Ecuador's 'Divided State' is Pulled Toward the Left

Posted in Other | 07-Apr-06 | Author: Michael Weinstein

Plagued for six years by a cycle of political instability, Ecuador plunged into social conflict on March 13 when the Confederation of Indigenous Nationalities of Ecuador (Conaie) mounted a campaign of direct action aimed at blocking Quito's negotiations on a free trade agreement (F.T.A.) with Washington.

The roots of Ecuador's instability, which is symptomized by the failure of its last three elected presidents to complete their terms in office, lie in the country's condition of being what its current president Alfredo Palacio calls a "divided state." The rifts within Ecuador's political structure are based on localism overlaid by a split between rich and poor that has resulted in weak presidents who are constrained to mediate between populist indigenous and mestizo movements, and the traditional creole political class that controls the legislature and judiciary. Executive authority is continually vulnerable to direct action from popular forces and institutional coups from the political class, depending upon which of the adversaries has not had its interests satisfied.

The pattern of Ecuador's politics was set early in the twentieth century and has been sustained by the country's economy, which has been dependent on exports of primary products that are subject to economic cycles. Populist pressures have gained strength when markets have collapsed and when they have risen, starting early in the twentieth century with the cocoa boom and bust, and continuing with the vicissitudes of the banana market and most recently the petroleum market. Declining fortunes lead to demands for economic security and advancing prosperity triggers calls to share the wealth. All the while, the wealthy use their institutional control to preserve their advantages.

The interplay between populism and oligarchy has led to chronic deadlock, reflecting a balance of power in which neither of the opposing forces is able to gain dominance permanently, neither is willing to compromise with the other to forge a social contract, and both seek to gain maximum benefits from the central government through intimidation. It is not surprising that efforts to appease both sides have resulted in over-indebtedness that has generated recurrent fiscal crises that have been followed by periods of austerity, which, in turn, have re-stimulated populist pressures.

The current cycle of instability began in 2000 when President Jamil Mahuad responded to a fiscal crisis involving a default on Ecuador's debt by adopting the U.S. dollar as the country's currency. The collapse had been caused by a ballooning fiscal deficit and an expansionary monetary policy that had left the country with a 52.2 percent rate of inflation, a 7.3 percent decline in G.D.P., a currency devalued by 65 percent, and a poverty rate of 70 percent (double what it had been through the 1990s).

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