PETRAS ESSAYS IN ENGLISH

February 2000

Rebellion in Ecuador

James Petras

On January 21 a popular rebellion, led by a coalition of Indians, peasants, and urban workers, supported by junior military officials occupied the Parliament, Judiciary, and surrounded the presidential palace. A three-person junta was established including a leader of CONAI—the Indian peasant organization—a civilian representing the middle class, and a junior military officer. President Clinton, outraged by the popular revolt, immediately intervened, threatening an economic boycott of Ecuador and ordering the U.S. Embassy in Quito to pressure conservative generals to act. The popular junta was overthrown and Vice- President Noboa of the discredited regime was installed in power. Noboa's first pronouncement was that he would dollarize the economy, meet foreign debt obligations, and impose "order and discipline," beginning with mass arrests of peasants and trade union activists.

On the surface, Ecuador appears as the typical "comic opera" of a banana republic with six presidents in four years. The reality is that Ecuador reflects the profound crises resulting from the neo-liberal policies promoted and enforced by Washington and Brussels throughout the Third World. For the past decade, Ecuador has had a series of neo-liberal presidents who have faithfully applied the austerity and free market prescriptions of the IMF and World Bank. The result is a precipitous decline of living standards, 60 percent rate of inflation, an economic depression (-7 percent decline in 1999), first world prices, and third world wages. Over the decade, each crisis required new loans, greater austerity, and more privatizations of lucrative enterprises. Unemployment and underemployment reached 80 percent of the labor force. Rising costs and declining prices resulting from cheap foreign imports hit Indian and peasant communities hard. Ecuador's elite, on the other hand, speculated on scarce commodities, pillaged the state treasury, and transferred World Bank loans, amounting to millions of dollars, to overseas accounts in Miami. Presidential candidates who pledged to end corruption and provide employment, in their electoral campaigns, once in power reinforced the neo-liberal agenda. General strikes and mass demonstrations became the norm, as the populace grew totally disenchanted with an electoral system that only provided a choice of oligarchies subservient to Washington. By mid-1999 the Ecuadorian treasury was empty, the economy bankrupt. President Jamil Mahuad could not squeeze the impoverished populace further. Ecuador reneged on its foreign debt. Despite mass poverty and growing discontent the international financial institutions insisted on new austerity measures and regressive fiscal policies. Mahuad obeyed and went one step further in formalizing the neo-colonial relationship. Mahuad decided to formally put Ecuador under direct control of the U.S. Central Bank by dollarizing the economy. The Ecuadorian people realized the consequences: the cost of basic foods and necessities would rise to U.S. levels while the Ecuadorian population would continue to be paid in a devalued local currency (sucre). In one day, January 6, the sucre fell 17 percent, 29,000 to the dollar. The result was the popular rebellion followed by the U.S. intervention via the military and the restoration of a client regime.

Popular disgust with corruption and servility of the last six presidents has led the vast majority of the Ecuadorian population to seek extra- paramilitary forms of political expression. The U.S., fearful of popular democratic movements intervened through the military to overthrow the popular junta. The events in Ecuador in January reveal the real political power behind the neo-liberal electoral façade: U.S. imperial power and its local client generals.

Ecuador also demonstrates that the popular movements have the power to depose neo-liberal presidents. Peasant-Indian movements have the capacity to catalyze the urban poor, the trade unions, and even sectors of the sub-officials in the military and lower clergy in the Church. While it is true that Washington and its generals have temporarily imposed a new president, Gustavo Noboa (referred to in Washington as "nobody"), it is also true that he is following the exact same policies that provoked the popular rebellion that overthrew his predecessors. While the Noboa regime is arresting hundreds of activists, it is creating the conditions for a further radicalization among the people. As one popular leader stated, "Our mistake was to think we could carry out a peaceful transformation. Next time we will have to resort to arms."

It would be a mistake to consider Ecuador as some exceptional circumstance. The electoral buffoonery of the political elites in Ecuador and elsewhere is a sideshow to the real drama of millions of citizens effectively excluded from the key economic decisions that affect their lives. Dollarization, the symbol and substance of recolonization, provokes a popular affirmation of national resistance and social solidarity. The popular rebellion in Ecuador demonstrates the strength and weakness of social movements. The lessons of moving beyond protest to political power are being learned in all the neighboring countries, especially Colombia, Brazil, and Venezuela. The events in Ecuador suggest that the people in Latin America are reaching the limits of depredation. Clinton's speeches in praise of free market prosperity are just the kind of obscene provocation that provokes anger and rebellion among the great mass of unemployed in the streets and plazas of Latin America. It is a truism of history that rulers do not expect revolutions until they happen. The U.S. may have won the initial battle but the bitter Indians have let the Ecuadorian elite know that the war is not over.