarding providing fuel subsidies for the poor, truck and bus companies and taxi drivers, as well as with farmers over the prices the government pays for their goods, but these negotiations have yet to produce results.

"The government never listens to us. We are waiting for definitive answers. Every time there is a strike it makes a proposal and does not comply with it," said one rice producer who preferred not to be named, reported the newspaper El Universo.

Leonidas Isa, President of CONAIE, has demanded that all negotiations be public. “I want full transparency and for everyone to hear what is said. No more government deceit,” said Isa.

What President Lasso's opponents have in common is that they are all protesting against aspects of the President's neoliberal capitalist economic agenda. Lasso wants prices to incrementally be reset at world market levels, including the domestic prices for gas. All goods in Ecuador are transported by trucks (there is no freight rail system), so the rises in the price of gasoline and diesel have led to inflation of virtually all goods.

While President Lasso wants Ecuadorians to pay world market prices for commodities, the average income of Ecuadorians is a fraction of those living in wealthy countries.

Lasso is proposing a major overhaul of Ecuador's labor law to allow employers to more easily hire and fire workers and avoid paying social security and other benefits on temporary hires. There is no doubt that there is massive unemployment. Only about 30 percent of Ecuador's working age population is officially employed, according to Humberto Salazar, a leading advisor to President Lasso and Executive Director of the Esquel Foundation.

President Lasso is also an advocate of international free trade agreements and has been signing trade agreements which have left Ecuador's farmers vulnerable to price competition from products produced in countries with more industrialized agriculture. Ecuador's economy is primarily agricultural and much of the population relies in whole or in part by cultivating small farms. Rice and banana growers have been holding sporadic protests on the coast since August, demanding a better price for their goods.

Government austerity is also central to President Lasso's plans. He has vowed to continue across the board cuts in government services and layoffs of government employees begun under Ecuador's previous President, Lenin Moreno. Lasso's ideology also favors privatizing government assets and services.

Most of Lasso's economic policies and proposed reforms are in line with recommendations by the IMF and international banks that have loaned Ecuador money.

The course of President Lasso’s presidency may depend on his ability, or inability, to compromise with opponents on his policies and proposals. Lasso can be expected to try to keep the opposition fractured by continuing to pursue separate negotiations with different sectors.

The National Assembly has twice rejected President Lasso's reform package, but at least some of the votes cast against it were for technical reasons and it is unclear the extent of substantive opposition. The votes against Lasso's reforms were led by legislators of the progressive Union for Hope alliance, the largest block in the National Assembly. The alliance is mainly comprised of the left-wing Citizens Revolution party, supporters of former President Rafael Correa (2007-2017).

While staunchly opposing President Lasso's neoliberal economic reforms, Citizens Revolution has kept its distance from the protests. In October of 2019, the party supported mass protests and was accused of subversion by the government, which went so far as to arrest and prosecute Paola Pabón, the Prefect of Pichincha Province where Quito is located.

Two parties in the National Assembly that are formally allied with Lasso's party, known as CREO (Creating Opportunities), the Pachakutik Plurinational Movement and the Democratic Left parties also voted down Lasso's package of reforms. CREO has only 12 of 137 seats in the National Assembly. Lasso has approached both Pachakutik and Democratic Left about possible revisions to win approval for his proposed reform.

The National Assembly is also investigating President Lasso regarding foreign investments in tax havens which are illegal for politicians under Ecuador's laws. Lasso was named in recent disclosures of The Pandora Papers. Lasso has asserted that he no longer holds such investments and ended them before he ran for President in 2017. Should the investigation find that Lasso lied about his investments, he could be sanctioned or even impeached. [ ]

President Lasso can't even count on a lot of help in the National Assembly from Ecuador's other major right-wing party, the Social Christian Party, which had joined with CREO in nominating Lasso for President. CREO and the Social Christian Party fell out when the latter was excluded from the current governing coalition in the National Assembly.

Lasso has threatened to dissolve the National Assembly which would require new elections for both the assembly and also for President. It would provide a period prior to the new elections in which President Lasso could govern by decree. It is a high risk strategy which Lasso could win, but if he didn't, it would mean an early end to his Presidency.

Previously, President Lasso had also threatened to put his proposed reforms to a popular vote by referendum. This is something that two previous Presidents of Ecuador were able to do successfully. Whether Lasso's neoliberal reforms are popular enough to win a majority of voters is in question.

In addition to Lasso's problems with street protests and in the National Assembly, on October 18, the first in what is expected to be a series of lawsuits was filed on behalf of Indigenous organizations aimed at limiting President Lasso's plans to greatly increase mining and petroleum extraction. Amazon Frontlines reported that, “hundreds of Indigenous elders, youth, and leaders arrived in the capital city of Quito, having journeyed from their communities deep in the Amazon rainforest..” to be present at the filing. The case seeks to block President Lasso's Executive Decree 95, which the suit describes as deregulating the oil and gas industry.

Another lawsuit is expected to be filed soon to stop Executive Decree 151, which critics maintain relaxes environmental controls on mining in Ecuador's Amazon region.

The lawsuits will attempt to build upon a landmark court decision in July of 2020 regarding the rights of Indigenous communities, “that recognizes their collective right to free, prior, and informed consultation and, in some cases consent, before the legislative or executive branch enact new laws or regulations that affect them.”

The court cases will be another chapter in a long history in Ecuador of Indigenous communities fighting to prevent mining and oil extraction that pollutes their ancestral lands and the water they depend on. [ ]
§Protesters blockade Pan-American Highway in Cotacachi, Ecuador
by Harvey Goldberg
Protesters and troops gather at blockade of ramp to Pan-American Highway in Cotacachi, Imbabura Province, Ecuador.
October 27, 2021
Photo credit: Apak Perugue
§Workers marched in Quito, Ecuador
by Harvey Goldberg
Photo credit: DemocracyNow!
§Banner of the Unitary Workers Front
by Harvey Goldberg
Members of the Unitary Workers Front hold the banner of Ecuador's largest labor union federation
Photo credit: @prensaceosi
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