Ecuador faces a government crisis

Ecuador’s sizeable indigenous population and labour unions have had enough of socialist President Lenin Moreno’s IMF-imposed policies.

On Monday this week thousands of student protesters and indigenous Ecuadorians celebrated a victory over the country’s government following President Moreno, who has agreement to cancel the economic austerity package he announced at the beginning of October.

Austerity is when the government creates difficult economic conditions to reduce public expenditure and in this case, Moreno wanted to end government subsidies (money granted by the state to keep the price of a commodity or service low) on gasoline and diesel that have kept the country’s fuel prices low for over 40 years.

The unrest caused by the announcement, which went on for 11 days and left at least seven people dead with more than 1,000 injured, was also ignited by a built-up anger and frustration about the marginalisation of Ecuador’s indigenous groups.

When explaining his reasoning behind scrapping the subsidy earlier this month, Moreno described it as a ‘zanganería’, which is an anti-working-class slur used by wealthy Ecuadorians meaning ‘drone’ or ‘worker bee’. This is what spurred the indigenous groups to spearhead mass demonstrations and riots.

As a result, the government was forced to declare a state of national emergency as chaos flooded the capital city of Quito and security forces struggled to contain the violence. What started as a verbal objection to Moreno’s decision, quickly developed into full blown pandemonium as masked attacked television stations, newspaper offices, an oil production facility, and Ecuador’s congressional building.

As clouds of tear gas engulfed the city, as rioters set fire to police and military vehicles. Truckers and taxi drivers blocked highways in an attempt to prevent government officials from escaping from the capital.

Consequently, a curfew was imposed on Quito and surrounding areas to re-establish order, but it wasn’t until Moreno actively repealed the austerity law – known as Decree 883 – that the demonstrations stopped. ‘Comrades, this deal is a compromise on both sides,’ he said. ‘The indigenous mobilisation will end, and Decree 883 will be lifted.’

Although the agreement between Moreno and indigenous leaders has concluded the violence, a great deal of irreparable damage has already been done, particularly in regard to Ecuador’s economy, which was paralysed throughout the protests.


So, what exactly is Decree 883 and why did it cause so much turmoil?

Like many of its Latin American neighbours, Ecuador is extremely vulnerable to changes in global commodity prices. They were driven to leave the Organisation of Petroleum Exporting Countries in 2020 due to fiscal problems, and since then the country has had to take drastic measures to recover.

Fuel subsidies are a huge issue as they cost governments around 5% of their budget (1.4 billion a year to be exact) and Moreno needed to improve public finances to meet the needs of the International Monetary Fund (an organisation that works to secure global financial stability and reduce poverty around the world). Consequently, Moreno established the IMF-backed package (Decree 883) to lift the economy, but this triggered the sharp rise in fuel costs.

Many Ecuadorians objected that poorer citizens would not be able to afford the change, and this is what caused the conflict.


What does the future hold?

In the past, racial tensions with indigenous Ecuadorians has contributed to the downfall of three of the nation’s previous presidents, and the pressure from this was enough to force Moreno to balance their demands.

Reconsidering the economic policies that spurred the protests, his pledge to withdraw from Decree 883 has led indigenous leaders to call off any more demonstrations and the two sides are now planning to work together to put in place a new policy of government taxes to increase revenues and spending cuts.

‘We have opted for peace. Let’s embrace a solution in which resources go to those who most need them,’ he said upon reviewing plans to cut salaries and vacation allowances for government workers as well as proposing a $20 monthly salary bonus to private sector employees.

Although Moreno has successfully managed to divide the opposition and quell the protests, serious harm has already been done to the nation’s economy and there’s no certainty that this won’t happen again.
‘If the government doesn’t comply, we will come back with more force, and the president knows this,’ a protester told Aljazeera.

The reversion of Moreno’s original measure does leave big questions about the oil-producing country’s economic situation, but it represents a big win for Ecuador’s indigenous communities and highlights the power of their voices.

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