Ecuador, the Survival of the Left, and the Structural Constraints of Global Capitalism in Latin America

Former President Raphael Correa and Incoming President Lenín Moreno, following Moreno’s election victory in 2017

On Sunday, February 4th Ecuador held a popular consultation (consulta popular) on seven questions; five of which were binding while the remaining two are to guide the government in developing future policies. There are strongly opposed opinions on the meaning of this public consultation and on its consequences for Ecuadorian politics and for the political left. The case provides us with insights into the Latin American political dilemma.

Ecuador’s Popular Consultation: A Squabble within the Left?

Ecuador is one Latin American country (the other is Bolivia) that appeared to have bucked the rightward swing in recent years. In 2017, the country elected Lenín Moreno, candidate of the left PAIS Alliance, to the presidency. He replaced former PAIS president Raphael Correa. Correa had been Moreno’s mentor, close friend, and vice-president during Correa’s final term in office. During President Correa’s ten years in power, Ecuador experienced unprecedented political stability, economic growth averaging 4 percent per year, and a sharp decline in both poverty and inequality. The election of Moreno raised popular expectations of more of the same.

The results of the recent Popular Consultation gave the country’s President Moreno (the “yes” vote) a win on all questions, averaging about 65 per cent support. This might sound like a solid victory and augur a consolidation of the left, but the situation is a complicated one. First it is important to bear in mind that the political figure leading the “no” vote was none other than former President Raphael Correa. A benign interpretation of the “consulta” (floated in many mainstream reports) is that Moreno was seeking greater legitimization of his rule and to extricate himself from the shadow of correismo. This does not necessarily signal a change in left policy direction—it could simply reflect a power struggle. Certainly, the question preventing anyone from holding an elected office more than once seemed directed against Correa and toward permanently ending his political career.

But There is Much More to the Story

However, Sunday’s vote indicates that Moreno has lost support from a substantial portion of the political left (about 30 percent). In addition, Moreno’s opponents in this vote were highly critical of what they saw as his embrace of the business class; they see the “yes” win as opening the door to the expansion of business power and the political right. It is not difficult to grasp the basis for this thinking. Moreno’s frequent meetings with domestic and international business during his election campaign during which he promised to make economic policy decisions in consultation with the private sector were surely taken as ominous warning signs by many among political left. Moreover, once in power, Moreno continued to meet with business leaders, asking for their collaboration in the development of economic policy. Business also supported holding the popular consultation vote.

President Moreno meeting with foreign petroleum business people

Moreover, features of the consulta suggest that its main objective might have been more geared to securing popular quiescence than to truly testing popular opinion on the questions posed. These questions were a disparate lot. Aside from those pertaining to corruption and re-election, there were questions on the restructuring the Citizen’s Participation Council, on limitations on sexual offenses, on taxation, and on mining and on petroleum exploitation. They were lengthy questions and the ordinary citizen would have had neither the legal background nor language capabilities to grasp their full meaning and ramifications. The “yes” vote about restructuring the Citizen’s Participation Council raises the concern that such a restructuring may be used to purge the Council of the regime’s critics who are furthest to the political left. Also telling is the “yes” vote for question number six about eliminating the tax on profits from the sale of houses, apartments, and land, passed by the previous administration and geared to keep housing affordable. This question was included at the behest of the country’s construction industrialists.

Structural Factors behind the Rightward Drift

Although there are as yet no clear policy decisions that indicate a rightward trend, the writing is probably on the wall. Before we condemn Moreno for abandoning concern for the popular classes, however, we need to consider the economic structural constraints under which he is operating. With the decline in petroleum prices, reconciliation with the private sector, whose investment is essential to economic growth, has become unavoidable. Petroleum had given Ecuador the revenue to pursue social improvements. Once that source of growth and income declines, social welfare programs and other social supports must be maintained through other sources of economic growth and revenue generation. Encouraging investment on the part of the private sector, however, involves cultivating a good business climate. In the current economic environment, that means lowering taxation, flexible labor regimes, low wages, the reduction or elimination of regulations that impede high profits, and entertaining a constant barrage of criticism that social spending is too generous and wasteful. Hence, any move to placate business along these lines raises the spectre of criticism from the left base of support.

Latin America’s Dilemma

This, in a nutshell, is the dilemma of most Latin American countries, which have depended on high commodity prices for economic growth and for revenue to expand social programs. Under this scenario, left political elites could avoid compromises with the business class that put their social base of political support in jeopardy. Latin American countries stand out for their historically high degree of socio-economic inequality and political polarization, features that make balancing the interests of business and popular groups particularly difficult. However, both features are becoming traits of northern countries, with worrisome consequences for achieving the sort of political consensus needed for social peace and improved social welfare.