Violent right-wing protests erupted in Ecuador on June 8, sparked by plans for a new inheritance tax law that would target the richest 2% of the population.
In response, President Rafael Correa agreed to temporarily halt two planned laws to carry out a nationwide debate on inequality and wealth redistribution – challenging the opposition to prove his government's laws would hurt the poor.
On June 18, Correa took to social media to start the debate, asking: “How can we call a country a 'democracy' if less than 2% of families own 90 percent of big businesses?”
TeleSUR English reported that day that opposition politician Guillermo Lasso — easily beaten by Correa in 2013 presidential elections — described Correa's proposed tax reforms as an attack on Ecuador's “meritocracy”.
Correa responded: “What kind of 'meritocracy' justifies that fact that in 2014 Guillermo Lasso 'earned' $15 million, which is to say the equivalent of 3,500 years of wages for a worker … How can that be morally justified?”
Supporters of the government's pro-poor policies are organising door-to-door brigades to promote the proposed laws, as well as nationwide forums. These forums will explain and debate proposed laws to redistribute wealth.
The planned inheritance tax that sparked the opposition anger would range from 2.5% on amounts between US$35,400 to $70,800, up to 47.5% for amounts of $849,600 and above.
Supporters march
Thousands of supporters of the Correa-led “Citizens’ Revolution” and its guiding ideal of “buen vivir” (“living well”) have taken to the streets in large counter-protests.
On June 13, anti-government groups attacked a pro-government demonstration. Among the injured was former culture minister Paco Velasco. Opposition marchers quickly shifted from simply opposing the tax reforms to calling for Correa's ouster, with many taking to social media to call for a military coup.
Why has a relatively moderate change in the tax laws that targets the wealthiest caused such an outcry among the opposition? What are the social and class forces that back Ecuador’s left-wing president?
And do these laws advance a revolutionary process, or are they simply one more piece of tax legislation from a progressive government?
Since Correa was first elected president in 2006, the country has undergone a range of important economic, social and constitutional changes. These have occurred under the banner of “Living Well”, Ecuador's unique brand of “socialism of the 21st century”.
Before Correa, Ecuador endured years of crippling neoliberal policies.
These included the “dollarisation” of the economy — with the US dollar becoming the official currency of Ecuador, an extreme undermining of Ecuador's sovereignty — privatisations, and the accumulation of illegal and illegitimate public debt. Poverty rates soared.
Following the path of other nations in Latin America's “Pink Tide”, Ecuador has sought to end rigid “free market” economics.
After a thorough audit, Ecuador formally defaulted on US$3 billion in foreign debt in 2008. At the same time, the government expropriated more than 195 companies, clamped down on corporate tax avoidance and raised petroleum windfall taxes to 87%.
These measures increased states revenues by $1 billion. Public and social spending has also grown significantly, with the government investing in health, education and infrastructure projects such as the Ruta Viva highway to Quito International Airport.
Poverty falls
Such polices have resulted in a drop in poverty. Structural poverty levels dropped from 37% in 2007 to 23% at the end of last year, while and extreme poverty was halved, dropping from from 16% in 2007 to 8% last year.
The Gini coefficient, commonly used to measure the level of inequality, has fallen from 0.55 in 2007 to 0.46 last year.
The Correa government has also overseen political changes to strengthen participatory democracy and embed progressive policies in the constitution.
In 2007, an elected Constituent Assembly drafted a new constitution, adopted by popular referendum. Measures introduced include allowing for citizen-initiated referendums, enshrining the right to access basic services such as health and education, protection of the environment and defence of workers' rights.
Political changes also concentrated more power in the executive — a sign of popular distrust of Ecuador's old, corrupt “political caste”.
In April, a new law extended workers rights. Among other measures, it recognised domestic work as productive, making home-makers eligible for social security.
Outsourcing of jobs by private companies has been banned, and job security strengthened.
The minimum wage gradually rose to the level of a “living wage” of $354 a month by last year. Unemployment fell to a historic low of 3.8% in March.
On the international stage, Ecuador has strongly supported Latin American integration and unity through bodies such as the Union of South American Nations and the Community of Latin American and Caribbean States (CELAC – formed in 2012 and including all nations of the Americas except the US and Canada).
Ecuador is also part of the anti-imperialist Boliviarian Alliance of the Peoples of Our America (ALBA) bloc, first launched by Cuba and Venezuela to promote pro-people trade and oppose US domination of the region.
Along with other left-wing governments in the region, Ecuador has supported Palestine against Israeli occupation and attacks.
Problems
Despite these steps forward, there remain big blocks in Ecuador's path away from neoliberialism and imperialist domination. Ecuador's oligarchs retain much economic and social power.
Among the biggest problems is the dominant model of economic development, based on extracting raw materials.
In this model, the government issues licenses and approvals for oil exploration and drilling operations, much of which occurs in the Amazonian area home to historically powerful indigenous movements.
In recent years, tensions have risen between the government and one of the main indigenous groups over oil drilling operations, involving many protests and arrests.
The Correa government has also been criticised for pursuing “resource-nationalist” policies based on what critics say is an over-reliance on windfall tax profits from oil companies. The vast majority of those profits have been directed towards social spending.
Other clashes between social movements and the government have occurred over alleged neoliberal policies, such as water and land reform laws in 2009.
The country’s trade union movement is generally supportive of new workers' rights laws, but sections, such as the National Union of Educators (UNE), have protested government policies.
Perhaps the biggest challenge facing the Citizen's Revolution is a lack of a productive and coherent relationship between Correa and the country’s historically powerful social movements.
Correa and his main electoral front PAIS Alliance have won seven national elections and referendums since 2006. But there is a visible lack of the type of grassroots organisation that could consistently mobilise, defend and debate the progress of the Citizens’ Revolution.
Grassroots organising
Such grassroots organisation, largely absent in Ecuador, has been a feature of the revolutionary processes in Venezuela and Bolivia.
Correa, who has no social movement background, has sometimes been accused of ruling in a technocratic fashion, owing to his origins as an economist and academic.
Thus, Correa lacks the sort of credentials as a fighter in popular struggles that have been earned by Bolivia's Evo Morales and Venezuela's Hugo Chavez and Nicolas Maduro.
Morales is a veteran unionist and coca growers' leader, while Chavez organised a revolutionary group inside Venezuela's army and went to jail after a failed uprising in 1992. Maduro is a former trade unionist and bus driver with decades of involvement in Venezuela's socialist movement.
The right-wing challenge to Correa and his pro-poor policies may provide a chance to significantly strength popular grassroots organisation. In this way, it may be possible to both consolidate the gains of the Citizens' Revolution and push further against the still-powerful capitalist elite.
Support and solidarity from other governments and revolutionary movements across Latin America will also be vital.