By Liam Higgins
With President Guillermo Lasso under intense pressure to negotiate an end to the indigenous-led national strike, some are asking if it is even possible to comply with the strikers’ 10 demands [see full list below] even if the government is willing.
“Based on the concessions the president offered Friday night, it’s clear he is eager to bring this ordeal to an end,” says Carlos Pazmiño, deputy finance minister during the Alredo Palacios administration. “The problem, from a practical sense, is that it’s impossible under current economic situation to meet all of the conditions presented by Conaie [The Confederation of Indigenous Nationalities].”
He adds: “Some of the demands are very reasonable, however, and should have been addressed long ago. Others are unreasonable and simply impractical.”
Pazmiño’s ambivalence about the feasibility of Conaie’s demands is shared by other former and current officials and political observers.
Alberto Acosta, an economic analyst and former National Assembly member, says improving the public health system, public universities and intercultural education and providing a more equitable system of agricultural price supports are realistic goals. “Problems in these areas are well known and have been widely discussed for months but the Lasso government has done little to find solutions,” Acosta says.
“Fixing the hospitals and clinics will take time but the government has no plan to do it and no plan for funding,” he says. “All it does is deliver medicines to selected hospitals and pays a few overdue invoices to placate the complainers. It operates entirely on the concept of greasing the squeaky wheel. The same can be said for upgrading the universities and public education generally. It is true budgets are tight but if there is no blueprint for changes, the core problems will persist.”
Former Finance Minister Magdalena Barreiro claims that Conaie is also reasonable in demanding protection for essential products in the agricultural sector. “The government has made promises to farmers but has not followed through. Small and medium size banana growers have suffered the most by this neglect since they have been affected by the markets in Ukraine and Russia,” she says.
“It is true that farm products are subject to the international market but without a coherent agenda for providing assistance to growers, the country’s food sector is at risk,” she says
Barreiro adds that Conaie’s demand to fix prices of food and other products to slow inflation is unworkable. “Market forces cannot be ignored entirely and the government does not have the resources to reimburse farmers and producers to fix prices,” she says. “Compared to the rest of the region, inflation is low in Ecuador and the government cannot control financial markets and supply chains in other parts of the world.”
The demand to stop privatization of government services is easily accomplished says Jaime Carrera, director of the Ecuador Fiscal Policy Observatory. “The claim that the government is selling off assets is based on unfounded rumors and the distrust of Lasso by indigenous leaders,” he says. “The constitution prohibits selling public assets without legislative and judicial oversight.”
Among the Conaie demands that that Pazmiño describes as unreasonable and impractical are the demand to reduce the price of regular gasoline and diesel fuel and to force private banks to provide a moratorium on debts and refinancing.
“Lasso agreed to freeze the price of diesel and regular gasoline last year and today those are priced at less than half the international market rate,” Pazmiño says. “Between diesel, gasoline and LP gas, the government is spending almost $4 billion a year in subsidies, a very high price for a country that needs those funds for social sector needs.”
According to Marco Rodríguez, Executive Director of the Association of Private Banks, the government does not have the authority to force private banks to refinance loans or grant payment moratoriums. “We did this voluntarily during the Covid pandemic and we suffered losses as a consequence,” he said. “We are required by the constitution to protect the resources of our depositors and we intend to do this.”
According to current Finance Minister Simón Cueva, the leadership of Conaie is under the mistaken impression that the government has large hoards of unspent money. “This is based mostly on the high price of oil and it true we are collecting more revenue than we did last year but this is needed to pay bills, fund education, health care, and social services and pay our debts. In addition, we have a new emergency funding demand for law enforcement due rising crime rates and this will cost us more than a billion dollars.”
He adds: “I can assure you, there are no piles of money sitting around the Central Bank.”
Wilson Iglesias, economics professor at the University of Guayaquil, says the root of Ecuador’s problem is an inadequate funding base. “We have one the lowest overall tax rates in Latin America and, historically, there has not been little appetite to make the structural changes necessary to increase it,” he says. “We also have outdated labor laws that discourage formal employment. When you have more than 70 percent of the population working informally it is very difficult to increase tax collections.”
Ironically, Iglesias says, the indigenous community has consistently opposed most new taxes. “When President [Rafael] Correa tried to raise the property tax and inheritance tax seven years ago, Conaie and other indigenous groups rioted in the streets of Quito. Many people were injured and Correa was declared the enemy of the indigenous people. This, despite the fact that the taxes would have had very little impact on most of the indigenous and poor people of Ecuador and would have supported new social spending.”
The National Assembly eventually passed the property and inheritance tax legislation but it was repealed overwhelmingly a year later in a national referendum promoted by President Lenin Moreno.
Conaie’s 10 demands
1. Fuel Subsidies – Reduce and freeze diesel at $1.50 and Extra and Ecopaís gasoline at $2.10. Focus additional fuel subsidies, in necessary, on agriculture, campesino, transport and fishing sectors.
2. Debts – Economic relief for four million families with a minimum 1 year moratorium, renegociation of debts with interest rate reductions in the financial system (public and private banks and cooperatives). No seizure of assets such as houses, land and vehicles for nonpayment.
3. Food – Fair prices for foods such as milk, rice, banana, onion, fertilizers, potatoes, corn, tomato and more. No to the collection of royalties in flowers. For millions of campesinos, and small and medium producers, a guarantee of sustenance and being able to continue producing.
4. Health and education – An urgent budget since hospitals are facing shortages of medicines and personnel. Guarantee youth the access to higher education and improvement of infrastructure in schools, high schools, and universities.
5. Mining – A moratorium on enlarging the frontier for mining and oil extraction. An audit and comprehensive reparations for social-environmental impacts. Protect territories, water sources, and fragile ecosystems.
6. Collective rights – Respect for the 21 collective rights: Education; Intercultural; Bilingualism; Indigenous Justice; Prior, free and informed consent; Self determination for indigenous peoples.
7. Privatization – A halt to privatization of strategic sectors, patrimony of Ecuadorians (Banco del Pacifico, hydroelectric plants, IESS, CNT, roads, health and more).
8. Price controls – Control prices and speculation by intermediaries in the market for basic necessities, to control price abuse in industrialized products in supermarket chains.
9. Employment – Policies and public investments to stop job insecurity and to ensure the sustainability of the economy for the people. Demand payment of debts to the IESS.
10. Safety from Crime – Safety, protection and generation of effective public policies to stop the wave of violence, contract killings, delinquency, drug trafficking, kidnapping, and organized crime.