Covid-19 Ecuador: Neoliberal shock and perpetual quarantine
Within the collection of “Notebooks of Latin American Critical Thought”, CLACSO presents la researchn: "Covid-19 Ecuador: Neoliberal shock and perpetual quarantine"Of Santiago Ortiz Crespo.
Covid-19 Ecuador: Neoliberal shock and perpetual quarantine
Notes on the current situation for the first half of 2020
Santiago Ortiz Crespo[1]
The Covid-19 virus has brought about a new shift in Ecuadorian politics. While the October protests halted the implementation of fuel price hikes, the current situation is a shock that deepens authoritarianism and the neoliberal escalation. The ruling class has a clear compass regarding the IMF's agenda and not only sought to exploit the quarantine to place the burden of the crisis on the shoulders of the majority of the population, but also to consolidate its authoritarianism in the face of the regime's loss of legitimacy. The following—with the October protests as a precedent—[2]– An analysis is made of the impact of the virus, the management of the pandemic, and scenarios for the near future are outlined.
October and the authoritarian decline
In 2019, the country's economy continued to deteriorate. This was compounded by the decline in oil revenues, external debt, and difficulties in the trade and payments balance. The government implemented a fiscal austerity agenda—affecting labor rights and leaving thousands of public sector workers unemployed—and managed to pass the Productive Development Law—aimed at benefiting large businesses with tax reductions and incentives.
Moreno signed an agreement with the IMF, confirming the path of austerity, privatization, and labor market deregulation. In exchange, the IMF granted a $4.2 billion loan which, along with other financial sources, allowed the government to access $10 billion in loans, a sum disbursed after periodic policy monitoring.
In general, the policy was geared towards strengthening the primary export-oriented economic model with a strong presence of financial capital, and a recession was induced with increased exploitation of workers and the displacement of a significant portion of the workforce into unemployment, leading to widespread precarious employment. Within this context, in early October 2019, the measure of “eliminating subsidies” was implemented, resulting in a consequent increase in fuel prices.
The popular response caught the government off guard, as it had planned to advance on a scorched earth. Social classes were gripped by a sense of vertigo, fearing they would fall into the next quintile, while the drivers' strike transformed into a general strike. This was made possible by the resurgence of the Indigenous movement, which demonstrated its capacity to unite the entire population. But the strike also revealed that neoliberal intentions could not be realized as a hegemonic project and that only an authoritarian drift with a disproportionate use of force could guarantee its implementation. In this scenario, the differences among the political elites resurfaced, as they needed to position themselves for the 2021 elections.[3] The divide between indigenous people and the movement that follows Rafael Correa's leadership was also noticeable in popular sectors, a wound caused by a decade of conflicts that were not healed.
The transport strike transformed into an indigenous and popular uprising that paralyzed the country, with Quito as its main stage. It was an 11-day strike that re-established the indigenous movement as a political force after a long process of internal transformation, presenting a younger, more national, more popular, and more diverse face. This movement regained its presence after a period of retreat and fragmentation during the decade of the Citizen Revolution (2007-2017). The strike saw widespread urban participation, but it failed to heal the wounds between indigenous people and the popular current of Correísmo after a decade of conflict.
A specific demand became an empty signifier insofar as it expressed the collective discontent with the IMF agenda and channeled the broad participation of diverse popular actors: youth, students, women, professionals, artists, working-class neighborhoods, drivers, farmers, rural populations, and market vendors. The Moreno-CONAIE dialogue, broadcast nationwide on television, led to the repeal of Decree 883. This truce was only momentary, however, as the government persisted in implementing the IMF agenda and retained the ministers responsible for the repression.
The October strike demonstrated that the second wave of neoliberalism reached a crisis point in Ecuador more rapidly than the first wave at the end of the previous century, due to its weak capacity for legitimacy. But it also revealed the new cohesion of the ruling class, the parties co-governing with business interests, and the private media. However, the influence of this coalition among the popular sectors eroded in the months leading up to the pandemic due to the president's lack of leadership and the impact of the economic measures.
But the government's decline continued: the ruling class demonstrated cohesion, although tensions arose as each sector positioned itself for the 2021 electoral contest. Furthermore, state reforms remained uncertain amidst the presidential vacuum, weak political leadership, the impotence of the National Assembly, and the alignment of oversight bodies, the Attorney General's Office, and the Judiciary with the executive branch. The role of the Armed Forces was also called into question, as they have been reoriented toward internal warfare under the influence of Defense Minister Oswaldo Jarrín, a retired general trained in the doctrine of national security, with the police now playing a repressive role. This has resulted in a restricted democracy that fails to recognize the political representation of at least 25% of the electorate who support the Citizen Revolution.
At the same time, the process of institutionalizing the late Julio C. Trujillo, a conservative lawyer who used the Council for Citizen Participation and Social Control as leverage to dismantle Correa's influence and establish a semblance of the rule of law, stalled. The absence of the legislature, the Constitutional Court's endorsement of repression, the curfew, and the excessive use of force—resulting in 11 deaths, dozens of injuries, and hundreds of arrests—marked the regime's drift toward authoritarianism. All of this unfolded amidst a media frenzy that accused Correa's administration of attempting to destabilize the country.
It should be noted that this movement failed to navigate the popular uprising effectively, because, among other things, it has a loose identification with a popular sector, but lacks a coherent and effective policy for the current situation. Furthermore, its leaders are facing charges from the Moreno government and are currently outside the country.
The virus
Covid-19 once again caught the elites off guard and ultimately eroded Moreno's leadership. Three years of fiscal austerity and disinvestment in healthcare laid bare the government's inability to manage the epidemic. Several incidents revealed the ineptitude of health authorities, as they allowed the virus to spread with the arrival of infected travelers from Italy and Spain, epicenters of the pandemic in Europe. Instead of isolating them, they were left unchecked to attend high-society weddings in Guayaquil and a Copa Libertadores soccer match. This negligence and the lack of basic sanitary measures in the care of Covid-19 patients led to the explosion of the epidemic in Guayaquil, making it one of the cities with the highest infection and death rates in the world.[4]This also demonstrated the limitations of the "successful" model implemented by the social-Christian elite who governed the port for 25 years, revealing the precarious living conditions of a significant portion of the population.[5]
To the above must be added the lack of control by the Ministry of Health and the authorities over the handling of corpses. Vice President Otto Sonnenholzner proposed burying the dead in a “mass grave” as a solution to the chaos caused by state inefficiency. There was also no epidemiological surveillance system in place to detect infections or curb the demand on a health system weakened by fiscal adjustments. “Investment in the health sector in Ecuador fell from $306 million in 2017 to $201 million in 2018 and $110 million in 2019, a reduction of 34% and 36%, respectively.”[6]
All of this demonstrated the incompetence of former Minister Andramuño, who should have been replaced midway through the crisis, and that of Finance Minister Martínez, who prioritized paying the external debt to bondholders over financing the emergency expenses of the health crisis. The leadership vacuum was addressed by entrusting the Vice President with the management of the Emergency Operations Center (COE), appointing a new Minister of Health, establishing a State of Emergency and a curfew, and tasking the Armed Forces with enforcing the epidemiological cordon around the most affected area: Guayaquil and the province of Guayas. This occurred amidst chaotic data on the epidemic, as, three months after the outbreak began,[7] There is no evidence to verify the information of those infected and there are no death certificates confirming Covid-19 as the cause of death.
This lack of direction and leadership in managing the epidemic is all the more serious considering it coincided with the economic disaster. With policies aligned with the IMF, Martínez prevented the State from reacting to the virus and providing the resources to combat it: food and basic necessities for the most vulnerable sectors were not ensured; small and medium-sized businesses were not protected; and the income and employment of the population were not safeguarded, given that a high percentage of Ecuadorians work in the informal sector and depend on daily earnings. Furthermore, the bills prepared by the government attempted to tax the wealthiest, but ultimately yielded to pressure from large corporations.
In the midst of the quarantine, the government secured the passage of the Public Finance Law, which establishes the Ministry of Economy as the governing body for public finances and sets limits on public spending. The legislature also approved the Organic Law of Humanitarian Support, which establishes a state of emergency suspending current labor legislation for two years, during which time employers and workers must establish working conditions. Public employees' salaries and working hours are reduced, and several state-owned enterprises are merged and privatized. In addition, Lenin Moreno implemented seven measures, including imposing price bands on fuel and adjusting diplomatic staffing levels. These measures are expected to reduce fiscal spending, in accordance with agreements with the IMF. The proposals of economist Augusto de la Torre, discussed in this article, are being fully implemented.
On the other hand, the government offloaded the responsibility of easing the quarantine onto local governments through a traffic light system in which red is confinement, yellow is social distancing and green is the reactivation of the economy with partial mobility.
The pandemic opened a deep divide among Ecuadorians as it demonstrated that it hit the population unequally, especially the popular sectors: 38% of Ecuadorians are affected by multidimensional poverty, without access to health and employment, live in overcrowded housing and do not have drinking water.[8] The virtual learning program proposed by the Minister of Education effectively excludes 50% of children and young people from the education system, as they lack internet access. The government has stopped paying teachers' salaries and cut $100 million from the university budget. The model has failed on all fronts: while the effects of the economic crisis plunge the country into recession, throwing half a million people into unemployment.
From hibernation to reset
The former head of the World Bank for Latin America and the Caribbean, the Ecuadorian economist Augusto de la Torre, posed the phrase that portrays the banks' perspective: “Reality overtook legality".[9] Faced with a collapsed economy, a radical neoliberal reform is necessary—according to him—expressed in three phases: hibernation, reset, and radical reform. For him, Ecuador must be realistic and assume a first phase of hibernation (like a bear in its cave conserving energy to avoid dying: quarantine); then, emerge into a second phase of reset, in which laws are not enforced, but rather agreements between private parties (the strong prevail over the weak), to reach a third phase of total reform of the legal and institutional framework. In other words, De la Torre proposes to complete what Alberto Dahik (vice president between 1992 and 1995) began in 1992 and Jamil Mahuad (1998-2000) continued with the banking holiday, which triggered a mass exodus of one million Ecuadorians. In other words, the aim is to take advantage of the shock of the pandemic and the state of exception to promote the neoliberal decalogue, as Naomi Klein (2011) pointed out.[10]
Both business leaders and right-wing parties have supported Moreno's government over the past three years, hoping he will use the quarantine to govern according to the IMF's agenda. However, the country's business elite has been unwilling to contribute financially, arguing that they are the ones who will reactivate the economy. Meanwhile, there is infighting within the ruling classes: one of their spokespeople, Osvaldo Hurtado (former Christian Democratic president, 1981-1984), is calling for unity around the government, but some politicians, business leaders, and retired military officers are urging the Armed Forces to assume their "historic mission," and there are sectors demanding Moreno's resignation so that Otto Sonnenholzner can take the reins of the crisis "with leadership."
Meanwhile, the government and the media are trying to weather the storm with media campaigns aimed at covering up the disaster. They urge “unity”; they claim that Ecuador was the first country to take action and that the health system was unprepared, “just like in other countries”; they point out the unexpected nature of the pandemic and that, while mistakes have been made, the appropriate measures are being taken to “flatten the curve.” And in the absence of a plan to address the pandemic, the government is trying to reactivate the productive sector by shifting responsibility to the municipalities: it is they who must decide how to transition from lockdown to physical distancing in their respective territories.
There is widespread public discontent over the disastrous handling of the epidemic. Healthcare professionals and workers have demonstrated at several hospitals demanding protective equipment; residents of Guayaquil have taken to the streets to beg for food; street vendors in Quito and Guayaquil have clashed with police who are preventing them from working; and teachers and university students in at least ten cities have protested the budget cuts and filed a constitutional appeal and a lawsuit against the Minister of Finance. There are sit-ins, pot-banging protests in some neighborhoods and cities, food barter and exchange initiatives, and an important role played by local governments, especially those committed to Indigenous and working-class communities. But these are still isolated actions taking place between the lockdown and the transition to social distancing.[11].
Food security is a priority. Farmers and Indigenous people have focused on food production, which is essential for the cities. Together with local governments, they have dedicated themselves to organizing its distribution, and CONAIE has instructed its members to ensure their survival and maintain their health and safety within their territories.
Meanwhile, in mid-April, a survey in Quito and Guayaquil revealed that 75% of the population was afraid, 60% had economic problems, and 75% believed that the health system was not capable of dealing with the crisis.[12].
Three political scenarios[13]
In this context, three possible scenarios emerge for Ecuador. The first scenario would be a return to “normalcy,” meaning Lenín Moreno remains president, implements some reforms (for better or worse), and calls for elections. Potential presidential contenders include Jaime Nebot or Otto Sonnenholzner from the Social Christian Party, banker Laso from the Creating Opportunities (CREO) party, Yaku Pérez from Pachakutik, and a candidate endorsed by Rafael Correa from Brussels. Another possible candidate could be Quito Mayor Jorge Yunda, whose image has improved during the pandemic. In this case, the government would maintain political control with ministers from the Ruptura 25 group, economic control with businessman Richard Martínez, and defense with Oswaldo Jarrín. It remains to be seen whether the elites are still willing to gamble everything on a worn-out card like Moreno.
A second scenario involves Moreno's resignation and a possible constitutional succession[14] as stated by journalist Carlos Vera, who is linked to the Social Christian Party (PSC).[15]Vice President Otto Sonnenholzner himself has promoted his image during his brief tenure leading the Emergency Operations Center. A new president—young, an insurance and media entrepreneur, a skilled communicator, and connected to the powerful Syrian-Lebanese community in Guayaquil—could govern for a year until the change of government, creating political conditions to launch his own candidacy or pave the way for Nebot's victory. The Social Christian Party (PSC) has carried out several political maneuvers from within the National Electoral Council and the National Assembly to assume a role in this transition. Interestingly, campaigns and pronouncements against corruption have been launched to weaken the ruling circle.[16] A year in government might be necessary to implement the IMF agenda, without the wear and tear that Moreno is experiencing.
A third alternative would be a popular uprising. Ecuador has a history of spontaneous mobilizations with political impact, and it wouldn't be surprising if an explosion like the 2005 protests by the Outlaws, when urban sectors overthrew Colonel Gutiérrez, or the October 2019 strike, were to occur. A social explosion, including looting and crime, is also possible. The economic situation is affecting people's morale, which is already experiencing hunger and desperation. The protests could accumulate until they find a common thread.
Aside from the government's willingness to maintain order, there are obstacles that would prevent any action with a destabilizing impact. First, the population is focused on survival; second, there is fear for the future; third, the quarantine has been imposed under a State of Emergency with a military and police presence in the streets; and fourth, an organizing body is needed to channel the mobilization. CONAIE has rejected another fuel price increase, but it's worth asking whether it currently has the capacity to take such a stance. The Citizen Revolution, for its part, lacks experience and doesn't rely on a massive popular uprising.
Furthermore, there are two important actors who are key in any scenario: on the one hand, the Armed Forces, currently commanded by a right-wing faction, and on the other, the stance of the United States embassy. It remains to be seen how they will position themselves in these possible scenarios.
Conclusions
The authoritarian drift, the restriction of freedoms and the fiscal adjustment characterized the regime of Lenin Moreno until 2019, but they had a surprising limit with the October Strike, although this did not manage to stop the neoliberal project.
When the coronavirus arrived, an arbitrary management model was implemented, the result of a policy of disinvestment in healthcare, a nonexistent epidemiological surveillance system, no testing capacity, no laboratories to process the tests, no containment measures to protect the population, a shortage of public health workers and trained primary care personnel, and an economic policy that failed to protect incomes, jobs, or businesses. This model involved military intervention and lockdowns under a state of emergency and curfew. Advertising campaigns could not mask the thousands of deaths in Guayaquil and the tragic record of infections and fatalities left by the pandemic.
But the health crisis is intertwined with the economic one, where the hibernation-reset-reform trajectory charts a course of action that deepens economic stagnation and the social divide. What Greece was for Europe, Ecuador is for Latin America, both subjected to a prolonged recession, in our case subject to dollarization.
This implies the formation of a regime where the legal framework is reset and authoritarianism is reinforced, coupled with a deepening of the social divide. It is extremely difficult for a population already burdened by five years of crisis to face the hunger, unemployment, and strict discipline imposed by a quarantine—a mechanism that threatens to become permanent.
Amid the uncertainty, various sectors have taken to the streets to protest, and in some cases, clashed with the police, though these incidents have been sporadic so far. Most are preoccupied with survival, searching for food or, like farmers and indigenous people, producing food themselves, in a new situation where supply is paramount.
If October 2019 was a protest by the moral economy of a population nostalgic for a certain standard of living and the dream of "Buen Vivir" (Good Living) offered by progressivism, the pandemic marked a new stage where the State will no longer be the savior, and only the people and social power can guarantee the conditions to live, organize, and fight for their rights. Meanwhile, the political and business elites seek a solution that allows them to continue governing. They lack the capacity to generate a legitimate national project since they are unwilling to even concede minimal benefits to the popular sectors; their interest lies in conducting their business and taking their profits out of the country. They align themselves with the discourse of national security and require a repressive state to ensure their stability, while they complete the process of resetting and completely reforming the country.
[1] Santiago Ortiz Crespo, PhD in Social Sciences, Professor at FLACSO Ecuador. He participates in the CLACSO Working Group on Disputed States.
[2] Santiago Ortiz, “Ecuador October 2019: Authoritarian drift and indigenous and popular uprising”, December 2019, https://movimientosocialesecuador.com/2019/11/09/ecuador-octubre-2019-deriva-autoritaria-y-levantamiento-indigena-y-popular/.
[3] During the last year, the Social Christian Party distanced itself from the government in the lead-up to the elections, while banker Guillermo Laso continued to support it.
[4] The government acknowledged 5700 deaths in Guayaquil https://www.bbc.com/mundo/noticias-america-latina-52318389On the other hand, Ecuador ranks sixth in the world and first in Latin America in number of deaths, and tenth and third respectively in number of infections per million inhabitants. Data from worldometers.info cited by Álvaro Sáenz https://www.facebook.com/alvaro.saenzandrade?epa=SEARCH_BOX
[5] On this topic, see Xavier Flores, “Guayaquil and the model that came to an end”, Common EquipmentApril 10, 2020, https://xaflag.blogspot.com/2020/04/guayaquil-y-el-modelo-que-toco-fin.html.
[6] Fernando Carrión, 10/04/2020, citing the “Annual Investment Plan for the Health Sector in Ecuador 2017-2019”, https://twitter.com/fcarrionm/status/1248629296056487937.
[7] Since February 15, when patient zero arrived at the Guayaquil airport, official data has been abruptly modified three times: “I don’t know what’s more shameful, the handling of coronavirus information in Ecuador or the excuses they use to justify it… This ‘curve’ of cases in Ecuador, which is published worldwide, clearly shows the three biggest blunders in the information.” Álvaro Sáenz, May 7, 2020, https://m.facebook.com/story.php?story_fbid=2744496442314470&id=100002624222058.
[8] “The multidimensional poverty rate […] stood at 38,1% of the Ecuadorian population in December 2019, while in December 2018 it was 37,9%.” Primicias, “38,1% of Ecuadorians live in poverty with multiple deprivations,” https://www.primicias.ec/noticias/economia/ecuador-lejos-reducir-pobreza-multidimensional/.
[9] Augusto de la Torre's statement notes that we are "the country of the five NOs: we have no fiscal space, no savings, no international reserves, no access to international markets, and we cannot expand credit if dollars don't come to us" from abroad. Augusto de la Torre, "This is the most virulent crisis in the last 100 years," April 13, 2020, https://www.planv.com.ec/historias/economia/esta-la-crisis-mas-virulenta-ultimos-100-anos-vision-economica-augusto-la-torre.
[10] Naomi Klein, The Shock Doctrine, Buenos Aires: Paidós, 2011.
[11]There is still no clear picture of the popular mobilizations, partly because information is difficult to obtain. The media maintains a monotonous discourse of support for the government, covered up tragedies like the one in Guayaquil, and censors itself. The available information comes primarily from social media.
[12] Santiago Nieto, director of the polling firm Informe Confidencial, “Covid-19 Perceptions Survey”, 13/04/2020, https://www.youtube.com/watch?v=AIkHr4SO380.
[13] It is very difficult to predict the future, even more so when the Covid-19 epidemic has meant a global upheaval where it will be impossible to return to the previous "normality". Surely the tools that the social sciences have used until now will have to change.
[14] The 2008 Constitution, in its article 146, states: “In case of the permanent absence of the President of the Republic, the Vice President will replace him or her for the time remaining to complete the corresponding presidential term.” Constitution of the Republic of EcuadorOfficial Registry 449, October 20, 2008.
[15] Carlos Vera, 12/05/2020, https://twitter.com/CarlosVerareal/status/1260247541129641984?s=08.
[16] The debate surrounding Otto Sonnenholzner has taken place among columnists: Felipe Burbano, in his weekly column in The universe He points out that: “there is no doubt about his strength, vitality, youth, and even enthusiasm; he refreshes the politics of the old leadership, especially in the divided center-right” Burbano de Lara, May 5, 2020, https://www.eluniverso.com/opinion/2020/05/05/nota/7831767/otto-sonnenholzner. Meanwhile, José Hernández, of Four PelagatosHe points out: “Sonnenholzner is not an acting vice president: he is a hero. The young man who fearlessly confronts the virus, the first vice president to visit a hospital with coronavirus patients, the man who tirelessly fights the battle… He does everything, he is everything. […] Is he doing this with the full agreement of the president? […] Taking on all the responsibilities alone, to create a hero in the midst of a war, could backfire on the government.” José Hernández, March 30, 2020 https://4pelagatos.com/2020/03/30/el-video-que-pinta-a-sonnenholzner-de-heroe/.
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