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Ecuador Likely To Become The 'Sick Man' Of America

1250 Connecticut Ave. NW, Suite 1C, Washington, D.C. 20036 Phone: 202-223-4975 Fax: 202-223-4979
Email: coha@coha.org Website: www.coha.org
Council On Hemispheric Affairs
Monitoring Political, Economic and Diplomatic Issues Affecting the Western Hemisphere

Memorandum to the Press 05.28

Word Count: 3500
Thursday, 10 March 2005

Ecuador Likely to Become
the “Sick Man” of Latin America
if Gutierrez Continues as President

• President Lucio Gutierrez, a self-described ''dictocrat'', has shown himself as little more than a poor copy of his country’s recent string of second-rate leaders and Washington’s newest ''yes-man'' in the region. With his popularity skidding, Gutierrez would be wise to look over his shoulder at a population that has a history of not hesitating to overthrow leader who they feel is a sell-out and an opportunist who breaks his word and forgets about the country’s little people.

• Three years into his presidency, Gutierrez has yet to prove that he can lead Ecuador out of the political turmoil, corruption, widespread poverty that has afflicted it for decades and has reached a new low under his rule. These and other continuing problems make Ecuador ripe to be the next candidate to join the left-leaning nations of South America with Venezuela’s Hugo Chávez and Brazil’s Lula in the lead.

• A former coup leader with professed leftist tendencies, Gutierrez has betrayed his populist principles in exchange for political control through deal-making and favoring the upper income sector. As a self-proclaimed nationalist, how can he support the American military presence at in Manta, which he once vigorously opposed?

• Washington’s interest in Ecuador is narrowly focused on its geographical proximity to Colombia, making it a prime area for cocaine logistics and an origin for illegal trafficking to the U.S. market.

• Ecuador could very well be the next domino that falls into China’s ever-growing sphere of influence in the region.

• COHA Research Associate Alicia Asper, currently in Ecuador, contributes a report from the field.

Lucio Gutierrez – A Disappointment to His People

The coming of a new century did not bring good news for Ecuador. This small South American country with a population of 13 million has suffered from intense domestic turmoil, destabilizing corruption and widespread poverty. While such a fate seems to characterize the history of much of the Latin American polity, it is especially true in Ecuador. Since his election in November 2002, President Lucio Gutierrez, a former army colonel who once led a successful coup with the crucial support of the nation’s indigenous people is leading an unprincipled and unstable administration that mirrors all of the delinquencies of its predecessors, and whose toleration of corruption has shamed the Ecuadorian state. Out of this chaos a regime change could occur with Ecuador emerging as the latest nation to join the de facto coalition of left-leaning countries which is currently composed of Argentina, Brazil, Cuba, Uruguay and Venezuela. Bolivia is another possible candidate to join the group, given its present political instability.

A History of Instability

Ecuador’s governmental crisis began in 1995 when then-Vice President Alberto Dahik Garzoni fled to Costa Rica amid corruption charges. Turmoil resurfaced in 1997 when the nation’s parliament deposed President Abdullah Bucaram on grounds of mental incapacity. In 2000, protests by the nation’s indigenous along with junior military officials forced newly-elected president Jamil Mahuad out of office. During this widely-backed coup, it was Gutierrez who, as a member of a three-man military junta, led efforts to oust Mahuad and then ruled the country for 72 hours before the Supreme Court tapped Vice President Gustavo Noboa as head of state. Unsurprisingly, Noboa himself fled to the Dominican Republic in 2003 amid accusations of corruption.

In the three years since he was elected president, Gutierrez has faced numerous crises with, at best, mixed results. During the April 14 2004 Garcia Moreno prison uprising in Quito, Gutierrez’s decision to send in the police, instead of negotiating with the rioting inmates, was seen as poor leadership. Three prisoners died and over thirty were injured in the operation, with at least sixteen escaping the prison through the sewers in the confusion (the police later recaptured six). Then again, Gutierrez’ dismissal of the entire Supreme Court in December 2004 - after accusing it of being biased against him - reflected his rising streak of authoritarianism. Last November, the president narrowly survived impeachment proceedings thanks to a last minute change-of heart by several congressmen who refused to vote for his removal. According to the constitution, at least 51 of Congress’ 100 members must vote in favor of impeachment for it to proceed. Congress also has performed ineptly during Gutierrez’s term. Since January, it has only approved two new laws while hundreds of other proposals, some of them relating to vital national interests, remained untouched. Congress’ inability to reach a consensus has been compounded by the fact that it is in session only a few hours each day, as many senators and deputies do not arrive at their offices in a timely fashion.

Amid the burgeoning chaos of his administration, President Gutierrez has been the subject of criticism from even his closest friends. In an article published in Ecuador’s daily El Universo, the former minister of social welfare, Colonel (ret.) Patricio Acosta, accused Oscar Ayerve, political advisor to the president, of organizing violent acts and harassment against him (Acosta). The former minister proclaimed that President Gutierrez was fully aware of Ayerve’s acts and allowed them to be continued.

Oil and Dollars

While trying to guide the nation through the rough times it now is facing, Gutierrez and his administration have given the international community mixed signals about his intentions, such as, whether to rejoin the Organization of Petroleum Exporting Countries (OPEC). Ecuador, a founding member of OPEC (established in 1972), withdrew from it in 1992, claiming that its participation did not boost the country’s revenues. At a recent conference in New Delhi, Ecuador’s oil minister, Eduardo Lopez, intimated that his country might return to OPEC. However, President Gutierrez quickly disavowed this possibility. Adding to the confusion, Bloomberg News issued a number of divergent articles regarding Ecuador’s interest in rejoining OPEC. With such confusion at the highest levels of government (in addition to domestic turmoil) one can expect that international financiers will exhibit some reluctance to invest in the nation. Dollarization is another major economic question currently being addressed by the Gutierrez administration. On January 9, 2000, then President Jamil Mahuad replaced the Ecuadorian sucre with the U.S. dollar as the national currency in an attempt to stabilize the economy. Gutierrez has since stated that he will revaluate Ecuador’s experience with the dollar, hinting that he might want to revive the sucre.

As Usual, Domestic Stability Not Washington’s Priority

Early this year, Senators Christopher Dodd (D-CT) and Lincoln Chaffee (R-RI) traveled to Quito for a forty-eight hour visit to address a potential free trade agreement among the U.S., Colombia, Ecuador and Peru. With the Free Trade of the Americas (FTAA) expected to come into existence next year in some form, these countries are anticipating this possible development by entering into a formal regional agreement. It is unclear whether the visiting U.S. senators and Ecuadorian officials discussed the presence of the American military in Ecuador, specifically the U.S. military base at Manta on the Pacific coast. Furthermore, in spite of the importance of an official American visit, neither senator declared their support for President Gutierrez, nor did they bring up, his recent and highly controversial sacking of the Supreme Court.

At the very least, the White House and State Department have begun to take notice of Ecuador instead of leaving it, at the periphery of its Latin American policy and taking Gutierrez’s support for granted. In fact, Ecuador could very well be the next hemispheric nation, like Mexico and Venezuela, to become a target for China’s search for energy resources and investment opportunities. Last December, Admiral Victor Rosero, chief of the joint command of Ecuador’s armed forces, met with Xu Caihou, vice-chairman of the Central Military Commission of the Chinese Communist Party. During the discussion Rosero declared Ecuador’s support for China’s position on the Taiwan issue and the concept of “one China.” The leaders also discussed bilateral economic and military cooperation. Beijing could very well be attempting to spread its influence as Ecuadorians, at the same time, are expressing mixed feelings about dollarization and the American military presence in Manta. In an interview with COHA, an Ecuadorian official explained that, “Ten years ago, Quito and Beijing only had a political representation in each other’s countries. Now there is an economic aspect.”

American Military Presence in Manta

In 1999, the U.S. signed what the Florida-based U.S. Southern Command calls a “lease agreement” with Ecuador to deploy up to 300 U.S. military personnel in a “forward operating location” (FOL) at Manta’s Eloy Alfaro air base. According to a spokesperson for the Southern Command, the sole purpose for the U.S. presence in Manta is to facilitate international cooperation for the aerial detection, monitoring, tracking and control of illegal narcotics activity. This entails the use of radar equipment to identify small aircraft capable of landing on jungle strips that are used for transporting illegal drugs over national borders. When an Ecuadorian tribunal determined the FOL agreement to be unconstitutional, Ecuador’s Supreme Court, stacked with members of the ruling conservative Social Christian Party, upheld it.

Local critics maintain that the FOL has been a disaster for the Manta community for a variety of reasons. Initial construction of the Eloy Alfaro base forced out upwards of some 15,000 Manta residents while in late 2001, rumors began circulating that it would merge with a nearby naval installation and Manta’s port complex to form a mega-facility that would oust additional thousands of residents now living inside the proposed military confines. Fortunately these rumors did not become a reality. Rumors reappeared in November 2004, that Gutierrez would give other bases to the U.S for military use. An Ecuadorian government official interviewed by COHA dismissed these new rumors, proclaiming that the Ecuadorian people were “absolutely dissatisfied with the American presence in Manta [since] in their belief, this agreement was not negotiated in the best possible way.”

Manta is just one of the issues that make Gutierrez appear more as Washington’s regional “yes-man”. Michael Flynn, a freelance journalist who has researched Manta, explained to COHA that, “It is clear that Gutierrez is going out of his way to pander to U.S. desires. Gutierrez loudly denounced the Manta base as a candidate [however] it didn't take long for his true colors to show on that and numerous other social issues in Ecuador.” It is worth noting that within ten days of his election, Gutierrez had already visited the U.S. and pledged his support for the war on Iraq.

COHA Research Associate Alicia Asper Reports from Ecuador’s Supreme Court:

Although the number of demonstrators marching against Gutierrez on any given day may be no more than a mere dozen or so, actual protestors number in the thousands of passing cars that voice their disapproval of the president by repeatedly honking their horns as they pass the Supreme Court building. The result is a continuous chorus of condemnation, the back up vocals for the incessant chants of “Get Out! Leave!” voiced by the marchers.

Santiago Gonzalez is a regular protestor and works as education director for Participación Ciudadana, a national organization that lobbies the government for authentic democratic practices and institutions. Providing focus to the protests, he stated, “We are here today because our security has been threatened by the unconstitutional actions of our president. Our government has violated our rights, and it is our duty to use the rights that are still intact to make our voice heard, to support change in this corrupt system.”

Gonzalez is not alone in his outcry against the practices of the Quito government. Protests have taken place across the country on a weekly basis, some drawing as many as 130,000 participants. Ecuadorians are clearly worried about the state of their nation, frequently describing their future as “unpredictable” and “insecure.” Francisco Lascano, a member of the pacifist citizen activism group Marcha Blanca, commented, “I can’t imagine anything other than instability with Gutierrez as president, for he has proven that he doesn’t have the capacity to make correct decisions.”

The problem is not just Gutierrez, but rather a historic pattern of corruption in the Ecuadorian government that shows little change even with a new president every four years. Each administration eventually has succumbed to the temptation of corruption and thereafter made decisions that benefit only a small sector of the population. In the words of Gonzalez, “We are certainly angered by the specific actions of Gutierrez and Congress, but the issue is broader than that—we want to exercise our rights as citizens to lobby for a better democracy. Democracy is for all people, all things and accordingly we cannot call Ecuador a democracy, for the overwhelming majority of the people do not have access to healthcare, education or even the basic opportunity of employment.”

According to a World Bank report, Ecuador’s poverty rate is close to sixty-five percent. This alarming statistic has not improved significantly over the years, and many believe it finds its roots in the attitudes of the people. Said Lascano, “One of the main problems in Ecuadorian democracy is the conformity of the people. They are too often indifferent, blindly approving the actions of politicians and letting them get away with too much.” Gonzalez added, “People here just do not pay attention to what’s going on in the framework of their society. This is clearly a result of lack of political education; people do not realize the importance of their actions in civil society.”

To fill the void, organizations like Participación Ciudadana and La Marcha Blanca prioritize citizen education in their campaigns. They insist that marches in front of the Supreme Court and the presidential residence mold the attitudes of the people as much as or more than the actions of the government. Said Gonzalez, “In the short term, that citizen communication is actually more important. If we can raise citizen awareness in the short run, in the long run we can change not only the presiding government, but patterns of corruption and, indeed, the entire system.”

In spite of their discouraging history and dire present circumstances and statistics, Ecuadorians have not given up hope for their country. They point to their nation’s plentiful resources, both natural and human, as keys to a brighter future. Said Lascano, “Ecuador has a lot of problems, but the people are making a new hope for the country.” Gonzales agreed, saying “We can’t choose the country that we’re born in, but we can choose its destiny. I truly believe that Ecuadorians have this capacity. One person can change a group, can change a society, even against great odds.” Hopefully, attitudes like these will combat the many obstacles that lie ahead for those who desire a better government and society for Ecuador.

On the U.S.

As preoccupied as Ecuadorians are with the travails of their own government, there is another nation that occupies much of their attention: the United States. Moisés Yánez, national director of the Confederation of Indigenous Nationalities of Ecuador (CONAIE), said, “Manta is nothing more than a strategic point to control the nation and the continent. All the talk about the war on drugs is rhetoric.” Whether or not the U.S.’s motives were purely concentrated on drugs, a number of analysts have determined that the use of Manta as a weapon against regional narcotrafficking has been largely ineffective. Another factor of opposition to the U.S. presence at Manta is related to the fairness of the agreement’s terms. Ecuadorian economist Dr. Alfredo Vergara, who is outspokenly opposed to the arrangement with the U.S., stated, “In my opinion, it’s bad business” referring to the fact that Washington saves millions of dollars by not having to transport supplies from the states to carry out its South American operations. Vergara continued, “If they want to maintain a base in Ecuador, Ecuador needs to financially benefit, since [the U.S.] is clearly benefiting tremendously.”

Local supporters of Manta make the case that it significantly benefits the Ecuadorian economy. Along with employing 144 Ecuadorians, the facility generates about $600,000 monthly for the city’s economy (according to the U.S. Embassy). Economist Martin Acosta, while conceding that he speaks for only a minority of Ecuadorians, has said, “Sure, [the agreement] is an infringement on abstract things like national sovereignty, but the world works in real terms, and in these terms we can see the money coming in.” Still, even enthusiasts like Acosta remain skeptical of the endeavor on several points; these are mainly due to the opaque nature of the arrangements. Acosta qualified his support by saying, “Ecuadorians were not informed about what was going on [in Manta], and we’re still largely in the dark. That’s one thing that needs to change.” Ecuador is now under pressure to allow a ten-year extension of U.S. presence at Manta, an arrangement that is expected to occur. But for the average Ecuadorian, the U.S. military presence is a hot topic, meaning that the issue of the Manta base is surely not going to go away anytime soon.

Another move viewed by many Ecuadorians as projecting American imperialism is the dollarization of the economy, undertaken in 2000 to combat severe inflation. While not viewed as severely as the U.S. lease in Manta, the replacement of the sucre by the dollar represents both symbolic and actual dependence on the U.S. economy. Said Vergara, “Even though it is unfortunate that we can’t control our own economy now, the benefits definitely outweigh the costs and therefore dollarization was largely a positive move.” Some of the benefits Vergara cites include stability, security and safety against corrupt government meddling in currency manipulations. The segment of the population that has benefited most from dollarization is undoubtedly those in the business sector, who now do not have to deal with a fluctuating currency and an ever-fickle exchange rate. Commented Acosta, “I’m an avid supporter of dollarization because it’s so much easier to make financial projections now that we have a stable currency.” He also noted that, under the devalued sucre, people lost real income every month. He claims that those hurt most by this were the poor, who could not hedge against the exchange rate by investing in dollars. CONAIE’s Moíses Yánez disagrees, stating “Amongst indigenous people, real income has gone down with dollarization. Like so many economic policies, it primarily benefited the rich businessman. For the common man and particularly the indigenous campesino, dollarization was a source of confusion and people have suffered economically.”

Ecuador appears to be the kind of nation that Simon Bolivar, the 19th century Venezuelan liberator was referring to when he proclaimed that “America es ingobernable” (America cannot be governed). It does not seem to matter what political party or what kind of figure is chosen to lead the nation; recent history shows that many of them meet the same fate. When it comes to Ecuador’s survival as a political entity with a stable, progressive government, there is hardly any possibility that this “sick man” nation will easily survive its century-long disease. Gutierrez’s presidency is evidence of this.

This analysis was prepared by Alex Sanchez, COHA Research Fellow, and Alicia Asper, COHA research associate.

March 10, 2005

For more information, please see an article by COHA Senior Research Fellow Lawrence Reichard, and COHA Research Associate Anthony Kolenic entitled Manta: Transforming Ecuador Into Another Cambodia, Another Colombia. Click here.

Michael Flynn is a freelance journalist based in Geneva, Switzerland. His article “Ecuador: What's the deal at Manta?” appeared in the Bulletin of the Atomic Scientists January/February 2005 pp. 23-29 (vol. 61, no. 01). Click here.

COHA research associate Xuan-Trang Ho has published an article on China’s emerging role in Latin America. Click here.

COHA research associate Jorge Esteban has written an article on Ecuador’s indigenous communities which will appear in an upcoming issue of COHA’s biweekly publication, the Washington Report on the Hemisphere. Contact COHA’s subscription manager to learn more about subscribing.

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being “one of the nation’s most respected bodies of scholars and policy makers.” For more information, please see our web page at www.coha.org; or contact our Washington offices by phone (202) 223-4975, fax (202) 223-4979, or email coha@coha.org.

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