National sovereignty is an undervalued asset in today’s world, especially in the international media, where the views of Washington and its allies largely prevail. This is true with regard to economic as well as political issues, and its consequences can be quite heavy in a region like Latin America, long regarded by US officials as their “back yard.”
The election in Ecuador is being watched as well as contested by forces that have opposing views on this question. On the left, there is the presidential bid of former vice president Lenin Moreno, and his party — which has already won a majority of the Congress — Alianza PAIS (Patriotic Alliance, AP). Like all of the left parties and governments that came to power in the “Pink Tide” that swept the region in the 21st century, the AP values national sovereignty and self-determination. Its leaders, as well as its activist and much of its electoral base, understand that the progress that has been made over the last decade would not have been possible if the government of President Rafael Correa had followed the economic prescriptions of Washington.
This progress included reducing poverty by 38 percent and extreme poverty by 47 percent. Inequality was also substantially reduced: the ratio of the income of the richest 10 percent to the bottom 10 percent was reduced from 36 in 2006 to 25 by 2012. Annual growth of income per person rose from 0.6 percent over the prior 26 years, to 1.5 percent. And access to health care and education was substantially increased, with spending for higher education rising from 0.7 to 2.1 percent of GDP — more than is spent by even many high-income countries. Social spending overall doubled, and public investment more than doubled, as a percentage of GDP.
In order to accomplish these goals the government had to re-regulate the financial sector, tax capital flight, require banks to repatriate most of their liquid assets held overseas, and make the central bank part of the executive’s economic team — among other economic reforms. Without this new role of the state — crucially, acting in the public interest instead of on behalf Ecuador’s bankers and richest citizens — Ecuador could not have made most of the gains over the past decade.
The challenger, former banker Guillermo Lasso, proposes a traditional right-wing program of tax cuts for the rich and spending cuts that will have to more than match these, so as to bring down the national budget deficit. He pledges to reduce the government’s role in the economy, which was actually quite important to the progress of the past decade, arguing that “free markets” are the key to unleashing the country’s economic potential. And he has pledged to restore the “independence” of the central bank, which would make it more an instrument of the big bankers, like it was when Lasso himself was in his prime in the late 1990s (when the economy was wrecked by a banking collapse).
Lasso has also admitted to owning a bank in Panama whose main line of business is to facilitate capital flight from Ecuador. This is also a big issue of national sovereignty in Ecuador, as the majority of people just voted (in the February 19 election) to approve a ballot initiative saying that people who are holding money in offshore tax havens should have not be able to hold public office.
This op-ed was originally published by The Hill on March 19, 2017. Read the rest here.
Mark Weisbrot is Co-Director of the Center for Economic and Policy Research in Washington, D.C., and the president of Just Foreign Policy. He is also the author of the new book “Failed: What the ‘Experts’ Got Wrong About the Global Economy“ (2015, Oxford University Press). You can subscribe to his columns here.