Interview: Left With Paradoxes in Ecuador

Economist Pablo Dávalos served as undersecretary to Rafael Correa when the now-President was Minister of the Economy under the previous Administration of Alfredo Palacio in 2005. He’s an advisor to the Confederation of Indigenous Nationalities of Ecuador (CONAIE) and member of the Latin American Council of Social Scientists (CLACSO). Although he supported Correa’s successful presidential bid, he is skeptical of the direction the government is taking.

September 4, 2007

Economist Pablo Dávalos served as undersecretary to Rafael Correa when the now-President was Minister of the Economy under the previous Administration of Alfredo Palacio in 2005. He’s an advisor to the Confederation of Indigenous Nationalities of Ecuador (CONAIE) and member of the Latin American Council of Social Scientists (CLACSO). Although he supported Correa’s successful presidential bid, he is skeptical of the direction the government is taking.

Davalos was undersecretary of the economy in 2005.

In Davalos’ opinion the government now represents the interests of a new middle class born out of the dollarization of the economy decreed during the 1999 financial crisis, which froze bank accounts and savings worth millions of dollars. Raúl Zibechi, a social movements scholar from Uruguay, spoke with Dávalos about Ecuador’s fledgling government.

How would you evaluate the performance of the Rafael Correa government in these first three months.

I see a lot of contradictory signs. On the one hand he’s a President that has a leftist discourse and is very critical of the political system, but he does not have roots in the left or in the social movements. His discourse legitimates a population tired of the party-ocracy (partidocracia), which is what Correa calls the corrupt politicians. But at the same time his cabinet is dominated by right-wing technocrats and members of the same parties he criticizes so much. The Agriculture Ministry is controlled by a member of PRIAN, the party of multibillionaire Álvaro Noboa, his staunchest opponent. The Ministry of Education was given to a member of the Democratic Left party, which was the party that introduced neoliberalism to Ecuador. The Transport Ministry is run by someone from the same party. The person in charge at the Ministry of the Environment is a representative of the mining multinationals, recycled from previous governments, who has granted more than four thousand environmental license to mining companies. You can’t have a policy of change with this type of cabinet.

Tell me about Correa’s economic program?

It’s interesting because it emphasizes employment and income distribution, thereby changing the touchstones of economic discourse from macroeconomic stability toward growth with employment and productive reactivation. But at the same time we see primary resource extraction through soy and corn cultivation for the use of biofuels. It’s alarming that the Yasuní National Park is being included in the exploitation of hydrocarbons [oil and gas]. In the 1990s, the brakes were put on the aggressive expansion of oil companies through the creation of national parks, which are the last redoubts of many uncontacted indigenous peoples. And one of those parks, Yasuní, was recently conceded to Brazil’s Petrobras and Cinopec, the Chinese oil company considered to have the worst ranking in environmental management.

What stage has been opened with the victory of Correa in the plebiscite on 
the Constituent Assembly for rewriting the constitution?

It’s a scenario characterized by polarization between the right and the government. The government is seeking to use that polarization as a hegemonic aspect so that the entire spectrum of the left and the social movements will have to rally behind Correa, which has basically been his strategy since the first round in the elections of last October.

Is there space for the movements and citizen organizations in the call to the Assembly?

We just voted for convoking the Constituent Assembly as well as for the statute regulating the process. In order to participate, lists have to be formed that then need to be validated with the collection of signatures, but the political parties don’t need to do this, which puts them at an advantage in comparison to civil society. And this raises a serious problem because many indigenous groups—who are a majority of Ecuador’s population—are not going to vote for the eventual candidates of the parties and so they’ll be left out of the Assembly. This is what already happened in Ecuador for the 1998 Constituent Assembly, and it’s the same thong happening now in Bolivia’s constitutional Assembly process.

What you mean is that the status quo political culture will not be weakened through the Assembly, but strengthened…

Yes, because those parties have well-oiled political machines and long-standing clients. While the Assembly remains in the hands of political parties, there is no chance of renovating a political culture branded with colonialism and exclusion.

How does the government explain this?

It argues for the necessity of reconstituting a supportive bloc of congressional representatives, which it had to do without during the electoral campaign. For Correa’s campaign to obtain the citizenry’s support, which it needed to win the elections, it had to make the concession of not presenting any candidates for congress, which was a total leap of faith. He did this because there were two candidates that were fighting for the support of the middle classes that were critical of the system: León Roldós and Correa. And in trying to win legitimacy before this constituency, he decided to take this risky step that sent a strong signal of not presenting candidates for congress [seen by many as a corrupt institution]. The move gave him enough legitimacy and credibility to reach the second round and win. We have to remember that Ecuador’s congress had an approval rating that did not surpass five percent.

Now we are in an interim period until the elections for representatives to the Assembly, but during that interim it is key for Correa to count on a bloc of representatives in congress to be able to govern the country and that bloc can only be obtained with the support of the certain parties. That is why the statute regulating the Assembly privileges the parties in comparison to other possible electoral groups.

You argue that Ecuador has created a new middle class, the same forajidos that toppled the presidency of Lucio Gutiérrez, and that this class constitutes Correa’s base. Is this a citizens’ movement that came out of the movement fatigue of the labor and indigenous movements? Could you characterize this social sector?

It’s a consequence of the dollarization. The middle class was never an important political actor, but dollarization creates the conditions so that it could. It generated new economic processes, but social ones, too, because dollarization is also a social and cultural phenomenon that later converts itself into a political phenomenon. When dollarization is instated, the loss of income is so dramatic the Ecuadorans flee the country en masse; out of a population of 12 million, two million leave in a span of five years, mostly to Spain. In 1999, when the financial system went bankrupt the first wave of immigrants sent back remittances to the tune of more than 200 million dollars. In 2006, remittances amounted to 3 billion dollars out of a total GDP of 44 billion. Oil exports account for 3.6 billion, which means that remittances have almost overcome our main export industry. They are already ten times greater than direct foreign investment. What’s more, this money goes almost directly directly into consumption, household budgets, and this allows us to sustain dollarization and the diversification of consumption.

The economy is going from production toward imports and rent seeking mechanisms. We now import potatoes and almost every other staple item in a standard “food basket.” National production merely complements what is imported. Quito, which has less than two million residents went from 180,000 cars to half a million is just five years.

Does this new middle class come from poor urban areas?

Urban and suburban, and also campesinos that have done well for themselves, but at the same time, society is polarizing because there are mechanisms, not just economic, but also legal and institutional that end up concentrating profits at the top, even as the economy is growing. Our GDP doubled in five years, but in that same time period the richest 20% of the country went from owning 45% of generated income to 51%. The poorest 20%, meanwhile earns barely 4% and keeps falling. This is all the result of the brutal growth of a dollarized economy.

But with the expansion of the flower-growing industry in the Andean highlands, there is also a change in the structure of production

Since the 1970s, Ecuador had a two-pronged export structure. ON the one hand was the oil sector with strong ties to the state, and on the other were the agro-exports from the coast—bananas, coffee, cacao and shrimp—controlled by the Guayaquil-based oligarchy. In the 1990s, a third sector in the highlands emerges linked to the export of flowers, which experiences the fastest growth under dollarization. It reaches 600 million dollars compared to 900 million in banana exports, and Ecuador is the world’s biggest banana exporter. Ecuador’s exports are worth 10 billion dollars, which for a small country is a hefty sum.

Why and how do the middle classes begin to play a political role?

The first case is in 1996 when Abdalá Bucaram is elected president. He was a populist supported by the marginalized in Guayaquil, whose corrupt and nepotistic presidency is contested by the indigenous movements and sectors of the middle class that constitute a pincer opposition and liquidate him in six months. But somehow the middle classes sort of moved to the back of the line behind the indigenous, who they later support in overthrowing Jamil Mahuad in January 2000.The first autonomous action of the middle classes really occurred under the government of Lucio Gutiérrez in clamoring for transparency. It was the so-called “velvet revolution.” The protests were attended by entire families in their SUVs, and some women even had their maids banging the pots and pans for them, a protest form that had never been seen in Ecuador before.

If that is the sector now supporting Correa, what are its objectives?

Moralizing the political system. They think the market is transparent and believe in it, which shows they are an ascendant social sector. They accuse the political system of being opaque, corrupt, of creating clientelism, and they’re right. They go to the market, consume, and now there are a lot of malls in Quito, and they see it as something transparent, and they want politics to function the same way, like the market.

What changes will the arrival of these successful middle classes produce within Ecuador’s political system?

The first thing to consider is that this class is the child of dollarization and, by extension, neoliberalism. And this is not just an economic model, but rather a model that first embeds itself in economic mechanisms, but that also generates a whole series of institutional, legal, political, symbolic and cultural shockwaves. There is a solid core that sustains this neoliberal model: in Argentina it was privatizations; in Ecuador it’s dollarization.

But doesn’t Correa want to change…

Exactly. The contradiction of Correa: he can’t change the political system, while maintaining dollarization. Dollarization is political: you can’t tell the united States that you don’t want the military base in Manta, but that you do want dollarization. The moment a country ascribes to the currency of another it converts itself into a kind of colony. Meanwhile, all this maintains itself with an aggressive policy of subsidizing the poorest, the losers of dollarization. The “human development bonus” [a subsidy] created at the insistence of the World Bank has doubled, going from 15 to 30 dollars, and on top of that there are subsidies for housing, credit for micro-enterprises, because the most vulnerable sectors have received the brunt of dollarization’s ill effects.

Raúl Zibechi, a member of the editorial board of the weekly Brecha de Montevideo, is a professor on social movements at the Multiversidad Franciscana de America Latina and adviser to several grassroots organizations. This interview was first published by, an Aregntina media collective. Translated from the Spanish by Teo Ballvé. Photo courtesy: Fotos, Comunidad Andina.


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