A reminder from Leonidas Iza and Conaie
Those who thought that Leonidas Iza and the threat from CONAIE to political stability were under control were proven wrong this week by the strong and extended protests that – albeit without the severity of the 2019 riots – have already produced losses to the productive sector, mainly the flower and broccoli farms of the central Andean region.
Once again, the cost of energy derivatives and their subsidies are at the core of the social unrest, together with an increase in the cost of living that is not perceived as a global trend but rather as the effect of public policies. Adding to these problems, the scarcity of medicines in public hospitals, which has not been resolved in one year of the current government, and the escalation of violence on the streets and in jails, are contributing to create the perfect brew for political instability.
The solution is neither easy nor clear, but the government must find channels to secure political stability – the highest priority at the moment – even if this implies increasing fiscal costs, which pale against the possibility of a revocation of mandate for President Lasso. This has already been requested by allegedly independent civilians, but with clear links to Pachakutik and Unes. To be effective, this request needs the support of 15% of last year’s 13 million voters – close to 2,000,000 signatures.
Even though increased oil and tax revenues, which produced an overall surplus of $595 million in Q1 for the Non-Financial Public Sector and $1306 million between January and May for the General Government, are less than what the government needs to alleviate the above-mentioned problems and comply with commitments such as the salary raise for teachers and the addition of new police officers, they pose the challenge of being wisely spent by the government. Increasing capital spending looks unavoidable if the government wants to alleviate the problem of stagnant employment amid the increasing cost of living. It is the uncertainty about the destiny of these higher revenues that might explain the differences in growth estimates for Ecuador for this year, which range from 1.5%-4%.
On the other hand, the good performance of President Lasso in the Summit of the Americas contrasts with his domestic troubles. Not only was Ecuador elected in a nearly unanimous vote (190-2) as a member of the Security Council of the United Nations, but several bilateral meetings with Canada, Costa Rica, Mexico, and the USA have also raised expectations about the possibility of enhancing trade relations through agreements and on raising funds to combat narco-trafficking and violence, as well as alleviating the problem of migration.
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