President
Rafael Vicente Correa Delgado was elected in November of 2006 in a run off election, in which he received nearly 57 percent of the vote. In April of 2009 Correa was re-elected under a new constitution with 51 per cent of the vote, avoiding a run-off. Correa studied in Belgium and later in the United States, earning a PhD in economics from the University of Illinois in 2001.
Considered a political outsider when he was elected in 2006, Correa campaigned against the neoliberal economic policies of the past, and pledged to reform the oil sector and reduce poverty. A new constitution was drafted, and then overwhelmingly approved by the electorate in September of 2008, winning nearly two-thirds (63.9%) of the vote. Correa also campaigned against renewing the lease for the U.S. Air Force base in Manta, Ecuador. Correa quipped, “We’ll renew the base on one condition: that they let us put a base in Miami — an Ecuadorean base.” Another key aspect of his campaign was the illegitimacy of much of Ecuador’s foreign debt. Upon assuming the presidency, Correa formed a debt audit commission, which found that much of the foreign debt was illegitimate and illegal. The audit’s findings led Ecuador to default on some $3.2 billion of its international debt.
Correa is currently the head of the Union of South American Nations (UNASUR), a regional grouping that rotates leadership between its member countries.
Political and Economic Background
Like most leaders spoken to in “South of the Border”, Correa’s rise to the presidency can be seen as a result of past political instability and failed neoliberal policies. When Correa became president in January 2007 he became the seventh president in ten years. Now, over three years into his presidency, he has the longest tenure of any president in over a decade, bringing needed stability to Ecuadorean politics.
Ecuador, like most Latin American countries, suffered from a sharp drop-off in economic growth in the 1980s and 1990s. There are now signs that economic development has picked up, and poverty has begun to decrease.
Ecuador adopted the dollar as its national currency in 2000. While this has had positive effects on stability and inflation, it also means that Ecuador does not have control over monetary and exchange rate policy. Ecuador has had numerous agreements with the International Monetary Fund (IMF) over the years, almost continuously from 1983-1995, and then again in 2000. Along with other international financial institutions such as the World Bank and Inter-American Development Bank, the IMF pushed for financial liberalization, the selling-off of state-owned enterprises and other neoliberal policies. During this time, Ecuador experienced a 25-year period in which GDP per-capita actually decreased by 14 percent, compared to positive growth of 110 percent during the previous 20 years. Social spending also saw a dramatic decrease in the years preceding Correa. In 2004 social spending was 6.6 percent of GDP, lower than the level in 1993.
The first two years of Correa’s presidency saw average GDP growth of 4.5 percent. At the same time, Correa’s government doubled health spending and social spending increased to 8.3 percent of GDP. These policies have had a positive impact on poverty rates, with poverty falling by 12.7 percent and extreme poverty by 13.9 percent from December 2006 to December 2008.
Recent Developments
As noted above, Ecuador defaulted on $3.2 billion of its international debt. This has proven to be largely successful, as the government was able to buy back 91 percent of the debt at just 35 cents on the dollar. Ecuador was therefore able to get rid of about a third of its foreign debt, and decreased its foreign public debt to 17 percent of GDP.
A key development in recent years has been Ecuador’s relationship with Colombia. A Colombian military raid on a FARC guerrilla camp in Ecuadorean territory in March 2008 led to the deaths of some two dozen rebels, including the FARC deputy leader Raul Reyes. Ecuador froze diplomatic relations after the incident, as they viewed the raid as a brazen breach of national sovereignty – an assessment shared by almost every other nation in South America.
An ongoing $27 billion class-action lawsuit pits oil giant Chevron against indigenous communities in Ecuador. The legal battle stems from accusations that oil contamination has had deleterious effects on the indigenous populations.
Ecuador’s new constitution, overwhelmingly approved by the electorate, is a truly unique document, enshrining Ecuador as a plurinational state, and recognizing the numerous nationalities and cultures present in Ecuador. The constitution also recognizes the inalienable rights of nature and prevents the government from destroying unique environments and eco-systems. The re-election of presidents, previously confined to just one term, is another significant constitutional change.
Ecuador recently took a stand against the climate negotiations in Copenhagen. Ecuador, together with numerous other developing countries and island nations stated that the agreement did not go nearly far enough towards cutting greenhouse gas emissions. In April 2010 the United States cancelled climate assistance aid to Ecuador and Bolivia in response to the Ecuadorean government’s opposition to the Copenhagen agreement, which the Ecuadorean and Bolivian governments characterized as too weak.
The world recession has negatively affected the Ecuadorean economy, and since the economy is dollarized there are limited options for the Ecuadorean government for stimulus measures. In response to outflows early last year, the Central Bank raised the liquidity requirements of banks with the goal of repatriating some $1.2 billion that was being held abroad. If successful this would have a similar effect to a large economic stimulus.
Resources:
Democracy Now! Interview with Rafael Correa, June 29, 2009
Film:
“Crude”, documentary film on the lawsuit against Chevron.
