President Lasso’s faulty bet
Last October, President Lasso bet on the responsible management of the economy and a successful vaccination campaign as the foundation for the future course of action for his government. It was a faulty bet, and the absence of a strong political front failed to predict the perfect storm we experienced in June.
While the economy started to recover and the fiscal accounts to show a more sustainable path, a dense mix of corruption, personal and group ambitions, and vested interests was cooking in the assembly. This resulted in a new majority that cares very little about the country and is working hard to seize power, eliminate vestiges of past corrupt actions and current legal problems, and possibly pave the road for Correa’s return.
On the outside, the boiling pot was fueled by the painful situation of the nearly half of Ecuadorians without a decent job and the small indigenous farmers without access to regular credit channels, victims of usurers and predatory leaders promising to change their situation through “brute force”.
The opposition failed to push President Lasso out of office, but has successfully managed to capture the majority in the Legislative Administrative Council, where the government has only one of the five votes necessary to give the green light for the plenary discussion of any bill. In the meanwhile, public officers are sitting with representatives from indigenous groups to shape a final agreement on the petitions of the June protesters. The best scenario is that both groups reach such an agreement, the government finds financing to cover the inevitable costs, and social peace is restored. The worst, highly probable scenario, is that indigenous groups officially sign the agreements and on the side, express their dissatisfaction, opening the door for new protests and chronic social unrest, revealing Iza’s true intentions.
Even in the first scenario, President Lasso still faces the dilemma of what to do with the Assembly. Both sides have expressed the necessity of a dialogue. Assembly President Virgilio Saquicela asked the Executive to appoint a commission to resolve issues of co-legislation and present new initiatives to avoid total presidential vetoes of legislative projects, but without presenting any agenda in favor of the country. The Assembly knows it can stop any initiative coming from the Executive, but they also know the Executive can block their own projects in a bloc-against-bloc, lose-lose situation.
In this context, there are voices asking President Lasso to take a risk and launch a long-due referendum to make critical structural political and labor-sector changes. There is a high probability that the referendum will end up being a mechanism of qualification or disqualification of the president, and the government probably wants to avoid this. But at this point it might be the only way to foresee a future with more clarity, rather than starting a dialogue of the deaf in which, most probably, the assembly will attempt to blackmail the government.
On the bright side, oil production has recovered from the losses experienced during the riots, the fiscal accounts seem to be following a manageable path, and high levels of RILD are giving a break to dollarization.
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