GP Insights # 165, 12 October 2019
The mass protests in Ecuador is continuing. The protestors released the riot police officers detained by them at a cultural centre in the capital city of Quito that has been used by thousands of indigenous protesters as their base since they arrived in the city on 3 October. Following the release, the Interior Minister María Paula Romo addressed in a public speech the release of 30 journalists along with the officers who were covering the incident and had been prevented from leaving the building. The demonstrators paraded the officers and forced few to carry the coffin of an indigenous activist allegedly killed during the unrest. The President of Ecuador Lenín Moreno moved the Government out of the capital and declared a two-month national emergency as the unrest gathered momentum and turned violent within a few days.
What is the background?
The protests began after the Government announced to cut the fuel subsidies as part of the broader public spending reduction policy agreed with the International Monetary Fund (IMF) in return for a loan to ease the fiscal deficit of the country. The deal reached in March will allow Ecuador to borrow $4.2bn (£3.4bn). To follow the austerity measures set by the IMF, Moreno announced that the fuel subsidies were no longer affordable and eliminating them would shore up Ecuador's flagging economy. This, in turn, led to a steep increase in the petrol prices as per the high current market price of petrol, leading the transport industry to call a national strike in protest.
Different indigenous groups later joined the protest from Amazon. In the past few days, the protestors have also entered few oil fields disrupting the production of the Andean. Along with the fuel subsidy cut, the Government has also released a series of labour and tax reforms as part of its austerity measures with the IMF. Five have been killed, and more than 700 people have also been arrested so far in Ecuador.
What does it mean?
The indigenous-led protests in Ecuador command a historical significance. In the past few decades, three presidents have been forced to resign owing to the tribal led protests in Ecuador. However, this is the first time, the protesters have taken dozens of police officers hostage in various locations throughout the country, forcing the President to shift the capital to the port city of Guayaquil.
Firstly, since the indigenous groups joined the protestors, the rhetoric of the dissent has been expanding and is no more centred on oil price or ease in transportation. The transportation unions were the first to organize a national strike, but after talks with the Government the national union leaders called off the strike on 4 October. The mass protests have continued, with thousands from the indigenous movement, student groups, human rights organizations and labour unions taking to the streets. Each group center voiced their own grievances making the protests a collective opposition.
Secondly, over the past week, Moreno has shifted the capital Quito. He has accused the protesters of being part of a larger plan to destabilize the Government.
He has also blamed the former President Rafael Correa. Moreno served as vice president under Correa and was elected in 2017 based on continuing his left-wing platform. However, weeks after the election, he broke with most of Correa's policies.
Nevertheless, why did the Government move out of the capital? The reason could be the intensity of the protests and the historical significance the protest holds in ousting power. The barricades made by the protesters in cutting all links and communication into the capital city could have forced the Government to shift power to Guayaquil.
Thirdly, the role of IMF in introducing austerity measures has been unpopular in all of the Latin American countries. Moreover, the protest in Ecuador against the organization is not the first of its kind. Previously, the leaders in Argentina have faced pushback on the structural changes that the IMF has promoted, leading to a political crisis. Moreno will be facing the same if he remains isolated from the mass protesters and their demands. The suspension of oil field operations has cut the nation's production by 12 per cent, and the country has lost $1.4 billion over six days of protests. This could further lead to nose tightening measures by the IMF.