Presidential
runoff elections in Ecuador on November 26 appear to have produced
a handy victory for radical young economist Rafael Correa over
banana magnate Alvaro Noboa.
Washington has an
interest in a friendly, stable Ecuador, but this outcome may not be
conducive to friendship or internal stability. The president-elect
has expressed hostility toward U.S. policies, particularly free
markets. At home, he could encounter stiff opposition from a
congress he promised to dissolve.
Some of Correa's
agenda may be campaign rhetoric, and U.S. policymakers should seek
opportunities to cooperate wherever possible. However, if he
chooses to cool relations, Washington should prepare to help
sustain Ecuador's civil society while strengthening support for
neighboring allies to fight drug traffickers and terror groups.
A Weak State
Ecuador's
democracy chugs along, but not without hiccups. Its politics have
been shaped by populist presidents, military interventions,
competing oligarchies in the highlands and coast, as well as by the
existence of dozens of small political parties that have served to
fragment the country's unicameral congress. During a 1970s oil
boom, nationalistic military officers seized power while
proclaiming a "reform" agenda, only to return to their barracks
when prices dropped. Over the last decade, Ecuador has had eight
presidents, three of whom were driven from office.
For now, Ecuador's
economy is growing by about five percent-thanks to high oil prices
and dollarization in 2000 that tamed inflation-but persistent
poverty and a noncompetitive business climate have fueled voter
discontent. Nearly half of all citizens live under the poverty
line, and half of school-age youth never get beyond elementary
grades. Company managers spend twice as much time dealing with
government regulations as counterparts elsewhere. Surveys show
little confidence in a justice system bogged down by thousands of
conflicting "junk" laws. Moreover, the use of oil
resources-exploited since the 1960s-and foreign borrowing to fund
subsidies for urban consumers still dominate national
discourse.
Answering the Wrong
Question
During the runoff
campaign, neither candidate challenged the country's rent-seeking
ways. Noboa came closer by favoring a free trade pact with the
United States, which would have opened doors to a more competitive
economy if accompanied by legal and regulatory reforms. Despite
radical rhetoric, Correa clung to rents, borrowing, and a return to
nationalism. He pledged to renegotiate contracts with foreign oil
companies to extract higher royalties from them, stop payments to
multilateral institutions, seek aid from Venezuela, and launch new
social programs.
In addition,
Correa promised to end trade talks with the United States, phase
out U.S. use of Ecuador's Manta air base for counternarcotics
operations, rewrite the constitution to give the presidency more
power, and clean up corruption. None of these actions address
deeper needs for the rule of law, stronger citizen control over
government, and a more open economy.
While
mismanagement and corruption in the state-owned oil sector have
depressed Ecuador's petroleum production for more than a decade,
further government intervention will only constrain investment.
Abandoning multilateral lenders for Venezuelan largesse may work as
long as President Hugo Chávez has money to spend, but the
flow could dry up at any time, leaving Ecuador unable to pay its
bills.
Correa's promise
to halt negotiations for a bilateral trade agreement with the
United States may be a moot point with the current U.S. Congress,
but cooling ties to Western, industrial democracies in favor of a
supplicant relationship with Venezuela does nothing to make
Ecuador's economy more welcoming to new small- and medium-sized
enterprises. Meanwhile, Correa's withdrawal of base rights for drug
interdiction suggests a worrisome tolerance for Colombian
narcoguerrillas operating inside Ecuador. That could disqualify it
for any extension of Andean trade preferences offered by the U.S.
Congress.
Correa's vow to
dismiss newly-elected lawmakers and name a constituent assembly of
loyalists to write a new constitution enlarging presidential powers
copies Chávez's original script. A similar experiment in
Bolivia has met strong opposition. In Ecuador, it could spark a
power struggle between congress and the executive, serving as a
pretext to Venezuelan intervention.
Finally, there is
the question of judgment. During his campaign, Correa referred to
U.S. President George Bush as "dimwitted." Although he recanted,
such outbursts erode chances that Correa will be taken seriously in
foreign capitals.
A Measured
Response
Correa is an
ardent proponent of restoring Ecuador's inflationary national
currency, but he backed away from that idea during the campaign. He
could soften on other radical positions as well, permitting
continued dialogue on a range of issues. Still, as Minister of
Economy and Finances, in a fit of impunity, he tried to raid the
nation's oil stabilization fund and attempted to sell debt bonds to
Venezuela, prompting President Alfredo Palacio to ask for his
resignation. In any case, America should
-
Clearly
state U.S. expectations that Ecuador will respect democratic
neighbors, continue cooperation on fighting drug trafficking and
international crime, and invest in its own long-term stability and
prosperity through policies that favor political and economic free
choice;
-
Adjust democracy and border alternative development programs
to boost personal contact with Americans and counter incoming
armies of Cuban doctors and Venezuelan security advisers;
-
Augment support for civil society groups while the opportunity
exists and ramp up public diplomacy efforts to strengthen local
voices proposing independent solutions to Ecuador's poverty and
governance troubles;
-
Show good intentions by keeping bilateral trade options
available when and if Ecuador qualifies for them; and
-
Redirect security assistance as necessary and adjust
strategies if America loses tenant rights at Ecuador's Manta air
base for drug interdiction efforts.
Conclusion
The darker side of
Latin American history is littered with attempts to amass power
disguised as reform. Hopefully, Ecuador is not experiencing one of
those moments. Even so, U.S. officials must be clear on Ecuador's
role in sustaining peace and stability in the Andean neighborhood.
And, if confronted by an antagonistic government, America may have
to pare back assistance, shelve trade talks, support civil society
where possible, and pursue a backup plan to fight drugs and thugs
without Ecuador's help.
Stephen
Johnson is Senior Policy Analyst in
the Douglas and Sarah Allison Center for Foreign Policy Studies at
The Heritage Foundation.