National sovereignty is an undervalued asset in today’s world, especially in the international media, where the views of Washington and its allies largely prevail. This is true with regard to economic as well as political issues, and its consequences can be quite heavy in a region like Latin America, long regarded by US officials as their “back yard.”
The election in Ecuador is being watched as well as contested by forces that have opposing views on this question.
On the left, there is the presidential bid of former vice president Lenin Moreno, and his party PAIS Alliance (AP). — which has already won a majority of the Congress. Like all of the left parties and governments that came to power in the “Pink Tide” that swept the region in the 21st century, the AP values national sovereignty and self-determination.
Its leaders, as well as its activist and much of its electoral base, understand that the progress that has been made over the past decade would not have been possible if the government of President Rafael Correa had followed the economic prescriptions of Washington.
This progress included reducing poverty by 38% and extreme poverty by 47%. Inequality was also substantially reduced: the ratio of the income of the richest 10% to the bottom 10% was reduced from 36 in 2006 to 25 by 2012.
Access to health care and education was substantially increased, with spending for higher education rising from 0.7% to 2.1% of GDP — more than is spent by even many high-income countries. Social spending overall doubled, and public investment more than doubled, as a percentage of GDP.
To accomplish these goals the government had to re-regulate the financial sector, tax capital flight, require banks to repatriate most of their liquid assets held overseas, and make the central bank part of the executive’s economic team, among other economic reforms.
Without this new role of the state — crucially, acting in the public interest instead of on behalf Ecuador’s bankers and richest citizens — Ecuador could not have made most of the gains over the past decade.
The challenger, former banker Guillermo Lasso, proposes a traditional right-wing program of tax cuts for the rich and spending cuts that will have to more than match these, so as to bring down the national budget deficit.
He pledges to reduce the government’s role in the economy, which was actually quite important to the progress of the past decade, arguing that “free markets” are the key to unleashing the country’s economic potential.
And he has pledged to restore the “independence” of the central bank, which would make it more an instrument of the big bankers, like it was when Lasso himself was in his prime in the late 1990s (when the economy was wrecked by a banking collapse).
Lasso has also admitted to owning a bank in Panama whose main line of business is to facilitate capital flight from Ecuador. This is also a big issue of national sovereignty in Ecuador, as the majority of people just voted (in the February 19 election) to approve a ballot initiative saying that people who are holding money in offshore tax havens should not be able to hold public office.
All this would bode ill under any circumstances, but the lack of respect for national sovereignty means that as the economy runs into trouble — which is likely, given the proposed budget cuts — Lasso would probably go to the International Monetary Fund for a loan.
This would mean the end of Ecuador’s hard-won sovereignty over economic policy, and a host of “structural reforms” made in the USA, which Lasso and his allies would be all too eager to implement.
We know what the decades of Washington-sponsored structural reforms looked like in the past: almost zero growth in income per person in Ecuador over 20 years (1980–2000).
We can also look at how the new, Washington-supported right-wing governments of Brazil and Argentina are doing.
Like Lasso, Brazil’s Michel Temer and Argentina’s Mauricio Macri are proteges of Washington. These people have US President Donald Trump and Republican extremists in the US Congress as their closest allies.
Not a great time for Ecuador to give its hard-won national sovereignty back to Washington.
[Mark Weisbrot is co-director of the Center for Economic and Policy Research. Abridged from cepr.net.]
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