Ecuador is currently undergoing times of electoral agitation and affirmation of sovereignty. The IMF has recently "recommended" the Ecuadorian government how to handle its reserves and expressed its opinion with regards to the international arbitration claimed by the Oxy oil company.

 Ecuadorian ministers strongly rejected IMF comments, while the presidential candidate and former Economy minister, Rafael Correa, is not discarding a moratorium on external debt payment. While on October 15 Ecuador decided who the next president would be, the International Monetary Fund (IMF) meddled once again in the internal affairs of the country by means of threats and recipes aimed at the candidate that were to be elected in the polls.

The IMF, through a private document, suggested Ecuadorian authorities "to gather reserves not only to face fluctuations in oil revenues and natural disasters, but also contingent expenditure such as a possible adverse ruling in the dispute with Oxy". Following Ecuador’s cancellation of the contract with Oxy for the exploitation of Block 15 with 100,000 barrels a day last March 16, the US company announced the filing of a multi-million dollar lawsuit against the country and filed an arbitration claim before the International Centre for the Settlement of Investment Disputes (ICSID).


The transnational company was sanctioned for breach of contract by transferring 40% of its stake to the Canadian firm Encana, without informing the government. In response to IMF’s threats, the ruling government made it clear that the ICSID is not a competent court to carry out the proceedings and that any solution will be settled in Quito.

The Ecuadorian Minister of Foreign Affairs, Francisco Carrión, pointed out that "it is not going to be them (the IMF and the World Bank) the ones to prescribe the right policies for Ecuadorian people but the government... Ecuador will act according to its own interests rather than upon the recommendations of international institutions".

 On the other hand, Economy Minister Alfredo Rodas said that the country is not planning to gather resources in view of a possible unfavorable ICSID ruling. "It’s as if the IMF had not witnessed the history of the last 30 years; where has the oil money gone?", wondered the minister and insisted that now Ecuador finally intends to put those resources to good use.


The Fund’s intentions with regards to the result of the upcoming elections have not taken long to be revealed given the fact that the left-wing candidate, Rafael Correa, is leading in previous polls, ahead of the other candidates: Social Democrat León Roldós, and right-wing candidates Cynthia Viteri and Alvaro Noboa.

In a recent TV forum with his opponents, Correa stated that he will maintain the dollarization imposed on the country in 2000 because it is harder to abandon than to continue with it; and he pointed out that it is not necessary "to obtain anybody’s consent to get closer to a sister nation like Venezuela and we will do so with all Latin American countries... we are representatives of the overarching trend in the region". He has also stated that he is not discarding a moratorium on Ecuador’s external debt payment and anticipated that, in case of winning the election, he will not sign a Free Trade Agreement with the United States.

For the IMF, the World Bank and the US government this is a serious matter and they will try to find a way to prevent Correa from coming to power as it has happened in other countries of the region. It is already quite common for the IMF to send urgent prescriptions to Quito. In February 2005 when an avalanche of people had taken to the streets, calling for the resignation of then-president Lucio Gutiérrez, the Fund’s Managing Director, Rodrigo Rato, arrived in the city to demand the implementation of several measures. Rato pointed out that the solution was to strengthen structural reforms in the public sector, to cut down social spending, to eliminate subsidies and to open up the oil and energy sector to private capital, that is to say, more of the same. In recent times, with the implementation of neoliberal-style measures, Ecuador has gone through periods of major crises.

Three presidents were overthrown: Abdalá Bucaram only lasted six months in office, being overthrown on February 7, 1997 and replaced by Fabián Alarcón, until then president of Congress. Jamil Mahuad was deposed on January 21, 2000 and then Vice-President Gustavo Noboa came to power. Colonel Lucio Gutiérrez was also removed from office on April 20, 2005, following popular demonstrations and was replaced by current President and then Vice-President, Alfredo Palacio. Ecuadorian people are ranked among the most needy in Latin America. Six years after the dollarization was imposed and the national currency (the sucre) went out of circulation, inflation was reduced but the economy failed to be reactivated.

The contracts signed with large transnationals make it easy for these companies to keep almost 75% of profits, while the state only gets the rest. Besides, they are income tax-exempt, which is the same as looting the country’s resources with the consent of national authorities. To export oil, bananas, prawns, coffee and cocoa does not imply an improvement for the 12,5 million people living in Ecuador, since 70% of the country’s population is under the poverty line.

A report issued by the United Nations Development Programme (UNDP) stated that poverty growth in Ecuador is directly related to the increase of inequality in income distribution since 20% of the wealthiest people in Ecuador absorb 60% of income. Twenty-five per cent of the poorest people get just about 4% of GDP, while only 50% of the population have access to health services. Sixty per cent of Ecuadorian people lack sanitation and 45% have no access to drinking water.

The Economic Commission for Latin America and the Caribbean (ECLAC) reported that the annual health expenditure per capita in Ecuador amounts to 20 dollars, one of the lowest in the continent. In view of these real calamities and provided that the already common electoral frauds are not registered, Ecuadorian people are going to the polls this October 15 (or November 26 if a second round of voting is needed) to try to break the already long and winding neoliberal road.

Source: http://www.rebelion.org/noticia.php?id=39212 Translation: Monitor de IFIs en América Latina

Instituto del Tercer Mundo – IteM
Juan Paullier 977, Montevideo 11200, Uruguay