Ecuador's Troubles

In both 2000 and 2005, riots resulted in the collapse of Ecuador's governments, causing two acting presidents to stand down. In early October 2019, Ecuador fell into national disarray over central government’s introduction of controversial economic reforms. The protestors won when the government withdrew its proposal on 13 October [1]. The current president, Lenín Mareno, faced a troubling situation which threatened to end his days in power. Clearly, memory of popular unrest shaped his decision to abandon reforms.

The nationwide dispute was over a popular attachment to low fuel costs. This month, Mareno decided to rid Ecuador’s fuel subsidies in the hope, with the help of the International Monetary Fund (IMF), that the decision would stimulate long-term economic growth. Subsidies are sums of money given to industries to help maintain low prices. Public funds provide this money. In Ecuador’s case, fuel subsidies are troublesome. On the one hand, they have cost the national treasury $60 billon in the space of four decades [2]. On the other, the public cherishes this expenditure as it promises to keep prices low.

Fuel prices shot after Mareno’s proposal. Drivers went on strike and riots broke out in various parts of the country. Rioters ransacked shops and government offices in Quito, the capital. Protestors forced their way into parliament, prompting Mareno’s government to relocate to Guayaquil, a port city almost 300 miles to the south. In recognition of volatile conditions, the president declared a state of emergency. Until 13 October, he stood by his decision and hoped to weather the storm. However, the cost of the proposals was too much – the public’s outrage was powerful and forced the government to backtrack on its decisions.

Notes:

[1] Ian Bremmer, ‘What Happens Next in Ecuador’ Time (18 Oct. 2019) [https://time.com/5705202/what-happens-next-in-ecuador/ accessed 20.10.19]

[2] The Economist, 433/9164, p. 52.