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Ecuador: Social Progress & Tax Justice Face Right-Wing Reaction & US Intervention

Rafael_Correa_in_France_(cropped)Ten years ago President Rafael Correa was elected President in Ecuador and, as in many Latin American countries in recent years, there’s been a tremendous shift in the country. He has remained enormously popular throughout his time in office, winning his last two elections in the first round, winning the most recent vote by some 30 points. Now on February 19 the country is holding votes for a new president, the national assembly and a pioneering referendum on the scandal of tax havens.

As we go to press, the progressive candidate Lenin Moreno is leading in opinion polls, although there is great concern at the level of US intervention into the country and media misrepresentation that are no doubt seeking to bring the country back into the US’s orbit. It is incredible to think that in Ecuador’s process of progressive change (known as the citizens’ revolution) – at a time when we are constantly told about the inevitability of cuts and austerity – spending in Ecuador on healthcare and education has doubled.

Upon Correa’s election the rich were forced to pay their taxes for the first time in the country’s history, and as a result government investment initially helped achieve economic growth of 4 per cent year by year. Even with extraordinarily low oil prices, the strong dollar and the devastation of a huge earthquake in April 2016, which pushed the country into recession, the government maintained funding for public services.  Crucially, the Ecuadorean government chose to protect those most in need and to continue investing in the economy which is now once again growing again.

As Correa leaves office this year, for the first time in Ecuador’s history, extreme poverty is in single figures at less than 8 per cent, down from 16.5 per cent. Ecuador also has one of the lowest unemployment rates in the continent. Yet prior to 2006 — as part what has been termed the “pink tide” in Latin America — Ecuador was a very unstable country, perhaps one of the most unstable in the region throughout the 1990s and 2000s.

It had seven presidents in 10 years, accompanied by a series of aggressive neoliberal economic packages, with a resulting sharp increase in inequality. This was most clearly illustrated in a major banking crisis in 1999, when as a direct consequence of deregulation about half of the banking system went bust overnight. People’s economic assets were frozen and many never had their assets returned. Indeed, in this period of neoliberal crisis in Ecuador, life got so bad that almost two million people left the country during the period of crisis, out of a population of 13.5m.

So how has such a dramatic change in the situation facing the country arrived, and what can we learn from it? The key point to note is that in contrast to the disastrous neoliberal packages much of the world has seen in recent years, there has also been a strong emphasis on public investment.

In 2006 public investment was little more than 4.2 per cent of GDP. Under Correa it has got close to 16 per cent. This has been a contributor of both growth and redistribution, and interestingly, has not crowded out (but instead complimented) private sector investment. A particularly innovative policy that should receive attention from all progressives internationally has been not allowing companies to pay out dividends on shares until they have paid their workers the living wage.

A similar innovative policy lead is also being taken now by Ecuador on tax havens, as alongside the elections on 19 February, it is set to become the first country in the world to hold a national referendum about tax havens.

Alongside the Presidential and National Assembly elections, the people of Ecuador will be asked: Do you agree that, for those holding a popularly elected office or for public servants, there should be a prohibition on holding assets or capital, of any nature, in tax havens? Politicians and public servants will have a year from the referendum date to repatriate their money or go!

This is a big issue for Ecuador, some $30 billion dollars, a sum equivalent to one third of Ecuador’s GDP, is in tax havens – equivalent to $2,000 for every Ecuadorian citizen.

This is certainly an issue on which we need global action – Oxfam calculates the sum hidden by wealthy individuals in tax havens across the world as 7.6 trillion US dollars, a figure not including the activity in this area of multinational corporations. In short, and a successful referendum on action on tax havens will confirm this, in recent years Ecuador has shown what can be achieved with the political will to put people first by pursuing an agenda that prioritises investment over cuts.

With President Correa leading the regional backlash against Trump’s Presidency in recent weeks, it will be interesting to keep an eye on Ecuador’s votes this month – let’s hope Latin American unity strengthens and we not see a return of the US-backed elites in the region in the years ahead.

You can follow Labour Friends of Progressive Latin America on Twitter here and Facebook here, and Friends of Ecuador here and here

For information, there will be a session on Ecuador after the elections with former Labour MP Chris Williamson at the March 11 day school hosted by the Venezuela Solidarity Campaign on Trump’s US and Latin America from 11am-5pm at the ITF, 49-60 Borough Road, London, SE1 1DR. More info and register at bit.ly/TrumpVen 

14 Comments

  1. Bazza says:

    Yes the US should keep it’s nose out of interfering in other democracies, they have a longer history of this and are as bad currently as Right Wing Russia and Right Wing Israel (Tariq Ali in a talk with Norman Finklestein in New York in May 2016 claimed that the right wing Israeli ambassador to the UK is currently involved in trying to get the UK Government to outlaw the BDS campaign and it seems to be working although it is ok for Government to impose sanctions on Russia etc. – one rule for Central Government another rule for local government!)

  2. Bazza says:

    On Israel I have come round to one state with equal rights for those of religion or of none.
    So will the 4.9m Palestinian human beings or the 4m Jewish human beings dominate such a state?
    No, but perhaps when both groups have overcome their brutalisation the majority will be left wing democratic socialists.
    X & Peace.

    1. Who started the brutalisation?
      According to Wikipedia, it was the Arabs:
      The Jaffa riots … on May 1–7, 1921, … began as a fight between two Jewish groups but developed into an attack by Arabs on Jews during which many were killed.
      Hearing of the fighting and believing that Arabs were being attacked, the Arabs of Jaffa went on the offensive. Dozens of British, Arab, and Jewish witnesses all reported that Arab men bearing clubs, knives, swords, and some pistols broke into Jewish buildings and murdered their inhabitants, while women followed to loot. They attacked Jewish pedestrians and destroyed Jewish homes and stores. They beat and killed Jews in their homes, including children, and in some cases split open the victims’ skulls.[1]
      Wikipedia, 1921 Jaffa riots

      1. Bazza says:

        There was also brutalisation in Latin America as some authors have argued the CIA helped train and fund death squads – perhaps the desperately poor well paid to attack the desperately poor on behalf of the Latin American rich and US interests.

        1. Bazza says:

          See William Blum, ‘Killing Hope: US Military Interventions and Assasinations since the 2WW (1995).

      2. R.B.Stewart says:

        Yes Bazza you got distracted but like Ecuador it is the same issue, powerful countries like the US interfering then complaining when it is done to them.
        Hope the Left win in Ecuador and everywhere but we need to recognise patterns by the Right and explain to working people what they are doing!

  3. Bazza says:

    On Israel Palestine.

  4. John Penney says:

    Ahem…Comrades… I think this article was actually about Ecuador . I certainly learnt a lot – knowing pretty much nothing about Ecuador , and it’s progressive government’s recent social achievements.

    Still, who cares about the Latin Americans eh… ?When we can now , via a completely non sequitur post by Bazza, have 200 comments about the Israel/Palestine one v two state proposals , “Zionism” , and no doubt before long Jackie Walker’s name will pop up !

    1. Bazza says:

      Fair point John and the US has a massive history of interference in Latin America as I think one ex-CIA operative who wrote a book on this said, they liberated (I think Chile) for US Corporations.
      And it’s the same pattern – US secretly funds right wing parties, create shortages etc.
      Why they even bombed an harbour in Nigaragua.
      But whilst some of the Left in Latin America were grassroots, bottom up others took the power for themselves although we too have much to learn from them thanks to writers like Paulo Freire.
      Hope the left wins in Columbia and the retiring left President (who was very popular) wrote a brilliant piece in The New Left Review a while back which I highly recommend.

      1. Bazza says:

        Hope they win in Ecuador too!
        Ha! Ha! You can tell I have just about got over a recent illness.

  5. C MacMackin says:

    While Correa’s economic policies have, I gather, been very successful, we shouldn’t be uncritical. First off, he doesn’t seem to look beyond a more humane form of capitalism (I believe he was a student of Ha-Joon Chang). More concerning has been his rather heavy-handed relationship with the press and with environmental movements. He’s also been permitting fossil-fuel exploration in environmentally sensitive areas. None of this is to take away from his very real achievements, but we also need to admit his shortcomings.

    1. Bazza says:

      Recommend you search The New Left Review archive over the last few years and a brilliant piece from him explains all this.

    2. The Ecuador media law takes the press out of the control of the banks, as it was before Correa, and says 1/3 can be private, 1/3 state and 1/3 communal/cooperative. Before, 4 of the 5 big media outlets were owned by big banks. The media law also put legal restrictions on publishing what is now called fake news.
      In the US corporate media, all this is called violation of the freedom of the press.

  6. We should also remember Correa’s Yasuni Initiative, where he proposed that Ecuador would not drill for oil in any of this area of the Amazon if the West compensated Ecuador for some of the money it would forego. The West refused. In Ecuador the people do discuss and vote on some of these development projects, so the government is not mining or drilling against the will of the people.
    Right now Ecuador is drilling in the Yasuni, but the land affected is 1/15000 the size of the Alberta tar sands.

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