Ecuador Protests - 8 October 2019
President Moreno faces large protests against fuel price hikes. His political opponents are divided.
In response to a reduction in fuel subsidies last week, part of a larger austerity package requested by the IMF, protests are ongoing and a large national strike is planned for Wednesday. President Lenin Moreno views these protests as a threat to his government.
Working in favor of Moreno’s stability
Moreno has the military and police on his side. Military commanders appeared with the president during his announcement on Monday evening regarding temporarily moving the federal government’s operations to Guayaquil.
Moreno’s opponents are divided between the left and right and the two sides hate each other more than they dislike the president. This makes a unified opposition to Moreno very unlikely.
Oil prices are relatively low at the moment, making the fuel price hikes less severe than they could be. While oil production output declines due to the protests may hurt the government budget long term, the short term effects are limited.
Working against Moreno’s stability:
Prior to this week, Moreno was already unpopular. Most recent public and private polling place his approval rating around 20% down from 30% at the start of the year and nearly 70% at the beginning of his term.
Protests against the fuel price hikes were large and swift, suggesting a greater level of organization than simple spontaneous protests.
Weak economic growth and legitimate anger at Moreno’s economic policies.
There is a history of protests playing a role in toppling governments in Ecuador (Abdala Bucaram in 1997, Jamil Mahuad in 2000, Lucio Gutierrez in 2005).
More protests and repression in the coming weeks:
Moreno appears stable in his position in spite of protests, political opposition and low popularity. He also appears committed to additional reforms that will bring more protests.
Moreno announced a 60 day state of emergency that gives him greater executive powers. That state of emergency is likely to be extended as long as protests continue in and around Quito.
To counter plans for protests, Moreno announced on Monday evening he will temporarily move the country’s capital to Guayaquil. This gives the president a small amount of additional stability (Guayaquil has far fewer Correa supporters than Quito or Cuenca) but will likely increase the protests in the coastal city as indigenous communities move their protests.
Ecuador’s security forces have shown themselves willing to repress protests and there is pressure from the business community to increase repression and arrests of those who are violent.
Moreno insists that the fuel price hike is the correct move and will not be reversed. In doing so, he will need to find ways to mitigate the effects including new subsidies and social programs targeting indigenous communities. It is likely that Moreno will attempt to negotiate with protest groups separately to break up any attempts at unifying the rural indigenous communities with the urban pro-Correa protesters.
Background
President Lenin Moreno announced an end to fuel subsidies last week, raising the price of gasoline by about 25% and more than doubling the price of diesel fuel. Moreno also announced a two month state of emergency and implied other cuts in the government workforce and privatizations will be occurring. The IMF has mandated an austerity program in exchange for delivering additional rounds of money that are part of a $10 billion program Moreno negotiated with various international organizations.
The Moreno government is making up for years of fiscal neglect that occurred under President Rafael Correa. The former president expanded the government’s annual budget deficit and placed the country into significant debt with infrastructure projects and social programs. With a dollarized economy, the government cannot print money in order to finance its deficits the way many other countries in the region have done.
The protests in response to the announcement were swift and disruptive to businesses and travelers throughout the country.
Over 500 people have been arrested, most due to vandalism.
About two dozen business owners have been arrested for raising prices without authorization.
Several businesses related to agriculture and food manufacturing have been targeted by protesters and vandalized or looted.
Military and police vehicles are being used to guard key government locations and security forces are doing their best to keep vital highways open including the one from downtown Quito to the airport.
At least two dozen police officers have been injured and several soldiers were detained by an indigenous community.
Three oil fields run by Petroamazonas were forced to shut down due to protesters.
In a small victory for the president, within 48 hours of the initial announcement, the main transportation union in Quito announced they were halting protests.
Ecuador’s indigenous communities led by the CONAIE organization have said they will continue protesting until the fuel subsidies are returned. In their view, transportation workers in big cities can pass on higher costs, but indigenous groups in rural communities do not have that option and will simply have less money to feed themselves and their families. Moreno has promised to dialogue with the indigenous communities and offer some government spending to make up for the lost subsidies.
Indigenous groups are planning to join urban protesters on Wednesday’s national protest. Several large groups of indigenous protesters arrived in Quito on Monday night.
Moreno’s political opponents sense weakness, but also attack each other
Some Moreno supporters and the business community have blamed Rafael Correa for being behind the organization of protests against the government. Moreno has said that there is a coup plot organized by Correa, perhaps with the assistance of Venezuela’s Nicolas Maduro. It is true that Correa and his Alianza Pais (AP) party do appear to have some ties to the protest organization in Quito and Cuenca and are using the moment to hit the president. Correa from the safety of his new home in Europe has personally criticized Moreno as a “traitor” to his ideology and voters. On the other hand, indigenous communities, even as they protest Moreno and the IMF, also rebuked Correa and his political gamesmanship.
Criticisms of Moreno also came from opportunist politicians on the right. Guillermo Lasso, Moreno’s opponent in the 2017 election, and Jaime Nebot, the former mayor of Guayaquil and likely contender for the presidency in 2021. Nebot’s comments were heavily critical of the IMF, suggesting he would seek to renegotiate debt and look for alternative financing if he were elected. Nebot also called for swifter repression of the protests, appealing to voters who are angry at the disruptions and vandalism that the protesters cause.
However, many protesters are legitimately upset at the price increases. Many urban protesters are poor and will face significant personal impact from the price increases in both fuel and food. The largest group of indigenous protesters are independent and long term opponents of Correa. There is real anger here by the poorest and most vulnerable populations in Ecuador that should not be dismissed as political opportunism. Moreno’s biggest challenge is finding a way to help those who are harmed by the price increases while successfully fending off political challengers who attempt to take advantage of the moment.
Playing a role in all this is jockeying for position prior to Ecuador’s presidential elections in 2021. Those elections appear likely to be tightly contested between a polarized left and right. While Moreno can run for reelection, it’s not clear whether he will. With only 20% approval and significant opponents on both the right and left, he likely recognizes the difficult position that he is in. He would not have the support of the AP machine that helped him win in 2017.
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