For all the prophecies of doom about the outcome of Sunday’s election, the changes that will follow are likely to be relatively minor no matter who wins.
Most of the dire forecasts come from right-wing and centrist editorialists and commentators. At their most restrained, they claim that a Andres Arauz victory will mean a return to the policies of Rafael Correa, higher taxes, more regulation and an enlarged bureaucracy. When their fantasies run wild, they envision a downward spiral into inflation, hunger, and degradation – “Ecuador will become another Venezuela” is their often-repeated warning. The dollar will be replaced by an even more fiat currency, or worse, a digital currency. The banks will be looted of people’s savings. Land will be confiscated. The peasants will storm the cities and plantations.
There is also concern on the left of a Guillermo Lasso presidency, of course: of market-driven programs that will punish the poor and loose a wave of rapacious capitalism upon the land. Mostly, however, it is the fear of an Arauz victory that sets off the alarms since he is the candidate who appears to have the advantage.
The predictions of catastrophic changes are faulty on several counts. First, the country is almost broke, offering little working capital for the new regime. Second, there will be even less money as the pandemic continues to wreak havoc, probably well into 2022. And then there is the deep-seated antipathy toward Correa in the National Assembly as well as among the population in general.
Neither Arauz or Lasso has presented credible plans of how they will finance their infrastructure projects, business loans and jobs programs. Arauz, whose plans are more ambitious and would require more capital, says he will borrow from the central bank but that will be only a drop in the bucket of what he needs. What is missing for both candidates, especially Arauz, are the $100-plus barrel oil prices that fueled many of Correa’s programs. Although prices may rise temporarily based on Saudi Arabian and Russian intrigue, they are unlikely to return to 2007-to-2015 levels any time soon.
Besides blaming the Moreno administration for the slow rollout of Covid-19 vaccines, neither Arauz or Lasso has acknowledged the full extent of the damage the virus has inflicted on the an economy — which was already reeling before the virus. Both seem to assume the pandemic will end soon after one of them takes office.
Despite foreign press reports that he will benefit from leftist gains in Ecuador’s National Assembly, Arauz will encounter strong headwinds in legislating major changes, including raising taxes. Most of the newly elected leftists of Pachakutik (Yaku Pérez) and the Democratic Left (Xavier Hervas), who will hold the balance of power in the new Assembly, are staunch anti-Correistas. Although they may provide support on some legislation that benefits leftist projects, they will be on the alert to anything that re-powers a broader Correismo agenda.
The suggestion that foreign loans will fund new programs for either Arauz or Lasso is highly questionable. Although the IMF announced this week it is developing a new loan program to help poor, indebted countries through the pandemic and beyond, the money will come, as always, with strings attached. And Arauz’s preference for Chinese loans, as it was Correa’s, is probably a non-starter. China has not made a single loan to a Latin American country in more than a year and announced last week that its banks are tightening the purse strings for international loans through 2022.
What about the expats?
So what does the election mean for expats? Probably not much.
Despite the howls of some gringos that the country will go to hell in a handbasket if Arauz wins, life will go on pretty much as it always has. Long-time expats understand this; they have heard it all before. There will be no mass exodus of foreigners. Ecuador will remain a good place to live and continue to attract newcomers.
The suggestion that other Latin American countries will become more attractive for expats assumes that Covid is an Ecuadorian virus. The pandemic has brutally leveled the playing field throughout the region and countries like Colombia, Peru and Panama have suffered at least as much as Ecuador.
It will likely take years for the country to recover from the twin economic shocks of low oil prices and the pandemic — but it will recover. As in other countries, its debts will be extended and more debt will be incurred. Ecuadorians have generations of experience at being poor and they will endure as they always have, with resolve and hard work. In the meantime, they will continue to be welcoming hosts. There will be no major shocks to the rules of foreign residency no matter who takes office in May.
Although conventional wisdom is that Arauz will win, it’s far from a sure thing and Lasso could easily pull off the upset. The political polls are notoriously unreliable in Ecuador, almost always missing underlying trends, and one recent trend is a strong last-minute move toward Lasso. The best estimates are that 25 percent of the electorate is undecided, disappointed by the choice of candidates. No one knows how many of the indigenous and their supporters will vote nulo or who those who break ranks will vote for.
Most foreigners, including many expats, don’t understand that the election has little to do with ideology. It is not a contest of right vs. left, capitalism vs. socialism, but one about personalities, most notably that of Rafael Correa. Do they choose the Correa who built highways, schools and hospitals and modernized the education system, or do they instead, vote against the megalomaniac Correa, the control freak, religious fanatic, the would-be architect of a nanny state, the muzzler of free speech and a man who managed to insult friends and enemies alike?
We will know tomorrow night. After that we can go back to bitching about Covid restrictions and the weather.