Region - Fuel prices driving protests
Ecuador is a warning siren for the region
Yesterday’s newsletter for paying subscribers covered the recent protests in Ecuador.
Key point: People are angry about inflation and President Lasso’s opposition (cynically and/or strategically) sees it as a moment to strike and destabilize the government.
Ecuador’s unrest, like every protest movement, has unique characteristics that differentiate it from other protests around the hemisphere. Particularly interesting about Ecuador is how the protests have created a common goal for the country’s largest indigenous organization and the pro-extractive left led by Rafael Correa. Those two groups really hate each other, with the former initially allying with Lasso to take down the latter in the 2021 election and build a governing coalition. But similar to the short-lived nature of the governing alliance, this alliance against Lasso is also doomed to collapse at some point.
Also notable about Ecuador is the fact that Lasso is a free-market and pro-business conservative in a region where politicians have largely moved towards more protectionist policies on both the right and left of the political ideology spectrum. That means the coalitions targeting him aren’t the same as those that would protest against many other regional leaders.
At the same time, Ecuador’s protests fit into the narrative about the regional protest wave that we’ve all been fearing for months. The region is primed for protests and anti-incumbency attitudes. Reuters last week covered how Latin America is losing to inflation. Bloomberg calls it the perfect storm of economic crisis. As I wrote in World Politics Review a couple weeks ago, some of this is driven by Russia’s invasion of Ukraine.
Despite the unique context of the Ecuador protests, public anger over high food and fuel prices is the common factor across Latin America that will be pushing protests and other political events in the coming months. Fuel prices and availability were behind the recent trucker protests in Argentina. The head of Petrobras in Brazil was forced out (again) over fuel price increases. Both El Salvador’s Bukele and Mexico’s Lopez Obrador have touted low fuel prices as part of maintaining their high popularity, but at a significant cost to the countries’ budgets that will eventually come back to haunt them or their successors.
Political discussions related to fuel and transportation subsidies are drivers of protests even in moments of lower prices. With prices as high as they are right now, any political system that starts to debate fuel subsidies risks having people in the streets.
Scheduling note: I’m hosting a Twitter Spaces discussion about the Lithium Triangle tomorrow at noon EDT.