The decline in Lasso's government demonstrates the failure of neoliberalism in Ecuador
Francisco Hidalgo Flor[1]
In Ecuador, events have unfolded rapidly in recent weeks. On May 16, the impeachment trial of President Lasso began in the National Assembly. There, the accusing members of parliament presented their arguments regarding the charges of embezzlement in large state-owned companies. The president responded with his defense, and then the parliamentary debates commenced. However, in the early hours of May 17, 2023, President Lasso, through Decree 741, invoking Article 148 of the Constitution, dissolved the National Assembly. Simultaneously, the presidential term was shortened, and general elections were called within sixty days. Colloquially, the measure is known as "mutual dissolution": Lasso and the Assembly are effectively shut down.
A measure of this magnitude leads to several interpretations. In this text, we argue that the most significant aspect of the resolution is the shortening of Guillermo Lasso's term, which now ends in November 2023, instead of lasting until 2025. This represents a major defeat for the political right and highlights the social failure of the neoliberal model, which is incapable of providing alternatives to the population in the face of the acute crisis the country is experiencing.
The evolution of Lasso's government must be read within a political stage that began in mid-2017, with the government of Lenin Moreno, and which culminates in the present days, with the shortening of Lasso's regime. It must be understood from the concept of "neoliberal return," and the driving force has been the application of the agreement with the International Monetary Fund, which was signed in mid-2018, during Moreno's term, and whose favorable evaluation of compliance was issued by the IMF at the end of 2022, during Lasso's regime, highlighting that it was the first time, so far in the 21st century, that an Ecuadorian government had fully complied with the dictates of the multilateral organization.
At the beginning of the 21st century, Ecuador experienced its first economic crisis, which led to the overthrow of then-President Jamil Mahuad, a member of the Christian Democratic Party, whose officials included Guillermo Lasso. This regime was brought down in the context of a civic-military uprising. From then on, right-wing forces were severely weakened and defeated in subsequent elections. This was followed by a decade (2007–2017) of neo-developmentalist policies under the three administrations of Rafael Correa, who implemented a model of state-controlled capitalism.
The neoliberal return was made possible by the neoliberal shift of a faction of the Alianza País movement, during the Moreno government (2017 – 2021), in a reconversion under the control of the embassy of the United States of America in Quito, giving way to the aforementioned agreement with the IMF.
Guillermo Lasso always represented the direct voice of large business associations and the banking sector; he himself was a banker (manager-owner of Banco de Guayaquil). He publicly defended a neoliberal discourse and formed a political movement around it called CREO (Creating Opportunities). He was a presidential candidate on three occasions: 2013, 2017, and 2021. For the last occasion, he allied himself with the traditional Ecuadorian right-wing party, the Social Christian Party, and there he achieved victory based on a discourse of liberalism and anti-progressivism.
The backbone of Lasso's government (2021–2023) was comprised of leaders from business associations. To mention a few examples: the current Minister of Economy, Pablo Arosemena, was president of the Federation of Chambers of Commerce; the current Minister of Energy and Mines, Fernando Santos, is a lawyer for transnational oil companies; the Minister of Production and Foreign Trade, Julio Prado, was president of the Federation of Private Banks of Ecuador. And, as if that weren't enough, he placed his lieutenant from the Bank of Guayaquil, Hernán Luque, at the head of the Coordinating Company of State Enterprises (EMCO). Luque, while in government, orchestrated a corruption scheme, and this was the law motive of the presidential impeachment trial in parliament.
Well, that government, presided over by bankers, led by representatives of the main associations of large private companies, which was also pampered by the United States Department of State, during its visit in 2021, the Secretary of State expressed the following: “The United States is proud to support in Ecuador a democratic leader in our hemisphere; our bilateral relationship grew as we worked closely together to strengthen regional security and promote inclusive economic development.”[2], is the one who must now leave through the back door.
This is the downfall of the regime decorated by the International Monetary Fund, which in its December 2022 statement indicated: “The Executive Board of the International Monetary Fund (IMF) concluded the sixth and final review of the arrangement under the Extended Fund Facility (EFF) for Ecuador. The decision by the Ministry of Economy allows for an immediate disbursement of SDR 497 million…With the conclusion of this final review, Ecuador has completed its first IMF-supported program in more than two decades. The 27-month EFF arrangement for Ecuador was approved by the Ministry of Economy on September 30, 2020.”[3].
This is the government that is forced to leave halfway through its term, facing intense social and political pressure, leaving behind a trail of discredit for the neoliberal policies that characterized it. That pressure was expressed at the ballot box in February 2023 and earlier in the streets during the June 2022 strike.
The government was already badly damaged in February, with the disastrous results of that month's elections. Lasso's government had promoted a referendum on security measures, seeking to gain public support. However, the regime obtained a mere 43% of the vote in favor, while 57% voted against the referendum. It was a clear and resounding "No" to the referendum and a "No" to Lasso.
In that same electoral process, the political movement led by Lasso, the Creo movement, barely reached a vote of 13% in the elections for prefects and mayors, did not win any prefecture, and only obtained 25 mayoralties out of a total of 223 mayoralties at stake.
In the national parliament, he never managed to consolidate a political alliance to support him; not even the other right-wing party, the Social Christian Party, backed him. Moreover, his former allies were part of the blocs that carried out the impeachment proceedings.
We maintain that the areas in which the regime deteriorated were the socio-economic and the security sectors, to which the allegations of corruption were added.
The socio-economic aspect, understood as that related to the living conditions of the population, especially the issue of employment and public services such as health and education, has deteriorated drastically. The situation brought about by the pandemic has not been reversed, due to structural factors. In addition to the pandemic, the government strictly adhered to the agreement with the IMF, with measures such as downsizing the state, reducing public investment, and deregulating labor.
To demonstrate the severity of the crisis in the labor market, we present the following table, which corresponds to the period 2019 – 2022:
Employment rates[4] ( in %)
| heading | 2019 (Dec) | 2021 (September) | 2022 (September) |
| Unemployment | 3.8 | 4,9 | 4,1 |
| Inappropriate Employment | 56,7 | 61,1 | 60,3 |
| Appropriate Employment | 38,8 | 33,5 | 35,5 |
In Ecuador today, two out of every three citizens do not have adequate employment. It should be noted that Ecuador's economically active population reaches 8,6 million people, that the concept of "inadequate employment" includes underemployment, unpaid work, and other non-full employment, and that the concept of "adequate employment" implies receiving the legal minimum wage and working 40 hours a week or more.
This grave situation was compounded by the growth of transnational drug trafficking, local mafias connected to foreign cartels, clashes over territory, and the expansion of contract killings, which have particularly affected areas near seaports and airports, especially coastal cities like Esmeraldas and Guayaquil. In 2022, Guayaquil recorded a homicide rate of 48 per 100,000 inhabitants, resulting in a total of 1537 murders that year—something unprecedented in Ecuador.
This deepening of the crisis is what has led to the growing disrepute of the conservative-neoliberal regime, which is now forced to go home halfway through its term of office.
But it must also be noted that during these two years there has been a significant popular struggle against the neoliberal regime. For example, there was a strike by public school teachers, organized around the National Union of Educators (UNE), which even included a hunger strike to demand compliance with the new intercultural education law in May 2022, and the National Indigenous-Popular Strike of June 2022 in opposition to the policy of eliminating state subsidies. The Lasso regime also suffered a blow from that strike, forcing it to backtrack on its policies. Even more seriously, Guillermo Lasso himself reneged on the dialogue agreements signed by the indigenous leadership and his ministers. A consummate right-winger incapable of listening to popular demands.
Finally, it should be noted that the social and political forces that emerged strengthened in opposition to the government are, on the one hand, the Citizen Revolution party, led by former president Correa, and, on the other hand, the indigenous social movement, especially the Confederation of Indigenous Nationalities (CONAIE). Both forces, along with other organizations, promoted the "No" vote in the referendum proposed by the government, achieving 58% of the vote.[5].
The aforementioned local elections in February of this year were also important in positioning these forces; the Citizen Revolution party obtained 36% of the vote and won 52 of the 221 mayoralties, including those of the main cities, and the Pachakutik movement, close to Conaie, obtained 16% of the vote and won 27 of the 221 mayoralties at stake, mainly in provinces of the Andean and Amazonian region.
The situation of “cross-death”, which has led to the closure of the national parliament, the reduction of Guillermo Lasso's presidential term, and the call for first-round elections in August 2023, implies a strong political earthquake. As we have said, it has several interpretations, but the one with the greatest strategic relevance is the acute deterioration of the conservative-neoliberal option and the reduction of the political and ideological influence of right-wing tendencies in Ecuador.
Neoliberal forces aspired to accelerate their long-cherished program of measures, dating back to the administration of Sixto Durán Ballén in 1994, such as the privatization of social security, the sale of state-owned companies in the telecommunications, electricity, and oil refining sectors, and the elimination of fuel subsidies. They achieved none of it; once again, they were left disappointed.
[1] Sociologist, professor at the Central University of Ecuador. Member of the CLACSO Working Group on Critical Studies of Rural Development.
[2] Statement by Secretary of State Anthony Blinken on the website of the United States Embassy in Ecuador.
[3] International Monetary Fund – Press Release 22/425. See full text of the press release: https://www.imf.org/es/News/Articles/2022/12/14/pr2245-imf-executive-board-concludes-review-of-the-extended-fund-facility-for-ecuador#:~:text=Con%20la%20conclusi%C3%B3n%20de%20esta,el%20Comunicado%20de%20Prensa%20No.
[4] The labor data comes from the INEC statistical bulletin – section evolution of the economically active population (Ecuadorian Institute of Statistics and Censuses / PEA)) as of September 2022.
[5] The electoral data comes from the bulletins of the National Electoral Council – CNE.
