Ecuador: Lenin defeats billionaire as 21st Century socialism scores key win

April 8, 2017
Issue 
Lenin Moreno.

Ecuador’s Citizens’ Revolution is set to continue for another four years after the candidate for the socialist-leaning ruling party, Alianza Pais, Lenin Moreno, won the April 2 presidential elections run off.

With 51.16% of the vote, Moreno defeated Guillermo Lasso, managing director of Ecuador’s third-largest bank and unsuccessful candidate in the 2013 elections.

The government was always favoured to hold onto the presidency and maintains a majority in parliament. However, the shrinking of the economy by about 3% between January 2015 and April last year due to the collapse in the price of oil fuelled calls for political change.

Right-wing response

Moreno’s narrow victory was marred by claims of fraud from Lasso and other figures in Lasso’s right-wing party. Echoing the Venezuelan elite’s response to losing the 2013 election after the death of socialist president Hugo Chavez, Lasso said a Moreno government would be “illegitimate”.

On the evening of April 2, the corporate media ran headlines claiming the election was a “technical tie” and broadcast live feeds of anti-government protests. But as the final votes were counted, Moreno’s lead of more than 200,000 votes would not be shifted.

The result was especially significant in that it marked the successful handover of power from Rafael Correa, the charismatic left-wing political economist who served as president from 2007–17.

Having come to power pledging a “Citizen’s Revolution”, in Latin America. His successes led progressive economists, including James Kenneth Galbraith, to sign a letter encouraging Ecuador to vote for continuity.

With such an eminent predecessor, Moreno opted for a conciliatory and non-divisive campaign. On a personal level, Moreno (or simply @Lenin on Twitter) cuts a figure that is hard to dislike.

Moreno, wheelchair-bound since the victim of a violent robbery in 1998, speaks quietly and with humility, and will readily break into song during his campaigns. He was formerly the UN Special Envoy on Disability and Accessibility and worked to register and provide carer services to Ecuador’s disabled population.

When asked to debate his opponent, Moreno refused; offering instead to “listen” and “engage in dialogue” with him.

Plutocrat banker

This personal style put the spotlight on everything to dislike about his opponent. Lasso is a billionaire from the coastal city of Guayaquil, which has a history of patriarchal politics led by conservative local business magnates.

At the age of 22, Lasso was made vice-president of the Ecuadorian arm of a Panamanian bank opened by his brother-in-law. This bank then purchased a majority holding in the Bank of Guayaquil. Lasso was made its managing director when the two banks were merged 13 years later.

While still controlling a major bank, Lasso became a member of the state board regulating the banking sector in 1996. From there, the country saw a liberalisation of regulation in the finance industry. This ended in a crash in 1999 that cost millions of Ecuadorians their savings.

It was, in a sense, a portent of what the US and Europe suffered in the 2008 financial crisis.

At this point, Lasso was governor of Guayas province, as well as vice president of the Banking Association. After the crash, he became economics minister while the Bank of Guayaquil was buying up consumer credit certificates — given to those whose savings were lost in failed banks — at 40-60 cents on the US dollar.

This preceded a presidential decree that those same certificates be bought by the state at 100% of their original value — netting the bank huge profits at the expense of ordinary people.

Vanquishing the Banana Republic 

In short, Lasso is a product of the days when Ecuador was the quintessential banana republic. Judging by his policies, he sought to turn back the clock.

Among his proposals were “incentives” for the involvement of the private sector in health care, policing and national parks, eliminating 14 different taxes, and eliminating all taxes on the “tourism” sector.

When pressed on privatisation of basic social services, Lasso responded that “the best Minister of Health is the mother” and “the best Minister of Education is the father”.

Although he was not drawn on wages, he was quoted during the campaign by the conservative mayor of Guayaquil as arguing that employment could not grow unless wages became “competitive”. He was referring to the apparently excessive minimum basic salary of US$500 per month.

All this makes Lasso a figure who provokes considerable animosity among many Ecuadorians. Days before the election, Lasso’s attempt to be seen amicably drinking beer at an Ecuador vs Colombia football match in Quito backfired when the crowd became aware of his presence and heckled him out of the stadium.

Taking the lead from Lasso’s subsequent press conference, the corporate media wrote that the government had paid off a mob to physically attack Lasso and his family.

Earlier in the campaign, pop singer Delfin Quishpe released a sequel to his most famous song, in which he laments his lover who was forced to leave the country during the 1999–2000 crisis. In a clip viewed more than 250,000 times, Quishpe called Lasso a “scorpion” who was responsible for the financial crisis. The chorus declared: “A banker in power, it cannot be.”

In an election decided by just 2.3%, it could have made the difference.

Leftist success story

Leftist ideals are fine, many say, in theory. If you’re not a socialist at 20, the saying goes, you’ve got no heart. But if you’re still a socialist at 30, you’ve got no brain.

Ecuador gives the lie to this disdain for socialism. It is a powerful example of what progressive politicians and left-wing economists can achieve in power.

From 2007–2017, Ecuador’s economy doubled in size. At the same time, the proportion of GDP dedicated to social spending went from 3.9% to 9.9%. This allowed the government to extend the reach of health and education institutions, while making these services free to all. The government also expanded welfare payments to the worst off.

In the words of a far-from-anti-capitalist source, The Economist: “Between 2006 and 2011 Ecuador had the world’s most ‘inclusive”’ economic growth, according to ODI, a British think-tank; incomes of the poorest 40% of Ecuadoreans grew by eight times the national average.

“The poverty rate, which started falling in the early 2000s, came down further, from nearly 40% in 2006 to less than 23% in 2016.”

This was financed by four significant policy interventions. Firstly, unlike in so much of the world, corporate tax is actually enforced in Ecuador.

Secondly, the government wrote down its unsustainable foreign debt, the interest payments on which were at one stage consuming over 40% of the budget. The country has still been able to borrow on international markets since then, though it has been forced to pay an average of 9.64% interest to do so.

Thirdly, the state expanded its activities in oil and mining. It also levied heavy taxes on private companies operating in this sector.

And finally, Ecuador’s central bank made stimulatory loans to the government to ameliorate the impacts of the oil crash.

Most of these policies are replicable, depending on the specific context, for governments that actually have the welfare of their people as their core interest.

This economic renewal made many things possible. To speak only of those affecting the rest of the world via climate change, Ecuador now produces more than 95% of its electricity from renewable sources. The vast majority is sourced from the network of hydroelectric stations built within the past decade in collaboration with Chinese engineers to tap the potential of the mountainous terrain of the Andes.

Previously, Ecuador’s primary source of electricity was burning imported natural gas. The gas cookers widely used throughout the country are in the process of being replaced by government subsidised electric stoves.

Similarly, the Socio Bosque (Forest Partners) program has been implemented to prevent deforestation. The program pays communities, 86% of which are Amazonian, to protect forests by only permitting fishing and hunting within them. It currently administers more than 1.2 million hectares of forests, which represents around 10% of the country’s forested territory.

Finally, the country is investing in mass transit systems in its largest cities. In the capital Quito, an underground Metro system and a network of cable-cars to hillside neighbourhoods is underway. The third-largest city, Cuenca, is being dotted with light-rail stations.

In a country whose GDP per person makes it the world’s 84th richest, such initiatives offer a glimpse of what government for the people could achieve in the world’s wealthy countries. But at the very least, with this most recent election out of the way, Ecuador can now look forward to its future.

The rest of us should look forward to seeing more of what it is capable of.

[Reprinted from www.importantcool.com.]

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