Some reduction in fuel subsidies is not off the table as indigenous and government begin talks

Indigenous leaders say they are not opposed to eliminating some gasoline and diesel subsidies so long as they don’t affect the poorest Ecuadorians.

Leonidas Iza

“We agree that there should be a reduction in the subsidy but it should apply to those who can afford to pay more,” says Leonidas Iza, leader of the Indigenous and Peasant Movement of Cotopaxi (MICC). “I agree with the government that much of the subsidy is unnecessary and it should not go to wealthy people and big corporations.”

He added: “Our objection to Moreno’s October 2 plan was that it was across the board hurt the poor much more than the rich.”

Iza also agrees with the government that strong steps should be taken to stop smuggling of diesel fuel across the borders with Colombia and Peru. According to a 2016 study by the University of San Francisco, 20 to 25 percent of diesel goes into foreign vehicles, most of them Colombian. “President Correa said the government would stop this in 2014 but nothing happened,” Iza says. “We should act now.

Currently, a gallon of diesel in Colombia costs $2.60 compared to Ecuador’s price of $1.04. In Peru, the price is even higher at $3.70.

“Obviously, there is a great incentive for smuggling because of these differences,” Iza says.

In a Tuesday interview, Confederation of Indigenous Nationalities (Conaie) president Jaime Vargas said that the fuel subsidies should remain in effect for the transportation and small agricultural sectors. “The cost of getting products to market and for bus transportation are major expenses for the indigenous and campesino population and must be maintained,” he said.

All agree that maintaining controls on a fuel system with two pricing regimes will be difficult. “It will require careful preparation to make sure the system we create is controlled,” says José Fuentes, economics professor at the University of the Americas (UDLA). “If the controls are not strict we will have the same kind of of problem we now have at the border.”