Ecuador in Turmoil

- Sundaram

(Below is the first part of the article. Part Two will look at current Ecuadorian politics, the record of the Lucio Gutierrez government and the responses of the left movement in Ecuador)

I T IS A COUNTRY that derives its name from an imaginary line drawn through the centre of the Earth -- the Equator. And that arcane fact is probably the only piece of information about the small southern American nation of Ecuador that most people outside the continent know -- the rest is a complete mystery.

One has heard of Brazil, Argentina, Chile, Venezuela and their social movements, politics and economy. Even Peru with its Shining Path, Colombia with its FARC guerrillas or Bolivia with its indigenous movements make it into the consciousness of left activists around the world, but Ecuador? Except for its football team that figured in the last World Cup, the country was missing, at least off my own mental map.

So it was with this complete ignorance that I went to Ecuador a few weeks ago to attend a conference of health activists and these are some of the things I learnt about it:

a) Socially, it is similar to many other South American nations -- with small, predominantly white minorities at the top of the hierarchy, with the numerically larger but mixed (mestizo) populations in the middle and the indigenous Indians right at the bottom.

b) Internally, the economy is deeply stratified again, with the distribution of good quality agricultural land and income from trade and industry both skewed in favor of small minorities. Out of a population of 12.4 million, 8 million Ecuadorians are classified as poor. Nationally Ecuador survives off commodity exports like oil, bananas and fisheries, but again like many Latin American nations, it has high amount of debts to service, and the fact that the country had to adopt the US dollar as its currency a few years ago tells us the entire story about its financial situation.

c) Politically, the picture is quite mixed, and this is because, again like in many of its neigbouring countries, the old regime is yet to go completely and the new unable to take over either. In other words a sort of transitory situation where the Ecuadorian left and various people’s movements are making repeated assaults on the bastions of entrenched semi-feudal power and are able to shake the system but not topple it entirely and create a new one in its place. Like the rest of the continent, US imperialism continues to play an insidious role here, meddling in local politics, set up military bases, manipulate behind the scenes and trying to subvert the process of any radical social change.

But before I get into those issues, some basic facts about Ecuador are in order.
Ecuador is located on the northwestern coast of South America, between Peru to the south and east and Colombia to the north. Ecuador covers 256,370 square kilometers of land, has a population of around 12.4 million and is the smallest country in South America after Uruguay and the Guyanas. The topography of the country is fascinating and ranges from a rich coastline to high snow-capped mountains and the lush-green forests of the Amazon. Thanks to its ownership of the Galapagos islands and the location of Amazon forests inside its borders, Ecuador has one of the highest amounts of bio-diversity per capita in the world.

Along with its neighbours like Peru and Venezuela, Ecuador also achieved independence from direct Spanish rule sometime in the early 19th century. Independence though basically meant the transfer of power from the hands of the ‘peninsulares’, i.e., Spanish-born persons living in South America, to that of the ‘criollos’ – persons of pure Spanish descent born in South America.

Since Ecuador lacked the mineral riches found in other Spanish colonies, such as Peru and Mexico, land was the most sought after commodity and the elites naturally grabbed most of the finest agricultural land in the Sierra, i.e., the Andean highlands, where the capital Quito is located at an altitude of 3000 meters above sea level. Native Indians were subjected to a kind of peonage system, under which they would work free in the landlord’s fields for four days a week in exchange for the right to own a small plot of land. This system, called the ‘huasipungo’, survived in isolated pockets of the Sierra and was finally abolished only in 1964 by a new Agrarian Reform Law.

The Agrarian Reform Law and other similar measures however did not affect the basic distribution of land ownership, which remained highly inequitable. In the early 1980s, only 5 percent of all farms exceeded fifty hectares, yet these represented over 55 percent of land under cultivation. By contrast, 80 percent of all farms encompassed fewer than 10 hectares and accounted for only 15 percent of farmland.

Compared to the feudal highlands around Quito the Ecuadorian coast, with its growing port city of Guayaquil, offered a more modern, capitalist option. Over the years a very large number of Ecuadorian workers, small peasants and agricultural labour migrated there, thanks first to the growing shipbuilding industry, then to the boom in cocoa and banana exports. The different modes of production between the coast and the highlands had its impact on national politics also, with Quito becoming the bastion of the religious, feudal Conservative Party and Guayaquil of the anticlerical, Liberal Party. Politically, the country has had quite a turbulent history as different sections of the elites fought each other bitterly for control and power. While maintaining a semblance of electoral democracy for long periods since independence, in reality, successive governments were often authoritarian and high-handed in their rule and transitions from one government to the other was done through use or at least a show of force. Since independence in 1830 Ecuador has had over 80 different governments and around seventeen constitutions!

On three occasions in the twentieth century -- 1925, 1963, and1972, and very briefly once in the 21st Century -- on 21 January, 2000, the military seized control of power. Very often the military used public disgust with corrupt politicians as an excuse to intervene, but on each such occasion what they established in turn was a corrupt and dictatorial military regime. Like other Latin American economies, Ecuador’s national fortunes, over the decades, have hinged on the rise and fall of global commodity prices. So, before the Second World War, the country’s economy was driven by world prices of cocoa, after the War it was bananas, and since the seventies, it has been petroleum, which was discovered in the sparsely-populated eastern part of the country in 1967.

In the first half of the 1970s, income from petroleum made possible the purchase of a wide range of imports as well as investments in public infrastructure and social welfare measures. When revenues began stagnating in the mid-seventies, the military government then in power resorted to massive foreign borrowing. Between 1976 and 1979, Ecuador’s foreign debt increased by over 400 percent.

In the 1980s further calamities hit the Ecuadorian economy when global prices for petroleum dropped sharply, there was a dramatic increase in international interest rates, widespread damage to crops due to flooding and a major earthquake that severed the country’s oil pipeline for five months and cost it US$700 million in lost revenues.

It is taking advantage of both these economic woes and aided by corrupt domestic politicians that the International Monetary Fund (IMF) was able to impose severe austerity packages in the 1980s that included reductions in public expenditures, currency devaluations and increases in interest rates leading to widespread unemployment nationwide.

The economic decline continued through the 1990s, particularly towards its end, due to falling petroleum prices and extensive damage to banana plantations following to freak weather. This resulted in soaring inflation of over 60%, unemployment going over 17% of the population and the exchange value of the Ecuadorian sucre falling steadily.

Between 1999 and 2000 the value of the local currency fell by a whopping 82%, reaching 25,000 sucre to the US dollar and cutting the value of real minimum wages in the country by half, to a low of US$30 per month. The then President Jamil Mahuad, who took office in August 1998, faced one financial crisis after the other. In March 1999 he imposed a one-week bank holiday, then in April he ordered all savings and current accounts frozen for a year. In September the government defaulted on part of its US$20 billion in foreign debt and by December, ten of the country’s largest banks had failed. That is when Mahuad declared a state of emergency, ordered his 15 member cabinet to resign and announced the dollarization of the economy, i.e., adoption of the US dollar as the national currency. This meant that Ecuador was handing over control over its money supply, interest rates and other economic policies effectively to the US Treasury, becoming the second Latin American country after Panama to do so.

The dollarization move sparked widespread opposition and mass protests including a siege of the national Congress by over 10,000 native Indians in mid-January and finally ending in the military overthrow of the Mahuad government. It was in that short-lived military coup that the current President of Ecuador Lucio Gutierrez, a middle-level military officer, with close connections to the native Indian and sections of the Ecuadorian left movement, shot into national limelight.