Tuesday, 19 November 2019
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sratfordownloadProtests involving labour, student and indigenous groups have convulsed Ecuador, putting its government in danger of toppling — and enabling the possible return to power of its former president or another tightly aligned populist figure. Together, it threatens investors and businesses with rapid policy swings or even the nationalisation of assets. The current unrest erupted after President Lenin Moreno cut hefty fuel subsidies in an effort to meet International Monetary Fund lending standards to sustain the flow of vital support.

Although entered office as the chosen successor to Rafael Correa, he has deviated from his predecessor's populist ideology and moved the country away from its alignment with Venezuela and its Chavista policies. Underscoring the jeopardy, Moreno announced in a nationally televised address on October 8th that he was relocating his government from the capital, Quito, to the coastal city of Guayaquil.

In the face of the unrest, Moreno has so far remained firmly committed to the austerity policies that sparked it. On October 7th, he told Ecuadorians he would maintain fuel price hikes put in place the week before. He also accused Correa and Venezuelan President Nicolas Maduro of mounting what he called a "coup attempt." From self-imposed exile in Belgium, where he fled to avoid corruption charges, Correa tweeted support for new elections in Ecuador, calling his successor "finished." Military leaders, the defence minister and the vice president flanked Moreno during his October 8th speech as he emphasized the armed forces' continued backing for his administration.

But the extent of its support remains an open question: Similar tumult in 1997, 2000 and 2005 forced Ecuadorian presidents from power. And despite the declaration of a state of emergency and the deployment of troops on October 3rd, protests have shown signs of intensifying. On October 7th, indigenous groups, spearheaded by the Confederation of Indigenous Nations in Ecuador, which participated in the 2000 coup, blocked roads across the country, disrupting travel, including fuel deliveries, along parts of the country's main north-south artery. In Quito, demonstrators vandalized the national assembly building and comptroller general's office. The protests have also disrupted business operations. State-run energy company Petroamazonas suspended work at three oil fields that had been seized by unnamed individuals, while assailants also attacked warehouses and farms in Cotopaxi province.

With the situation fragile, the military reaction will be key. Any moves by military personnel to side with the protesters against the government could tip the balance against Moreno. Correa's return to Ecuador would, of course, be a major development. Also key would be the involvement of any external actors, with Venezuela and Cuba being the most likely to support Correa and the United States and members of the Organization of American States likely to favor Moreno. The direction of the protests will also be vital. Moreno is likely hoping that a retreat to Guayaquil, where his pro-business policies have more support, will give him the time and space to wait out the popular furor.

If Correa or a close protege manages to seize power, the country would almost assuredly resume the populist policies that marked his period in power and put a stop to the economic reforms that Moreno spearheaded. A Correa-led government would also likely reverse Moreno's efforts to smooth relations with the United States and his movement away from Venezuela.

Moreno championed a national referendum that reestablished presidential term limits removed in 2015. This legally bars Correa from running in the 2021 presidential and legislative elections — blocking a path to power. But Moreno's tenure has been fraught with economic issues, including high debt levels incurred during Correa's term and his effort to cope with lower oil prices by borrowing money.

This is an edited version of an article that appeared in Stratfor Worldview (c) www.stratfor.com Reproduced by their kind permission

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