Ecuador: Beyond the Petrostate: Ecuador’s Left Dilemma (Opinion)

Thea Riofrancos wrote: Oil revenues have been the cornerstone of the Ecuadorian economy since the 1970s, and continue to account for over half of the country’s exports. Until the recent drop in oil prices, Correa benefited more from oil price increases than any prior administration since democratization. In Ecuador, the so-called “re-primarization” of the economy—a South America–wide phenomenon of increasing economic dependence on primary commodity exports—has accompanied the repayment of what Correa calls the “social debt.” Social spending on health, education, and, perhaps above all, direct cash transfers to the poor have drastically reduced poverty. The administration has also undertaken tax reform, resulting in a broader and more progressive tax base. This is an impressive feat for an oil-dependent state, for which the temptation to rely on resource revenues, a lucrative and politically convenient—if volatile—source of state income, is strong.

Despite a broader tax base and some economic diversification, however, Ecuador’s economy—and especially the state coffers—remains highly dependent on oil income, and is exposed to price shocks. This is especially so because oil production has stagnated in mature fields and the government has had difficulty attracting new …….. The message is clear: from the government’s perspective, to oppose resource extraction is to be an enemy of the state. This logic extends to entire organizations. In March 2009 the radical environmental group Acción Ecológica was dissolved by an executive order (reversed that August after an international campaign). In December of 2013, the offices of Fundación Pachamama, an NGO that works closely with indigenous communities in the Amazon, were shuttered by the Ministry of Environment for its alleged participation in physical confrontations and for engaging in verbal abuse during a protest against oil exploitation. State officials asserted that the group had violated an executive decree calling for the dissolution of NGOs that deviate “from the ends and objectives for which it was constituted” or interfere “in public policies that threatens the internal or external security of the state, or that affects public peace.” Read Article