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Ecuador, the crucible of neoliberal betrayal in Latin America

THERE is a clear connection between the protests presently raging throughout Ecuador and the long-running gilets jaunes movement which has now renewed in France. In both cases it is austerity at the root of the trouble where people not quite managing can take no more increases in the burdens they carry.

Both protests started when government action resulted in fuel price rises. In Ecuador petrol is going up by up to 75 per cent while diesel will double. And this in a country that itself is oil-producing.

The neoliberal President of France Emmanuel Macron was forced to go cap-in-hand to his “partners” in the EU Commission to beg for enough fiscal flexibility to blunt the strength of the protests. Now the turncoat president of Ecuador, Lenin Moreno, is confronted with the inevitable consequences of his capitulation to the power of global capital.

Moreno accepted a $4.2 billion loan from the IMF earlier this year. The conditions attached to such loans routinely require states to conform to policies which give unconstrained freedoms to big capital, reduce corporate taxes and impose hard conditions on working people. In Ecuador they entail not just the abolition of fuel subsidies but a “liberalisation” of the country’s employment laws and the abolition of import duties on capital equipment.

This is the price paid in keeping onside the international investors whose direct instrument the IMF is.

Poverty directly affects about 22 per cent of Ecuadorians and this is rising. A complicating factor for Ecuador is that the country has no currency of its own, the economy runs on the US dollar. This puts Ecuador in the same category of those countries in the European Union and most especially those tied into the eurozone. Decisive control over the main instruments of economic policy are out of national control. Effective economic power is beyond the grasp of the people.

The dollarisation is not only an outward sign of the power of US imperialism in the southern cone of the Americas but a powerful constraint on the country’s autonomy.

Where Moreno’s predecessor Rafael Correa steered his country towards a more popular economic policy and aimed to protect the country’s indigenous peoples, boost living standards and open up education to the people as a whole, Moreno has executed an economic U-turn.

Cutting the fuel subsidy directly hits a wide spectrum of working people including small business folk and petty entrepreneurs whose costs rise immediately. Fuel price rises have an immediate impact on the cost of living in an underdeveloped place like Ecuador. Moreno chose ending the fuel subsidy as an alternative to a rise in VAT which would have had an even more immediate effect on the cost of living.

The resultant social crisis is following the traditional route for countries which lose their sovereignty and surrender to the dictates of the IMF. Protests are met by repression.

Where Moreno proffered yesterday “an openness to dialogue on the part of the government, but that [we] will not allow the country to be thrown into chaos” he is today offering empty words where only decisive action can resolve the immediate crisis.

Moreno came to office endorsed by his predecessor and expected to follow the same path. His betrayal was immediate, profound and dramatic and has inevitably resulted in a measure of demoralisation and an extra contempt for politicians who go back on their word.

Combine austerity policies imposed on an economy subject to powerful pressures exerted by extra-territorial power with a measure of cynical political manoeuvring by the political elite and we have a mixture that seems, somehow, quite familiar.


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