Latin American Affairs: April 2017

Lenin Moreno (popularly called as Lenin), the leftist candidate has won the Presidential run-off elections of Ecuador on 2 April, beating his rightist rival Guillermo Lasso, a wealthy banker.

Moreno's victory is being celebrated by the Latin American Left which had lost power to the right in Argentina and Peru in the recent elections. In Brazil and Paraguay, the rightists have brought down the leftist Presidents through constitutional coups. There is talk of 'retreat of the left' and 'fading of the pink tide' in the region. Against this background, the victory in Ecuador has come as a moral boost to the Left in the region. Moreno is the hand-picked candidate of the leftist President Rafael Correa, who has ruled the country since 2007. The outspoken Correa is known for his fierce crusade against neoliberalism and Washington Consensus. He had refused to sign FTA with US and pulled out of the negotiations even when the other neighbours Colombia and Peru went ahead. He closed the American airbase in Ecuador when the lease expired in 2009. In a bold move, he gave asylum to Julian Assange who is wanted by US prosecutors after he had published secret American documents in 'wikileaks'. Assange is still staying in the Ecuadorian embassy in London since June 2012. Lasso threatened to evict him if he won the election.

The victory of the Left in Ecuador comes as a relief and hope for those frustrated with the rise of the right-wing extremism in Europe, US and some other parts of the world. It should not be forgotten that the Left continues to rule in Bolivia, Chile, Uruguay and Venezuela. Ex-President Lula is still rated as a potential winner in the next elections in Brazil, if he is not banned by right-wing conspiracy. The chances of Lopez Obrador, the Mexican Leftist candidate, has become brighter in the elections next year, as a reaction against the anti-Mexican diatribes of Trump.

The credit for the victory of the Left in Ecuador goes to the the exemplary performance of Rafael Correa's government in the last ten years. Correa has pulled the country out of its economic mess of the past when it had suffered one crisis after another. He has reduced the poverty rate from 40% in 2006 to 23% in 2016. He has doubled the social spending and improved the living standards, infrastructure and public services. He has included native Indians and other marginalized groups in the political and economic development. He achieved all these without stoking inflation, which stood at 1.3% in 2016. Under his government, economic growth increased steadily while unemployment decreased. He redrew the unequal oil and mining contracts of the multinational corporations and made them pay more. He used the additional revenue for education and healthcare. Alarmed by the fact that 38% the government revenue went to service external debt, he cut it down by aggressive and compulsory restructuring and by standing up to IMF and World Bank and the western creditor mafia. While his close friend Chavez ruined the Venezuelan economy with disastrous policies in the name of 'Twenty first century socialism', Correa, who got his economics Masters and PhD from a US university, showed pragmatism. For example, he continued the policy of his predecessors in keeping US dollar as the country's currency as part of the economic stabilization, despite his anti-US rhetoric and his own criticism of dollarisation when it was introduced in 2000.

More importantly, Correa gave political stability to the country which was notorious for chronic political instability. It had seen eight presidents in the previous ten years and witnessed military coups and congressional impeachment of Presidents before Correa came to power in 2007. Three of his predecessors in the previous ten years were forced out of office before completing their terms. Correa was the first Ecuadorian President elected to serve a third consecutive term in the last hundred years of Ecuador's history. After his first election in 2006, Correa got a new constitution approved in 2008 under which he won the elections in 2009 and 2013. Correa is leaving the Presidency honorably with his head high and a respectable approval rating of 44% after ten years in power. He has announced that he would pursue academic work in Belgium, where he had done university studies and married a Belgian student.

Moreno, who had served as Vice President during Correa's first term (2007-13), has promised continuation of Correa's inclusive agenda of development. He is more moderate and conciliatory than his sharp-tongued and thin-skinned combative predecessor who was intolerant of criticism. Moreno is a paraplegic and uses wheel chair, after he was shot in a robbery attempt in 1998. He had used 'laughter therapy' as part of his recovery process and has created a foundation "Eventa" to promote humor and joy as a way of life. He is the author of numerous books on his theory of humor.

Lasso, who lost narrowly with 48.83% of votes as against Moreno's 51.17 %, is contesting the results claiming irregularities. He has asked his supporters to protest peacefully but forcefully. But he has not come out with solid evidence to substantiate his allegations. The external missions of observers sent by the Organisation of American States (OAS) and UNASUR (the South American community of States) have not reported any adverse observations on the polls. In fact, the Secretary General of OAS has already congratulated Moreno for his victory. It may be noted that Lasso got 10% less votes than Moreno's 39.36 in the first round of elections held in February. His party CREO got just 34 seats while Moreno's Alliance Pais (Country Alliance) party has got 74 and secured a majority in the 137- member National Assembly in the February elections. Lasso had lost to Correa in the 2013 Presidential election getting just 22.7% vis-a vis Correas's 57%.

Ecuador, a small country with a population of 16.4 million and 100 billion US dollars of GDP, depends largely on oil exports for its revenues. With the drastic decline in oil prices in the last two years, the country faces problems of budget deficit, foreign exchange shortage and austerity. The GDP growth in 2017 is projected to be just 0.3% after the contraction of 2% in 2016. The country is in deep debt to China which has given a cumulative credit of 17.4 billion dollars. The Chinese are taking oil against repayment and are dominating in the oil, mining and infrastructure sectors of Ecuador.The excessive dependence on China for credit and investment is the price Correa had to pay in view of the hostile and high-handed approach of western cartel of financial institutions.

India's trade with Ecuador was 378 million US dollars in 2016 (January-December) of which exports were 165 million and imports 213 m. India's imports have fallen drastically from 987 m in 2014, due to the fall in price of crude, the main import of India. Ecuador is an OPEC member with an estimated 8 billion barrels of proven reserves and daily production of 540,000 barrels. TCS has implemented a 150 million dollar IT project for Banco Pichincha of Ecuador. This is one of their largest contracts in the region. India had exported seven Dhruv helicopters to Ecuador but four of them have crashed. The delay in amicable resolution of this issue has caused some strain in bilateral relations. In spite of this, Ecuador is keen to strengthen trade with India and attract Indian investment. It had sent a large business and government delegation headed by their Vice President to the Indo-LAC Business Conclave organized by CII in December 2013. PetroEcuador has signed a MOU with ONGC Videsh Ltd (OVL) for cooperation in hydrocarbons. Ecuador has established a consulate in Mumbai besides an embassy in New Delhi. This is noteworthy given the fact that only Brazil and Argentina are the other Latin American countries with consulates in Mumbai. It is time for India to consider opening an embassy in Quito. Ecuador is more important than Iceland where India has an embassy for unknown reasons. India's exports to Iceland are less than 20 million dollars and imports below 5 million. The cold and barren Iceland, with a tiny population of 330,000 and an insignificant GDP, does not have oil, minerals or opportunities like Ecuador has.