By Larry Luxner
Half a century of communist rule in Cuba gave the island’s 11 million inhabitants superb health care and wiped out illiteracy, yet it’s also decimated the private sector and crippled the Cuban economy in the long term. Nicaragua, also ruled for decades by Marxists, remains one of the poorest countries in Central America. Brazil’s leftist revolution that lifted millions from abject poverty came to a screeching halt when its president was impeached. Argentina chose a free-market businessman to replace its populist president, and Venezuela — whose vast oil reserves are larger than Saudi Arabia’s — is mired in poverty and racing toward total economic collapse under the failing leftist dictatorship of Nicolás Maduro.
Yet oil-rich Ecuador, also ruled by a populist firebrand for the last 10 years, chose a different path — and bucked the leftist political slide in Latin America.
On May 24, President Rafael Correa hands off power to his former vice president, Lenín Moreno, who — as his first name suggests — will rule the Colorado-size nation with a leftist bent until 2021 after narrowly defeating former banker Guillermo Lasso 51 to 49 percent in an April runoff election.
Correa leaves office as one of Latin America’s most popular heads of state. He ushered in a wave of political and economic stability and slashed poverty and inequality, in part by using high commodity prices to fund social services such as health and education. Unlike Venezuela’s widely despised Maduro, whose economic mismanagement ruined his country, Correa continues to enjoy nationwide approval ratings of more than 60 percent.
His popularity in the United States is another matter. Under Moreno, Ecuador’s often rocky relationship with the U.S. will definitely improve, says Francisco Borja Cevallos, Quito’s ambassador in Washington.
“His personality is different from [that of Correa], but more important than that, the president-elect has specifically said he wants to refresh Ecuador’s relationship with the United States,” Borja told The Washington Diplomat in an April 13 phone interview. “This is a political decision. As always, we want the U.S. to respect our process and our country. We can agree or disagree, but as good friends.”
During his decade in office, Correa — like Cuba’s Castro brothers, Venezuela’s Maduro and Maduro’s mentor, the late Hugo Chávez — did not hesitate to lash out at the United States. In early 2011, the State Department declared Ecuador’s then-ambassador in Washington, Luis Gallegos, persona non grata and gave him 72 hours to leave the country. That followed the expulsion of Heather Hodges, the U.S. ambassador in Quito, after WikiLeaks released a secret diplomatic cable in which Hodges accused Correa of links to police corruption.
For a whole year, neither country had an ambassador. Making matters worse, in 2012, Correa further infuriated Washington by giving WikiLeaks founder Julian Assange refuge at Ecuador’s embassy in London. Five years later, Assange remains holed up there to avoid extradition to Sweden, where prosecutors want to question him about accusations of rape and sexual assault.
Yet Correa — who has both a master’s degree and a doctorate in economics from the University of Illinois — “regularly flipped between the mold of a fiery populist and the pragmatism of a studied technocrat,” wrote Nicholas Casey and Maggy Ayala in a Feb. 19 New York Times article.
Among other things, Correa slashed the poverty rate by 38 percent and extreme poverty by 47 percent, according to the Center for Economic and Policy Research (CEPR), in part by funneling government money to social programs such as cash transfers and doubling spending on education, health care and housing. New roads and bridges were built, more children enrolled in school and clinics spread to rural areas. Inequality fell substantially during Correa’s term, while annual per-capita GDP registered steady increases over the last decade.
But economists point out that much of Correa’s lavish spending was financed by booming oil prices. Now that those prices have crashed, it remains to be seen if the new president can continue his predecessor’s largesse.
But a February 2017 report by CEPR, a leftist think tank, argues that Correa deserves credit for deftly managing Ecuador’s economy. The paper notes that his achievements were not driven by a “commodities boom,” but from deliberate policy choices and reforms that the Correa government enacted, including ending central bank independence, defaulting on illegitimate debt and taxing capital leaving the country, among other measures.
“Ecuador’s experience over the last 10 years indicates that a relatively small, lower-middle income developing country is less restricted in its policy choices by ‘globalization’ than is commonly believed,” said co-author and CEPR Co-Director Mark Weisbrot.
“The Correa government renegotiated contracts with foreign oil companies, and used the increased earnings to start transforming education and health,” wrote James North in The Nation. “The government is reducing tax evasion among the rich, which is a pervasive problem throughout Latin America. Correa played hardball with foreign creditors, and forced significant reductions in Ecuador’s onerous debts.”
Correa also brought stability to a country that had seen seven presidents in the space of only 10 years. His administration “ended neoliberalism in Ecuador, strengthened the state, inflated the bureaucracy, increased social spending and redistributed income in the context of a boom in the price of oil, a commodity that represents 58 percent of the country’s total exports,” noted Carlos de la Torre, a sociology professor at the University of Kentucky.
But the former Wilson Center scholar worries that the end of the Correa era could lead Ecuador into a new phase of political turmoil, and is even concerned that Moreno — who will govern under a cloud of corruption and who clearly lacks Correa’s charisma — could be tempted to follow Maduro’s example in using repression to cling to power.
Taylor Lewis, a research associate at the left-leaning Council on Hemispheric Affairs (COHA), disagrees, arguing that for Latin America, the election of Moreno presents an “interesting spark” in the region’s leftist movement.
“Moreno’s presidency and his ruling party’s authority in the National Assembly will now provide a continuity of leftist rule at a time when prominent leftist figures of the region are falling from their positions of power,” wrote Lewis, noting the end of the presidency of Argentina’s Cristina Fernández de Kirchner in 2015, the ouster of Brazilian President Dilma Rousseff in 2016 and the death last year of Cuba’s Fidel Castro.
“In Ecuador, much of Moreno’s leftist presidency will be shaped by Correa’s influence and whether the former president attempts to rule once-removed, or grants his successor the freedom to pursue his own agenda for the benefit of all Ecuadorian people. Ultimately, Moreno’s presidency has the potential to demonstrate the ability of his leftist party to provide for Ecuador’s citizens in a way right-wing regimes cannot, and may ultimately serve as a litmus test for the endurance of key leaders of Latin America’s left.”
On the other hand, Michael Shifter, president of the Inter-American Dialogue, says it would be a mistake to over-interpret Ecuador’s elections in a regional context.
“There’s always a strong temptation to say this was a shift to the left. But this election had more to do with Correa and the two candidates, Moreno and Lasso,” Shifter told The Washington Diplomat in a phone interview. “Correa made a shrewd move in picking someone like Moreno. He’s radically different in temperament and style than Correa. He’s much more conciliatory and low-key. He continues Correa’s citizens’ revolution but with a much softer, gentler approach. Correa is extremely confrontational and aggressive. Ecuadorians got tired of that. But they also liked some of the benefits.”
For one thing, the standard of living for many of Ecuador’s 15 million inhabitants has improved substantially in the 10 years Correa was in charge — and the idea of going back to a market-driven economy under a banker made many voters nervous about Lasso (who, among other things, had promised if elected that he’d boot Assange from the country’s embassy in London).
Moreno, who was Correa’s vice president from 2007 to 2013, left office with an approval rating above 90 percent, said COHA’s Lewis, “largely as a result of his widely recognized efforts to create government support programs for the disabled, increase government funding for health care and create housing subsidies for low-income citizens.” Moreno is himself a paraplegic, having been confined to a wheelchair since 1998, when he was shot in the back as gunmen stole his car from a Quito parking lot.
However, world oil prices have dropped substantially since 2014, and Ecuador — the smallest of OPEC’s 13 members — is now in trouble.
The country’s GDP shrank by 1.7 percent last year after growing only 0.2 percent in 2015, and the IMF forecasts a similar decline this year. Additionally, the government’s rising deficit has led to an increase in public debt, which now represents nearly 40 percent of GDP after a low of 15 percent in 2009.
The Guardian’s Jonathan Watts added: “Indigenous groups and environmentalists accuse the government of putting Chinese oil and mining interests above local people and protected areas in the Yasuni national park,” he wrote in a Feb. 15 article. “And the middle class complain of high taxes, excessive bureaucracy, clampdowns on NGOs and attacks on the media.”
While Lasso’s failed campaign promised to cut taxes and reduce public spending to encourage foreign investment and growth, Moreno did exactly the opposite: he vowed to expand public credit and investment, which includes an ambitious housing scheme and the “Plan for a Lifetime” social program, which will ultimately cost more than $2 billion.
Borja, who replaced Nathalie Cely Suárez as ambassador to the United States in May 2015, acknowledged that Ecuador indeed faces a crisis, but that it will pull through.
“Ecuador is much stronger than it used to be. Our GDP has grown from $50 billion to more than $100 billion in the last 10 years,” he told us. “We have much better infrastructure — roads, ports, airports, hydroelectric power, communications — so we are better prepared than we were before to face the crisis.”
Borja added that there’s also better communications between Ecuador and the U.S. than before the turmoil that erupted with the mutual expulsions of ambassadors from each other’s capitals. He said that Todd Chapman, the U.S. ambassador to Ecuador, has “a very good relationship” with his counterparts at Ecuador’s Foreign Affairs Ministry.
“Those moments of tension of years ago have passed, and we’re on a much better path now,” he said. “There are areas in which we have a very good relationship, such as security and fighting drug trafficking. We’re a little bit worried about our immigrants, but we hope we can talk frankly about this, too.”
Borja expects change on the domestic front as well, noting that “President-elect Moreno has said he wants a dialogue with the opposition, with civil society. There’s great support for the citizens’ revolution in Ecuador, and the majority of Ecuadorians still support this process — but at the same time, they wanted a change, especially in the way the government interacts with the rest of the country.”
Whether the low-key Moreno — following in Correa’s thunderous footsteps — actually meets voters’ political and economic expectations remains to be seen.
“Ecuador hasn’t had a real history of political violence and turmoil,” says Inter-American Dialogue’s Shifter. “But there’s a lot of tension and polarization, and the new president will have to reach out to the business community, which Correa had a hard time doing, if they want to get the economy back on track.”
Credit: Washington Dispatch, www.washdiplomat.com