Reform and Opposition in Ecuador

Ecuador’s recently formed Constituent Assembly is under an intense crossfire after promulgating its first Acts. The new Assembly, one of the crucial promises of Rafael Correa’s presidential campaign, was set up at the end of November 2007, following a referendum and the election of the delegates.

The Assembly sets itself the task of rewriting the Constitution, in accordance with the principles of equality, inclusion and transparency on which Correa (pictured) has centred his political discourse. However, its duties have been extended, as it has dismissed the National Congress, and legislative powers have now been taken up by the new body. This was not an unexpected move, because the new Assembly, which is dominated by Correa’s party, Alianza País, and other aligned movements, was elected on the premise of full powers and the explicit proposal of Correa to dismiss the Congress. The latter is widely recognised as being one of the most corrupt institutions of the country and scores very low in popularity polls. Astutely, Correa had not presented any candidate to the Parliamentary elections in December 2005, thereby making clear his intention not to ‘contaminate’ with the old institution, but also creating a contradiction between the executive and the legislature, which has now been resolved in favour of the former.

Despite various criticisms arising from the traditional parties, often defined by Correa as the ‘old partitocracy’, all attempts to denounce the dismissal of the Congress as anti-democratic have been relatively unsuccessful, including the appeal to the Organization of American States, which is little likely to yield any result.

The internal opposition however, could have found a new leader, who enjoys a quite extended popularity in the Southern coastal region, and a new platform, on which to build a broader consensus. Jaime Nebot, current mayor of Ecuador’s biggest city, Guayaquil, has consolidated a strong influence in the Guayas province, because of the various public posts occupied since the 1980s, but especially thanks to the ‘urban regeneration’ programs, which he implemented, and that have modernised some sectors of the city in the last decade. Nebot is strongly associated with the old party system, having been the right hand of León Febres Cordero, an old politician with a dubious record on human rights during his 1984-88 presidency. In spite of having taken distance from his own party, Partido Social Cristiano, Nebot remains affiliated to it and his reputation is fairly low in the Andean region.

Some frictions had already mounted between Correa and Nebot in the last year, of which the major one had to do with decision of the government to split the province of Guayas in two, with the creation of a new administrative unit. Lately, Nebot has been very critical of the proposals to redesign the architecture of local powers advanced by the Constituent Assembly, and this has led him to a more open confrontation with Correa. The apex was reached last week, when two massive demonstrations were organised in Guayaquil, one headed by Correa and the other by Nebot. Specifically, Nebot is wary of the intention of the Assembly to redraw the jurisdictions of local authorities, and the parallel plan to alter their financing, in the name of the national interest, and a more equal redistribution of resources between provinces. The worry of Nebot is that of seeing the special autonomy granted to the Guayas province curtailed, and together with other sectors of the opposition, he has insisted in claiming Correa’s intentions as authoritarian and despotic.

Correa on the contrary has read the behaviour of the mayor differently, and has compared it to the attitude of another autonomic region of Latin America, that of Santa Cruz in Bolivia, which is being a constant headache for President Evo Morales. “Between the oligarchy of Guayaquil and that of Santa Cruz there are even signed agreements, agreements to lead those regions to autonomy, that in reality is separatism” said Correa last week. Guayaquil has historically been the fulcrum of the dominant economic region of Ecuador and its upper classes have always fostered highly exclusive models of development, as well as trying to retain a certain degree of autonomy from the rest of the country.

It is uncertain whether Nebot is willing to extend his pretensions, which so far have had a local character, to a national level. His discourse remains still very much oriented in favour of Guayaquil, but it is not clear whether he will be tempted to reorganise the opposition front on a bigger scale, especially in the light of his recent speeches. What is almost certain is that he will try to play a prominent role in the campaign leading up to the confirmatory referendum of the new Constitution.

Another source of troubles for Correa comes from the new tax reform adopted by the Constituent Assembly last December. The new fiscal strategy emphasizes the role of direct taxation, and introduces a tax of 0.5% on capital flight, thereby elevating the overall fiscal pressure in the country. Also, it provides for a tougher struggle against tax evasion, and for the different allocation of state resources to the different sectors, even though details have still to be devised. This is why the tax reform is strongly connected to the issue of the local financing, which has led to the opposition of Nebot. Nevertheless, the government has promised that universities and local municipalities will not suffer from any budgetary reduction. The reform has caused skepticism and little support from the entrepreneurial world and bankers, who have also advanced an unsuccessful claim of unconstitutionality against it. The risk is that of the opening of a new front of internal opposition for Correa, even though in the last few days talks between the two parties, whose relationship has not been very good from the very beginning, have seemed quite reassuring.

It is worth mentioning that Latin America has a very low level of taxation as compared to the rest of the world, and that income distribution is often worsened by state intervention. Correa’s plan is to be framed within a context of augmenting state revenues to foster a new plan of development with a bigger role for the state, even though he is accused of attempting to exert a broader leverage through a net of clientelistic subsidies.

Correa has recently celebrated his first year as President of Ecuador. After the confirmatory referendum of the new Constitution, he has promised he will submit his mandate to a new Presidential election in 2009, following the path of Chávez in Venezuela. However, despite considering himself an admirer of Chávez, he has repeatedly shown consistent autonomy and independence of judgement from the Venezuelan leader.

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This post was written by Samuele Mazzolini