STUDIES of the AMERICAS Assessing the Left Turn in Ecuador

STUDIES OF THE AMERICAS

Assessing the Left Turn in Ecuador

Edited by Francisco Sánchez · Simón Pachano Studies of the Americas

Series Editor Maxine Molyneux Institute of the Americas University College London London, UK The Studies of the Americas Series includes country specifc, cross- disciplinary and comparative research on the United States, Latin America, the Caribbean, and Canada, particularly in the areas of Politics, Economics, History, Sociology, Anthropology, Development, Gender, Social Policy and the Environment. The series publishes monographs, readers on specifc themes and also welcomes proposals for edited collec- tions, that allow exploration of a topic from several different disciplinary angles. This series is published in conjunction with University College London’s Institute of the Americas under the editorship of Professor Maxine Molyneux.

More information about this series at http://www.palgrave.com/gp/series/14462 Francisco Sánchez · Simón Pachano Editors Assessing the Left Turn in Ecuador Editors Francisco Sánchez Simón Pachano Instituto de Iberoamérica Department of Political Science University of Salamanca FLACSO Ecuador Salamanca, Spain Quito, Ecuador

Studies of the Americas ISBN 978-3-030-27624-9 ISBN 978-3-030-27625-6 (eBook) https://doi.org/10.1007/978-3-030-27625-6

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifcally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microflms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifc statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affliations.

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This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland To Mateo, so he understands his other Patria, which is also his. Francisco Sánchez To Mateo, Francisca and Emilio, looking to the future Simón Pachano Acknowledgements

The collective effort refected in this volume is the result of close collaboration between the Instituto de Iberomérica of the University of Salamanca and FLACSO Ecuador. Initial versions of the chapters were presented and discussed in a workshop held in Salamanca, Spain, on May 21 and 22, 2018. In addition to the authors, participating commenta- tors included Manuel Alcántara, Marianne Kneuer, Iván Llamazares, Mercedes García Montero, Teodoro Bustamante, Elisa Botella, Erynn Masi de Casanova, Iliana Olivié, José Ignacio Antón, Juan Manuel Bautista, Sergio García Rendón, Julián Martínez, Mónica Almeida, and Ana Karina López. We again offer our thanks for their constructive contributions, many of which are noted in the text. We also wish to thank the project entitled “Competición ideológica y sistema político: escenarios de estabilidad y escenarios de cambio (CSO2015-63555-R)” (Ideological competition and political system: scenarios of stability and change scenarios), funded by Spain’s Ministry of Economy, Industry, and Competitiveness and led by Leticia M. Ruiz Rodríguez, who supported the development of many of the ideas here presented. Thanks are also due to Rosana Hernández, Sara Martín, Alida Toé, Joseph Candora, Elizabeth Ramos and María Rosa Bonilla, who assisted in many ways throughout this process. We hope that the resulting volume, which can

vii viii ACKNOWLEDGEMENTS be credited to everyone involved, will be of interest to readers and help in clarifying what has been taking place in la Patria Grande.

Francisco Sánchez (Salamanca, Messidor de l’an CCXXVII) Simón Pachano (Quito. June 2019) Contents

1 Introduction 1 Francisco Sánchez and Simón Pachano

2 Reshaping the State: The Unitary Executive Presidency of Rafael Correa 15 John Polga-Hecimovich

3 “La patria ya es de todos:” Pilgrimages, Charisma, Territory, and the Return of the State 41 Felipe Burbano de Lara

4 State-Organized Crime: A Hypothesis on the Institutionalization of Corruption During the Revolución Ciudadana 67 César Montúfar

5 Rafael Correa’s Technopopulism in Comparative Perspective 91 Carlos de la Torre

6 A Revolution with a Female Face? Gender Debates and Policies During Rafael Correa’s Government 115 Marcela Morales Hidalgo

ix x CONTENTS

7 Intellectuals, NGOs, and Social Movements Under the Correa Regime: Collaborations and Estrangements 137 Carmen Martínez Novo

8 The Macroeconomics of the Commodities Boom in Ecuador: A Comparative Perspective 163 Augusto de la Torre, Simón Cueva and María Alexandra Castellanos-Vásconez

9 Understanding Ecuador’s Growth Prospects in the Aftermath of the Citizens’ Revolution 213 Matias Bayas-Erazo

10 The Political Management of the Oil Bonanza During Correa’s Government 231 Andrés Mejía Acosta and Vicente Albornoz

11 Buen Vivir: A Reference for Public Policies and Development in Ecuador and the Governments of the Latin American Left 257 Antonio Luis Hidalgo-Capitán and Ana Patricia Cubillo-Guevara

12 Educational Policy in Ecuador During the Citizens’ Revolution 283 Juan Ponce Jarrín

13 Far from Becoming the Jaguar of Latin America: The Ecuadorian Science, Technology and Innovation Policy Turn 301 María Belén Albornoz

14 Rafael Correa’s Foreign Policy Paradox: Discursive Sovereignty, Practical Dependency 325 Grace Jaramillo CONTENTS xi

15 Conclusions: Assessing the Left Turn in Latin America—10 Years of the Correa Administration in Ecuador 351 Francisco Sánchez and Simón Pachano

Bibliography 373 Notes on Contributors

María Belén Albornoz is Professor-Researcher at FLACSO Ecuador, where she has held positions as Dean of Communication Studies and Deputy Director. Her current research concerns technology transfer models and public policy of science, technology, and innovation. This includes comparative studies of STI policies in the Andean Region and a case study of technology transfer from South Korea to Ecuador. She received her Ph.D. in Sociology from Universidad Nacional de Cuyo on a study of pri- vacy and social media, which combined STS theory and law. In 2017 she was a Fulbright Scholar at Rensselaer Polytechnic Institute, and a Visiting Scholar at Aalborg University in Denmark, where she worked in theoriz- ing imaginaries of innovation and policy network analysis. Vicente Albornoz is Dean of The School of Business and Economics at Universidad de las Américas in Quito (UDLA). He is an economist and journalist. After a stint as a Member of the Ecuadorean Parliament (2000–2003), he directed a private economics think tank in Quito (2003–2012). He has done consulting work for the Inter-American Development Bank, the World Bank, and the Andean Development Corporation, among others. He is also Op-ed columnist at El Comercio and also presents a thrice-weekly TV program economics on Teleamazonas and a weekly radio talk show on economics for Radio Democracia.

xiii xiv NOTES ON CONTRIBUTORS

Matias Bayas-Erazo is a Ph.D. Candidate at Northwestern University, Department of Economics. Holds an M.Sc. in Econometrics and Mathematical Economics from the London School of Economics. He is an applied theorist whose main feld of interest lies at the intersection of information economics and macro-fnance. His current research focuses on fnancial crises in emerging markets and applied game theory. He has also worked on the implications of asymmetric information for central bank policy as a research assistant for the Monetary Affairs Division at the Board of Governors of the Federal Reserve. Felipe Burbano de Lara is Professor-Researcher in the Department of Political Studies at FLACSO Ecuador. His research has focused on populism, democratic forms of government, and state and nation building in Ecuador and Bolivia. His most recent book is La Revuelta de las Periferias. Movimientos Regionales y Autonomías Políticas en Bolivia y Ecuador. He has a Ph.D. in Procesos Políticos Contemporáneos from the University of Salamanca and an M.A. in Political Sociology from Ohio University (Fulbright Fellowships). He has been a political com- mentator for several newspapers in Ecuador. María Alexandra Castellanos-Vásconez obtained an M.Sc. in Economics at University College London sponsored by the Chevening Programme. She has worked as Research Associate at the National Institute of Economic and Social Research in London, Researcher and Lecturer at the Economics Department of Universidad de las Americas, Economic Consultant for the public and private sector in Ecuador as well as multilateral organizations. Awardee of the Citi Journalistic Excellence Award 2015 granted by Citi and Columbia University. Ana Patricia Cubillo-Guevara is a consultant, a researcher at the Transdisciplinary Research Group of the University of Huelva (Spain), and a member of the Spanish Network of Development Studies. Her main research lines are Development Studies, Good Living Studies, and Gender Studies. She holds a Ph.D. in Sociology from the University of Huelva. She has been Vice Minister for the Environment of the Government of Andalucía. Simón Cueva is Academic Executive Director, Laureate International Universities and Director, TNK Economics—Ecuador. Formerly CEO, Laureate Costa Rica; Academic Vice Rector, UDLA Ecuador; Senior Economist & Representative in Bolivia, IMF; Chief Economist, Central NOTES ON CONTRIBUTORS xv

Bank of Ecuador; international consultant; Professor in French and Ecuadorian universities; Engineer from École Polytechnique—France; Economist & Statistician from ENSAE—France; an M.A. and a Ph.D. in Economics from the University of Paris I. Augusto de la Torre is Adjunct Professor, Columbia University’s School of International and Public Affairs and Director, Economics Research Center at the Universidad de las Américas, Ecuador. He held senior positions at World Bank (1997–2016), including Head of the Financial Systems Department and Chief Economist for Latin America. He was the Governor of the Central Bank of Ecuador (1993–1996) and served at the IMF (1986–1992) as senior economist and resident representative for Venezuela. He has a Ph.D. in Economics from the University of Notre Dame and a Licenciatura in Philosophy from the Catholic University of Ecuador. He has published extensively on macro, fnancial and development topics. Carlos de la Torre is Professor of Sociology at the University of Kentucky and Emeritus Professor at FLACSO Ecuador. He has been a fellow at the Simon Guggenheim Foundation, and the Woodrow Wilson Center for Scholars. His most recent books are Populisms: A Quick Immersion (Tibidabo, 2019), and Populist Seduction in Latin America (Ohio University Press, second edition, 2010). He is the editor of The Routledge Handbook of Global Populism (Routledge, 2019), The Promise and Perils of Populism (The University Press of Kentucky, 2015), and with Cynthia Arnson, Latin American Populism of the Twenty First Century (The Johns Hopkins University Press and the Woodrow Wilson Center Press, 2013). Antonio Luis Hidalgo-Capitán is Associate Professor at the Department of Economics, member of the Center for Research on Contemporary Thought and Innovation for Social Development and principal investigator of the Transdisciplinary Research Group of the University of Huelva (Spain). His main research lines are Development Studies, Good Living Studies, and Global Political Economy. He has a Ph.D. in Economics from the University of Huelva. Grace Jaramillo is currently a postdoctoral research fellow and lecturer at University of British Columbia, Department of Political Science. She obtained her Ph.D. at Queen’s University where she is still fellow at the Centre for International and Defence Policy. During his tenure xvi NOTES ON CONTRIBUTORS as professor at FLACSO Ecuador, where she became the chair of the Department of International Relations from 2007 to 2010. Among her publications in Spanish are: Ecuador vs. the World: Ten years of Foreign Policy Analysis, Building Bridges Between Ecuador and Colombia, and New Approaches to Regional Integration: New Regionalism and Beyond. Her most recently publication is Latin American: Trade and Culture at a Crossroads. Carmen Martínez Novo is Associate Professor of Anthropology at the University of Kentucky. She has a Ph.D. in Anthropology from the New School for Social Research. She is the author of Who Defnes Indigenous? (Rutgers University Press, 2006) and editor of Repensando los movimientos indígenas (FLACSO, Ecuador, 2009). She has written numerous peer-reviewed articles and book chapters on indigenous identities and politics in Mexico and Ecuador. She was awarded a 2017–2018 American Council of Learned Societies scholarship to complete her upcoming book Undoing Multiculturalism (University of Pittsburgh Press). She is an editor in the Journal Latin American and Caribbean Ethnic Studies. Andrés Mejía Acosta is Senior Lecturer in Political Economy of Emerging Markets at King’s College. Ph.D. in Political Science, University of Notre Dame, his research explores how formal and informal political institutions shape policy-making in middle-income countries. He has published extensively on topics like legislative dynamics, management of natural resource revenues, transparency and accountability initiatives, and food politics. He has worked as a policy and country expert for Freedom House, UN agencies, the IADB, and the British Department for International Development among others. César Montúfar is Professor of Social and Global Studies at the Universidad Andina Simón Bolívar in Quito. He received his Ph.D. and Master’s degree in Political Science at the New School for Social Research, where he won the Frieda Wunderlich Award for the best doctoral dissertation by a foreign student. His areas of expertise include Ecuadorian and Latin American politics, international development, and international security. He is author of Rafael Correa and His Plebiscitary Citizens’ Revolution; ¿Vivimos en democracia?: aproximación conceptual al régimen político ecuatoriano 2007–2015; Hacia una teoría de la asist- encia internacional del desarrollo; and other publications. NOTES ON CONTRIBUTORS xvii

Marcela Morales Hidalgo is cofounder of the Ecuadorian Network for Women in the Sciences and research offcer at Southern Voice, a global network of think tanks about Sustainable Development Goals. She holds a Master’s degree in Development Studies from the University of Cambridge, an M.A. in Intercultural Confict Management from the Alice Salomon Hochschule and a B.A. in International Relations from the Catholic University of Ecuador. She was the research coordinator of ELLA, a south-south knowledge generation initiative in oil and gas sector. She has also been a consultant for governmental and nongovernmental institutions in topics related to gender and education. Simón Pachano is Professor-Researcher of Political Studies at FLACSO Ecuador. He holds an Ph.D. in Political Science from the University of Salamanca and a Master’s Degree from a CLACSO-PUCE Program. His current research focuses on democracy, quality of democracy, political parties, electoral processes, and comparative politics of Latin America. John Polga-Hecimovich is an Assistant Professor of Political Science at the United States Naval Academy. He received his Ph.D. in Political Science at the University of Pittsburgh; his research broadly focuses on the effects of political institutions on democratic stability, policy-making, and governance, especially in Latin America. He has taught at Wake Forest University, the College of William & Mary, and FLACSO Ecuador, and has published peer-reviewed scholarship in The Journal of Politics, Political Research Quarterly, Democratization, and Latin American Politics & Society, among others. Juan Ponce Jarrín is currently the director of FLACSO Ecuador. He has a Bachelor’s degree in economics and law, a Master’s degree in Political Science and another Master’s degree in Economics. He has a Ph.D. in Development Studies by the Institute of Social Studies in The Netherlands. His research areas include: economics of education, development economics, poverty and inequality, impact evaluation of social programs, and econometrics. He has published some books and papers in high-impact factor journals. Francisco Sánchez is Director of the Instituto de Iberoamérica at the University of Salamanca. Associate Professor of Political Science and Public Administration. Earlier, he was Associate Professor at the University of Valencia and researcher at the Institut Für Iberoamerica xviii NOTES ON CONTRIBUTORS

Kunde Hamburg (GIGA—Hamburg). He holds a Ph.D. in Political Science and a Master’s degree in Latin American Studies from the University of Salamanca. He is the coauthor of Funciones, proced- imientos y escenarios: un análisis del poder legislativo en América Latina (AECPA Prize for the best book in 2005), and he has published in Latin American Research Review, Latin American Politics and Society, Journal of Latin American Studies, América Latina Hoy, among others. Acronyms

AD Alternativa Democrática ALBA Alianza Bolivariana para los Pueblos de Nuestra América ANC Asamblea Nacional Constituyente APEC Asia-Pacifc Economic Cooperation ATPDEA Andean Trade Promotion and Drug Eradication Act BCE Banco Central del Ecuador CAN Comunidad Andina CC Corte Constitutional CCP The Comparative Constitutions Project CEAACES Consejo de Evaluación, Acreditación y Aseguramiento de la Calidad de la Educación Superior CELAC Comunidad de Estados Latinoamericanos y Caribeños CES Consejo de Educación Superior CGE Contraloría General del Estado CISMIL Centro de Investigaciones Sociales del Milenio CNC Consejo Nacional de la Competencia CNE Consejo Nacional Electoral CNP Consejo Nacional de Planifcación CODENPE Consejo de Desarrollo de las Nacionalidades y Pueblos del Ecuador COIP Código Orgánico Integral Penal CONACYT Consejo Nacional de Ciencia y Tecnología CONADE Consejo Nacional de Desarrollo CONAIE Confederación de Nacionalidades Indígenas del Ecuador CONEA Consejo Nacional de Evaluación y Acreditación de la Educación Superior del Ecuador

xix xx ACRONYMS

CONESUP Consejo Nacional de Educación Superior CONUEP Consejo Nacional de Universidades y Escuelas Politécnicas COOTAD Código Orgánico de Arganización Territorial, Autonomía y Descentralización CPCCS Consejo de Participación Ciudadana y Control Social ECLAC Economic Commission for Latin America and the Caribbean ECORAE Instituto para el Ecodesarrollo Regional Amazónico EMBI Emerging Market Bond Index ENIPLA Estrategia Nacional Intersectorial de Planifcación Familiar y Prevención del Embarazo en Adolescentes EU European Union FAO Food and Agriculture Organization FARC Fuerzas Armadas Revolucionarias de Colombia FDI Foreign Direct Investment FENOCIN Federación Nacional del Organizaciones Campesinas, Indígenas y Negras FGE Fiscalía General del Estado FLACSO Facultad Latinoamericana de Ciencias Sociales FMLN Frente Farabundo Martí para la Liberación Nacional GAD Gobiernos Autónomos Descentralizados GDP Gross Development Product GNP Gross National Product ICCI Instituto Científco de Culturas Indígenas IDB Inter-American Development Bank IFS International Financial Statistics IMF International Monetary Fund INEC Instituto Nacional de Estadística y Censos INEVAL Instituto Nacional de Evaluación Educativa LAC Latin American Countries MAS Movimiento al Socialismo MPD Movimiento Popular Democrático MUP-Pachakutik Movimiento de Unidad Plurinacional—Pachakutik NGO Non-Governmental Organization OCP Oleoductos de Crudos Pesados PAIS Patria Altiva y Soberana PDE Plan Decenal de Educación PGE Procurador General del Estado PNBV Plan Nacional para el Buen Vivir PRC People’s Republic of China PRE Partido Roldosista Ecuatoriano ACRONYMS xxi

PS-FA Partido Socialista—Frente Amplio RAI Regional Authority Index SENAIN Secretaría Nacional de Inteligencia SENESCYT Secretaria de Educación Superior, Ciencia, Tecnología e Innovación SENPLADES Secretaría Nacional de Planifcación y Desarrollo SOTE Sistema Oleducto Trans-Ecuatoriano STEM Science, Technology, Engineering and Mathematics STL Standard Template Library TCP Tratado de Comercio de los Pueblos U.S. United States UINPI Universidad Intercultural de las Nacionalidades y Pueblos Indígenas, Amawtay Wasi UN United Nations UNACH Universidad Nacional de Chimborazo UNASUR Unión de Naciones Suramericanas UNDP United Nations Development Programme UNESCO United Nations Educational, Scientifc and Cultural Organization USAID United States Agency for International Development VAT Value-Added Tax WDI World Development Indicators WEO World Economic Outlook WWII World War Two List of Figures

Chapter 2 Fig. 1 Cabinet ministries in Ecuador (1979–2017) (Source Author’s own data) 19 Fig. 2 Judicial and legislative constraints on the executive (Source Varieties of Democracy v8) 27 Fig. 3 Monthly net presidential approval rating (1988–2017) (Source Executive Approval Database 1.0. Available for download at www.executiveapproval.org) 32 Fig. 4 Share of legislative seats, president’s party (1979–2017) (Source Author’s own data) 33

Chapter 3 Fig. 1 Counties visited by Rafael Correa between 2007 and 2017 (Source Presidencia de la República, El Comercio, SENACOM, El Ciudadano) 53

Chapter 4 Fig. 1 Institutional conditions of impunity and the system of institutionalized corruption (Source Author’s own classifcation) 77

xxiii xxiv LIST OF FIGURES

Chapter 8 Fig. 1 Commodity price index and terms of trade in South America (Source World Bank’s GEM, Bloomberg, IMF, and national sources. Author’s own calculations. Notes Panel 1a: The Terms-of-Trade series is the average of standardized series for Argentina, Brazil, Chile, Colombia, Ecuador, and Peru, obtained by subtracting the mean and dividing by the standard deviation. Panel 1b: ECA Eastern = and Central Asia; MCC Mexico, Central America = and the Caribbean; SEA MICs South East Asia & = Middle-Income Countries; Africa MICs the average = of 15 middle-income countries in Africa, following World Bank classifcation) 168 Fig. 2 Latin America: percentage of relevant commodities with rising or falling prices (Source Sinnott et al. [2010]. Notes Share of the 16 commodities most relevant for the major Latin America countries in each period whose prices increased [dark blue] or decreased [light blue]) 169 Fig. 3 Terms of trade and selected macroeconomic variables in South America (Source Bloomberg, national sources, and the dataset constructed by Lane and Milesi-Ferretti [2007]. Author’s own calculations. Notes Panels 3a to 3d: Average standardized series for Argentina, Brazil, Chile, Colombia, Ecuador [except 3c], and Peru. Standardized series obtained by subtracting the mean and dividing by the standard deviation) 170 Fig. 4 Ecuadorian oil production and export volumes and prices (Source BCE and Author’s own calculations) 171 Fig. 5 South America: terms of trade and nominal and real savings rates (Source De la Torre et al. [2016]. Notes Average standardized series for Argentina, Brazil, Chile, Colombia, Ecuador, and Peru. Standardized series are obtained by subtracting the mean and dividing by the standard deviation) 173 Fig. 6 Latin America: changes in domestic demand and the terms of trade during the boom (Source ECLAC, UN National Accounts. Author’s own calculations. Notes Domestic demand expansion measured as the average annual growth rate of real domestic demand during the boom years for each country. Terms-of-Trade Improvement measures the percentage increase of the terms of trade between 2003 and the end of the boom for each country. The end of the boom varies from country to country between 2011 and 2013) 177 LIST OF FIGURES xxv

Fig. 7 Distribution of domestic demand increases between consumption and investment (Source UN National Accounts. Author’s own calculations. Notes Real Investment and Consumption as a percentage of real GDP. Percentage increase of each variable between 2004 and 2012) 178 Fig. 8 Savings rates and domestic demand in South American countries (Source UN National Accounts, IMF. Author’s own calculations. Notes Real Savings are period averages calculated as real GDP minus real consumption plus real net primary and secondary income) 178 Fig. 9 South America: terms of trade and real exchange rates (Source Bloomberg, national sources, and IMF. Author’s own calculations. Notes An increase of the real exchange rate means an appreciation. Panel 10a: Average standardized series for Brazil, Chile, and Colombia [9a], for Argentina and Uruguay [9b], and for Bolivia, Ecuador, and Peru [9c]. Standardized series are obtained by subtracting the mean and dividing by the standard deviation) 180 Fig. 10 South America: degree of trade openness (Source UN National Accounts. Author’s own calculations. Note The degree of trade openness is measured as the sum of exports and imports of goods and services as a percent of GDP, in constant 2010 U.S. dollars) 181 Fig. 11 South America: credit expansion and terms-of-trade improvement (Source ECLAC and World Bank. Author’s own calculations. Notes Credit expansion measures the percentage point increase in the ratio of private bank credit to GDP between 2003 and the end of the commodity boom [2011–2013]. The Terms-of-Trade Improvement measures the percentage point increase of terms of trade for the same period) 181 Fig. 12 Exports diversifcation for selected economies (Source UN Comtrade. Author’s own calculations. Note Concentration is measured by the Herfndhal-Hirschman index. Non-commodity exports exclude raw commodity exports) 183 Fig. 13 Relative importance of non-tradable versus tradable value added (Source UN National Accounts Statistics. Author’s own calculations. Notes Non-tradable GDP includes Construction, Wholesale and Retail Trade, Restaurants and Hotels, Transport, Storage and Communication, and Other Activities. Tradable GDP includes Agriculture, Hunting, Forestry and Fishing, Mining and Utilities, and Manufacturing) 184 xxvi LIST OF FIGURES

Fig. 14 South America: change in government revenues and spending during the boom (Source IMF. Author’s own calculations) 185 Fig. 15 Selected South American countries: public, private and total investment (Source WDI and national sources. Author’s own calculations) 187 Fig. 16 Real investment and international reserves in Peru and Ecuador (Source IMF. Author’s own calculations. Notes IR are the international reserves held by the central bank; NFA are the foreign exchange-denominated reserves held by the banking system) 189 Fig. 17 EMBI spreads: Ecuador, junk bonds and the average of Colombia, Chile and Peru (Source Bloomberg and Reuters. Author’s own calculations) 190 Fig. 18 Commodity prices and terms of trade boom and bust in South America (Source ECLAC, FAO and World Bank. Author’s own calculations. Notes Panel 17b compares the percentage change of the terms of trade in the boom years [2003 to the peak] and the bust years [peak to 2016]) 193 Fig. 19 South America: fscal defcits and sources of change in the bust years (Source De la Torre et al. [2016]. Notes The changes for each variable are calculated as the difference between its value in 2016, and its value in the year when the smallest fscal defcit was reported, prior to the terms-of-trade bust) 194 Fig. 20 Ecuador: fnancing of fscal imbalances during the bust (Source BCE and Ministry of Economics and Finance. Author’s own calculations) 196 Fig. 21 South America: current account defcits and real exchange rate in the bust years (Source De la Torre et al. [2016] and IMF. Author’s own calculations. Notes Panel 20a: the changes for each variable are calculated as the difference between its value in 2016 and its value in the year when the current account balance was lowest, prior to the terms- of-trade bust. Panel 20b: the fexible exchange rate regimes series is the average of the real effective exchange rate for Brazil, Chile, and Colombia) 198 Fig. 22 Growth and the current account (Source ECLAC and national sources. Author’s own calculations) 200 Fig. 23 South America: per capita income growth during the boom and bust years (Source World Bank. Author’s own calculations) 201 LIST OF FIGURES xxvii

Fig. 24 South America: convergence performance during the commodities cycle (Sources World Bank and IMF. Author’s own calculations. Notes Panel 24d: convergence is defned as the average annual rate of change of the ratio of a country’s per capita GDP to the U.S. per capita GDP, both measured in constant 2010 dollars) 204 Fig. 25 Poor, vulnerable and middle-class population in Ecuador (Source World Bank. Author’s own calculations) 208 Fig. 26 Poverty reduction (Source World Bank. Author’s own calculations) 209 Fig. 27 Inequality reduction (Source World Bank. Author’s own calculations. Note Data for Bolivia correspond to 2002 instead of 2003. Data for Chile correspond to 2013 instead of 2014) 210

Chapter 9 Fig. 1 GDP and GDP per capita (Source BCE and Author’s own calculations) 216 Fig. 2 Income taxes relative to GDP (Source BCE and Author’s own calculations) 218 Fig. 3 Government expenditures relative to GDP (Source BCE and Author’s own calculations) 219 Fig. 4 Real investment (Source BCE and Author’s own calculations) 220 Fig. 5 Best response functions and conjectured tax rates (Source Author’s own calculations) 223 Fig. 6 Government revenues and expenditures (Source Author’s own calculations) 224 Fig. 7 Fiscal policy under unconditional commitment (Source Author’s own calculations) 227 Fig. 8 Best response function under unconditional commitment policy (Source Author’s own calculations) 227

Chapter 10 Fig. 1 Price for Ecuadorean crude oil, dollars per barrel (Note Showing the average for January 2002 to December 2004 and January 2008 to December 2014. Source BCE and Author’s own calculations) 239 Fig. 2 Share from oil production kept by private companies (Source Observatorio de Energía y Minas, based on date from the BCE) 240 xxviii LIST OF FIGURES

Fig. 3 Budget reallocations at different stages of the budget process (Notes CBL total change in the composition of spending = between the Executive’s proposal and the budget law approved by Parliament. This is a measure of the relative power of Parliament, compared to the Executive. CLV total change in the composition of spending between = the budget law approved by Parliament and the detailed budget released by the Finance Ministry. This is a measure of the relative power of the Finance Ministry, compared to Parliament. CVD total change in the composition = of spending between the detailed budget released by the Finance Ministry and the actual expenditure by the government. This is a measure of power struggles between different government sectors or ministries. Source Mejía Acosta et al. [2018]) 245 Fig. 4 The loyalist cabinet: Duration and portfolio of most stable ministers 2007–2016 (Source Mejía Acosta et al. 2018) 246 Fig. 5 Sources of GAD income according to revenue type (index, base 2007 100) (Source Mejía Acosta and Meneses 2019) 248 = Chapter 13 Fig. 1 Linear model of innovation (Source Godin [2005, p. 6]) 308 Fig. 2 Total expenditure on science and technology, 2009–2014 (Source INEC—National Survey of Science, Technology, and Innovation 2014) 311

Chapter 14 Fig. 1 Correa’s foreign policy timeline, 2007–2017 (Source Author’s own data) 331 List of Tables

Chapter 2 Table 1 Rafael Correa’s executive decrees by year (2007–2017) 28 Table 2 Bureaucratic organization and staffng by Rafael Correa via executive decree 30

Chapter 3 Table 1 Counties where Enlaces Ciudadanos were held 54 Table 2 Distribution of Enlaces Ciudadanos and Gabinetes Itinerantes by province 56 Table 3 Gabinetes Itinerantes by region 57

Chapter 4 Table 1 Legal pillars of institutionalized corruption in the strategic sectors 79 Table 2 Selected presidential decrees and institutionalized corruption 83

Chapter 6 Table 1 Evolution of female participation in the National Assembly, Ecuador 1979–2009 130

xxix xxx LIST OF TABLES

Chapter 8 Table 1 From terms of trade to domestic demand: amplifers and dampeners 191 Table 2 Ecuador: nonfnancial public sector accounts as percent of GDP 195 Table 3 Selected South American countries: macroeconomic balances and pending adjustments 202

Chapter 10 Table 1 Municipal elections and reelection rates—2009 and 2014 249

Chapter 12 Table 1 Analysis of the cost effectiveness of the programs 293 Table 2 Pre-school net registration rate 295 Table 3 Net registration rate for primary and high school 296

Chapter 14 Table 1 Loans contracted with Chinese fnancial institutions, 2007–2017 337 CHAPTER 1

Introduction

Francisco Sánchez and Simón Pachano

Ecuador is perhaps the least studied among the Latin American nations that experienced a shift to the left in recent years, despite the fact that the country’s Revolución Ciudadana (Citizens’ Revolution)—developed under the administration of President Rafael Correa—altered its economic, social, and political conditions more signifcantly than most. The normative and institutional changes, the public policies applied, the ways of conceiving policy, and the consolidation of strong leadership all clearly defned and differentiated this historical period in Ecuadorian history. However, academic research in these areas has been limited. This is evident in the small number of articles and books published (as confrmed in the bibliography of this volume) and in the fact that few have offered a broad panorama of the general process of the Revolución Ciudadana in order to evaluate its results. Little dialogue has focused on the facts

F. Sánchez (*) Instituto de Iberoamérica, University of Salamanca, Salamanca, Spain e-mail: [email protected] S. Pachano Political Science, FLACSO Ecuador, Quito, Ecuador e-mail: [email protected]

© The Author(s) 2020 1 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_1 2 F. SÁNCHEZ AND S. PACHANO of the period as compared to theory, while descriptive explanations predominate. In order to contribute to this debate and fll in gaps in the literature, this book examines Ecuador’s Revolución Ciudadana within the framework of a wider regional process and compares it to other processes developed throughout Latin America.

1 the Ecuadorian Case Within the Latin American Framework Previous studies are quite diverse and often overlapping, but it is useful to identify four groups that may serve to highlight the particular characteristics of the Ecuadorian case. The frst group of analyses has looked chiefy at the beginning of the process, focusing on the defnition, identifcation, and classifcation of the various left-oriented governments (Castañeda 2006; Lanzaro 2006; Murillo et al. 2011; Ramos 2017; García Montero et al. 2019; Gargarella 2014; Madrid et al. 2010). Classifcation criteria include the populist left—institutional left divide, the management of the economy, the relationship with democracy, the position taken in the state/ market divide, levels of citizen participation, or the style of government. These approaches have allowed for construction of a multidimensional outlook in which Ecuador’s process would be situated at the populist left, as Carlos de la Torre argues in this volume; and the government of President Correa can be regarded as a regime with authoritarian features, as the chapters by César Montúfar and John Polga-Hecimovich both report. These and other characteristics placed Ecuador in a left wing often denominated ‘Bolivarian’ or ‘21st century socialism’, far from social-democratic tendencies. Another aspect of interest in comparative studies has been that of institutional innovation. Special attention has been given to constitutional and legal changes in examining the specifcities of each case (Sánchez and García Montero 2016; Nolte and Schilling-Vacafor 2012; Paramio 2006; Arnson et al. 2009; Mayorga 2009; Cameron and Sharpe 2010; Barrios 2017). The Revolución Ciudadana saw a deepening of such reforms, including the installation of a Constituent Assembly, the creation of a new Constitution, and the enactment of nearly 100 laws referring to the constituent elements of the political system. Therefore this represented a process of re-founding that, as a goal of last resort, 1 INTRODUCTION 3 sought to redefne the very guidelines of civic coexistence. The distin- guishing feature, as considered in the chapters by Felipe Burbano de Lara and César Montúfar, was centralism. Such power centralisation was expressed in the concentration of decisions at the national level of government, and in the predominance of a technocratic vision in the formulation of public policies. A third aspect, highlighted by several comparative studies, is that of the orientation of the policies applied (Weyland 2010, 2011; Levitsky and Roberts 2011; Sánchez and García Montero 2019). The emphasis in this feld has been placed on economic and social policies that departed from those previously predominant in Latin America under the so-called Washington Consensus. Although Ecuador was among the countries in which fewer neoliberal measures were applied (compared to, for example, Peru or Argentina). The reforms favored by the successive governments of Rafael Correa was explicitly contrary to that system. The interventionist role assigned to the state, the strong regulations imposed on the private sector, and the infexibility introduced into certain fundamental variables of the economy were all clear characteristics of the new orientation, as the chapters by Augusto de la Torre, Simón Cueva, and Alexandra Castellanos, by Felipe Burbano de Lara, Matías Bayas-Erazo, and Andrés Mejía, and by Vicente Albornoz all attest. In general, these authors highlight the contradictions between the changes in policy orientation and institutional weakness, thus threatening the continuity of these reforms under an eventual change of government (as proved to be the case). Another issue examined in studies of left-wing governments is their relationship to the rights and principles of liberal democracy (Molina 2003; Novaro 2006; Panizza 2009a, b; García Montero et al. 2019). There were tensions in the attempts to replace representative democracy with forms of direct and participatory democracy, or in the authoritarian drift of governments and the closing of spaces for free deliberation. In the case of Ecuador, these variables appeared with great force, as observed in practically all the chapters of this volume, especially those by John Polga-Hecimovich, Grace Jaramillo, Carmen Martínez Novo, and César Montúfar. Inevitably, the treatment of this issue is related to the role of leadership, which is sometimes associated with the concept of populism, another object of recent study (De la Torre 2008, 2013; Conaghan 2011; De la Torre and Arnson 2013) addressed in this book in the chapters by Carlos de la Torre and César Montúfar. 4 F. SÁNCHEZ AND S. PACHANO

The concentration of decision-making (and of political action in general) in the offce of the President of the Republic—alongside control over all powers of the state—set clear limitations on the liberal and republican components typical of contemporary democracies. Finally, the role of citizens in relation to their governments has been of interest to authors investigating the characteristics of government– society relations (Luna 2010) and of electoral preferences and ideological outlook (Molina 2003; Borsani 2008; Arnold and Samuels 2011; Basabe and Barahona 2017). These aspects are here approached through the analysis of government policies aimed at specifc social groups, such as indigenous peoples and women, in the chapters by Carmen Martínez Novo, Antonio Luis Hidalgo-Capitán and Ana Patricia Cubillo-Guevara, and Marcela Morales. Belén Albornoz also considered these facets, implicitly, when dealing with the politics of science and technology. So did Juan Ponce Jarrín when analyzing certain educational policies, Grace Jaramillo when observing aspects of Ecuador’s foreign policy, and Andrés Mejía and Vicente Albornoz when examining decentralization and state budgets. All these chapters emphasyse the nature of public policies, either as responses to social demands or as impositions from the governmental sphere. This book takes a comprehensive approach to the analysis of the ‘left turn’ process. In each chapter, suffcient theoretical contributions are given and empirical evidence is presented to allow comparisons and infer- ences with other Latin America countries that moved to the left.

2 democracy and the Revolución Ciudadana Throughout the book, authors make reference to authoritarian practices during the government of Rafael Correa. But what is the support for such affrmations? The cycle of instability (1997–2006) in which institutionality was eroded, and citizens’ rejection of politics became general resulted in three successive presidents who failed to complete their mandates. Faced with a dissatisfed society and the collapse of the party system, within the framework of the greatest economic boom in Ecuador’s history, the new Correa government found conditions favorable to a project of sweeping and radical transformation. A change of government proper to democratic alternation was promoted as a change of political and economic regimes.This was expressed mainly at the institutional level, in the redefnition of the role of the state in the economy, in the 1 INTRODUCTION 5 reorientation of public policies, and in the electoral preferences of the population. Institutionally, Correa and his political allies sought to establish an alternative to representative democracy through profound constitutional and legal reforms. The role of the state in the economy turned toward a strongly interventionist model, based mainly on public spending (and made possible by the rising value of commodities in international markets). Correa’s government promoted the centralization of redistributive policies, especially by way of subsidies and state investment in infrastructure. To achieve all this, Correa had electoral support from a population that reelected him twice and gave his political organization (Alianza PAIS) a suffcient legislative majority to govern. President Correa did not encounter signifcant obstacles to the application of his economic and political model. This was due to his own political will in a context of weak institutions, supported by an unstruc- tured party rarely engaged in internal debate or deliberation, and political practices that sought to establish a direct relationship with citizens. In addition, there was no opposition to threaten continuity. Thus he maintained tight control over practically all state institutions, and unlike previous administrations that sought to promote partial reforms in various felds, Correa proposed comprehensive transformation of the economic, political, and social realms. The characterization of his movement as a revolution meant avoiding the piecemeal reform of specifc components of the political system, aiming instead at integral replacement of all aspects of the prior regime. A pivotal point of this proposal was to transform the state into the central actor of economic activity, not merely in order to regulate, but to drive every dynamic. The objectives indicated by the revolution’s promoters were redistribution and the closing of the income gap. It should be noted that, previously, under the 1998 Constitution, some of the operating conditions of the economy had been redefned, especially in terms of reduction of the state’s regulatory and intervention powers and capacities. At the same time, these reforms broadened and deepened the scope of citizens’ rights (both individual and collective). And strengthened citizen control over authorities and forms of direct democracy (including by way of revocation of the presidential mandate). An important milestone in these reforms was the recognition of certain demands by indigenous peoples, most clearly expressed in the denomina- tion of the state as multiethnic and multicultural. 6 F. SÁNCHEZ AND S. PACHANO

When Rafael Correa assumed the presidency, Ecuador was expe- riencing a contradictory process of institutional reform in a context of political upheaval. The issuance of a new Constitution in 2008 and (as a result) a broad new set of laws provided propitious space for the promotion of reforms in areas that required them. However, despite having opted for radical change, certain causes of the aforementioned problems were left untouched by the new Constitution, and emphasis was instead placed on aspects that required no intervention, or that were not most adequate to confronting issues of governance or defciencies in representation. In fact, many of the reforms introduced into the institutional structure and the procedural scope contributed to deepening negative factors, as in two substantial areas of democratic governance: citizens’ rights and the balance and control of powers. In the area of rights, the notion of fragmented citizenship was introduced, whereby universality was replaced by the differentiated allocation of rights to specifc groups. Likewise, conditions were established to condition citizenship, where the validity of citizens’ rights became dependent on state action, granting recognition through public policies rather than via broad acceptance of all persons as autonomous citizens. As a result, much of the liberal component of modern democracy was eroded. Moreover, within this approach to understanding citizenship, no order of priorities was established between individual and collective rights, leading to very complex situations where conficts between the two levels required redress. To a large extent, this new orientation was based on adoption of the legal bases of the new constitutionalism, especially with regard to the direct application of rights established in the Constitution and to the power of interpretation given to authorities. In the second area, the balance and control of powers, reforms worsened the imbalance by reducing the powers of the legislature in basic aspects, such as the interpretation of law (now assigned to the Constitutional Court), its participation in the selection of state offcers (now transferred to the Consejo de Participación Ciudadana y Control Social—CPCCS), and its control over other functions (now subjected to cumbersome procedures, and without real capacity to sanction). Conversely, the constitutional power of the President of the Republic was augmented, granting the executive power to dissolve the Legislative Assembly (Constitution, Article 148) through the so-called muerte cruzada (mutual death) procedure. Increased executive power also manifested in that branch’s relationship with the judiciary, by way of reforms 1 INTRODUCTION 7 and especially through direct intervention by the executive in its operations and appointment of its governing bodies. In addition, the President of the Republic and other offcials (such as the president of the Council of the Judiciary) were constantly involved in the decisions of judges and prosecutors (Pásara 2014; Basabe 2009). These institutional changes confgured a political regime that departed from certain basic elements of democracy, approaching a subtype or hybrid regime between democracy and authoritarianism (Morlino 2008, 2013; Merkel 2004; Szmolka 2010). This form of ‘hyperpresidential- ism’ (León 2012; Granda 2012; Salgado 2017) included an institutional design, with new ‘rules of the game’ in which preeminence was given to the executive. It could also be the case of ‘imperial presidentialism’ (Basabe 2017), considering the institutional and political powers of the president alongside contextual factors (the state of the economy and the president’s wide approval); or, in view of Correa’s political practice, discourse, management of government, and use of the media, a form of populism (Conaghan 2011; Mejía 2012; Ulloa 2017) or technocratic populism (De la Torre 2013). This changes advanced in Ecuador manifested not only in the executive powers, but across the whole political regime. As mentioned, there was an obvious restriction of rights and freedoms, through normative provisions in the Constitution and law and through actions and policies promoted by the government. Consequently, the tendency was to form a regime so far from canonical democracy in numerous aspects that it became diffcult to identify in standard terms. Because this movement toward diminished democracy was due to no single factor, the defnition of the resulting regime must be based on identifcation of those democratic components that were weakened or lost (Morlino 2013; Merkel 2004; Bogaards 2009; Szmolka 2010). Through this approach, it becomes possible to identify multiple variants located on the democracy/authoritarianism continuum, some of which are nearer to democracies (such as illiberal democracies (Zakaria 1998), or delegative democracies (O’Donnell 1992)), others representing diminished forms of authoritarianism (such as competitive authoritarianism (Levitsky and Way 2002), or electoral authoritarianism (Schedler 2006)). Few studies on Ecuador have examined this question in depth. Considering the perspective of ‘democracy as a whole’, Ecuador under Correa has been described as a plebiscitary democracy (Conaghan 2008) or, depending on the components under study, a hybrid regime 8 F. SÁNCHEZ AND S. PACHANO

(Morlino 2013; Pachano and García 2015), electoral authoritarianism (Montúfar 2016), or competitive authoritarianism (Levitsky and Loxton 2013; Sánchez-Sibony 2017). Thus, numerous authors have found elements to situate the country between democracy and authoritarianism, making political research on Ecuador even more compelling. Maybe, both institutional reforms and the exercise of government proved decisive in weakening certain constituent elements of democracy, including the validity of rights, the separation and balance of powers (horizontal accountability), and citizens’ control over rulers (vertical accountability). Moreover, according to the magnitude and intensity of changes in Ecuadorian governance, several constitutive factors of democracy might have been weakened but not entirely eliminated, thereby bolstering the argument that the resulting regime remained within the feld of democracies and stopped short of authoritarianism. According to the classifcation by Morlino (2008), that provides a more comprehensive proposal for analysis, during the period of the Citizens’ Revolution, Ecuador could be considered a hybrid regime (Morlino 2013, p. 63). More precisely, it can also be described as an illiberal democracy, a subtype of electoral democracy. The central features would be the reduction to a minimum of democracy’s liberal components, the weakening of checks and balances instruments, and the relega- tion of citizenship to a passive position vis-à-vis the authority.

3 change Without Continuity Presidential speeches and offcial government documents ensured that, along with changes promoted by the Citizens’ Revolution, inaugurated a new historic period for Ecuador. This new stage was seen as the overcoming of problems that had affected the country throughout its history. This change was meant be maintained for a long time (campaign statements predicted up to 300 years). However, reality proved such forecasts wrong, because with the subsequent change of government—in which a candidate of the ruling party triumphed—the process was not only stopped but radically reoriented. These prospects were unfulflled due to three factors. In the frst place, the economic situation in the last two years of Correa’s administration changed markedly, ending expansionary policies and, therefore, political-electoral hegemony. The commodities boom in global markets had favored Ecuador as an oil exporter and had allowed the government 1 INTRODUCTION 9 to successfully implement policies based on public spending. But the reduction in revenues derived from a fall in oil prices ended the national government’s eight-year role as the engine of the economy. Inevitably, this had consequences at the political level, given that the maintenance and perpetuation of the centralist model and strong presidentialism required a permanent fow of resources. Secondly, and in close relation to the above, the support of the citizens was essential for Correa’s reforms. This is an indispensable condition in cases seeking to promote transformation at all levels (economic, political, social, cultural), beyond the legitimacy that any democratic regime must enjoy. Support for Correa had been expressed on multiple occasions in electoral terms, and it was maintained throughout most of the period, with favorable opinions in the polls, but it weakened considerably as economic conditions deteriorated. Most signifcantly, this support was directed almost exclusively at the president and not at his new political-economic regime, as becomes evident when comparing evaluations of Correa with those of Ecuador’s institutions (See Latinobarómetro or Latin American Opinion Poll—LAPOP, for example). Invariably, institutions received much lower support in public opinion and were in some cases rejected. Additionally, the ideological preferences of citizens did not change much throughout the period; that is, they did not move to the left, as might be expected in a process of this nature. Therefore, support was subject to factors alien to the ideological proposals of the Citizens’ Revolution. In the third place, despite long-term expectations and constant appeals to citizen participation, the process was sustained almost exclusively by the fgure of the president. Rafael Correa’s strong leadership was as important a factor as the favorable economic situation. Possible participation by social organizations was discarded, even in the frst electoral campaign, when preference was given to the individual fgure over various forms of collective expression that might have claimed space in the nascent process. The vertical and technocratic character of the government, and the exclusion of persons who might compete with the president for leadership, sharpened that tendency. Likewise discarded was the possibility of building a stable political organization that might ensure continuity of the process, with active militancy and with leaders at all political and territorial levels. The Alianza PAIS party was merely an electoral instrument, comprised largely of clientelist networks activated by the presence of Rafael Correa and by very short-term expectations. 10 F. SÁNCHEZ AND S. PACHANO

This set of characteristics determined that the intended regime would ultimately prove very weak, with little chance of continuation beyond Correa’s tenure. Strength resided in the president and derived from his governance, but it was not transmitted in a way that would allow other elements to take root. Therefore, the change of government after Correa also meant the closing of any possibility of consolidating the regime that had been designed. In short, the opportunities opened by the failure of the previous model was never seized upon, and the democratic vision that emphasized the fundamental factors of the regime did not prevail; rather the entire process was subservient to strong presidential leadership.

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Reshaping the State: The Unitary Executive Presidency of Rafael Correa

John Polga-Hecimovich

Energy in the Executive is a leading character in the defnition of good government. It is essential to the protection of the community against foreign attacks; it is not less essential to the steady administration of the laws; to the protection of property against those irregular and high-handed combinations which sometimes interrupt the ordinary course of justice; to the security of liberty against the enterprises and assaults of ambition, of faction, and of anarchy… A feeble Executive implies a feeble execution of the government. —Alexander Hamilton, Federalist 70

1 introduction Rafael Correa would no doubt agree with Alexander Hamilton that a strong and active executive is the most effective form of presidential leadership. Over his ten years in offce, Correa (2007–2017) radically reshaped the Ecuadorian government and its role in society using

J. Polga-Hecimovich (*) Political Science, United States Naval Academy, Annapolis, MD, USA e-mail: [email protected]

© The Author(s) 2020 15 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_2 16 J. POLGA-HECIMOVICH a variety of formal and informal unilateral powers, as well as a creative interpretation of the constitutional limits to his power. Through a series of constitutional and institutional reforms, Correa’s left-wing Revolución Ciudadana (Citizen’s Revolution) sought to strengthen the state, increase its regulatory and economic planning power, and broaden its social infuence as a means of promoting his government’s ambitious developmental plan of buen vivir (good living). Bolstered by high international oil prices, Ecuador’s principal source of export earnings, Correa also made important investments in education, health care, and infrastructure and enjoyed record public approval ratings. Yet the president also used the combination of these powers to justify the erosion of Ecuadorian civil liberties and liberal democracy. In this chapter, I argue that the radical transformation of the Ecuadorian state between 2007 and 2017 can be best comprehended through the application of theories on power, both president-centered and presidency-centered, as well as through an understanding of individual presidential interpretations of the reach and limits of their authority. Correa’s makeover of Ecuador was arguably more drastic than that achieved by any other presidential administration since the country’s return to democracy in 1979, including the neoliberal reforms advanced under León Febres Cordero (1984–1988), Sixto Durán Ballén (1992–1996), or Jamil Mahuad (1998–2000). What truly separated Correa from his predecessors was not constitutional power—although the 2008 Montecristi Constitution endowed him with certain prerogatives not enjoyed by previous Ecuadorian presidents—but rather his vastly stronger informal powers and willingness to maximize his authority. In this sense, Correa appears to have adopted a “unitary” perspective of presidential authority, which argues that presidents should be able to act how they wish unless explicitly prohibited by the constitution. In the next section, I explain how the Correa administration changed the structure, scale, and power of the executive branch, both by growing the size of the bureaucracy and by centralizing power. In order to interpret how he managed to do this, I review presidency- and president-centered theories of power and summarize four dominant claims that presidents may make to their constitutional powers. Subsequently, I expound on how Correa was able to realize change through a combination of strong formal presidential powers, complementary informal powers, and a constitutional interpretation of all these powers that was favorable to the presidency. The following two sections explain 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 17 how Correa exercised his formal and informal powers. The fnal section concludes by examining the permanence of these changes and by comparing Correa’s presidential authority to other presidents in Latin America. There are at least two implications to the argument that Correa was different from his predecessors on account of his informal powers and personal ambition. First, an accurate characterization of presidential power in comparative politics must incorporate both the formal rules of the presidency-centered approach as well as informal power— and each president’s willingness to interpret his or her role within the Constitution differently. Secondly, the extent to which Rafael Correa was able to change the state and governing institutions to make them more responsive to his agenda demonstrates the sizeable clout of the Ecuadorian presidency, especially when the president in question is adequately motivated. Ultimately, any leader with suffcient informal power who is determined to use it expansively will have plenty of opportunities to do so.

2 changes to the Ecuadorian State and Public Administration One of the chief objectives of Rafael Correa’s Revolución Ciudadana government was to promote a “post-neoliberal” project that reas- serted the capacity of the state to intervene in the economy and society (Sánchez and Polga-Hecimovich 2019). At the inauguration of the Constituent Assembly on 30 September 2007, the president proclaimed that: “Certainly the new Constitution should return the capacities of control, regulation, and planning back to the central state, guarantee that public policies are developed by agents with democratic legitimacy, adequately defne the concept of autonomy, and perfectly establish the reaches and limitations of different levels of government” (Correa 2007). This marked a sharp contrast to constitutional reforms carried out during the 1980s and 1990s that reduced the state’s rigid institutional control over certain strategic sectors and political-economic processes. For the frst time, the country’s political constitution recognized a wide catalogue of individual, collective, and historical rights and guarantees. It also incorporated the rights of nature and respect for other cosmovisions, and it integrated the indigenous concept of buen vivir as a basis for rights and as the central axis of the country’s development model 18 J. POLGA-HECIMOVICH

(Constitución de la República del República del Ecuador 2008 Articles 71–74). The need to guarantee and enforce these rights meant giving the state greater political and institutional capacities. In order to achieve all of this, the Correa administration signifcantly altered the structure, scale, and power of the branch. The president vastly increased the number of public sector employees and government bureaus, increased the state’s budget, and used powerful planning agencies to reinsert the state into political and economic life in pursuit of his Revolución Ciudadana, all while centralizing decision-making.

2.1 Growth of the Public Administration Ecuador’s public administration has never been larger than from 2007 to 2017, during which the government increased both the number of public servants and the public sector budget. Although offcial government statistics are diffcult to obtain, the Inter-American Development Bank fnds that the number of civil servants more than doubled between 2003 and 2011, from 230,185 to 510,430 (Iacoviello 2006, 2014). While some of these hires flled new agencies, the majority were sent to staff existing administrative bodies in strategic policy areas. According to Correa, 97% of the positions created were in just fve sectors: public education, public health, the judiciary, policing, and social welfare. An overwhelming percentage of these were street-level bureaucrats provid- ing frontline services to citizens: between 2006 and 2015, the government added 26,328 teachers (a 15% increase, from 197,000 to more than 230,000) and 31,407 health care workers (marking an astounding 81% increase, from 28,626 to 70,033) (Enríquez 2015). Moreover, total public sector salaries more than tripled, from US$3.161 billion in 2006 to US$9.6 billion in 2014, representing a bump from 7% of the country’s GDP in economically lean times to 9.5% in more prosperous ones. The state’s prioritization of improvements to social services was clear. There was concomitant growth in the number of bureaucratic bodies. Admittedly, the state had also grown under neoliberalism: in 1976, the branch consisted of a mere eleven ministries and 37 other public agencies; by 1999 this had expanded to 15 ministries and 112 agencies. However, the scale of the expansion under Correa was unprecedented, with the number of ministries and other agencies ballooning to 28 and 152, respectively (Arroyo 2015). Figure 1, which shows the evolution of ministries between 1979 and 2017, illustrates the relative magnitude of 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 19

Fig. 1 Cabinet ministries in Ecuador (1979–2017) (Source Author’s own data) ministerial expansion under the Correa administration and how it compares to prior growth of the executive branch—as well as the subsequent decrease in ministries following the election of Lenín Moreno in 2017. That is not all. Correa also added an array of new secretariats during his time in offce, bringing the number from three to eleven. In fact, the cabinet more than doubled in size from 2007 to 2017, from 16 ministries and three secretariats to 28 ministries and eleven secretariats. Some of these new agencies were designed specifcally to help design and implement the state’s Plan Nacional para el Buen Vivir (National Plan for Good Living, PNBV), including the Secretaría Nacional de Planifcación y Desarrollo (National Secretariat of Planning and Development, SENPLADES), the Secretaría Nacional de Administración Pública (National Secretariat of Public Administration), and the Secretaría Nacional del Buen Vivir (National Secretariat of Good Living). Others were broken off from existing ministries or elevated to cabinet-level status by the president.1 In addition to the regular ministries and secretariats, the president created an additional bureaucratic layer in the form of “coordinating

1 For an in-depth examination of this evolution, see Basabe et al. (2018). 20 J. POLGA-HECIMOVICH ministries”. These bodies, linked to different dimensions of the national development plan, were in charge of managing a common feet of ministries and affliated agencies, while coordinating between the central government and local governments. For instance, the Coordinating Ministry of Strategic Sectors managed the Ministry of Electricity and Renewable Energy and the Telecommunications and Information Society, as well as at least eight other public agencies and corporations dealing with energy and telecommunications issues.

2.2 (Re)Centralization of the State Despite reforms ostensibly aimed at decentralization, Correa’s government managed to centralize a great deal of political power. On the basis of Article 264 of Ecuador’s Political Constitution (República del Ecuador 2008) and Article 108 of the Código Orgánico de Organización Territorial, Autonomía y Descentralización de Ecuador (Organic Code of Territorial Organization, Autonomy and Decentralization, COOTAD) (2010), the government launched its Plan Nacional de Decentralización 2012 (National Decentralization Plan of 2012). In theory, this plan relied on provisions of the organic code on local government units, creating the Consejo Nacional de la Competencia (National Council of Competencies), a technical body composed of one representative from each level of local government charged with coordinating the process of transfers of power from the central government to local government units. It is not clear, however, that any signifcant political or fscal devolution took place. On the contrary, several articles in the COOTAD refer to the centralization of power at the national level, and some reforms may have actually made it easier for the central government to penetrate the local level (Ortiz 2017). The same was true economically. Formally, the 2008 Constitution gave the president power over monetary, credit, exchange rate, and fnancial policy formulation, all of which became exclusive faculties of the executive branch (despite dollarization), and it relegated the Central Bank to an instrument of the executive. Also, despite the adoption of rules for fscal decentralization and decentralized political competition, the commodities boom that occurred under Correa undermined such devolution, allowing the central government to recentralize the allocation of fscal transfers and to gain greater political leverage over the country’s decentralized autonomous governments (Mejía Acosta and Meneses 2018). 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 21

In fact, Ecuador’s score in the Regional Authority Index (RAI), a dataset that tracks regional authority on an annual basis from 1950 to 2010 in 81 countries, remained the same after these constitutional and legal changes (Hooghe et al. 2016). Moreover, in the cross-national sample, Ecuador ranked 40th out of the 80 countries in terms of decentralization, behind other unitary systems such as Peru, Uruguay, and Paraguay. With respect to the authority exercised by provincial governments over those who live in their provinces, the RAI classifes provincial autonomy as “non-deconcentrated” and focused on general-purpose administration, subject to veto by the central government (Hooghe et al. 2016). The central government sets the base and rate of all regional taxes, and provincial governments may only borrow under prior authorization from the central government, with certain centrally imposed restrictions. Moreover, in terms of “shared rule”, Ecuadorian subnational representatives do not co-determine national legislation, or national policy in intergovernmental meetings, or the distribution of national tax revenues, or subnational or national borrowing constraints, or constitutional change. The Correa government’s de facto concentration of power becomes clearer in observance of its use of the state bureaucracy to centralize policy-making, especially through bodies such as SENPLADES. In short, Correa signifcantly increased the size of the Ecuadorean bureaucracy and its interventionist power with the goal of allowing the president and his administration to better pursue their developmental and policy goals. Moreover, far from decentralizing political and fscal decision-making, constitutional changes and de facto behavior may have actually resulted in an increase in the centralization of power and a decrease in horizontal checks on the executive branch.

3 Presidency- Versus President-Centered Approaches to Power Correa was able to realize these modifcations to the public administration— and more broadly, to the state in general—through a combination of his formal unilateral powers (more or less common across post- transition Ecuadorian presidents), his unique informal tools, and, perhaps most importantly, through an interpretation of these powers favorable to the presidency. It is important to consider all dimensions, as 22 J. POLGA-HECIMOVICH comparative scholarship (with few exceptions, such as Ferreira Rubio and Goretti 1998) tends to focus on legalistic or presidency-centered explanations of executive power rather than president-centered or integrative ones. The “presidency-centered” approach seeks insight on executive power through the study of institutional rules and formal powers shared by presidents (Heclo 1977; Hager and Sullivan 1994). This includes a president’s ability to unilaterally implement policy without the consent of the legislature, by way of such mechanisms as presidential decrees or Executive Orders (Howell 2003; Mayer 2001), or by fortifcation of presidential bargaining power through control over the bureaucracy and its extensive resources (Banks and Weingast 1992; Gailmard 2009; Hammond and Knott 1996), or through executive powers of bureaucratic appointment (Lewis 2008, 2011). This is the approach that tends to predominate in comparative politics. For example, Cox and Morgenstern (2001) and Cheibub and Limongi (2002) explain that Latin American presidents intrude into traditional legislative domains, although the branches are not as fully integrated as in the typical parliamentary system. Elsewhere, O’Donnell (1994) admonishes that overly powerful presidents in Latin America yield a cheapened form of “delegative democracy”. In other words, comparative political science scholarship emphasizes differences across countries rather than across presidents. Yet not all presidents are created equal, nor do all presidents recognize the same limits to their power. The “president-centered” approach maintains that presidential power can differ according to the president’s leadership style, character, and ability to move public opinion. This includes the president’s “power of persuasion” in legislative bargaining as a function of reputation and prestige (Neustadt 1990; Rudalevige 2002), along with his or her ability to appeal to the public and to generate a mandate (Lowi 1985; Canes-Wrone 2005). Ingberman and Yao (1991), for example, argue that public support allows presidents to issue credible veto threats, while Canes-Wrone (2005) demonstrates how presidents’ appeals to the mass public can place pressure on Congress and shift policy in the direction of majority opinion. Reliance on a single analytical approach is likely to provide an incom- plete picture of power. A singular focus on institutions and constitutional rules necessarily overlooks the ways in which presidents interpret those 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 23 different rules. Similarly, viewing presidents solely from an individualis- tic perspective makes it diffcult to draw general conclusions about presidential power or presidential policy-making. On the other hand, an integrative approach can offer a more satisfactory statistical and substantive explanation of presidential success, as opposed to an approach based on a single perspective. This is precisely the case with Rafael Correa: the Constitution endowed him with a great degree of unilateral power, both in terms of policy-making and control over the bureaucracy. At the same time, he was aided by strong informal powers.

4 Presidential Perceptions of Power There is a third element to consider that these two approaches often overlook: the president’s own perspective on the scope of his mandate and the constitutional limits to his authority. Specifcally, some presidents view their powers as the authority explicitly delineated in the constitution, while others understand their power to include everything beyond what is explicitly prohibited by the constitution. Americanist scholars have identifed at least four presidential governing philosophies: literalist theory, prerogative theory, stewardship theory, and unitary executive theory. All refect interpretations by different presidents of the U.S. Constitution regarding the reach and limits of their formal and informal authority. So while all U.S. presidents have governed under the same constitution, they have interpreted that document and their role in the checks-and-balances system distinctly. Notably, all of these interpretations have legal foundations. One of the most limited views of presidential power was William Howard Taft’s so-called “literalist” (or “strict constructionist” or “Whig”) view. Taft’s actions as president and his writings after leaving offce suggest that he believed a president had an important role to play in the system, but one that fell somewhere between that of a mere administrator or constitutional clerk and a modern, rhetorical leader (Korzi 2003). As opposed to his predecessor Theodore Roosevelt and a spate of modern Latin American presidents (including fgures like Carlos Menem, Alberto Fujimori, Álvaro Uribe, Hugo Chávez, Evo Morales, or Rafael Correa), Taft emphasized the importance of a balance of powers and the necessity to restrict executive action to those powers granted by the U.S. Constitution. He wrote: 24 J. POLGA-HECIMOVICH

The true view of the Executive functions is, as I conceive it, that the President can exercise no power which cannot be fairly and reasona- bly traced to some specifc grant of power or justly implied and included within such express grant as proper and necessary to its exercise. Such specifc grant must be either in the Federal Constitution or in an act of Congress passed in pursuance thereof. There is no undefned residuum of power. (Taft 1916)

In other words, while some may endow the president with the ability to exercise power in order to best advance the interests of the nation, Taft believed that the polity is best served only by actions closely tied to constitutional grants of power. Few Latin American presidents appear to have shared this perspective. Building from this strict view, “prerogative power”, is a legal doctrine that originated in England and that gives the sovereign the right to operate in a supra-legal manner if he or she determines it to be in the supreme national interest. U.S. President Abraham Lincoln famously invoked this interpretation at the start of the Civil War, when Congress was in recess. Lincoln delayed calling the body into session and on his own authority called up state militias, suspended the writ of habeas corpus, placed a blockade on the South, and spent money that had not yet been appropriated (Crouch and Rozell 2005, pp. 306–307). In a letter to A.G. Hodges dated 4 April 1864, Lincoln went so far as to write, “I have never understood that the presidency conferred upon me an unre- stricted right to act…. I felt that measures otherwise unconstitutional might become lawful by becoming indispensable to the preservation of the Constitution through the preservation of the nation” (Basler 1953). In other words, the president could in good faith violate articles of the Constitution if by doing so he or she was able to preserve the republic. Use of emergency powers simply to achieve political stability or to foster economic prosperity—as proposed by Juan Bautista Alberdi in the Argentine Constitution of 1853—would not qualify. The third interpretation of executive power is Theodore Roosevelt’s “stewardship theory”, which argues that the president should be able to act unless the Constitution dictates otherwise. This interpretation claims that executive power is limited only by specifc restrictions appearing in the Constitution or imposed by Congress under its own constitutional powers. In his autobiography, Roosevelt defended his philosophy: 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 25

I declined to adopt the view that what was imperatively necessary for the nation could not be done by the President unless he could fnd some specifc authorization for it. My belief was that it was not only his right but his duty to do anything that the needs of the nation demanded unless such action was forbidden by the Constitution or by the laws…. I did not usurp power, but I did greatly broaden the use of executive power…. I acted… whenever and in whatever manner was necessary, unless prevented by direct constitutional or legislative prohibition. (Roosevelt 1913)

Roosevelt further argued that, “I don’t think that any harm comes from the concentration of power in one man’s hands” (Blum 1962, p. 122). This expansive theory is one that multiple generations of ambition Latin American presidents have shared. A fourth theory, that of the “unitary executive”, holds that the president possesses the power to control the entire executive branch (Burke 2016). In the U.S. context, this doctrine is rooted in Article Two of the Constitution, which vests “the executive power” of the United States in the President. Since in addition to possessing those powers not expressly prohibited by the Constitution, the president also controls the entirety of the executive branch, some (e.g., Crouch et al. 2017) argue that unitary executive theory is an example of the stewardship theory run amok. Presidents acting according to the unitary executive theory tend to make broad claims to power, which leads to one of two general outcomes. First, the system of checks and balances does not effectively push back against these claims, which then quickly become institutionalized in the presidency and available to successive presidents—as has been the case in Ecuador under Correa, Venezuela under Chávez, and Bolivia under Morales, among others. Second, checks and balances may work effectively, but the president’s rhetoric provides his successors with the rationale and support to make claims to vast powers. I argue that, far from violating the constitution to pursue his radical change of the state, economy, and society, Rafael Correa perceived limits to his power in terms of unitary executive theory. With constitutional powers that vastly supersede those of U.S. presidents, and informal powers stronger than any preceding Ecuadorian president, Correa was uniquely positioned to undertake his ambitious reform agenda—and to undermine elements of liberal democracy. 26 J. POLGA-HECIMOVICH

5 correa’s Formal Sources of Power Correa affected a great deal of change on the basis of his formal constitutional power and control of the bureaucracy. However, consistent with unitary executive theory and contrary to other interpretations of presidential authority, he took full advantage of the discretionary use of these formal powers, allowing him to separate himself from his presidential predecessors.

5.1 Constitutional Power Ecuador’s 2008 Political Constitution guarantees that regardless of the individual sitting in Carondelet, the Ecuadorian president possesses multiple means to shape policy-making and the state. The Comparative Constitutions Project (CCP) fnds that among the world’s 190 national constitutions, Ecuador’s 2008 iteration is tied for frst place in terms of executive powers (Elkins et al. 2016). As established by that document, the president is able to initiate legislation (Article 134, subsection 2; Article 147, Section 11); to issue executive decrees (Article 147, subsection 5); to initiate constitutional amendments (Article 441, subsection 1; Article 442); to declare states of exception (Articles 164–166); to cast full or partial legislative vetoes (Articles 137 and 138); to challenge the constitutionality of legislation (Articles 137 and 139); and—unlike under the country’s 1998 Constitution—to dissolve the legislature under the so-called muerte cruzada (mutual death) provision (Article 148). In addition, the president possesses exclusive lawmaking power, especially with regard to economic issues. Article 135 stipulates that “only the President of the Republic will be entitled to submit bills that levy, amend, or eliminate taxes, that increase public spending, or that change the country’s political and administrative division”, while Article 140 gives the president the right to fast-track economic legislation through the Asamblea Nacional (National Assembly), which must adopt, amend, or turn down any such bill within 30 days. There are no limits to this urgency provision beyond it being restricted to “economic legislation”. Not surprisingly, the country’s legislative powers rank 159 out of 190 countries in the world, according to the CCP, with the Asamblea Nacional exercising a comparably smaller effect on the lawmaking process than the executive. As Fig. 2 illustrates with data from the Varieties of Democracy Project, both legislative and judicial constraints on the 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 27

Fig. 2 Judicial and legislative constraints on the executive (Source Varieties of Democracy v8)

Ecuadorian Executive decreased notably upon promulgation of the 2008 Constitution. In combination with a more assertive president, these constitutional changes weakened horizontal accountability and elevated the offce of the presidency above the other branches of government. Lastly, the constitution explicitly established the president as the most important actor in developing and promulgating the country’s post-neoliberal PNBV. Article 147 defnes 18 presidential responsibilities, including “to submit to the Consejo Nacional de Planifcación (National Planning Council) the proposal for the Plan Nacional de Desarrollo (National Development Plan)” (subsection 4), and “to create, change, and eliminate coordination ministries, entities, and bodies” (subsection 6). In short, the constitution gives the president the power to dictate and defne the country’s national development plan, to organize executive agencies to carry out that plan, and to determine the precise role that distinct government bodies will play in that plan. In other words, even a weak and ineffectual Ecuadorian president possesses ample unilateral (and in some domains, exclusive) authority to shape the public administration and public policy. 28 J. POLGA-HECIMOVICH

Table 1 Rafael Year Admin Legislative Symbolic Total Correa’s executive decrees by year 2007 659 178 41 878 (2007–2017) 2008 433 245 18 696 2009 340 228 8 576 2010 219 186 14 419 2011 238 138 15 391 2012 286 110 4 400 2013 202 119 3 324 2014 263 81 5 349 2015 186 136 9 331 2016 305 102 11 418 2017 76 69 8 153 Total 3207 1592 136 4935

Source https://minka.presidencia.gob.ec/portal/usuarios_externos. jsf. Author’s own classifcation

Ecuadorian presidents may unilaterally implement policy without the consent of the Asamblea Nacional through such mechanisms as executive decrees. With regards to shaping the public administration, Article 147, Section 5 of the Constitution allows the president to “direct public administration… and to issue the decrees needed for its integration, organization, regulation, and monitoring”. Through his broad view of such power, Correa did precisely that. As Table 1 shows, the president issued nearly 5000 decrees during his decade in power, expending two- thirds of that total on administrative issues such as bureaucratic appointments, retirements, promotions, regulations, and agency reorganization. However, the content of these executive decrees was not merely limited to administrative change. To the contrary, Correa issued 1592 decrees with legislative content—about three per week for the duration of his ten years in power. On June 8, 2009, he issued Decree 1768 to reorganize the country’s Dirección Nacional de Inteligencia (National Intelligence Directorate) and to create the Secretaría Nacional de Inteligencia (National Intelligence Secretariat, SENAIN), an agency accused of espionage, surveillance, and persecution of political opponents, journalists, and activists until its dissolution in 2018. Likewise, in June 2013 Correa issued Decree 16-2013, which established strict government control of the structure and activities of all social organizations while circumscribing their political participation and limiting free speech. This decree-law laid out a complex process for registering organizations 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 29 and required them to provide extensive information to the executive and to demonstrate fnancial assets. Incredibly, this gave the government the right to dissolve organizations and deny registration to new ones that had pursued “partisan activities reserved for political movements”. The president was well within his legal bounds to issue these decrees with legislative intent, demonstrating how Correa was able to use the cover of the constitution to erode civil liberties.

5.2 Bureaucratic Control The president also exercised to an extreme degree the formal power of bureaucratic control, consistent with the central tenants of unilateral executive theory. He did so through extensive use of his formal appointment (and removal) and administrative reorganization powers, as well as through his ability to use certain bureaucratic bodies as tools to directly make policy and exercise control over other branches of government. Thus, as referenced in the abovementioned Article 147, subsection 5, the Ecuadorian president is tasked with staffng the public administration as s/he deems necessary, while subsection 9 of the same article allows the president to appoint and remove Ministers of State and other public servants. Unlike in the United States, where appointments require Senate confrmation, the Ecuadorian Chief Executive has the power to unilaterally remove and appoint many public servants, and Correa exploited this power to exercise control over the state. As Table 2 shows, he used his decree powers to make more than 1500 appointments during his time in offce, in addition to 865 explicit removals (some appointments included removal of the previous appoin- tee). This did not apply to mere low-level bureaucrats: under Correa, Ecuador continued to suffer the highest rate of cabinet turnover in Latin America, with ministers lasting an average of only thirteen months in offce (Basabe et al. 2018). This volatility was entirely the result of presidential initiative (or capriciousness): although the 2008 Constitution gives the legislature the power to remove ministers through censure, this requires a favorable vote of two-thirds of the members of the Asamblea Nacional, and not a single minister under Correa was removed via this mechanism. The ability to reorganize the public administration or otherwise reform the state is also enshrined in the 2008 Constitution, specifcally in Article 147, subsection 6, which allows the president, “to create, change, 30 J. POLGA-HECIMOVICH

Table 2 Bureaucratic Appts. Removal Reorg. Reforms organization and staffng by Rafael Correa via 2007 318 106 46 107 executive decree 2008 215 45 31 116 2009 165 116 24 78 2010 115 46 21 70 2011 139 50 20 42 2012 122 97 16 40 2013 107 71 11 26 2014 131 107 8 24 2015 90 65 12 39 2016 140 145 8 21 2017 38 17 7 6 Total 1580 865 204 569

Source https://minka.presidencia.gob.ec/portal/usuarios_externos. jsf. Author’s own classifcation and eliminate coordination ministries, entities, and bodies” (2008). As with the political appointments, Correa utilized this power to great effect, using 204 Executive Decrees (Table 1) to create, eliminate, or combine public agencies, or to reorganize their competencies as he saw ft, thereby vastly increasing the size of the public administration over his ten years in offce (Fig. 1). He also exercised bureaucratic control by combining these the powers of appointment and reorganization, and by creating several key public agencies and naming key leaders and staffers—and thus limiting their autonomy. In doing so, he was able to use certain bureaucratic bodies as tools to directly make policy and more easily infuence other branches of government. For example, the institution in charge of reforming the state apparatus, training public servants, and writing the PNBV is the Consejo Nacional de Planifcación (National Council for Planning) and its technical secretariat, the aforementioned SENPLADES. Since state public policy must be aligned with the objectives set out in the PNBV, SENPLADES is fundamental actor. This gives the state a prominent role in the direction of the economy, as well as in planning, investment, and redistribution. Correa not only staffed the agency with some of the country’s top technocrats, but he relied on it extensively throughout his 2009–2013 term to carry out a wide range of public policy initiatives (Andrade Andrade 2016). 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 31

Likewise, the Consejo de Participación Ciudadana y Control Social (Council of Citizen Participation and Social Control, CPCCS) is an unelected executive body that has usurped authority from the Asamblea Nacional and largely served at the pleasure of the president. The administrative body was created by the 2008 Constitution as a public entity responsible for judicial and nonpartisan political appointments, including the attorney general, comptroller general, banking superintendent, and media regulator. Furthermore, it was designed to act as an anti-corruption oversight body. Nonetheless, under Correa, its directorate was comprised of offcials who had previously served in his administrations, and opposition politicians and independent analysts accused the body of being a politicized extension of the president’s offce. Perhaps not surprisingly, the CCP fnds that the Ecuadorian judiciary ranks 129 out of 190 countries in terms of constitutionally determined judicial independence, while judicial constraints on the executive were lower under Correa than under previous presidents (Fig. 2).

6 correa’s Informal Sources of Power Correa also enjoyed informal powers far greater than any other president in the post-transition era, and he wielded them sharply. Specifcally, his unprecedented public popularity gave him high powers of persuasion and allowed him to pursue measures like plebiscites to strengthen his position and pursue policy change. Moreover, as the frst post-transition Ecuadorian president to enjoy a legislative majority (2013–2017), he was able to pass legislation with little trouble and to avoid the kinds of con- frontations with the legislature that resulted in the removal of his three democratically elected predecessors. Signifcantly, Correa’s public approval ratings were consistently higher over the frst eight years of his presidency than was the case for any other modern Ecuadorian president. Figure 3 shows that, aside from initial ‘honeymoon’ bumps for newly elected presidents in the post 1979 era, most Chief Executives possessed net approval ratings between 10 and 20%, while Correa’s hovered between 40 and 80%. He utilized these persuasive powers in part through his direct, personal appeals to the citizenry (Conaghan and De la Torre 2008). Among other things, Correa mounted extensive publicity campaigns via radio, and he regularly engaged citizens through his weekly national radio and TV broadcast, Enlace Ciudadano (Citizen Connection), as well 32 J. POLGA-HECIMOVICH

Fig. 3 Monthly net presidential approval rating (1988–2017) (Source Executive Approval Database 1.0. Available for download at www.executiveapproval.org) as through prominent use of Twitter and other social media to engage with Ecuadorians outside the political class. Such public support is a tool of legitimacy (Canes-Wrone 2005), and the president leveraged it strategically to enact far-reaching constitutional changes through national plebiscites. The most important of these were the steps leading to the promulgation of the 2008 Constitution. After a number of failed attempts to convene a Constituent Assembly through the opposition-controlled legislature, the president turned to the Tribunal Supremo Electoral (Supreme Electoral Court, TSE) to convene a plebiscite on March 1, 2007, to promote his main campaign promise. Correa was able to rely on his high public approval and support for the assembly, and his referendum on the matter passed with 87% support. This same popular support helped the nascent Alianza PAIS movement to win 80 of 130 Constituent Assembly seats on 30 September, and to give Correa carte blanche in shaping the constitution. The government then held a constitutional referendum on September 28, 2008, in which 69% voted in favor of ratifcation. Moreover, in 2011 the president called a referendum on ten issues including reforms to the judicial system, 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 33

Fig. 4 Share of legislative seats, president’s party (1979–2017) (Source Author’s own data) limits to due process rights in criminal cases, limits to the freedom of the press, restrictions on animal cruelty, gambling, and illicit enrichment. As before, all measures passed. Similarly, Correa’s “partisan powers”—the size of the president’s party in congress, party discipline, and the mandate acquired by the president via election—were tools that separated him from previous powerful Ecuadorian presidents. In two-party systems, presidents often enjoy partisan powers that allow them to buy or negotiate for the support of legislators (Mainwaring and Shugart 1997). However, as Fig. 4 shows, no post-transition Ecuadorian president prior to Correa enjoyed a legislative majority, meaning that nearly all leaders found it diffcult to legislate. Correa, on the other hand, controlled 47.5% of the Asamblea Nacional from 2009 to 2013, and then a supermajority from 2013 to 2017. The president used these partisan powers to enact legislation that reinforced his constitutional power while limiting political and social veto players. Notably, the government pursued policies aimed at the media, civil society organizations, and higher education that enlarged the scope of regulation and enhanced the powers of the executive branch 34 J. POLGA-HECIMOVICH

(Conaghan 2015). One example is the Public and State Security Law that endowed the SENAIN with a permanent fund of gastos reserva- dos (special expenses) for intelligence and counterintelligence activities and that freed the organization from external auditing. Later, in June 2013, the Asamblea Nacional passed the Ley Orgánica de Comunicación (Organic Law of Communications), a controversial measure that subjects public information to oversight and regulation through the newly created Superintendencia de Información y Comunicación (Superintendent of Information and Communications, SUPERCOM). Likewise, during Correa’s third presidential term, on December 3, 2015, the Asamblea Nacional passed a package of 16 constitutional modifcations, including one lifting term limits on any public offcial, including the president, beginning in 2021. Without his high popular approval and partisan support in the legislative branch, it is unlikely that Correa would have been able to implement his post-neoliberal strategy and exercise the strong control over political affairs that he did. The former was absolutely necessary to pursuing the 2007–2008 Constituent Assembly, as well as a number of subsequent constitutional changes that would otherwise have required a two-thirds vote in the Asamblea Nacional. Likewise, without that legislative support, Correa could have faced challenges to his longevity in offce (as his predecessors did), and he would have found it considerably harder to pass legislation that allowed his government to regulate the media and social groups.

7 the Legacy of a Unitary Executive: Temporary or Permanent? It is unlikely that any single approach to the study of the presidency will fully capture the range of strategies and tools available to chief executives. Instead, I argue that an approach that integrates both president- and presidency-centered explanations of executive power offers a more satisfactory statistical and substantive interpretation than any approach based on a single perspective. This is relevant to Ecuador—and to all presidential systems outside the United States—in a number of ways. All too often, comparative political science research fails to measure var- iations in informal presidential powers, or else suggests that presidential power is constant over time in these places (Morgenstern et al. 2013). 2 RESHAPING THE STATE: THE UNITARY EXECUTIVE PRESIDENCY … 35

Yet these theories of presidential power demonstrate that the exercise of power depends in part on who is in offce and how he or she interprets her role. As president, Rafael Correa vastly increased the number public sector employees and government bureaus, increased the state’s budget, and used powerful planning agencies to reinsert the state into political and economic life in pursuit of his Revolución Ciudadana. He was able to do this through a variety of formal and informal unilateral powers, while using a “unitary executive” interpretation of the constitutional limits to his authority. Yet Rafael Correa is not so different from other Ecuadorians who have worn the presidential sash: they too have possessed roughly the same amount of constitutional power. And while León Febres Cordero, Abdalá Bucaram, and Lucio Gutiérrez may have shared Correa’s ambition to radically change the Ecuadorian state, only Correa among the post-transition presidents possessed adequate informal power to make those changes and to survive in offce. In this sense, Correa is more akin to his ambitious contemporaries Hugo Chávez and Evo Morales, or past presidents like Alberto Fujimori or Juan Domingo Perón. All sought to rewrite constitutions in order to centralize power and weaken horizontal accountability, and all cultivated strong partisan powers and/or public approval to help push these changes through. Undoubtedly, this combination of strong formal and informal powers and a unitary executive perspective can be dangerous for democracy. Without checks or meaningful limits to their authority, presidents from Perón to Correa have undermined liberal democracy and helped drag their countries toward hybrid regimes or in some cases, outright authoritarianism. Moreover, changes in the state may be more transitory than politicians think. For example, given the Ecuadorian presidency’s high formal powers and the ability of any president to adopt a similar approach to their authority, it is worthwhile to ask how permanent Correa’s state reforms might prove. The danger with a unitary executive presidency is that norm-breaking sets a powerful precedent (Crouch et al. 2017). The country’s volatile constitutional history and proclivity for amending the Constitution via both the legislature and national referendum mean that the permanence of changes is uncertain (Sandoval-Rojas and Brinks, Forthcoming). Moreover, Correa’s presidential successor Lenín Moreno enjoys most of the same powers that Correa did, from his formal 36 J. POLGA-HECIMOVICH constitutional powers to high public approval, and even legislative support (although the strength of the latter is negatively affected by a split between the Correista and Morenista factions of Alianza PAIS). To achieve and implement such changes to the existing rules, Moreno is already borrowing a page from Correa’s playbook. Taking advantage of his high public approval ratings, Moreno circumvented the established institutional channels staffed with Correistas (like the Asamblea Nacional or the courts) in favor of a plebiscite in February of 2018. Then he made certain that the questions in the referendum would reverse unpopular constitutional changes made during Correa’s rule, while two accompa- nying items for popular consult were valence issues that enjoyed broad popular support. In line with Correa’s unitary executive presidential actions, these changes took effect immediately, despite a lack of pro- nouncements from the Corte Constitutional (Constitutional Court, CC). The CC should have approved the constitutionality of the proposed referendum and public consult questions when Moreno frst approved the process in late 2017. However, the CC exceeded its 20-day window for issuing a ruling, after which Moreno convened the vote via two executive decrees in November of 2017. Paradoxically, as suggested by unitary executive theory, Rafael Correa’s success in pushing through a new political constitution and in complementing his high degree of formal presidential power with informal power has made it easier for subsequent presidents to do the same.

Acknowledgements The author would like to thank Brendan Doherty for his help in beginning this manuscript, and Manuel Alcántara, Simón Pachano, and Francisco Sánchez for their feedback. The views expressed in this chapter are solely those of the author and do not represent the views of or endorsement by the United States Naval Academy, the Department of the Navy, the Department of Defense, or the U.S. government.

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“La patria ya es de todos:” Pilgrimages, Charisma, Territory, and the Return of the State

Felipe Burbano de Lara

1 introduction This chapter provides an analysis of the strategies deployed by the Revolución Ciudadana (Citizens’ Revolution) to territorialize Rafael Correa’s political leadership, in order to give it a national dimension. This strategy required the creation and setting in motion of what I call an “itinerant center”, referring to territorial political management that involved: (a) the recentralization of state power through a concentration of resources and a strengthening of the institutional and bureaucratic capacities within the Executive branch, and the mobilization of these throughout the country; and (b) constant trips taken by Correa from one end of the country to the other, in the context of so-called Gabinetes Itinerantes (itinerant cabinet meetings) and through Enlaces Ciudadanos

F. Burbano de Lara (*) FLACSO-Ecuador, Quito, Ecuador e-mail: [email protected]

(Citizen Connections, weekly broadcasts colloquially known as sabatinas).1 The incorporation of territory as a variable in political management has constituted a key element of the Revolución Ciudadana. The itinerant center was not only a mechanism deployed to legitimize this process throughout the territory, but an ingenious mechanism for joining the center with the peripheries, the national with the local, and the charismatic leader with his followers. These sabatinas and cabinet meetings endowed the center with impressive territorial mobility while generating a permanent chain of events through which Correa consecrated his presence on the national political stage. The Revolución Ciudadana was thus driven in part by this extraordinary effort, resulting in a total of 523 Enlaces Ciudadanos and 122 Gabinetes Itinerantes during the administration’s ten years in power. Every Saturday, without fail, the president traveled to a small or mid-size city, or to an area in the periphery of a major city, to stage an Enlace Ciudadano. Correa defned these events as an exercise in accountability to Ecuador’s people. As we shall see, the Enlaces Ciudadanos included meetings with local leaders and authorities, building popularity around Correa’s practice and discourse, and a nationally televised program featuring a three-hour presidential monologue. Meanwhile, once a month, at the site of a given Saturday’s Enlace Ciudadano, the Gabinete Itinerante was held with all ministers and directors of participating state enterprises. These cabinet meetings connected the administration with the territories, demonstrated the state’s renewed capacity for action and intervention, and established alliances and consolidated networks of local leaders loyal to Correa and the revolution. At sites where these Enlaces Ciudadanos and cabinet meetings were staged, the presidential visits were an extraordinary event, both festive and political, that roused inhabitants out of their tranquil routines. The sum of these events over time, and the president’s constant movement throughout the territory, generated popular excitement in small towns and cities, all the while strengthening the itinerant center. Correa marked the places

1 The Enlaces Ciudadanos became known as “sabatinas” because they took place on Saturday, sábado in Spanish. As indicated in the dictionary of the Real Academia Española, the word has its origins in the Saturday Divine Offces, but more recent use was related to an academic act taking place on Saturdays, in which the lessons of the week were summarized; students attended this public exercise in order to practice defense of their conclusions. 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 43 he visited as his own, traveling to the most distant sites to conquer them and, at the same time, to integrate them into a renewed sense of political community. If the cabinet meetings and the Enlaces Ciudadanos can be considered as pilgrimages of the “Patria”2 (Fatherland) through the territory, it is because, during these events, the exaltation of the presidential fgure took the form of a ritual that conferred a kind of sacredness (Burbano de Lara 2015), as in what Geertz (1994) calls “the sacredness inherent in sovereign power”. The symbolic resource put into play was the Fatherland itself, with the slogan “La patria ya es de todos” (“The Fatherland is now everyone’s”). In his travels through the territory, Correa had a double perspective in mind: that of the state and that of the Fatherland, both incarnated in his person. While the state was positioned as a powerful mechanism for social transformation, the Fatherland idealized the re-founding of the political community. Examining the ten-year progress of that itinerant center, I here uncover elements to explain how Correa maintained his popularity over time, how his leadership was projected at the national level, and how his political movement Alianza PAIS maintained its electoral strength as Ecuador’s major political force for a decade (Polga-Hecimovich 2013; Freidenberg 2013). In a country with profound territorial cleavages, where the system of political party representation has been historically characterized by extreme fragmentation and polarization, the exceptional national strength of Alianza PAIS merits explanation (Pachano 2007; León 2003). This chapter is divided into four sections. The frst part provides an analysis of the repositioning of the state as an agent of change in Ecuador’s political life. Like all Latin American countries involved in the so-called “turn to the left”, Ecuador proclaimed the return of the state as the central element in post-neoliberal policies. In the second section, I describe the administration’s strategies for bringing the state to the territories. This involved a deconcentration of government agencies that paradoxically and simultaneously worked to subordinate local powers to a centralist state project. In the third part, I analyze the territorial coverage of the sabatinas and the Gabinetes Itinerantes—where they were held, how they were organized—to illustrate their reach and the

2 The concept of “Patria” goes beyond territory and includes the idea of a national sovereign political community and a new state with strengthened institutions. 44 F. BURBANO de LARA logic of these presidential travels. While the sabatinas were the stage on which Correa displayed his charismatic leadership—the grand platform from which he exhibited the politics of personal power—the Gabinetes Itinerantes made manifest the state’s renewed presence and capacity for action throughout the country. In the fnal section, I describe the activities undertaken during the Enlaces Ciudadanos—what Correa did during each broadcast in a programmed, repetitive fashion—to demonstrate how they functioned not only as a discursive space, but as practices connected to popular organizational dynamics, tying the leader to his followers and creating local governing structures loyal to the Revolución Ciudadana.

2 repositioning the State With its promise to end the neoliberal experiment and return the state to full presence in national life, the Ecuadorian process followed the most radical manifestation of the regional turn to the left (Conaghan 2015). As in Venezuela and Bolivia, the objective was to construct stronger, more autonomous states, with the capacity to implement policies independent of international fnancial institutions and national economic elites (Mazzuca 2012, p. 548). Francisco Sánchez and Polga-Hecimovich (2018) have called these post-neoliberal agendas a state counterreformation, and in Ecuador’s case, this counterreformation led from a minimal state to an omnipresent one (Sánchez and Polga-Hecimovich 2018). The Revolución Ciudadana explicitly proposed strengthening the matrix of state power as the basis for a national transformation (SENPLADES 2009). State repositioning took two forms. On the one hand, it concentrated and broadened institutional, bureaucratic, fscal, and symbolic capacities in the Executive (Conaghan 2015; Sánchez and Polga-Hecimovich 2018; Burbano de Lara 2015); on the other, it projected this reinforced power throughout the territory and turned it into the infrastructural base of the national project. Multiple instruments were used to empower state capacities: planning, multiplying agencies and rules, broadening regulatory capacity, strengthening the coercive apparatus, and implementing a policy of widespread public investment and social spending during a period of fscal prosperity. The Secretaría Nacional de Planifcación y Desarrollo (National Secretariat of Planning and Development, or SENPLADES), the offce 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 45 for planning, regulating, and guiding public policy, clearly illustrates the extent of state strengthening. This was one of two national secretariats created as part of the institutional redesign of Executive power, and it became “the major tool for control and change in the administration and reconstitution of the state” (Fontaine and Fuentes 2011). Strengthening included increasing the budget, hiring professionals with academic cre- dentials, instituting new working and salary conditions, and expanding throughout the territory via eight area offces. SENPLADES became a powerful institution with around 1000 employees, two vice ministers, seven undersecretaries, 21 national offces, and eight area undersecretaries. The voluminous Plan Nacional para el Buen Vivir (National Plan for Good Living) produced by SENPLADES served as the basis through which the central government reinserted itself as the foremost actor in defning general policies (Sánchez and Polga-Hecimovich 2018). At the center of the state’s return through public policy planning and leadership—a function virtually abandoned during the preceding two decades (Sánchez and Polga-Hecimovich 2018)—there was also greater capacity for regulating and controlling the market, which was key to post-neoliberal programs (Grugel and Riggirozzi 2012). As Correa (2012) repeated in countless speeches throughout his ten years in offce, it was a matter of exchanging market societies (created by neoliberalism), in which society is subsumed by the market, for societies with market, in which the market is an attribute of society. It was a matter of domesticat- ing the market so that it stopped being a bad master and instead became a good servant. Dismantling neoliberalism implied a transference of the market’s regulatory power to the state through stricter rules governing investment, fnance, business practices, and taxes (Conaghan 2015). The market was regulated in order to change power relations between state and society. The agenda was defned as an “uncoupling of political power from the ruling classes that pushed liberalization of the economy, weakening of the state, and subordination to the Washington Consensus” (SENPLADES 2013). Alongside the imposition of stricter conditions on private capital, the labor and fnancial markets were regulated, direct control over the Central Bank was established, business people’s social security obligations were broadened, business associations were prohibited from participating on the boards of public companies and entities, taxes were increased, and ownership schemes of banks and the media were changed, among other actions (Ramírez 2012; Sánchez and Polga-Hecimovich 46 F. BURBANO de LARA

2018; Conaghan 2015; Wolf 2018). Correa insisted that all this was done in order to change power relations between labor and capital, thereby generating an egalitarian and inclusive society. The uncoupling came with a redefnition of the model of accumulation through subjecting private capital to the state. According to intellectuals closest to the Revolución Ciudadana, these governmental practices were the new power elite’s way of increasing their feld of political command. But the dynamic of state autonomy through the concentration of power and decision-making capacities into the center produced conficts, not only with economic elites and business associations, but also with social organizations and movements, whose members staged protests in public spaces. In response, regulatory power was applied to civil society, affecting its organizational dynamics and its capacities for mobilization, protest, and expression (Ortiz 2014; Burbano de Lara 2017; Conaghan 2015; De la Torre 2013b). The most active social organizations—labor, indigenous, environmental, teachers, state employees—faced repression, and top- down parallel organizations were created to support the administration. The only agenda for change deemed to be legitimate came from Correa’s administration and practice (León 2012). State expansion was justifed to guarantee the sacred rights of citizens spelled out in the new constitution, but the recognition of new rights did not imply an increase in spaces for participation in defning the post-neoliberal agenda. The only political space open for citizen participation was that defned by state policy, and by Correa’s transgressive and combative leadership. Anything entering from outside state initiative was looked upon with suspicion and fnally rejected according to the logic of popular antagonisms. From the administration’s perspective, the state’s transformative action, including the concentration and centralization of power, was not subject to social criticism. In areas where the state broadened its interventionist and regulatory capacities, a dual path was followed: new legal frameworks were created for action, and institutional bureaucracy was strengthened. An exhaus- tive list of all the areas into which state power expanded would require more space than this chapter can afford, but Conaghan (2015) has studied its spread throughout universities, civil society organizations, and the media, illustrating this point. An arsenal of new laws, regulations, and administrative resolutions was unleashed to increase a strictly bureaucratic power that subjected social and economic life to rules emanating from the Executive. At the same time, there occurred a “massive increase in public administration to deploy its objectives in economic and social 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 47 policy” (Sánchez and Polga-Hecimovich 2018). According to offcial sources, between 2006 and 2014, ministries increased in number from 15 to 29, secretariats (many assigned to the presidency) from fve to 14, and public employees from 462,000 to 672,000; the mean increase in public sector monthly salaries rose from US$446 to US$946; and spending on salaries by the central government climbed from US$2,581,400 to US$7,842,700. Taken all together, this represented a heavy and rapid institutional densifcation of state power tied to the Executive. The period of the Revolución Ciudadana was also one of tremen- dous fscal prosperity, which facilitated an unprecedented expansion of public investment and social spending, which Correa based in state activism tied to territorial strategies. The state’s rising fscal capacities were due to an increase in the market price of oil, a series of tax reforms, and contract negotiations with multinational oil corporations (Correa 2011). When these resources diminished, a policy of aggressive public indebtedness was initiated (see the chapter by De la Torre, Cueva, and Castellanos in this book). Within the framework of the leftward turn, Ecuador experienced the largest increase in public spending among Latin American states. “In 2013 and 2014, nonfnancial public sector spending represented 44% of Ecuador’s GNP, a huge increase compared to the 25% seen in years prior to the boom (2002–2004) and to the increase in public spending seen in other countries of the region during the raw materials boom” (De la Torre and Hidalgo 2017, p. 10). These same authors indicate that public investment ballooned from US$1.98 billion in 2006 to US$13.85 billion in 2013. This represented 4.2% of the GNP in 2006 and 14.7% in 2013. Increased state presence in total capital formation was also refected in the decline of private investment from 16.6% of GNP to 13.2% over the same period. These data describe both the extent of state repositioning and its subsequent capacity to mobilize resources, and the confguration of a cumulative model that progressively replaced private with public investment. Complementing this model was an enormous increase in social spending that nourished state activism in favor of better income redistribution and reductions in poverty and inequality. As a percentage of GNP, the central government’s social spending rose from 4.2% in 2006 to 9.2% in 2014. At the same time, per capita social spending grew from US$195.9 million in 2006 to US$315.2 million in 2012. Income redistribution and demands for an egalitarian society were part of a political activist drive accompanied by a permanent dynamic of popular antagonisms. 48 F. BURBANO de LARA

In moments of discursive euphoria, the Revolución Ciudadana talked about replacing the bourgeois state with a Popular State (Correa 2017). At calmer moments, spokespersons limited themselves to redefning democracy’s horizon by ending the powerful infuence of neoliberalism, present since the 1980s (Grugel and Riggirozzi 2012). The revolution constantly fed the trade-off between post-neoliberal re-democratization and popular national re-foundation. The state’s renewed presence was intended to bring a new sense of democratic belonging, with the argument that neoliberal policies were inconsistent with popular expectations (Grugel and Riggirozzi 2012), but the political dynamic of popular nationalism predominated, with state activism playing a key role, guided by polarizations generated by Correa (León 2012).

3 the State Goes to the Territories The second axis of state policy involved deploying reconcentrated, accumulated power throughout the territory. The Revolución Ciudadana understood that the political project had to penetrate the territory to achieve its nationalizing logic. Construction of infrastructural power that would facilitate taking the center’s policies to the peripheries was put in play when SENPLADES introduced a deconcentration program with the suggestive slogan “The state at your side” (Madrid and Torres 2014; Falconí and Bedón 2013; Muñoz 2014). On the one hand, state agencies were deconcentrated to achieve a more uniform distribution throughout the territory; on the other, the territorial map was redrawn to bring ‘good living’ programs to micro-physical levels. SENPLADES planned its public policy implementation not according to Ecuador’s existing territorial administrative divisions (i.e., provinces and counties) but on the basis of a new cartography consisting of nine zones, 140 districts, and 1134 circuits. The agency established an intervention route outside of the existing territorial power structure in order to reach public policy benefciaries. While the zones included various provinces, the districts brought together counties according to population density. The circuits were defned as the fnal spaces for state action and SENPLADES installed a planning secretariat in each zone. While the zones were defned as spaces for the convergence of deconcentrated entities from central and local governments (Barrera 2018), in practice, deconcentration was never applied in coordination with provincial and county governments (Ortiz and Hurtado 2017). 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 49

The central government’s greater presence throughout the territory was part of the counterreform strategy described by Sánchez and Polga- Hecimovich (2018), also made in response to the decentralizing and autonomist processes of prior years, which the revolution questioned as part of its dismantling of the neoliberal state and market domination (Falconí and Bedón 2013). A program known as “El estado junto a ti” (The State at Your Side) vied with local governments for the citizens’ sense of territorial proximity within the framework of a general policy of recentralization. With the redefnition of the territorial power structure incorporated into the 2008 Constitution, areas that fell under the exclusive jurisdiction of the central government increased from four to 12. Based on the new space assigned to the center, responsibilities were distributed among other levels of territorial government: regions, provinces, municipalities, and parishes (Barrera 2018; Ruíz Giraldo 2013). The new scheme created an obligatory, progressive system of jurisdictional areas for each level, meanwhile maintaining a systemic balance and a unitary state vision (Ruíz Giraldo 2013). The phantom haunting this model was the Guayaquil province’s secessionist threat, attributed to local oligarchic elites; it was turned into a weapon to emphasize national unity as the guiding principle of the state model (Viciano 2009). In the Constitution, the possibility of secession is mentioned in Articles 244 and 246 as though it were a phenomenon endangering state unity. The ‘territorial’ was that area in which the nationalizing dimension was deployed most forcefully, and the ‘good living’ plan was to be carried to every corner of the Fatherland. SENPLADES defned that orientation as an “anti-elitist reaction, a recovery of the senses of national belonging, and a widespread sentiment of sovereignty in broad layers of the population” (SENPLADES 2009). For Alianza PAIS, the project of national construction had been decimated during the neoliberal period by strengthening local structures under the guise of disorganized, incoherent, and privatizing decentralization (p. 35). Actually, local governments were subordinated to the centralist project or else fell into permanent confict when they resisted the recentralizing logic, as occurred with Guayaquil. Subordination was reinforced with the dependence of local governments on economic transfers from the center (Ortiz and Hurtado 2017). In global terms, although local governments enjoyed greater resources during the prosperous decade of the Revolución Ciudadana, thanks to an increase in state income and a new system of transfers, their participation in all nonfnancial public sector investment 50 F. BURBANO de LARA fell notably, from 36% in 2006 to 10% in 2014. The territorial model continued to be strongly municipalist, without intermediate levels (Ortiz and Hurtado 2017; Barrera 2018). That orientation was evident in the distribution of spending: 27% went to provincial councils, 67% to municipalities and metropolitan districts, and 6% to parish councils (Barrera 2018). Completing the ‘return of the state’ process was its repositioning in discursive and symbolic terms, to convert it into a generator of collective identity through rhetoric around the Fatherland (O’Donnell 2004; Burbano de Lara 2015). The state was deployed as a discursive device to expand political possibilities and horizons, and to activate power conficts tied to multiple cleavages, especially those related to class, within the perspective of an egalitarian, sovereign, and inclusive community. In the leftist tradition and in Latin American modernizing visions, the state confgured new felds of identity, introducing other classifcations of social groups, and it opened the possibility for renegotiating its insertion in social structures. The Revolución Ciudadana, like all Bolivarian revolutions, strongly affected the political feld through horizons opened by the return of the state, but possibilities for different social groups to negotiate their structural position were always defned by the governing elite, rather than through interaction with social organizations and movements (De la Torre 2013a; Burbano de Lara 2017). The rhetoric of the state, in the Latin American tradition, constitutes a very powerful source of symbolic capital for confguring prospects of change and social justice. The left, however, never questioned the authoritarian deviations of state strengthening. This centralized power’s symbolic dynamic was also ceremonially empowered through the invention of the ‘changing of the guard’ ritual staged every Monday, without fail, in Quito’s Independence Plaza. What had once been a discreet ceremony within the interior patios of Carondelet Palace now occurred in the public plaza: grander, more colorful, more decorative, and with the participation of the Granaderos de Tarqui military corps, considered Heroes of the Fatherland, with their slogan “Loyalty above all”. President Correa almost always presided over the ceremony from the palace’s principle balcony. The ritual exalted the palace, the fgure of the president, and the power of the center. As Rokkan and Urwin (1982) indicate, the center has also been the site of ceremonies and ritual festivities. The Revolución Ciudadana understood that ritual is part of power and used it to enhance the grandeur 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 51 and the permanent acclamation of the fgure of the leader as the center of the process. An institutionally strengthened, centralized state with abundant economic resources, territorialized and personalized, was the state that repositioned the Revolución Ciudadana.

4 Sabatinas and Gabinetes Itinerantes The sabatinas and the Gabinetes Itinerantes were the frosting on the cake of territorial politics. Incarnate in the hyper-personalized fgure of the president, the center journeyed throughout the territory in order to conquer it politically, and to insert it into the national project. Both instruments became a ritual of governmental management: with their rigorously repeated structures and carefully prepared content, they demonstrated the territorializing power of a highly centralized and personalized administration. At the onset of the Revolución Ciudadana, the Enlaces Ciudadanos were radio broadcasts featuring encounters with journalists, much like Hugo Chávez’s program “Aló Presidente”. Before long, they became encounters with local populations, very similar to Alvaro Uribe’s community councils. Each Enlace Ciudadano combined activities in the territory with the president’s account of his agenda—a three-hour monologue—transmitted throughout the country via public television and radio. Analysts have characterized the Enlaces Ciudadanos as a commu- nicational strategy designed to position a counter-hegemonic discourse in the name of subalterns (Cervino et al. 2016); as a ritual exalting the charismatic fgure of Correa, exhibiting his doctoral gifts to the country (De la Torre 2013a); and as a direct and personalist mechanism linking him to his followers (Muñoz 2010). They have not been analyzed as a tool for political territorialization and nationalization, nor have analysts considered the set of activities Correa deployed in the territories. Instead, studies have concentrated exclusively on the president’s televised appearances. During the Revolución Ciudadana’s ten-year reign, 511 Enlace Ciudadano programs were held within the country, 12 were celebrated abroad with migrants, and there were 122 Gabinetes Itinerantes. Their extensive coverage of the territory and their continuity over time demanded an enormous effort. The powerful Secretaría Nacional de Comunicación (National Communications Secretariat) included a Dirección Nacional de Informes Gubernamentales (National Offce 52 F. BURBANO de LARA of Governmental Reports) dedicated exclusively to preparing and producing the Enlace Ciudadano broadcasts. Planning began on Tuesdays with discussion of a tentative agenda and possible communication products to be prepared. The agenda covered four areas to be included in the president’s address: his weekly activities, the administration’s progress and achievements, media (dis)information, and the current situation. On Thursdays, a second meeting was held with Correa to defne the fnal content of the week’s Enlace Ciudadano, the communication products to would be included, and the personages and local authorities—governor, mayors, parish council presidents—to be invited. President Correa was constantly accompanied by a communications team whose members recorded all of his weekly activities. When the site of the sabatina was defned, the Secretaría Nacional de Comunicación’s team went there to create an audiovisual portrait of its touristic, artis- tic, and culinary attractions, and to interview local residents and record their voices for the production. Meanwhile, the Secretaría de la Política (Political Secretariat), under Executive jurisdiction, worked on relations with organizations in the territory and with local leaders and authorities, created maps of political actors, and identifed local problems and demands. Around 50 government employees from the Secretaría Nacional de Comunicación, including Ecuador TV (public broadcasting) personnel, as well as from the Presidency, traveled every Saturday to the Enlace Ciudadano site. To this group was added the president’s support team, his security detail, and invited ministers (Fig. 1). Through the sabatinas, Correa visited 148 of Ecuador’s 222 counties (see Fig 1 in Chapter 2). Table 1 groups counties according to the number of visits. Of the 148 counties visited, 114 were small, distant rural localities which Correa visited on one or two occasions. This group of counties is followed by a second group (25), similar in character, that he visited three to fve times, and the two groups together represented 93.9% of those visited. They can be defned as peripheral rural counties, with high percentages of the population dedicated to agriculture, very poor and with high levels of inequality. These visits describe well Enlace Ciudadano’s territorial strategy: do not travel to provincial urban centers, much less to provincial capitals; instead, concentrate on localities peripheral to the state structure. Correa’s frequent visits to small counties was striking; for example, eight sabatinas were held in Santa Elena and 15 in Pujilí. 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 53

Fig. 1 Counties visited by Rafael Correa between 2007 and 2017 (Source Presidencia de la República, El Comercio, SENACOM, El Ciudadano)

The record of Enlaces Ciudadanos demonstrates another striking fact: in Quito, capital of the republic, 176 sabatinas were held (or 34.4% of the total). One might conclude at frst glance that these Enlaces Ciudadanos ultimately reaffrmed the state’s centralist structure (that is, with the center reaffrming itself primarily in its own space). However, the reasons for holding so many sabatinas in Quito were logistical, demographic, and political. In the frst place, holding the events in Quito facilitated presidential needs, given Correa’s extraordinarily intense agenda, and Quito is Ecuador’s second most populous city, with 2.6 million inhabitants. Moreover, this assured political dominion over the center, taken to be the heart of the revolution, while the Enlaces Ciudadanos in Quito were conducted in peripheral neighborhoods. Almost half of these events (40%) took place in rural parishes, the rest in working class and poor neighborhoods far from the city’s central core. In addition, while it might appear that Correa favored Quito over Guayaquil (he held 176 sabatinas in the capital and only 37 in the port city, which is Ecuador’s most populous), in fact the president traveled 54 F. BURBANO de LARA GINI 2017 0.49 0.48 0.37 0.38 0.39 0.49 Average of Average poverty by consumption 2017 0.42 0.30 0.35 0.18 0.12 0.26 2 Average area area Average of country km 1306.2 1604.2 1292.1 3505.2 4124.3 2612.3 Percentage Percentage of population working in agriculture 0.44 0.22 0.28 0.10 0.05 0.21 6.5 Percentage Percentage of total Enlaces (%) 28.2 19.0 11.9 34.4 100 97 33 61 Number of Enlaces 144 176 511 3.4 2.0 0.7 Percentage of Percentage total of coun - ties visited (%) 77.0 16.9 100 5 3 1 25 County vis - ited by groups 114 148 Counties where Enlaces Ciudadanos were held Group 1 (1–2 visits) Group 2 (3-5 visits) Group 3 (6-9 visits) Group 4 (10 or more) Group 5 (Quito) Total 1 Table Presidencia de la República, SECOM: El Ciudadano, SENPLADES, INEC, Sistema Nacional Información.Source Author’s and Bryan Pérez classifcation 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 55 every Tuesday to the coastal city to visit government projects, to inau- gurate those that had been completed, to meet with supporters, and to confront Guayaquil’s mayor, Jaime Nebot. All of this speaks to the importance that Guayaquil represented, although Alianza PAIS never managed to get a mayor elected there; the city remained under the control of Nebot, considered a fundamental player in traditional party rule and an antiquated expression of Guayaquil’s aristocracy. The distribution of the Enlaces Ciudadanos by province indicates a strong concentration in Pichincha, given the large proportion held in Quito, and this in turn refects the regional distribution: 308 in the sierra, 159 on the coast, 40 in the Amazon, and four in the Galapagos islands. When regional distribution is analyzed according to the counties visited rather than the number, there is greater balance. Sabatinas were held in 100% of counties in Pichincha, Santa Elena, Cotopaxi, Imbabura, Napo, Orellana, and Santo Domingo de los Tsáchilas (Table 2). The situation of the Gabinetes Itinerantes differed: their occurrence by region and province was fairly homogenous. Of the 85 meetings, 33 (39%) were held in coastal counties while 51 of 87 (59%) took place in the sierra (Table 3). Unlike the Enlaces Ciudadanos, no Gabinetes Itinerantes took place in Pichincha (although they did in all other provinces) (Table 3). An explicit decision was made to take the cabinet out of the center—the meetings were always held in cities far from provincial capitals, and never more than once at the same site. Both the sabatinas and cabinet meetings were held in alternating regions, and very seldom in counties of the same region or province two weeks in a row. In this way, the administration made sure that Ecuador’s regional diversity was constantly on display through the nationwide broadcasts, provoking a permanent sense of national integration thanks to the center’s itinerant nature. The Gabinetes Itinerantes required a gigantic logistical effort. Correa estimated that around 600 persons were mobilized for each, including ministers, support teams, advisors, and security personnel (Russia Today 2014). The president literally arrived with the state in tow, displaying himself with this immense political apparatus—an overwhelming sight in peripheral places with scant power in relation to the center. As reported via Russia Today (Russia Today 2014) in San Pedro de Huaca, on that day, this tiny community in the province of Carchi became the nation’s center. 56 F. BURBANO de LARA

Table 2 Distribution of Enlaces Ciudadanos and Gabinetes Itinerantes by province

Province Number of Counties Counties Percentage Number of Percentage Enlaces visited per of counties Gabinetes of province visited/ Itinerantes Gabinetes total by province Itinerantes counties by province

Guayas 62 15 25 0.6 8 6.6 Manabí 30 14 22 0.64 7 5.7 Pichincha 25 8 8 1 4 3.3 Santa Elena 25 3 3 1 3 2.5 Cotopaxi 18 7 7 1 7 5.7 El Oro 17 8 14 0.57 7 5.7 Esmeraldas 15 7 8 0.88 6 4.9 Azuay 14 5 15 0.33 7 5.7 Los Ríos 13 9 13 0.69 6 4.9 Chimborazo 13 9 10 0.9 5 4.1 Tungurahua 12 5 9 0.56 5 4.1 Imbabura 12 6 6 1 5 4.1 Sucumbios 10 4 7 0.57 5 4.1 Loja 10 7 16 0.44 6 4.9 Napo 8 5 5 1 5 4.1 Carchi 8 5 6 0.83 6 4.9 Morona 7 5 12 0.42 4 3.3 Santiago Bolívar 7 6 7 0.86 5 4.1 Cañar 6 5 7 0.71 4 3.3 Orellana 6 4 4 1 3 2.5 Zamora 5 5 9 0.56 4 3.3 Chinchipe Pastaza 5 3 4 0.75 4 3.3 Galapagos 4 1 3 0.33 2 1.6 Santo 3 2 2 1 4 3.3 Domingo de los Tsachilas Total 335 148 222 0.67 122 100

Note Pichincha do not include Sabatinas held in Quito County to avoid the distortion its inclusion would introduce Source Presidencia de la República, SECOM: El Ciudadano, SENPLADES, INEC, Sistema Nacional de Información. Author’s and Bryan Pérez classifcation 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 57

Table 3 Gabinetes Itinerantes by region

Region Number of Counties visited, Total counties, by Percentage of Gabinetes by region región counties visited/ Itinerantes total counties, by region (%)

Coast 37 33 85 39 Galapagos 2 1 3 33 Amazon 25 21 47 45 Sierra 58 51 87 59 Total 122 106 222 48

Source Presidencia de la República, SECOM: El Ciudadano, SENPLADES, INEC, Sistema Nacional de Información. Author’s and Bryan Pérez classifcation

The idea of an itinerant center (rather than the number of visits to any specifc place) emphasizing Correa’s constant movement throughout the territory, the spectacle produced, the political commotion provoked, is one of ubiquity. Correa appeared in a different location every Saturday on all state media outlets; thus the same center, the same body, the same rhetoric, the same structure, the same message was carried to distinct sites. A spatial network of a strict political order was woven, uniting those disparate points with the central power represented by the president.

5 rafael Correa in Action Correa’s presence reaffrmed his leadership and centrality, putting at center stage his polarizing dynamic and exhibiting the powerful face of an active state. Publicity for each Enlace Ciudadano usually took the form of fyers. On Fridays, support teams from the Communications Secretariat and Presidency would iron out any details in situ. Depending on the site, the president would arrive on Friday night or early Saturday morning. Correa’s activities began at six in the morning with a 12-kilometer bicycle ride in the company of his retinue and (occasionally) local residents. He then attended a Desayuno Popular (popular breakfast)— his own term for it—in a nearby neighborhood or hamlet or inside a market. These were informal encounters with social activists, movement militants, and neighborhood leaders who exchanged views on 58 F. BURBANO de LARA local problems and the nation’s current political situation. Next Correa moved to the sabatina site: stadiums, coliseums, high schools, neighborhood football league headquarters. When a sabatina was held outdoors, a huge tent was erected with rows of chairs on which attendees found at least 16 leafets containing propaganda and government messages (Zeas 2012). Outside, street vendors sold food, clothing, trinkets. Care was taken to make sure that leaders, authorities, and persons with a local following were invited and attended. Often an individual from these groups was scheduled to address the public. The most powerful moment during any given sabatina was Correa’s carefully prepared entrance. One informant described it as “hallucina- tory”. The moment the president stepped into the long central corri- dor, people began waving tiny fags (Zeas 2012). Then, the frst notes of a patriotic song were heard: “Patria, tierra sagrada, de honor y de hidalguía…” (Fatherland, sacred land of honor and chivalry…), in what Geertz (1994) calls a “numinous moment”. According to Revolución Ciudadana protocol, this song was to accompany Correa’s arrival at all public events. It cast an aura of sacredness over him, associated with an idealized community—the Fatherland that now belongs to everyone, the return to which Correa also symbolized. As he walked to the stage, always equipped with an enormous LED screen, Correa greeted people, kissed children, and raised his arms, protected by an alert security detail. This was the moment of the leader’s presence and acclaim, of physical contact with his followers. Prior to his arrival, political emotions were stirred up by slogans blasted through speakers in favor of the Revolución Ciudadana, and praise for Correa and the government’s projects. Offcial sources estimate that 2500 persons attended each sabatina. When Correa was on stage, the Enlace Ciudadano began with a video about the site—landscapes, natural wonders, gastronomic delights, the voices of residents. The importance of the place was affrmed and at the same time inscribed in the dynamic of the project for national state construction. For three hours the president informed listeners of his activities during that week, praising the government’s work and constructing a narrative of the political situation through constant, systematic criticism of his social and political adversaries, and above all the media, which he considered his chief enemy. Correa often ripped newspapers apart to illustrate that they were trash. Editorialists, journalists, social activists, political leaders were questioned, and sometimes their faces were projected on the giant screens so that people would recognize 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 59 and stigmatize them. Correa constantly portrayed the political scene as a contest between friends and enemies—polarizing, agitating, discredit- ing. His rhetoric was intended to lend rationality and coherence to state action while, at the same time, producing what some theorists call the “state effect” (Abrams 2015; Mitchell 2015); that is, presenting the state as a structure external to and differentiated from society, but with the capacity to give it form. Correa’s narrative portrayed a society in the process of change thanks to government action: a society molded, constructed, transformed by the government that also punished society’s enemies. He also provided a review of the current situation, emphasizing how political struggle was a never-ending daily task. In fact, Correa understood the act of governing as a game of hegemonic construction maintained by his rhetorical abilities, his personal dominion over the political feld, state paraphernalia, and a frst-class communications apparatus. When the three-hour monologue ended, Correa participated in a popular lunch in a local marketplace. Everything was programmed: the bicycle route, the popular breakfast, the site of the enlace, the lunch, and even the songs that the president would sing with his fans. Then, the following Saturday, for 511 consecutive weeks, the same ritual would be repeated someplace else. From town to town the show traveled, a spectacle that built territorial support networks and exalted the presidential fgure—a nonstop power festa celebrated throughout the territory.

6 with the State on His Shoulders While the sabatinas served to empower Correa’s charismatic prestige, personalizing and territorializing the power of the revolution, the Gabinetes Itinerantes joined the localities to the center as an expression of a project of state construction. The cabinet meetings placed the state in the territories, brought the center to the peripheries, also subjecting them to a personalist power and leadership structure. They were a mechanism for political territorial exchange: they consolidated local power structures that were loyal to Correa and the revolution, in exchange for commitments from the central government for public works at the site in question. Cabinet meeting logistics were complex, with a management and information system dedicated specifcally to this matter. As mentioned above, around 600 persons traveled once a month to a secondary 60 F. BURBANO de LARA provincial city. The process began on Thursday with the arrival of the presidential court to the selected site. Like the sabatinas, the event was structured in a fxed fashion, month after month. Early on Friday, activities began with a reporter from the local media interviewing Correa. The president used this space to demonstrate his familiarity with the area and its problems. According to those who worked with him, Correa’s knowledge of the country was indeed impressive, and it was reinforced on these occasions with information provided by his advance team. After the interview, Correa met with the expanded cabinet to deal with governmental management matters: the center moved to the periphery to make its work visible. The expanded cabinet included all coordination ministers, ministers, employees of public institutions, and presidents of the boards of directors of state enterprises, all with their respective support teams. Attendees at the Friday meeting took a mid-day break for lunch at a previously selected site—a market, a plaza—and Correa arrived with members of his senior staff. There they enjoyed the area’s culinary specialties and a sing-a-long. The cabinet meeting resumed in the after- noon and lasted until eight-thirty that night. Then the Noche Cultural (Cultural Night) began, featuring meetings with artists and politicians. The program opened with speeches by local authorities praising the administration’s works and the president himself. One resident was chosen to thank the administration for benefts received. Then the president took the stage and held forth on the country’s current situation. Finally, the cultural segment of the event began, featuring local artists as well as the president singing on stage, accompanied by Ricardo Patiño, his most faithful shield. The following day, Saturday, Correa returned to his sabatina routine: bicycle ride, breakfast at the street market, report on the week’s activities. The ritual was always the same. While this was going on, a meeting led by the vice president and the mayor took place for ministers and local authorities, neighborhood and social leaders, and congresspersons from Alianza PAIS, to discuss local problems and the administration’s work. While this meeting between central and local government authorities was going on, a Feria Ciudadana (Citizens’ Fair) was held in a plaza where state agencies—social security, banking and fnance, higher education, ministries, etc.—provided information on state services available to citizens. Every detail was programmed and governmental agencies interested in participating had to comply with requirements established by the Secretaría Nacional de Administración Pública (National Secretariat 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 61 of Public Administration): public employees had to wear their uniforms, stands had to provide informational material (posters, brochures) and promotional material (pens, bracelets, key rings, etc.). The state exhibited its modern face through marketing strategies designed by the administration’s director of communications, Vinicio Alvarado. Members of Correa’s team now say they worked at a hellish pace. The president’s demands were never-ending. After the cabinet meeting with local authorities, the sectorial tables were set up: Production, Political Economy, Social Development, Natural and Cultural Heritage, Internal and External Security, and Strategic Sectors. Here specifc problems were dealt with related to the central government and the local agenda. This monthly effort also required an institutional support structure. The Secretaría Nacional de la Administración Pública was in charge of general coordination for the cabinet meetings, including the agenda, invi- tations, and logistics. The military provided security; the Coordinación Diplomática (Offce of Diplomatic Coordination) took care of protocol and logistical support; the Subsecretaría de Organización, Métodos y Control (Undersecretary for Organization, Methods, and Control) provided support for what was known as “management control and commitment follow-up”. And the Subsecretaría de Comunicación (Undersecretary for Communications) coordinated the radio broadcast and transmission in other media.3

7 conclusion The greatest achievement of the sabatinas and the Gabinetes Itinerantes, as I hope I have demonstrated, was the staging of a complex tool for political action throughout the territory—a tool I have termed the “itinerant center”. Correa’s territorial reach was enormous thanks to the events described, which required an impressive political and institutional effort to maintain over time. The power of the itinerant center came as the result of the number of times he traveled to towns and cities, but above all thanks to his continuous movement, and the spectacle and political excitement created in the territories. While the Enlaces

3 More information on the Gabinetes Itinerantes can be found on the website of the Sistema de Información y Gestión de Gabinetes Intinreantes (itinerant cabinet meetings information and management system), available at: http://gabinetes.cege.gob.ec/ gabinetes/. 62 F. BURBANO de LARA

Ciudadanos became a space for the expression and strengthening of Correa’s personal power, the affrmation of a structure of charismatic leadership, the cabinets mobilized the central government (with its immense paraphernalia) to small population centers. These two mechanisms joined the center with the periphery, the nation with the local, through the active presence of the state and the fgure of Correa. The sabatinas described the construction of a national project based on a personalized power structure traveling systematically to local spaces. The cabinet meetings, on the other hand, indicated a repositioned state, with new capacities for action, which Alianza PAIS conceived as an instrument of top-down social transformation with pronounced authoritarian leanings. The itinerant center accomplished a political purpose: service to the cause of the revolution and praise for Correa’s charismatic prestige as the central legitimizing factor in the process. The heterogeneous dynamics and interests behind Alianza PAIS were always hidden by the unifying capacity of presidential practice and his histrionic deployment. As suggested at the beginning of the chapter, this charisma derived from the heroic sense assigned to political action through constant confrontation with those identifed as part of a power structure opposed to change and to genuine democracy. The journeys through the territory became weekly proofs of that dynamic of confict and struggle; at the same time, they served to weave local networks of popular support into the revolution. The enormous effort deployed to mobilize the state and its structure of political leadership to the territory’s most peripheral spaces largely explains Correa’s sustained popularity and the national presence of his leadership, and of Alianza PAIS. The ‘center’ implies an accumulation of power in institutional, bureaucratic, economic, and symbolic terms. As Max Weber (1974) suggested, the state achieves such accumulation through expropriations from society and the markets. But the center also has a symbolic dimension, and its presence and authority carry an aura of sacredness. Correa made use of this dimension by constantly associating his leadership with the return of the Fatherland. His strength was based on the antagonistic attitude he created against the social life, values, rules, and institutions prior to his coming to power. To dispute the center, to make oneself the center, means creating a confrontational arena vis-à-vis the basic rules and institutions of social and political life. This further requires that, wherever the center goes, things important to citizens will occur. 3 “LA PATRIA YA ES DE TODOS:” PILGRIMAGES, CHARISMA, TERRITORY … 63

The Gabinetes Itinerantes and the sabatinas were continuous events throughout the territory wherein Correa became the agitating center (omnipresent, heroic) of national life. When Correa’s administration ended, this immense device of power and legitimization disappeared, along with the misery and the magic (as one might call it) of the caudillo in twenty-frst-century Ecuadorian politics.

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State-Organized Crime: A Hypothesis on the Institutionalization of Corruption During the Revolución Ciudadana

César Montúfar

1 introduction Corruption has emerged as a big subject in almost all of Latin America. Its importance has coincided with the ‘commodity boom’ cycle during which state revenues in most countries increased exponentially. Corruptions scandals such as Lava Jato, the Panama Papers, and others have produced unprecedented political earthquakes, particularly in Brazil, Peru, Argentina, Panama, and Ecuador. Focusing on the Ecuadorian case, this chapter proposes a polemical hypothesis in order to offer an explanation of this phenomenon: The government of the Citizens’ Revolution (Revolución Ciudadana), which was in power between 2007 and 2017, triggered a process of institutionalization

The author acknowledges the contributions of Raúl Cabanilla, Byron Real, Paúl Ayala, and Adrián Montúfar.

C. Montúfar (*) Universidad Andina Simón Bolívar, Quito, Ecuador e-mail: [email protected]

© The Author(s) 2020 67 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_4 68 C. MONTÚFAR of corruption in Ecuador. This phenomenon emerged from numerous actions, planned and executed from the pinnacle of power, in a way such that the concept of state-organized crime appropriately explains the rationale behind major policy decisions of the Correa administration, especially, at the so-called strategic sectors. In Ecuador, as in other Latin American countries, one can observe an unparalleled growth of corruption claims both in the judicial system and in public opinion.1 Never in the history of this country was the perception of corruption as high as during the decade of Rafael Correa’s administration. The information systematized by Ecuador’s Comptroller Offce (Contraloría General del Estado, or CGE), notes 2408 reports fnding criminal responsibilities in the period 2007–2017. This fgure accounts for an impressive number of corruption cases, though only a few of them have led to convictions.2 The vast majority of these illegal events took place at local governments (1418) and national institutions (990). Of the latter, a plurality came from the Executive branch (335), including ministries, secretariats, public companies, and other national institutions. Since no equivalent information is available from before 2007, no historical comparison is possible. However, the growth of corruption over the last decade seems uncontested, at both the national and subnational levels of government. This data poses several questions: Should the proliferation of corruption in Ecuador during the 2007–2017 period be considered as an isolated, spontaneous, or marginal phenomenon, resulting from illegal behavior by individual government offcials? Is this merely an anomaly or dysfunctionality on the part of public institutions? Or, on the contrary, does it refect a pattern of governmental practices geared toward illicit objectives? Can this phenomenon be defned as the manifestation of state-organized crime? Finally, how does it inform our understanding of the state, the model of governance and the political regime?

1 A summary of the outstanding allegations of corruption during the Correa administration can be found in PlanV (2017), Museo de la Corrupción, and 4Pelagatos (2107). 2 Between 2007 and 2017, very few top offcials of the Correa administration were investigated by the Attorney General Offce. These include the cases of the former Minister of Sports, Alfredo Carrión, in 2009; the COFIEC scandal in 2010; the Duzak case in 2010; Alex Bravo and Carlos Pareja Yanuzelli in the Esmeraldas oil refnery case in 2016; former Vice President Jorge Glas and associates in 2016; former Comptroller Carlos Pólit; and former Electricity Minister Alexei Mosquera in the Odebrecht case. 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 69

Answering these questions requires a multidisciplinary approach involving comparative political science and criminal law. Our hypothesis presupposes, in addition, a complex understanding of causality, not centered on unidirectional models, but rather on the establishment of what Alexander Wendt (1998) calls the ‘conditions of existence’ of a given phenomenon. Accordingly, our aim is to explain a complex issue such as institutionalized corruption as the result of a set of ‘institutional conditions of impunity’. These ‘conditions of impunity’ were consciously built by the group in power (state-organized crime) through crucial constitutional and legal reforms, as well as its political action, both of which facilitated or legalized illicit policy decisions.

2 theoretical Reflections and Comparative Elements My questions implicitly suggest a prior conceptual distinction between generalized corruption and institutionalized corruption, the latter being of interest here. In the literature on corruption, known as “corruptol- ogy” (Rabotnikof 2003), the predominant approach defnes generalized corruption as the violation of an obligation by a decision-maker for his or her personal or group beneft (Garzón Valdés 2003). Similarly, other authors understand it as the abuse of authority to obtain personal benefts (Laporta 1997) or the “positional violation of any specifc function performed within a framework of discretion in order to obtain an extra- positional beneft” (Malem Seña 2002). In such cases, corruption is associated with individual violations of a given rule, or the extralegal abuse of a position of power. The notion of institutionalized corruption represents a different phenomenon. Although this may likewise involve the violation of pre- determined norms, or else the linking of organized criminal groups to institutions of public power, the crucial point is the articulation of illicit practices by persons with public decision-making power through the legal and institutional structures of government. Here it is possible to distinguish “acts of corruption” from “systems of corruption” (Reátegui Sánchez 2004). This is crucial given that, at present, the most signifcant cases of corruption (such as those involving bribes by large private corporations to government offcials) occur not through individual initiative, but by “organizations (companies and public entities)”, and respond to group interests (Reátegui Sánchez 2004). 70 C. MONTÚFAR

Thereby, institutionalized corruption (Reátegui Sánchez 2004) presents systemic attributes that differentiate it from individual corruption, identifed as the individual violation of an obligation by a decision-maker (Garzón Valdés 2003) or, potentially, generalized or ‘hypercorruption’ (Rabotnikof 2003), referring to a quantitative explosion of individual cases. We understand institutionalized corruption as those illicit acts affecting public administration that occur within a legal and institutional framework that has been adapted or expressly changed by those currently holding power. Institutionalized corruption is, therefore, a legalized system in which the state apparatus and public policies are ftted to the illicit interests of the incumbent criminal organization. Such unlawful acts should be considered as part of a system of organized crime operating within the state, and that constitute much more than simple, isolated, or individual violations of the law. In the judicial realm, a number of political regimes have been pros- ecuted recently as instances of organized crime. In the case of Nigeria, General Sani Abacha and his family were sentenced by a Swiss court for “organized corruption” (Monfrini 2008). The trial lasted nearly a decade, by the end of which the former leader was already dead. Nevertheless, the trial against his relatives continued, ultimately leading (per the court’s judgment) to the repatriation of US 500 million that the former president and associates had concealed in 130 Swiss accounts (Monfrini 2008). Along similar lines, another body of literature has focused on countries like Mexico (Flores Pérez 2018) and Colombia (Garay Salamanca et al. 2008), considering situations in which organized criminal groups merge with state bodies and act through public offcials. This involves interactions between the state and organized crime under conditions that are neither anomalous nor dysfunctional, but characteristic of certain state confgurations. In Mexico, in a study that includes a look at the operations of drug-traffcking organizations, Flores Pérez interprets the situation in terms of a symbiosis between institutional actors and criminal groups (2018). The purpose of this symbiosis is to infuence wealth-accumulation patterns determined by state policies in order to beneft either legal or illicit interests. This author employs the concept of “networks of hegemonic power”, referring to groups of public offcials and private actors (both legal and illegal) that defne the very purpose and functioning of state institutions and the patterns of capital accumulation (Flores Pérez 2018). In this way, members of these “networks of 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 71 hegemonic power” determine the patterns of distribution of resources through the infuence of the state. These patterns determine the original constitution of the state apparatus as a function of those illicit ends (Flores Pérez 2018). From a different perspective, Francisco Durand (2018, p. 23) argues that, in the context of the last decade’s commodities cycle, weak states facing an “infrastructural defcit” tended to be captured by global corporations, especially those working in the construction of engineering megaprojects. In particular, Durand explores the role of Odebrecht in Perú, concluding that through various legal and illegal arrangements, this frm managed to capture the Peruvian state, and obtain disproportionate benefts in its multimillion contracts (Durand 2018, p. 40). In the context of economic liberalization, the corporate capture of the state became consolidated as a regional trend of business power exerting illegitimate infuence over weak states in developing countries; states exhibiting feeble mechanisms of horizontal and vertical accountability (Durand 2018, p. 39). Some of the aforementioned elements are clearly recognizable in Ecuador’s Revolución Ciudadana. In this case, we fnd traits of ‘organized corruption’ (Monfrini 2008); ‘fusion of criminal groups and the state’ (Garay Salamanca et al. 2008); activation of ‘networks of hegemonic power’ (Flores Pérez 2018); and ‘corporate capture of the state’ (Durand 2018). Nevertheless, I argue that the category of ‘state-organized crime’ is best suited to explain what occurred during the Correa administration (2007–2017), particularly in the realm of what the government called ‘strategic sectors’. Herein, crucial policy decisions, under the direction of the government but in conjunction with specifc private actors (principally, transnational corporations in charge of infrastructure megaprojects), were systematically oriented toward promoting, protecting, provoking, or legalizing various kinds of illicit activities. This could only be possible after the confguration of what I call a set of ‘institutional conditions of impunity’; such conditions resulted from key reforms at both the normative (the Constitution) and political (the political regime and party system) levels. In this way, the group in power, acting according to the logic of a criminal organization in control of the state, put in place by an overly powerful and popular Executive, which was capable of ruling the country by decree, free from the activation of any relevant mechanism of horizontal or vertical accountability. In short, institutionalized corruption in the strategic sectors emerged from the 72 C. MONTÚFAR establishing of an institutional arrangement favoring impunity. Herein, corruption transformed into a system. This was not a spontaneous side-effect of the government’s reform policies, but rather the result of decisions and planning that came from the top of Executive power, and can thus be defned as a case of state-organized crime. In what follows, I describe the causal chain connecting state-organized crime, a framework of impunity, and the system of institutionalized corruption. This explanation, of course, does not explain all corruption cases in Ecuador, but only those taking place in the public sector, and specifcally within the so-called strategic sectors in the period 2007–2017.

3 the Constitution: ‘Hyper-presidentialism’ and Concentration of State Power Rather than extensively discussing Ecuador’s 2008 Constitution, this section offers a brief annotation of the constitutional text that analyzes the political plan implicit within it. This plan allowed the group in power to directly capture all institutions of the state. In addition, I consider the strengthening of the Executive branch and the deactivation of key mechanisms of institutional and social control over its actions. I highlight the confguration of the so-called strategic sectors3 and the weakening of other branches of government, including the Legislature, together with processes of state co-optation and of limiting civic participation. First, let us note that the Constitution consists not only of the 444 articles of its main corpus, but also of the 60 additional transitional articles, which are divided into two sections: the Transitory Provisions (TPs) and the Transitional Regime (TR). Both sections outlined the optimal normative and institutional reconstruction of the state after the promulgation of the Constitution, and they established a political path leading to the capture of all the key institutions of the new state by the party

3 According to constitutional Article 313, being part of the state, and under the area of the Executive, the so-called strategic sectors include: energy (broadly defned); nonrenewable resources, telecommunications, oil transportation and refning, biodiversity and genetic diversity, water, the radio spectrum, and others defned by specifc laws. Strategic sectors represented the greatest share in of the public sector budget. Between 2008 and 2017, 21.97 billion USD were spent in these sectors. In addition to this sum, state-owned companies spent 31.019 billion USD over the 2007–2017 period, for a total of 53.008 billion USD. The public sector budget for the period was 316.4 billion USD. 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 73 in power: Alianza PAIS (Montúfar 2012, Chapter 1). This constituted a political plan geared toward a full replacement of the people in charge of all state institutions at the national level. In this way, the Ecuadorian state acquired a markedly partisan profle—Alianza PAIS took control of the state apparatus as a whole. A defning characteristic of the Montecristi Constitution’s design is the strengthening of presidentialism, or hyper-presidentialism (Torres 2009; Granda 2012; Montúfar 2012; also, see Chapter 1 of this book). Ecuadorian hyper-presidentialism is evident at three levels: frst, in the unparalleled increase of presidential powers; second, in the weakening of the Legislative branch through the creation of other co-equal branches of government (such as the Transparency and Social Control branch) which take over key functions of the legislature; and third, in the deactivation of key mechanisms of institutional and social control over the Executive. The “Power of the Executive Index” created by the Comparative Constitutional Project rates countries on a 0–7 scale according to the power of their Executive branch (Elkins et al. 2016). In this index, Ecuador obtained a maximum score of 7, alongside 24 other countries where the president exhibits dominance over such areas as: legislative initiative, power to initiate constitutional amendments, power to decree states of emergency, veto power over laws approved by the legislature, power to dissolve the legislature, among others. In Latin America, Ecuador exhibits the strongest presidentialism, followed by Venezuela and the Dominican Republic (both with a rating of 6), while all other countries in the region rated 5 points or less.4 In short, the 2008 Constitution created the framework for an extremely powerful and discretional Executive, capable of acting any without checks and balances or social control. This certainly produced some normative conditions highly favorable to impunity and the spread of corruption at all levels of government. In addition, the Legislative branch was weakened to minimum, and direct presidential infuence was brought to bear on institutions such as the Contraloría General del Estado (Comptroller General, or CGE) the Fiscalía General del Estado (Attorney General, or FGE), the Procurador General del Estado (Solicitor General, or PGE), the Consejo de la Judicatura (Judiciary Council), and

4 For more on the themes of concentration of power and hyper-presidentialism in the 2008 Constitution, see Montúfar (2012, Sect. 3). 74 C. MONTÚFAR the Consejo Nacional Electoral (National Election Council, or CNE). In addition, the Executive held the reins of economic activity through the creation of strategic sectors of the economy, under direct presidential control. It is clear that the Constitution created an institutional and normative framework in which the Executive could act without the mechanisms of horizontal and vertical accountability required in a functioning democracy (O’Donnell 1997). For example, throughout the decade, the Asamblea Nacional (National Assembly) failed to produce a single oversight process that might have triggered the censure or dismissal of any government offcial.5 The same was true of the FGE, the Judiciary, and the newly formed Consejo de Participación Ciudadana y Control Social (Council of Citizens’ Participation and Social Control, or CPCCS). None of these institutions produced, over the course of Correa’s tenure, a single act of horizontal accountability for his administration.

4 Political Regime: Electoral Authoritarianism and a Hegemonic Party System What remained of the old regime that had emerged with the 1979 return to democracy collapsed with the election of President Rafael Correa and the ‘constituent’ process unleashed by his government in 2007. This process began during Correa’s presidential campaign in 2006, when he announced that he would not present candidates for Congress but would instead promote an Asamblea Constituyente (Constituent Assembly). This triggered a dizzying period of institutional demolition that included the consolidation of a new legislative majority, a new electoral authority, a new Judiciary, and a new Constitutional Court. A few months later, Correa achieved his major political goal: an empowered Asamblea Constituyente under the absolute control of Alianza PAIS. This led to the consolidation of a new political regime and a new party system. After the 2013 national elections, in which President Rafael Correa was reelected for his third term, the political regime created by the Revolución

5 During the Correa administration, the opposition in the Asamblea Nacional repeatedly attempted to conduct oversight processes on high-level government offcials. None prospered within that body’s Oversight Commission (Comisión de Fiscalización), which throughout the decade operated under an offcial majority. 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 75

Ciudadana had lost the indispensable attributes of a democracy (party pluralism, the exercise of civil and political rights, electoral integrity, and political alternation6), and a new political regime emerged, surrounded by an aura of plebiscitary legitimacy. Elsewhere, I have defned this new regime as electoral authoritarianism (Montúfar 2016).7 This regime type presents some characteristics that are quite different from other competitive authoritarian regimes, such as those of Alberto Fujimori in Perú or Hugo Chávez in Venezuela (Levitsky and Way 2010). In Ecuador’s electoral authoritarianism, the main element of legitimization consisted in popular support as confrmed in consecutive electoral processes (Montúfar 2016).8 This kind of nondemocratic regime enjoys a greater degree of electoral competitiveness than other variants of authoritarianism. Nevertheless, it maintains those attributes that Linz (2000) called typical of authoritarianism: limited pluralism; social demobilization and systematic disrespect for societal autonomy; and the predominance of a discursive mentality over partisan programs (as may prevail in democracies) or over totalizing ideologies (preeminent in totalitarianism). As a result, important changes also took place in the party system. The multiparty arrangement in force since the democratic transition of 19799 collapsed when Rafael Correa and Alianza PAIS took over all the

6 See Montúfar (2016) for an analysis of Przeworski (2000), Mainwaring et al. (2001), Morlino and Daimond (2004), and Schedler (2004) on the criteria for classifying political regimes, in perspective of defning Correa’s Citizens’ Revolution. 7 At this point, it is perhaps worth considering that the close and contested election between Lenín Moreno and Guillermo Lasso in April 2017 (without Correa as presidential candidate) denoted a possible change in the type of regime, from electoral authoritarianism to competitive authoritarianism. Due to allegations of fraud and the narrow margin of results, the winning candidate could no longer count on strong popular support but only on the advantages provided by a biased electoral authority. 8 During the period under study, the Alianza PAIS won nine consecutive elections: the presidency in 2006, 2009, 2013, and 2017; the Constituent Assembly (2007); the National Assembly (2009–2013 and 2013–2017); the majority of local governments throughout the country (2009 and 2014); the referendum to approve the new Constitution (2008); and the plebiscites of 2007 and 2010. 9 Of the four major political parties dominant in the previous system, only the Partido Social Cristiano survived as a regional party due to its electoral infuence in Guayaquil and neighboring provinces. Both the Izquierda Democrática (social democrats) and the Partido Roldosista Ecuatoriano (center-left populists) reappeared in 2017 as minority parties. The Democracia Popular (Christian democrat) party was extinguished. 76 C. MONTÚFAR key positions within the new state. A noncompetitive party system, similar to a hegemonic type described by Sartori (1992), was reproduced in Ecuador between 2008 and 2013. In Giovanni Sartori’s terms, this type of one-party system emerges when the ruling party, through elections, monopolizes the access to national power, thus precluding other parties from real electoral competition. In the Ecuadorian case, although Alianza PAIS was never able to extend its absolute control into local governments, its national dominance obliterated any trace of a multiparty system, in a context of a pronounced centralization and concentration of national power. This new political regime and party system did not emerge over- night—it resulted from a premeditated process carried out, both by the political will of the group in power and through the constitutional, legal, and institutional changes implemented during the decade. Electoral authoritarianism with the preeminence of a hegemonic party provided the President for even more political space to exercise his already extended constitutional powers; powers that Correa was very much inclined to use and abuse. Undeniably, these political transformations created additional ‘conditions of existence’ for the institutionalization of a system of corruption.

5 the ‘Conditions for Institutional Impunity’: Regulatory Governance, Government by Decree and Institutionalized Corruption Constitutional hyper-presidentialism, and electoral authoritarianism created a framework of institutional impunity, the main ‘condition of existence’ of institutionalized corruption. The Executive achieved broad constitutional powers without institutional counterweights (weak accountability) or political obstacles (plebiscitary legitimacy); a perfect framework for impunity and, thus, for corruption. Figure 1 describes how these ‘conditions for institutional impunity’ worked, as the result of both, constitutional ‘hyper-presidentialism’ and electoral authoritarianism, which assured a total control by the Executive of the key decisions of all state institutions. The President’s infuence over those institutions limited the independent oversight of the administrative and fnancial management of the state, and of the performance of public enterprises, including the execution of the infrastructure megaprojects in 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 77 WZd z hd,KZ/dZ/E/^D ,'DKE/ >dKZ> Ǉ ŽƵƌƚ͕ ůĞĐƚŽƌĂů ƩŽƌŶĞǇ z ŽƵŶĐŝů͕ ƚ ů EĂƟŽŶĂ Ă Ğ ĂĐĐŽƵŶƚĂďŝůŝƚ ŽŶƐƟƚƵƟŽŶĂů DWhE/d KZZhWd/KE ͕ &/ ƉƌŽũĞĐƚƐ ƉƌŽƚĞƐ ĞĐƌĞ ŵĞĚŝ ĂĐƟǀŝƐ ŵ ƵĚŝĐŝĂƌǇ Ğ ^K 'ĞŶĞƌĂů͕ ͕: ǇĚ ǀĞƌƟĐĂů ƚŚ 'KsZEE Ĩ ƚď ƐƚĂƚĞ ƐŽĐŝĂů ƐƐĞŵďůǇ ĂŶĚ ŶŽ ŽĨ ŽƵŶĐŝů Ŷ ^ŽůŝĐŝƚŽƌ KE/d/KE ͘ ĂƟŽŶĂ ů > /E^d/dhd/KE>/ 'ŽǀĞƌŶŵĞŶ ƌĞŐƵůĂƟŽ ŽŶƚƌŽů ͗E ŚŽƌŝǌŽŶƚĂů ŝƐĐƌĞƟŽŶĂƌǇ K& Z'>DEdZz ŽĨ WŽůŝĐŝĞƐͬŝŶĨƌĂƐƚƌƵĐƚƵƌĂů ŽǀĞƌ KǀĞƌ ^ŽĐŝĂů ŽŵƉƚƌŽůůĞƌ͕ ƌŝŵŝŶĂůŝǌĂƟŽ ^z^dD ĂŶĚ ŽŶƚƌŽů /E^d/dhd/KE ƐĐ ƵƉĞƌŝŶƚĞŶĚĞŶĐŝĞƐ 'ĞŶĞƌĂů ĞĂĐƟǀĂƟŽŶ WĂƌƟĐŝƉĂƟŽŶ 'ĞŶĞƌĂů͕ ŽƵŶĐŝů ͕^ ǆĞĐƵƟǀĞ͛ KE^d/dhd/KE> ,/WZͲWZ^/Ed/>/^D Institutional conditions of impunity and the system of institutionalized corruptioninstitutionalized of system the and impunity of conditions Institutional own Author’s ( Source Fig. 1 classifcation) 78 C. MONTÚFAR the strategic sectors. As explained above, this institutional capture began in the period of constitutional transition, but was consolidated after the Constitution was promulgated. It is important to mention that, through a strong majority in the legislative body (be it the Asamblea Constitucional in 2008–2009 or the Asamblea Nacional from 2009 onward), the government of Rafael Correa obtained approval for whatever laws or amendments to laws it presented. Put simply, between 2008 and 2017, the president acted as the frst and most important law-maker. Some of these legal bodies directly promoted or facilitated corruption. Focusing exclusively on the strategic sectors, one can fnd specifc articles in four major laws— the Penal Code, the Public Procurement Law, the Planning and Public Finance Code, and the Law of Public Enterprises—that constitute the pillars of a legal scheme enabling and concealing illicit acts by public offcials. Very importantly, the Penal Code redefned and lowered the penal- ties associated with several crimes associated with corruption. In addition, the Law of the Attorney General and the Law of State Comptroller reduced their attributions to supervise and control the Executive branch, especially in the procurement of public works. Table 1 specifes the ways in which these laws were tailored in order to promote, permit, or cover up illicit acts. In sum, the deactivation of the institutional mechanisms of control and supervision (horizontal accountability), leading to the confguration of a legal framework favorable to promoting and protecting corruption, was complemented by a strategy of weakening and neutralizing the mechanisms of social control (vertical accountability). The Penal Code, along with the application of the Communications Law (Montúfar 2014) and of Executive Decrees 16 and 739 (establishing a control-and-sanction scheme over all social organizations), established a framework of overregulation and interference in civil society. Moreover, these rules also aimed at criminalizing social protest and neutralizing mechanisms of social control and demands for transparency. During Correa’s administration, here were countless cases of legal persecution of social protest, and of judicial persecution of social 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 79 (continued) Enables the President to declare a state of emergency, which would allow the so-called ‘special Enables the President to declare a state of emergency, regime’ in public contracting. This entitlement allows offcials to sign contracts omitting public tenders, as well avoiding the presentation of monetary guarantees, among others decreeContracts by emergency can be signed under the responsibility of the highest authority of each public institution, directly appointed by the Executive. It is permissible to contract with state foreign companies without prior requirements of residency or provision of guarantees A reform of this law allowed for the so-called ‘specifc business focus’, allowing direct contracting under an umbrella agreement that concedes contracts within the business spheres included in the agreement. Another reform increased the ceiling to a 70% increase vis-à-vis the initial value for complementary contracts. In other words, if the prize of an infrastructure project was USD 100, through complementary contracts, USD 170. This became a the Ecuadorian state could pay, generalized practice in the mega projects of the strategic sectors The new Penal Code (article 581) introduced a flter or report issued by the Comptroller’s Offce whereby penal accusations have to a frst validation The Attorney General could conduct investigations on accusations of embezzlement and illegal asset accumulation within a period of seven years after the Comptroller’s Report was issued The Penal Code introduced a new characterization of “minor embezzlement” called “infuence peddling” that prescribes on a time scale, while the former didn’t. minor embezzlement charges Based on this amendment, many contractors were if any indicted on minor charges, The maximum penalty for bribery crimes was reduced from jail of 4–8 years to 5–7 years. The damage payment which, according to the former Penal Code, represented three times the amount received is now limited to a maximum fne of ‘one thousand basic salaries’ (about USD 386,000) An abbreviated trial, nonexistent in former penal legislation was introduced for corruption offenses, allowing defendants to reduce a minimum penalty by as much one-third Selected legal provisions facilitating or covering up corruption Approved by the Constituent Assembly in 2008 Proposed by the Executive, and approved in 2014 Approval date Legal pillars of institutionalized corruption in the strategic sectors Ley Orgánica del Ley Orgánica Sistema Nacional de Contratación Pública (Public Procurement Law) Código Orgánico Código Orgánico Integral Penal (Penal Code) Law 1 Table 80 C. MONTÚFAR The Board of Directors of all public companies is composed delegates the Executive branch. Within the powers of Board is to authorize the contracting of lines credit and These will accept no responsibility for not having achieved to appoint the General Manager. economic returns in the managed companies, so long as they established that some social return. Associative agreements and investments with other state-owned companies are approved by the Board of Directors and require no other procedures The hiring of public companies through ‘special regime’ is based on the content of an association document with national or international companies. No contracting will require a prior report from the Comptroller’s Offce, the Procurator’s Offce, or from any other body external to the the General Manager is authorized for In cases of emergency, management of the company. contracting and will respond to any controversy Allows public companies to use the ‘specifc business turn’ Creates a Debt and Financing Committee, composed of offcials of the Executive branch, to approve all credit operations, which previously required additional approval from autonomous agencies such as the Attorney General’s Offce or the Central Bank Declares debt operations reserved, even for the Comptroller General. Excludes the advance sale of oil from calculation of the national debt, despite fact that resources enter in the General State Budget Repeals several legal regulations, replacing them with provisions allowing the defnition and discretional application of concepts around public indebtedness and the use thereof Selected legal provisions facilitating or covering up corruption Proposed by the Executive, and approved August 4, 2008 Proposed by the Executive, and approved in 2010 Approval date (continued) Ley Orgánica de Ley Orgánica Públicas Empresas (Law of Public Companies) Código Orgánico Código Orgánico de Planifcación y Finanzas Públicas (Planning and Public Finance Code) Law Author’s own classifcation Source 1 Table 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 81 leaders and journalists.10 Andocilla (2018) fnds that arbitrary arrests were made repeatedly in judicial proceedings against social leaders and organizations. Additionally, the author reports systematic violations of due process and the acceptance by judges of weak standards of evidence for condemning the defendants, among other procedural faws (2018). Furthermore, in several of these trials, President Correa or Alexis Mera (Legal Secretary at the President’s Offce) acted in person as the accuser, in addition to pressures and interferences from the Executive brought to bear on judicial processes. As regards to punitive overregulation of the media, information provided by the Fundamedios NGO (2016) indicates that the Correa administration instituted a planned strategy against journalists and media organizations aimed at polarizing and politicizing all media spaces. This strategy included: an offcial discourse of intimidation and harassment toward journalists; direct pressure against dissenting journalists and critics in the media; the initiation of legal claims against journalists; the generalization of censorship practices; and the use of public and seized media for political attacks on opponents. During the decade under study, no less than 2446 attacks against freedom of expression were registered; 1037 legal proceedings were launched against the media; and 561 journalists and media outlets received administrative sanctions under the Communications Law. Complementing all of this, a nonstop propaganda campaign by the government invaded the public and private media. Fundamedios (2016) reported that 5586 mandated national

10 The most representative cases included the shutdown of Radio Arutam in Morona Santiago in 2009; the trial for terrorism of the so-called ‘10 de Luluncoto’ in 2012; the prosecution of Mary Zamora, president of the teachers’ union, in 2010; the persecution and prosecution of dozens of police and military offcers in connection with ‘30S’ (a policy mutiny that erupted on September 30, 2010, during which President Correa went directly to a police compound, and in the aftermath of which he accused innocent civilians and policemen of plotting a coup d’état and assassination attempt against him); the trial against the newspaper El Universo in 2011; the trial against journalists Juan Carlos Calderón and Christian Zurita for publication of the book El Gran Hermano, which reported on illegal contracts by Correa’s brother, in 2009; and the sentence against Pablo Chambers and Gerardo Portillo, members of a civil oversight commission created for the Gran Hermano case. Other noteworthy cases include the dissolution of the Pachamama Foundation in 2013 and of the Unión Nacional de Educadores (the National Teachers Union) in 2016, among 445 organizations dissolved during the period, as well as attempts to close human rights NGOs such as Fundamedios and Acción Ecológica (Fundamedios 2017). 82 C. MONTÚFAR radio and television broadcasts took place from 2007 to 2016, equivalent to 5 months (158 days, or 3792 hours) of free and uninterrupted air time. Returning to Fig. 1, we fnd that everything converges in the box labeled ‘regulatory governance’, meaning the margin of discretion awarded to the Executive in order to ‘govern by decree’. This scheme of regulatory governance relied on the President’s Legal Secretariat, which designed the legal framework. During his presidency, Rafael Correa signed 4916 such decrees through which he modifed the structure and functions of the Executive branch, especially signifcant in the creation of coordinating ministries (such as the one for the strategic sectors) and other state organisms, along with innumerable public companies (see Chapter 1 of this book). Similarly, the president ordered the execution of numerous business projects; he arbitrarily tapped public resources from the fscal budget; he declared countless emergencies; and he appointed trusted persons to key positions. Finding the exact correlation between regulatory governance and institutionalized corruption in the government of the Revolución Ciudadana would require a quantitative and qualitative analysis of all 4916 Executive Decrees, which were subsequently developed by countless ministerial resolutions. For a generalized indication of this correlation, Table 2 highlights key Executive Decrees that underline how corruption was institutionalized by government initiative. A clear trend extends through all these decrees: they increased the Executive’s discretion regarding decision-making in the contracting of public works, indebtedness, and the operation of public companies. Among them, the elimination of the Fondo de Solidaridad (Solidarity Fund) was the keystone in the creation of the so-called strategic sectors. Prior to 2007, this fduciary instrument managed the resources of public enterprises and prevented the discretionary use of government assets by the Executive. Due to discretionary management of public companies and assets, and huge investments in infrastructure megaprojects, the scheme of regulatory governance had a decisive impact over the rest of the economy and required the elimination of the Solidarity Fund, one of the most signifcant dispositions contained in the 2008 Constitution. In practice, the legal scheme of ‘regulatory governance’ was carried out at a policy and project level by the Coordinating Ministry of Strategic Sectors. I call this moment ‘Discretionary state activism at the policy and project level’. This ministry took over the responsibility of structuring 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 83

Table 2 Selected presidential decrees and institutionalized corruption

Decrees Approval date Abstract

Presidential October 30, 2009, This decree reforms the Legal Regime of the decree and subsequent Executive branch, an instrument that strengthens Nº109 reforms the regulatory powers of the Executive and, among other things, reorganizes the institutions, reinforce the attributions of the Vice President, and exempts the national secretaries from being subject to oversight and political control by the National Assembly Presidential April 14, 2010 This decree liquidates the Solidarity Fund, decree delivering 30% to the Coordinating Ministry Nº325 of Strategic Sectors and 70% to the Ministry of Telecommunications. Previously. On May 13, 2008, through Constituent Mandate 9, the Board of Directors of the Solidarity Fund authorized that assets of the institution (until then maintained as fnancial investments or administrative operations) be invested directly in capitalization of the electric and telecommunications companies owned by the Solidarity Fund itself. The elimination of the Solidarity Fund, established by the 1998 Constitution, allowed for a discretionary operation of all public companies and assets, under direct infuence of the President or his appointees Presidential August 14, 2010 This decree authorizes the payment of debt with oil decree sales, opening the possibility of contracting credits Nº466 with international companies or oil intermediaries. Thereby, it became possible for commercial intermediaries of crude oil to appropriate the differential between the values agreed to in contracts and the market price Presidential November 13, This decree regulates the Planning and Public decree 2014 Finance Code, expanding key technical defnitions Nº489 such as infrastructure, public investment, or debt destination, in order to hide fgures of public debt. Further, it establishes clauses that reserve confdenti- ality, preventing public knowledge of the debt- contracting processes, and its oversight by auditing institutions such as the General Comptroller (continued) 84 C. MONTÚFAR

Table 2 (continued)

Decrees Approval date Abstract Presidential November 25, 2015 This decree issues implementing regulation regard- decree ing the mandate, duties, and responsibilities of the Nº822 boards of directors and general management of public enterprises and includes the possibility of entering into debt contracts bypassing the Ministry of Finance and thus complementing the provisions of decree 466 Presidential October 20, 2016 This decree reforms the implementation norms of decree the Planning and Public Finance Code, by altering Nº1218 the methodology for the calculation of public debt. This change allowed public debt to exceed the 40% debt to GDP ratio, a limit set by the Constitution. This decree purposely fails to consider public sector institutions’ debt in the calculation of total internal debt

Source Author’s own classifcation and supervising all projects carried out in the oil sector, highway construction, electricity, telecommunications, and other areas related to infrastructure. The outcome: countless projects tainted by corruption; a corruption, however, which had become institutionalized. We can trace key moments when these institutionalized events of corruption unfolded in the so-called strategic sectors; especially, at the phases of debt contracting and project negotiation and construction. As a rule, all infrastructure megaprojects were awarded to huge transnational engineering companies such as the Brazilian Odebrecht, the Chinese Sinohydro, the Korean SK, among others. In most cases, Ecuadorian frms assumed a secondary role, articulating their participation to the former. The contracts signed with these transnational frms were funded by international loans issued by the development banks of various countries, including Brazil, Thailand, China, and others. Multilateral banks also funded some projects. This scheme required the operation of Ecuadorian public companies whose authorities had unlimited power, in addition to public fnancing practices that guaranteed discretionary use of current and future resources. In sum, the system of institutionalized corruption in the strategic sectors emerged from multiple ‘conditions of existence’ at various levels: constitutional and political levels, as well as legal-institutional, public policy and project levels. As I have argued above, these ‘conditions’ were 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 85 carefully designed and implemented by the group in power; we need to analyze the character of the Revolución Ciudadana and the political elite in power during this period.

6 conclusion: The Citizens’ Revolution as a Case of State-Organized Crime Institutionalized corruption implies that illicit actions emerge as the product of an organized machine, even independently of the machine’s direct operators. This returns us to our hypothesis: that a criminal structure imposed from the pinnacle of the Executive branch organized in Ecuador a pattern of regulatory governance, government by decree, in order to advance illicit ends within the so-called strategic sectors, during the 2007–2017 period. In this regard, the Constitution and law, the political regime, the party system, and the state itself were all modifed following a plan crafted by the Executive, thus qualifying Correa’s Revolución Ciudadana as a case of state-organized crime.11 ‘Institutionalized corruption’ does not refer to all the acts of corruption that took place under Rafael Correa’s government or Ecuadorian society during this period. To so claim would be far-fetched. However, corruption cases occurring in other areas of the state, at the national and subnational levels, may have taken advantage of the legal and institutional framework created for that purpose. Here we employ the term to signify the series of harmful acts against public administration per- petrated directly by the presidential circle, and emerging from the legal framework described above, taking as reference the scope of the strategic sectors. Given all this, I argue that a system of organized crime, as consigned in Ecuadorian criminal legislation (Article 369 of the Penal Code), may apply to the top echelon of the ruling cadre that came to power with

11 On March 5, 2018, the author fled a criminal claim at the PGE on counts of organized crime against: Rafael Correa Delgado, former President of Ecuador; Jorge Glas Espinel, former Vice President; Alexis Mera Giler, former legal counsel of the presidency; José Serrano Salgado, former President of the National Assembly and Minister of the Interior; Galo Chiriboga Zambrano and Carlos Baca Mancheno, two former Attorneys General; Carlos Pólit Faggioni, former Comptroller General; Diego García Carrión, former Solicitor General; and the company Norberto Odebrecht. Due to this criminal complaint, Attorney General Gen Rhea Andrade opened a criminal investigation on April 20, 2018. 86 C. MONTÚFAR

Rafael Correa as President of Ecuador. This group, composed of civil servants at the highest levels, along with national and international busi- nesses, constituted a true “hegemonic power network” in the sense set forth by Flores Pérez (2018). We may ascribe to this network the decision-making nucleus of the government, led by the President and those who (as offcials of the Executive branch) assumed decisive roles within this criminal organization in the realization or concealment of illicit acts. We may also include the chief authorities of other state institutions, such as the Comptroller’s Offce, the Solicitor General, the Attorney General, the Judiciary, and those national or foreign companies that were partners and participants in massive contracts with the state. We consider our hypothesis applicable, in particular, to the scope of the so-called strategic sectors, as defned in Article 313 of the Constitution and under the authority, throughout the entire decade, of Vice President Jorge Glas.12 In this huge area of the public administration, transnational corporations were awarded megaprojects in electricity, oil concessions, telecommunications, infrastructure, etc. The international loans that funded those megaprojects were critical to the corruption scheme, and this model may well have extended to the rest of the administration. In the feld of criminal law, we base our hypothesis on the doctrine of ‘mediated authorship’ by dominion of the will, by virtue of organized machinery or power structures. This doctrine, developed by Roxin in 1963 (2016), aims at linking leaders to illegal acts as executed by their subordinates. I argue that Roxin’s criminal doctrine, already applied in Latin America to human-rights violations in Argentina and Peru, is perfectly applicable to other crimes, and particularly crimes related to institutionalized corruption. The important point here is the responsibility arising by virtue of functional competence: crimes of ‘duty infringement’ (Sánchez-Vera 2002) which are rendered invisible in traditional criminal theory. Roxin’s conception of criminal authorship transcends the traditional doctrine, which imputes only the direct per- petrators of crimes. Instead, this conception focuses on crimes that are

12 President Correa appointed Jorge Glas as President of the Solidarity Fund in January 2007, as soon as he assumed the presidency. In 2011, Correa nominated Glas as Secretary of the newly created Ministry of Strategic Sectors and, afterwards, when elected Vice President, Glas was nominated as the highest authority responsible for the strategic sectors. Due to corruption charges related to the Odebrecht scandal, Glas is now serving a 6-year prison sentence. Throughout the entire decade, Jorge Glas acted as the key government fgure in charge of the strategic sectors. 4 STATE-ORGANIZED CRIME: A HYPOTHESIS … 87 originated at higher levels of power, whether by the express order of a boss or by establishment of a legal and institutional framework designed for the commission of illicit acts (Roxin 2016). This theory points to criminal situations in which the “actor behind” such crimes has at his or her disposal an organized power machinery that allows for the per- petration of crimes without the need to delegate or induce their commission to an autonomous decision by the direct author (Roxin 2016). The control and dominance of the state apparatus by a president and his cohorts is based on “a formal legitimacy framework” that empow- ers them, as mediated authors, to use the formal mechanisms provided by the Constitution and the law to foment illicit activities, and to cover them up. This sort of criminal organization is very diffcult to detect, as it hides within an institutional structure of impunity. This is what Roxin establishes as the “domain of the will of the deed” (2016), which in our case corresponds to Rafael Correa and his inner circle, in addition to other members of the hegemonic power network. The culpability of the mediated author then derives from having set in motion the criminal apparatus, and not necessarily from the direct commission of related crimes. Such anti-legal actions are not a “particular initiative” of the direct offenders but resultant of the operation of the criminal machinery (Roxin 2016). In this sense, one element of this type of authorship is that the direct author be fungible (that is, replaceable at any time, being only one gear in the power machinery)— to the point that if an individual refuses to perpetrate a given crime, he will simply be replaced by another more willing author (Roxin 2016). Thus, while the direct author dominates the material action of an illicit act, the mediated author dominates the organized apparatus. As Roxin writes when referring to the Adolf Eichmann process, in the context of the Holocaust: “Crime here is not the work of the individual; the state itself is the author” (2016). Thus, the criminal machinery continues to operate beyond its personnel, without exempting them from criminal liability. These criminal organizations therefore deploy their operation independent of the identity of their members. The autonomous life of the organization ensures compliance with unlawful behaviors beyond the direct executors (Caro Coria 2010). One key analytical aspect is to determine whether these illicit behaviors contradict the legal system, or whether they form part of it. In the frst case, this would represent a not-unusual situation wherein offcials transgress the law to beneft themselves or their group, corresponding 88 C. MONTÚFAR to the traditional defnition of corruption. This would imply an external relation of the criminal organization to the legal order; bosses or subordinates found responsible for having derailed the good intentions of the legal apparatus. As regards the second case, this refers to cases of institutionalized corruption, or corruption systems, wherein illicit behaviors are integrated into the legal system, having been expressly planned, legalized, and even constitutionalized. In this second scenario, institutionalized corruption results from the “automatism of the apparatus of power itself”, noting that whoever controls the structure of the state may be distant from the direct commission of imputed crimes (Roxin 2016). According to Roxin, criminality by “dominion of the will by virtue of the structures of organized power” usually occurs in totalitarian states, or through the operation of clandestine organizations within the state (2016). Such practices could hardly arise within the framework of democracies or consolidated legal states (Roxin 2016). This allows us to put into perspective the proposition that the emergence of undemocratic regimes is associated with arbitrary and discretionary forms of government, which can likewise lead to institutionalized corruption. The point is that such crimes by defnition do not arise spontaneously, but instead originate from the decision or will of those who (from positions of state power) transform their political project into a criminal one, or else who begin with criminal intentions and later politicize them. At this point, we are not in a position to establish whether the frst or second option occurred under the Revolución Ciudadana. So far, we can only establish that it should be investigated as a case of state-organized crime, in which political goals and illicit objectives were integrated at a given moment. This may have occurred even before Rafael Correa became the President of Ecuador.

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Rafael Correa’s Technopopulism in Comparative Perspective

Carlos de la Torre

1 introduction Despite advocating for different economic policies, appealing to different class and ethnic constituencies, and promoting different models of democracy, populists old and new share a political logic and use similar pol strategies to obtain power and to govern. Populists aim to rupture exclusionary systems, to give power back to the people. They understand politics as an antagonistic struggle between the people and their enemies. Populist leaders claim to be the only voice of the people and even their embodiment. Many use revolutionary rhetoric; all claim to face enemies and not democratic adversaries. After gaining power, populists attempt to create new political and social institutions; they share majoritarian views of democracy, disregard pluralism, and attempt with different levels of success to regulate and control the public sphere and civil society. This chapter compares Rafael Correa’s technocratic populism with past and contemporary populist administrations in Latin America.

C. de la Torre (*) University of Florida, Gainesville, FL, USA e-mail: [email protected]

Despite their promises to give power to the people, populists have generally undermined democracies from within. Classical populists like José María Velasco Ibarra or Juan Perón polarized their nations into two antagonistic camps and closed spaces for the opposition, and were toppled by military coups. Velasco was able to fnish only one term in offce—the military ousted him four times, and he engineered three self- coups. Contemporary populists like Hugo Chávez, Evo Morales, and Rafael Correa used similar populist playbooks of concentrating power in the hands of the president, instrumentally using the legal system to punish critics, entering into war with the media and autonomous organizations of civil society, and creating loyal social movements from the top down. Instead of falling to military interventions, their administrations pushed weak democracies into a gray zone between democracy and authoritarianism. At the same time, these populists failed in their attempts to control and regulate the public sphere and civil society. These regimes were not dictatorships, and some space was left available for journalists, social movement activists, and politicians to voice their dissent. Furthermore, populists have proved unable to control their own suc- cessions. Whereas Nicolás Maduro relied on the military, repression, corruption, and cronyism to keep his populist alliance together, Lenín Moreno is currently leading an era of perestroika in Ecuador. Correa will not be able to run again for the presidency in 2021, and were he to be implicated in abuse of power or corruption scandals, his political career could be fnished. This chapter is divided into six sections. The frst explores the ambiguous legacies of populist inclusion for democratization in Ecuador. The second analyzes Rafael Correa’s strategies of legitimization, using the rhetoric of revolution, the permanent campaign, and a combination of populist and technocratic appeals. Like other populists, he claimed to be the only and truthful voice of a homogeneous people. Yet unlike populists who disdain the knowledge of technocrats, Correa embodied within his persona both the populist and the expert. He claimed to head a government of experts with the know-how to usher his nation into progress and hypermodernity, all the while using populist tactics to transform his rivals into enemies. The third section explains the category technopopulism. The fourth compares Correa with Hugo Chávez and Evo Morales, who differed in their strategies of legitimation, in their relationships with social movements, and in whether or not they promoted 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 93 institutions for participatory democracy at the grassroots level. The ffth section discusses how Rafael Correa led a democracy in crisis into the zone of hybridism, and later toward competitive authoritarianism. The fnal section focuses on the perils of populist succession, comparing Lenín Moreno with the Venezuelan case.

2 the Legacies of Populist Inclusion: Velasquismo in Comparative Perspective José María Velasco Ibarra dominated the political scene from the 1930s to the early 1970s. He was fve times president, but able to complete only one of his terms in offce, being removed by the military in all the others. Velasco Ibarra engaged in reforms to bring to an end the practice of electoral fraud, and to expand the franchise, which rose from 3.1% of the Ecuadorian population in 1933 to 16.83% in 1968 (Maiguashca and North 1991, p. 132). Civil society grew during Velasco’s era. The number of employee, artisan, and labor organizations increased from 42 in 1930 to 210 in 1942, and to 682 in 1950 (Maiguashca and North 1991, p. 106). He embarked on a project of nation-state building, and in the construction of infrastructure and schools. His populist language gave symbolic worth to the poor and the excluded as the essence of the nation. Differently from Juan Peron’s policies of social and economic inclusion in Argentina, inclusion under Velasco was more political and symbolic than socioeconomic. During Perón’s initial administrations (1946–1955), the share of wages in Argentina’s National Gross Domestic Product increased from 37% in 1946 to 47% in 1955 (Plotkin 2010, p. 273). Moreover, while Perón built a political party and strong organizations in civil society, Velasco created no political party or civil organizations that could outlive himself. Unlike Peronism, which has lasted from the 1940s to the present, velasquismo died when its caudillo passed away in 1979. Like other populist leaders, Velasco Ibarra constructed politics as a confrontation between two irreconcilable camps: the people and the oligarchy. Velasco and his followers understood democracy as the occu- pation of public spaces in the name of a leader built as the symbolic representation of the excluded populace. They did not face rivals but rather enemies who had to be contained. Like other populists, Velasco closed 94 C. de la TORRE spaces to the opposition and disregarded basic democratic procedures. He engineered three self-coups (in 1935, 1946, and 1971). Velasco closed critical newspapers, sent thugs to beat up journalists and to attack newspapers, and incarcerated members of the opposition. During his administration, two constitutions were drafted (in 1945 and 1946), but Velasco refused to respect either of these charters. His self-coup of 1946 abolished the 1945 constitution, and his coup of 1971 temporarily abolished the 1946 constitution. Without any institutional mechanism for resisting his autocratic policies, his opponents called in the military to resolve civilian problems. Velasco’s legacy was one of acute political instability, disregard for the basic rules of the democratic game, political polarization between his followers and opponents, and the destruction of political parties. After six years of military rule (1972–1979), a process of democratic transition took place which resulted in the successful instauration of civilian rule, putting an end to the past populist/military cycles of dictatorship. Despite the hopes of the architects of this democratic transition, populism did not disappear with Velasco’s death. Firstly, the populist Abdalá Bucaram served as president for six months (August 1996– February 1997). Unlike Velasco, who was removed by military coups, a popular impeachment process terminated Bucaram’s presidency. His overthrow launched a cycle of acute political instability wherein three presidents failed to complete their terms in offce. After this, Ecuador would witness the emergence of a new era of populism under the administration of Rafael Correa, which lasted ten years (2007–2017).

3 rafael Correa’s Technopopulism When Rafael Correa won the 2006 election, all the institutions of democracy were in crisis. He came to power on the heels of widespread movements of resistance to neoliberalism. Three presidents had not been allowed to fnish their terms due to popular protests and congressional impeachments. Correa promised to call for a new constituent assembly, to overhaul failing institutions. His administration abandoned neoliberal policies, strengthening the state and placing it at the center of development. When the price of oil was high, he redistributed oil rents and reduced the levels of poverty; according to World Bank fgures, poverty was reduced from 37% in 2006 to 29% in 2011. Correa was also elected on promises to restore Ecuador’s national sovereignty, the nation having 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 95 surrendered its currency (the sucre) to the U.S. dollar, also permitting the United States to install a military base in Manta. Correa reoriented Ecuador’s foreign policies by joining the ALBA, CELAC, and UNASUR alliances. He promised better democracy based on social justice, meanwhile disregarding the institutions that protect pluralism. He followed a populist script of concentrating power in the presidency, controlling all institutions of accountability and the courts, using constitution-making instrumentally to centralize his power, entering into war with the media, attempting to control NGOs and civil society, creating social movements from the top-down, and criminalizing protest. Correa’s legitimacy was grounded in the notion of revolution, on the strategy of using elections to displace the opposition and to create a new hegemonic block, and of combining both populist and technocratic appeals. Similar to Chávez and Morales, he used the old leftist notion of revolution understood as the overhaul of all institutions, while changing the revolutionary strategy. Instead of resorting to bullets, Correa used bal- lots. On several occasions, Correa argued that his mission was to lead a revolution to achieve the second and defnitive liberation of his mother- land. He portrayed his struggle on behalf of the poor and the nation as heroic: “We defeated the representatives of the most reactionary sectors of the oligarchy, corrupt bankers, and the media that defend the past” (Correa 2009e). “We are infringing on the interests of the powerful, (thus) we are confronting a virulent reaction” (Correa 2009d). He also claimed, “Few governments in history had to confront such a stubborn and irrational opposition as the one we had” (Correa 2009d). The second liberation that Correa led was part of a continent-wide movement. He ended his speeches quoting Ché Guevara’s famous slogan, ¡Hasta la Victoria siempre¡ (Till victory forever!) To an audience of policemen he said: “Nobody takes a step backwards. This revolution will not be sold or surrendered” (Correa 2009d). He understood revolution “as a radical, profound and rapid transformation of political, social, and economic structures” (Correa 2009b). He claimed that his revolution was “irreversible, and nobody would stop it” (Correa 2009a). Correa became a master at using populist rhetoric that divided society into two antagonistic camps: the people versus the oligarchy. He characterized the oligarchy as pelucones (Whigs). Traditional politicians, journalists, and anyone who opposed or challenged him were labeled as pelucones. Social movement organizations were also the target 96 C. de la TORRE of his belligerent rhetoric. He called environmentalists “aniñaditos” (well-to-do, infantile, pampered children lacking proper masculinity) “with full belies who oppose everything all the time”. He contended that “infantile radical” ecologists are “the main danger to our project”. A few months later he corroborated: “We always said that the main danger to our political project, after defeating the right in elections, are the infantile left, environmentalists, and indigenists” (Correa 2009c). In October 2009, he called the leadership of the indigenous organization CONAIE “golden ponchos” and “Indian Whigs” out of touch with their social base. As with other populists, Correa saw himself as the only voice qualifed to speak on behalf of “the people”. Dissent, even from the left, was portrayed as treason. He was not merely the voice of the people— he acted as if he embodied their unitary will and interests. The people’s trust in his leadership was reiterated by Correa victories in 11 plebiscitary elections. Correa consolidated his charisma from offce, using two strategies designed by experts in communication: the permanent campaign, and the Enlace Ciudadano (Citizen Connection) program broadcast every Saturday morning for ten years. American journalists popularized the term ‘permanent campaign’ to describe situations where the distinct processes of campaigning and governing are merged. To engage in a permanent campaign, presidents increasingly rely on experts in media and communications, such as advertisers and pollsters, and Correa was no exception. In order to constantly win elections, Correa was in permanent campaign mode. He boasted that he was campaigning in order to boost national self-esteem, and that his main job as president was to serve as “motivator” (Dieterich 2008, p. 57). Meanwhile, publicist Vinicio Alvarado was the most powerful member of his cabinet, in charge of the government’s communication campaigns (Conaghan and De la Torre 2008). The main innovation of Correa’s media strategy was his weekly radio and television broadcast Enlace Ciudadano, lasting two hours every Saturday morning. The president became a charismatic fgure, the “center of the nation”, who irradiated his power to the margins (Geertz 1985). Power materialized in his words; he became the nation’s professor as he pedagogically explained his policies. More pragmatically, he also set the weekly news agenda. 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 97

This program allowed Correa to enter into direct contact with the people. The day before each broadcast, as described in the chapter by Felipe Burbano de Lara in this book, the president and his cabinet would meet with local authorities and offer free musical spectacles, open to everyone. By visiting remote regions where politicians and state offcials rarely ventured, he reinforced his charisma. Like the historical Kings discussed by Geertz (1985), Correa visited all regions of the national territory, seeking to become the center of the social order. The Enlace Ciudadano programs followed a consistent ritual. Correa sat at a podium and like an old-time college professor lectured to the nation. He used audiovisual presentations to explain policies. In one program, he explained in detail a project for pharmaceutical industries to developed generic medicines, as well as the new law concerning sports and the need for the state to obtain higher royalties from oil companies. The audience nodded and responded ‘yes’ or ‘no’ to the questions he posed. Rarely was there dialogue between the citizens and their president. At most, he invited one of his ministers to explain a particular law or policy, but Correa was seen to be knowledgeable on all topics, and he was in charge. These programmed interactions showed how power worked in his administration: the president-professor lectured to a public who could acclaim him, but who received no opportunity to engage in critical dialogue. His performances further cemented the notion that he was the embodiment of the nation and the state. He took note of the beauties of his homeland, the delicacies of local regional cuisine. He said: “I who had the opportunity to travel abroad can assure you that Ecuador is the most beautiful country in the world”.1 In a coastal town he pointed out: “Even humpback whales come to Ecuador to make love”.2 He talked about his private life, his dreams, and his personal accomplishments. After delivering lectures at Oxford and at the London School of Economics, he explained how important those academic institutions were. On another occasion, he told how during a trip to the Pichincha volcano, his family spotted a fox. To prove that he was like the common people, Correa used popular colloquial language. He explained that, although his social background

1 Correa, Rafael in “Enlace Ciudadano 139”. September 26, 2009. 2 Correa, Rafael in “Enlace Ciudadano 131”. August 1, 2009. 98 C. de la TORRE was humble, he was superior to the common man, having earned his Ph.D. in Economics abroad, with the help of a scholarship, at the University of Illinois, Urbana. This experience allowed him to master technocratic and scientifc languages. In addition, like Hugo Chávez, Correa joked, and sang, and asked the public to chant slogans with him against the opposition. When he referred to what he labeled the “barbar- ities” of the opposition and the private media, he would raise his tone of voice and fush red with anger. The most commented-on segment of his TV and radio show was entitled la libertad de expresión ya es de todos (freedom of expression belongs to all of us), clearly referring to a slogan used by his administration: la Patria ya es de todos (the homeland now belongs to all of us). He asserted that the bourgeois press was the new opium of the people. He cited the lyrics of Argentinean protest singers Piero (“every day, and all the time, newspapers publish trash”) and Víctor Heredia (“they lied, they always lied”). Politics was thus transformed into a personal dispute between Correa’s persona—a teller of truth—and the lies of the mass media. He characterized journalists and the press as “mafosos, journalistic pornography, human wretchedness, savage beasts, and idiots who publish trash” (Conaghan and De la Torre 2008, p. 274). He brought lawsuits against journalists and newspaper owners, claiming that editorial pieces and investigative reports on corruption caused him moral harm. He closed over twenty radio stations, a major newspaper was pushed into bankruptcy, and the best journalists migrated to the internet. Correa used technocratic arguments to rebuild the state. He envisioned a state positioned above the particularistic requirements of special interests and corporatist groups. All organized groups, regardless of their ideology or class, “were dismissed as privileged interlocutors representing special interests, while his elected government was deemed the only legitimate guardian of the national interests” (Conaghan 2011, p. 274). The Secretaría Nacional de Planifcación y Desarrollo (National Secretariat of Planning and Development SENPLADES) was in charge of public planning and investment, reforming the state apparatus, training public servants, and writing the national development plan to set the overall goals of social, cultural, and economic policies. SENPLADES’ technocrats were drawn from academia and from NGOs. Unlike neoliberal experts who believed in econometric models, these were interdisciplinary and eclectic, citing postcolonial theorists, radical democrats, unorthodox economists, and political ecologists. 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 99

Their goal was to foster sumak kawsay (Good Living), metaphysically understood as “the harmony between community and the cosmos” (SENPLADES 2009, p. 18). This objective, they claimed, derived from indigenous cosmology and aimed to build non-Western relationships between society, nature, and development. Correa dismantled all state institutions that had been in the hands of social movements, such as bilingual education programs managed by indigenous movements. His administration argued that they were ration- alizing and modernizing the state to eliminate bureaucratic irrationali- ties and corporatist privileges. Thus the Correa government entered into confict with most organized groups from civil society: teachers, students, public employees, and indigenous organizations (Martínez Novo 2014). Correa saw indigenous and other poor Ecuadorians as benefciaries of state distribution, but not as autonomous actors. When indigenous and other organizations articulated their own views of development or democracy, they were stigmatized as “infantile” leftists, or as being manipulated by foreign NGOs. Correa criminalized protest, and over 200 hundred peasant-indigenous activists faced accusations of terrorism for resisting mineral resource extraction. Indeed a few notorious leaders of social movement organizations were sentenced for “terrorism”.

4 technopopulism The term technopopulism used in this chapter to characterize the governing and discursive style of Rafael Correa might at frst seem incon- gruous. After all, charismatic rule and technocracy (based on instrumental reason) have been considered distinct forms of domination. Technocracy is designed to dominate nature and society through the rational-instrumental use of science and technology, while Weber (1968, p. 52) characterized charisma as inherently irrational, “in the sense of being foreign to all rules”. Populism has been viewed as a paradigmatic case of charismatic domination, and thus characterized as utterly irrational. Binary thinking would suggest that the rational policies and organization of political parties are opposite to the irrationality of populist masses. In line with Weber (1946, p. 116) analysis of the demagogue as a politician who takes no responsibility for the consequences of his or her actions, populist leaders are generally portrayed as irrational and dangerous charlatans. Economists similarly differentiate between rational neoliberal policies 100 C. de la TORRE and irrational populist policies that do not take into account the risks of hyperinfation (Dornbusch and Edwards 1991). However, considering Weber (1946, p. 79; 1977, p. 867) suggestions to study how different ideal types of domination may be combined into concrete historical experiences, the relationship between charismatic rule and technocracy can be understood as not necessarily antagonistic. The elective affnities between charisma and technocracy were evident in neo- populist neoliberal regimes, where populist presidents such as Alberto Fujimori in Perú or Carlos Menem in Argentina appointed experts to manage their economic policies (Roberts 1995; Weyland 2001, 2003). Populism and technocracy are among the most loosely defned categories in the social sciences (Centeno 1993, p. 331). Populism is a Manichaean discourse that divides society into two antagonistic camps: the people versus the oligarchy. A charismatic leader is constructed as a redeemer of the nation. Populism emerges when common people feel that politicians have appropriated their power, and when institutions are perceived as unrepresentative and exclusionary. Under populism, it is assumed that the people share an identity and interests, and that they form a collective body “which is able to express this will and take decisions” (Abts and Rummens 2007, p. 409). When elected, populists concentrate power and reduce institutional spaces for the opposition under the assumption that enemies are always conspiring, and that the populist must remain in offce until the tasks of transforming the state and society are complete. Technocracy, on the other hand, is based on a cognitive structure and mentality that appeals to scientifc paradigms (Centeno 1993, p. 312; Centeno and Silva 1998, p. 4). Experts legitimate themselves by using scientifc discourse, claiming that they represent the interests of society as a whole and not of any particular class or interest group. Although technocratic experts have served under both democratic and authoritarian regimes, in both statist and neoliberal governments, their legitimacy derives “from adherence to the dictates of a ‘book’. Whether that document contains the word of god, a theory of history, or the econometric functions that describe equilibria” (Centeno 1993, p. 313). Experts adhere to ideologies based on High Modernism: a “sweeping vision of how the benefts of technical and scientifc progress might be applied—usually through the state—in every feld of human activity” (Scott 1998, p. 90). High Modernism has been called the ideology “par 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 101 excellence of the bureaucratic intelligentsia, technicians, planners, and engineers” (Scott 1998, p. 96). Technocrats often take on colossal redemptive missions such as building the nation state or achieving progress, modernity, or development. For example, Sergio Castro, the guru of the Chilean Chicago Boys, argued that he had to overturn not just three years of failed socialist policies under Salvador Allende, but also “half a century of errors” (Constable and Valenzuela 1991, p. 186). Domingo Felipe Cavallo saw himself as “a Messiah who had to solve all Argentinean economic calamities” (Corrales 1997, p. 50). Similarly, Ecuador’s post-neoliberal technocrats claimed the mission of morally regenerating their nation and building a new world from scratch. They aimed to transform the productive matrix of the nation from agricultural and mineral exports to the production of biotechnology and nanotechnology. Their aim was to modernize Ecuador so that by 2030 it would be “a society of bio-knowledge and a provider of eco-tourist communitarian services” (SENPLADES 2009, p. 56). As Belén Albornoz elucidates in her chapter in this book, these technocrats created a city of knowledge and moved rural indigenous dwellers into cities of the new millennium. They “imagined wiping the slate utterly clean and beginning from zero” (Scott 1998, p. 94). However, when the power of technocrats is not constrained by solid liberal institutions and a robust civil society, their actions often end in catastrophe (Scott 1998). In order to identify a regime as technocratic, the most important state institutions must be in the hands of experts (Centeno 1993). In Ecuador, the SENPLADES was tasked with setting the overall goals of social, cultural, and economic policies. Even college and graduate studies syllabi had to conform with the goals of the development plan drafted by SENPLADES. In addition to the technocrats at SENPLADES, most top members of Correa’s administration held graduate degrees. In 2010, out of 37 top offcials in the administration, 29 had graduate education, and 8 (including the president) had completed a Ph.D. This is a high fgure in a country where in 2010, only 358 college professors had earned a Ph.D. (De la Torre 2015, p. 174). Under Correa, populism became elitism (Urbinati 1998). A technocratic elite composed of post-neoliberal social scientists knew how to liberate the people, but without their direct participation. Technocratic reason pretending to be true and scientifc replaced democratic debates around proposals. Experts, after all, claim to be above the particularistic 102 C. de la TORRE interests of social movement organizations and other actors in civil society. The populist leader, for his part (as the embodiment of the people), knows the route to liberation, happiness, and a new society created from the ashes of the old regime. Technocrats transform citizens into benefciaries and consumers of rational policies. Populism makes citizens into grateful and loyal followers of a liberator.

5 correa’s Technocratic Populism in Comparative Perspective The term technopopulism helps to explain the specifcities of Correa’s populism and its difference from other Bolivarian cases. Hugo Chávez’s mission was to create a new Venezuela that would be re-baptized as the Bolivarian Fifth Republic. He claimed that “a comprehensive moral and spiritual revolution” was needed to demolish “the old values of individ- ualism, capitalism, and selfshness” (Zúquete 2008, p. 114). The people of Venezuela were incarnate in their charismatic leader. Chávez reiterated the phrases “I am not myself, I am the people” and “I represent, plainly, the voice and the heart of millions” (Zúquete 2008, pp. 100, 104). Venezuelans voted 16 times between 1999 and 2012, and Chávez won 15 plebiscitary elections (López Maya and Panzarelli 2013). Like Correa, he used television to appear as the professor and redeemer of the nation in his weekly show Aló Presidente (Marcano and Barrera 2004). Yet his government was not placed in the hands of experts, as politicians administered the most important state institutions. Studies of public policy revealed ineffciency and lack of technical criteria (Corrales 2010). In Bolivia, under Evo Morales’ charismatic leadership, populist and technocratic and indianist sectors of his MAS party have managed to coexist (Laserna 2010). Like the Ecuadorian experts discussed in this chapter, Bolivian Vice President Álvaro García Linera and his group of experts were put in charge of public policies (Laserna 2010, p. 41), and their goal was the transition to socialism, understood as “nationalist etat- ism in the economy” (Laserna 2010, p. 39). García Linera argues that his government has been forging a state “in the Hegelian and Weberian sense as the representative of the general will and the general interests of society” (Stefanoni et al. 2009, p. 74). Nonetheless, Morales’s government continues to lack qualifed technocrats (Stefanoni and De Alto 2006), and the strength of social movements has at times forced the 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 103 government to walk back technical measures, such as a hike in the price of gasoline, further limiting the impact of experts on public policy. The term technopopulism also helps to explain the way in which Correa differed from Chávez and Morales in creating participatory institutions at the local level. Whereas Correa’s technopopulism afforded little room for participatory democracy at the local level, Chávez created a top-down form of participatory populism, while Morales’ populism was mostly bottom-up. Evo Morales came to power at the peak of an indigenous-led popular protest against neoliberalism and the system of pacted democracy (1985– 2003)—the name given to rule by political parties which negotiated coalition governments, thereby ending the prior instability of Bolivian democracy. Morales’ party, the MAS, became the political instrument of strong social movements. Participation in Bolivia remains to a large extent grounded in communitarian traditions, where all participate and deliberate until a decision is made (Crabtree 2013, pp. 269–295). In Bolivia, the very ambiguity of the concept of ‘the people’ has left politics open-ended. Even Morales, likewise portrayed as the embodiment of the people, has been challenged in their name (Harten 2011, p. 162). For example, in 2011, indigenous people from the lowlands marched to La Paz to resist plans to build a road through the Territorio Indígena Parque Nacional Isibor-Sécure, one of the nation’s most diverse tropical reserves and home to its Moxeño, Yuracaré and Chimane indigenous communities (Postero 2015, p. 414). When the price of gasoline was increased by 75% in December 2010, social movements such as the Central Obrera Boliviana and neighborhood associations staged robust demonstrations that forced Morales to reverse the hike. In both cases, powerful social movements challenged Morales in the name of the people and forced his administration to negotiate. In Venezuela, corporatist arrangements between the state and organized sectors of society bypassed the growing informal sector of the economy. When Chávez came to power, social movements were disperse and lacked the organizational structures to engage in sustained collective action. His regime tapped the opportunity to organize and to mobilize the excluded (understood as the poor, those without formal education, and those without work in the formal economy) (Gómez Calcaño 2009). Chávez organized his followers from the top down and created a series of participatory institutions such as the Círculos Bolivarianos (Bolivarian Circles) and Consejos Comunales (Communal Councils). 104 C. de la TORRE

In 2001, President Chávez encouraged the formation of Círculos Bolivarianos. In their heyday, the Círculos Bolivarianos numbered about 2.2 million members and played an active role in the massive demonstrations that rescued President Chávez when he was temporarily removed from offce in the coup of April 2002 (Hawkins and Hansen 2006). Consejos Comunales were formed beginning in 2005 to involve communities in infrastructure projects and urban renewal. Using the Americas Barometer survey of 2007, Kirk Hawkins (2010, p. 41) estimated that 35.5% of the adult population participated in these Consejos Comunales—an exceptionally high proportion, totaling about 8 million. For those who actively participated in the different Chavista institutions, this meant a new sense of dignity and inclusion (Fernande 2010). These institutions created strong loyalties to Chávez which were partially transferred to his successor, Nicolás Maduro. Chávez’s charismatic leadership set the limits for popular autonomy, since the “revolutionary process” was centered on himself, and his top-down populism neutralized autonomous grassroots input. Rather than treating the governments of Chávez, Correa, and Morales as homogenous examples of left-wing populism, it is necessary to look at their differing outcomes. When social movements have the organizational resources to challenge a populist leader, as in Bolivia, that leader is forced to actively negotiate the claim that he is ruling on their behalf. When social movements lack the resources to engage in sustained collective action, then a leader like Chávez is freer to impose his claim of being the authentic voice of the people. Correa, who was elected after the indigenous movement had entered into crisis, and who saw indigenous and other social movements as threats to his rule, felt no obligation to engage with their leadership.

6 the Autocratic Legacies of Correa’s Populism Despite promising a better democracy rich in social justice and equity, Correa’s project was autocratic from the outset. He followed a populist playbook: using constitution-making to centralize power, concentrated in the presidency; controlling the courts and all institutions of accountability; entering into war with the media; attempting to control NGOs and civil society; creating social movements from the top down; criminalizing protest; and labeling all critics as enemies. The end result was to move a democracy in crisis into the gray zone between democracy and 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 105 dictatorship. After winning the 2013 election with over 50% of the vote, Correa took control of all powers of state and directed a hybrid regime toward authoritarianism. His Alianza País party controlled the assembly (the congress in Ecuador), and the courts of justice and all institutions of accountability were in the hands of Correa’s loyal followers. In 2013, his party passed in the assembly a law of communication that severely restricted the right to free information. In 2016, his administration dissolved the teachers’ union, among other autonomous organizations of civil society. In the prior year, the assembly (on a simple majority vote) reformed the constitution to allow for Correa’s permanent reelection. But timing did not work well to Correa’s advantage. The price of oil, Ecuador’s top source of foreign exchange, declined. Indigenous people, environmentalists, workers, and sectors of the middle class took to the streets to protest his plans to stay in power indefnitely. Opinion polls suggested that Correa would have diffculty winning reelection in 2017, and he decided not to run. He put his former vice presidents Lenín Moreno and Jorge Glass on his ticket and used the power of the state to make sure that they would win. Correa fully expected to return to the presidency in 2021, and it is rumored that he left Moreno thick volumes full of policy prescriptions. Even though political scientists differed on whether to categorize Correa’s regime as electoral authoritarianism (Montúfar 2016), competitive authoritarianism (Basabe-Serrano and Martínez 2014), or a hybrid (Pachano and García 2015), they all agree that there was a process of slow death of democracy. Accountability was restricted, the separation of powers were weakened; elections took place on a skewed playing feld; freedoms of information and association were rigorously restricted; and the legal system was used instrumentally to punish critics and to favor cronies. As Montúfar shows in his chapter in this volume, corruption became widespread because Correa ruled during an unprecedented economic boom; he controlled all institutions of control and accountability; and because he censored and terrorized the media. When the Panama Papers were leaked, and Brazil’s Odebrecht corruption scandal erupted, Correa’s government dismissed them both and covered them up. The opposition was convinced that Lenín Moreno, Correa’s successor, would continue with his mentor’s policies of concealing corruption. 106 C. de la TORRE

7 the Uncertainties of Populist Succession When Lenín Moreno and Jorge Glass won the 2017 election, Ecuador was polarized in two camps. Moreno, who had served as Correa’s vice president from 2007 to 2013, received 51% of the vote in the runoff. His rival Guillermo Lasso, a Catholic banker, was supported by the right, the business community, and leftist parties and social movements that wanted to end Correa’s autocracy. Lasso did not accept the election results, claiming fraud without proof. President Correa and his followers were determined at all costs to stop what they labeled the ascension of the right in Latin America. Correa’s detractors were convinced that Moreno would follow the autocratic policies of his predecessor and continue to veil corruption. Despite their insurmountable differences, both the opposition and Alianza País coincided in believing that Moreno would serve as Correa’s loyal puppet. However, quite unexpectedly, Moreno broke with his mentor, took charge of Alianza País, and began dismantling Correa’s autocratic grip on the institutions of accountability. He won a referendum in February 2018 to prevent future bids for reelection by Correa, and to forbid politicians charged with corruption from holding government posts. Correa claimed that Moreno had betrayed him and his citizens’ revolution; he is now the leader of the opposition, though he will not be able to run in 2021. Contrary to expectations, Moreno empowered the institutions of accountability and justice to lead a campaign against corruption, investigated by the comptroller and the offce of the attorney general. Jorge Glass, who had served as Correa’s vice president from 2013 to 2017, as well as under Moreno for a few months, is now serving time in jail along with several former Correa cabinet members. Rafael Correa is himself no longer immune from justice. As of July 2018, a judge had ordered Correa to testify on his role in a failed attempt to kidnap opposition politician Fernando Balda in Colombia in 2012. The policeman who led this failed operation received $60,000 from intelligence funds and claimed that Correa knew of the details, and that he had spoken to Correa personally. And this is only the frst accusation against Correa for abuse of power. Accusations on the horizon include covering up the assassination of General Jorge Gabela after his revelation of irregularities in the purchase of helicopters from India, along with other abuses against human 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 107 rights. Correa, who now lives in Belgium, will likely spend the coming years in the company of defense lawyers. In February 2018, Lenín Moreno won a referendum to amend the constitution, receiving 67% of the vote. The referendum included seven proposals for constitutional revision, and these ranged from ban- ning mineral exploitation in urban areas and national parks to the prevention of politicians charged with corruption from ever participating in elections. Politically, the most important was the proposal to abolish the constitutional reform of 2015 which allowed for permanent reelection; the original limit of two terms was reinstated, meaning that Correa would never again ascend to the presidency. In a second major result, voters agreed to the naming of a new, temporary Consejo de Participación Ciudadana y Control Social (Council of Citizens’ Participation and Social Control, CPCCS) that would evaluate all the offcials running Ecuador’s accountability institutions. The 2008 Constitution had created the CPCCS in order to ensure transparency and give citizens another voice in governance. In practice, the seven-member body was stacked with Correa appointees, who in turn named the comptroller general, the attorney general, the human- rights ombudsman, and the members of the Consejo Nacional Electoral (National Electoral Council, CNE). Moreno was empowered by the referendum result to name a transitional CPCCS from lists of nominees submitted by civil society groups. In 2019, popular elections will produce a permanent CPCCS. In the meantime, the temporary council has moved swiftly to name a new ombudsman and attorney general as well as to turn over the membership of the Consejo de la Judicatura (Judiciary Council) and the CNE. When Moreno revealed that corruption and ineffciency had been widespread in Correa’s administration, he questioned Correa’s self-ag- grandizement as the ‘expert’ who would lead the modernization of Ecuador. Correa and his entourage were revealed as irresponsible and self-interested bureaucrats who squandered public funds for their own self-promotion. The list of colossal projects advanced under Correa included an oil refnery that was never constructed, another that was never repaired, several unfnished and perhaps unnecessary hydroelectric projects, unused computers in brand new schools, and sophisticated medical equipment rotting in hospital basements (Burbano de Lara 2017, p. 17). In sum, instead of using the commodity bonanza to effciently and technically transform the nation’s productive capacity, as 108 C. de la TORRE he claimed, Correa wasted resources, used state funds to keep winning elections, and relied on corruption to cement the loyalty of his clique. Moreno also broke with Correa’s populist rhetoric that had polarized society into friends and enemies. The new president instead relies on dialogues with different sectors of society, and on the politics of com- promise. He has not been using the state media for self-promotion, nor has he attacked journalists or activists in civil society. His victory in the February 2018 referendum allowed him to sweep Correa’s cronies from the highest courts of justice and from the institutions of accountability. Unlike Correa, who has been abandoned by his own party, Nicolás Maduro in Venezuela has survived by retaining power at all costs. Without the charisma of his predecessor, and under conditions of acute economic and social crisis, he has relied on the military, cronyism, widespread corruption, and repression (López Maya 2016). If Chávez moved Venezuelan governance toward the gray zone between democracy and authoritarianism, Maduro moved it into autocracy. The independent watchdog Freedom House branded Venezuela ‘not free’ for the frst time in 2016. Chávez used constitution-making to concentrate power in the executive offce; he packed the courts and all institutions of accountability with loyal followers; he used the legal system to take over private media and to control more than 60% of television stations; he used laws to forbid NGOs from receiving foreign funds; and he criminalized protest (Corrales 2015). And yet Chávez did not resort to widespread repression, nor did he close all independent media venues or systematically jail his opponents. He counted on the support of large sectors of the population because his policies during the oil boom benefted the poor. He also organized his followers into various participatory institutions at the local level, creating a base of support for his Bolivarian Revolution. Maduro, on the other hand, has incarcerated leaders of the opposition, and many political parties have been stripped of their legal rights to exist. Journalist Alberto Barrera (2018) reports that, whereas 56 parties existed in 2016, that number was reduced to 17 in 2018, twelve of which are close to the Bolivarian government. Maduro has claimed that the fascist right is attacking his revolution, and he has militarized Venezuela. His administration has used repression to stop protests, and he decapitated the opposition-controlled Asamblea Nacional (National Assembly) in 2015 by calling for new elections in 2017. Infation reached 2600% in 2017, and thousands are now feeing the worst 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 109 humanitarian crises in South America. Because the opposition remains divided, and the population lives in acute diffculty, where even basic necessities are hard to fnd. At present, it seems that Venezuela will continue to persist in a protracted state of stalemate (Buxton 2017). President Lenín Moreno is meanwhile leading a period of perestroika in Ecuador. It is uncertain whether he will be able to reinstate strong democracy, a vibrant public sphere, and independent social movements after ten years of Correa’s autocracy. Ecuadorians will have to wait until the elections in 2019 and 2021 to evaluate whether Moreno refrains from using the power of the state to infuence electoral outcomes, and whether Ecuador moves from competitive authoritarianism to democracy. Moreno has promised that he would neither adopt neoliberal adjustment policies nor slash social spending. But he does seek to establish trade pacts with the United States and with the nations allied in the Trans-Pacifc Partnership. The Ecuadorian right also dreams of reversing Correa’s foreign policy, hoping that Moreno will rid the government of all of Correa’s erstwhile collaborators. Moreno wants to maintain a leftist identity while engaging in dialogue with both the right and left, and offering concessions. Social movements may regroup and strengthen after ten years of co-optation and repression. Moreno’s democratic opening and diminished fears of repression will encourage people to march in the streets and protest. Indigenous and environmental groups might mobilize against mining projects; public sector workers might demand reinstate- ment of their right to strike. Correa’s future is uncertain. He is banned from future attempts at reelection and is facing legal charges of abuse of power. If he decides to return to Ecuador to face those charges, he could end up in jail for several years, after which he might fnd a way to return to politics. If he seeks political exile, he may avoid prison but at the cost of his political career.

8 conclusions Following Weber’s suggestion to study how different types of domination are combined in concrete historical experiences, this chapter has analyzed the affnities between charismatic rule and technocracy in the ten-year Correa administration. The term technopopulism has been introduced to explain the specifcities of Correa’s populism. 110 C. de la TORRE

Correa combined charismatic and technocratic appeals in his speeches and televised programs. Experts occupied key positions of his administration, and they agreed with the president’s view that their role was to lead the nation through historic, revolutionary transformations. These experts and their leader aimed to build an entirely new society organized around the metaphysical principles of the sumak kawsay, understood as the harmony between the community and the cosmos. However, when these plans were implemented, import substitution industrialization and the extraction of natural resources took priority over utopia. Oil exports increased from 41% in 2002 to 58% in 2011, and Ecuador opened its doors to large-scale mining interests. Experts see themselves as capable of enacting policies in the interests of society as a whole, and not for particularistic groups. They feel a call to redeem and rebuild their nations as modern utopias. With Correa—at once an expert and a charismatic leader—they share a faith in the inherent goodness of their mission. Like the charismatic leader, the expert know the route to liberation of a nation, and like the charismatic leader the experts disdains messy dialogue with civil society. Thus bolstered by technocrats, Correa’s government repeated the classical populist strategy of replacing autonomous movements with loyal organizations created by the state. Despite the populist’s promise to include political, cultural, and economic sectors that were once excluded, populists in power undermine democracy in two ways, as explained by Kurt Weyland (2019). The frst is their closure of democratic spaces to the opposition, which can lead the radical or undemocratic opponent to plot a military coup. The frst wave of populism through Latin America was characterized by just such a cycle of coups d’état. But military interventions are costly, and risky, given that the international community currently sees elections as the only legitimate means of regime change. At present, and with few exceptions, populist governments no longer end with a coup; rather, as Weyland argues, populist regimes undermine democracy from within (Levitsky and Loxton 2013). In a context where the international community no longer accepts coups as tools for removing presidents, populism is becoming “democracy’s nemesis”, in Peruzzotti (2017) apt words. In the name of improving democracy and returning power to the people, populists have targeted checks and balances, the principle of separation of powers, and the roles of the opposition, the critical press, and autonomous organizations in 5 RAFAEL CORREA’S TECHNOPOPULISM IN COMPARATIVE PERSPECTIVE 111 civil society. Populist regimes come to power through elections, and yet elections are treated as plebiscites to confrm the leader’s power and authority. As Peruzzotti argues, populism in government “is likely to promote a specifc path to regime change, one consisting of the gradual hybridization of the structure of liberal democracy through the selective removal of some of the latter’s defning features”. Venezuela and Ecuador have exhibited different routes of populist succession. Whereas Nicolás Maduro has been able to remain in offce, relying on the military as his base of support and displacing democracy toward autocracy, Moreno may yet return electoral democracy to Ecuador. Despite populism’s failures, populist politicians who promise redemption and who use Schmittian logic to manufacture symbolic enemies will likely reappear. As long as economic inequalities remain large, and participation and representation remain in defcit—as long as the rule of law is used instrumentally to punish critics and to favor cronies— populists will reemerge on the political stage.

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A Revolution with a Female Face? Gender Debates and Policies During Rafael Correa’s Government

Marcela Morales Hidalgo

1 introduction Rafael Correa, president of Ecuador from 2007 to 2017, has often referred to his ten-year presidency as la década ganada (the ‘won’ decade), due to evident improvements made in the country’s economic, social, and political indicators during his mandate (Ordóñez et al. 2015). Under his presidency, gender criteria were introduced into the formal policy discourse, and gender equality gained visibility as a force for institutional transformation in Ecuador. According to Correa, among the priorities of his government were that women be assured access to health care, social security, and employment, and that structural problems that perpetuate gender-based exclusion be addressed. During his 2006 presidential campaign, Correa promised to eradicate the neoliberal practices that had infuenced Ecuadorian politics for decades, and these promises were later institutionalized in a series of reforms

M. Morales Hidalgo (*) Southern Voice, Ecuadorian Network for Women in the Sciences (REMCI), Quito, Ecuador

© The Author(s) 2020 115 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_6 116 M. MORALES HIDALGO refected in the Constitution of 2008. The new constitution created spaces and mechanisms to ensure the redistribution of wealth and the creation of a participatory democracy where citizens would be able to engage in the decision-making process and hold their elected leaders accountable. In many respects, the new constitution set the tone for historical transformations at the institutional level; however, as this analysis will show, Correa’s ‘won’ decade over-relied on change at the formal institutional level, meanwhile replicating colonialist and heteronormative practices that undermined (or at least did not contribute to structurally altering) Ecuadorian women’s access to their full rights. While Correa’s administration opened up opportunities for the adoption of more feminist and gender-aware state policy, it ultimately served to reinforce traditional gender roles. The next section of this chapter briefy reviews conceptual notions of gender-based institutional exclusion, and the role of both formal and informal practices in perpetuating gender-based discrimination. The sections that follow contrast the progress achieved and the setbacks suffered during this period in the felds of education, sexual and reproductive rights, and political representation. Looking at these three areas together, the advances and contradictions that shaped Rafael Correa’s ten-year government in relation to women’s rights in Ecuador can be clearly observed.

2 gendered Institutions and Exclusion Exclusion is a multidimensional phenomenon that compromises a person’s (or group’s) ability to fully participate in the social, economic, political, and cultural spheres of their communities, due to the restriction or limitation of access to resources, rights, goods, and services (Levitas et al. 2007; Stuart and Woodroffe 2016). Gender has been and remains one of the main issues behind several types of exclusion. In this analysis, gender will be understood as the social construction of identity and the process through which different roles, rights, and opportunities are assigned to people based on their sex (Padmanabhan 2010). In order to comprehend how gender operates as a form of exclusion, it is important to understand what relevant institutions can tell us about exclusion, and how they contribute to maintaining and exacerbating that practice. North (1991) defned institutions as humanly devised constraints that structure political, economic, and social interactions; they 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 117 are composed of formal rules and procedures developed and enforced through ‘offcial’ mechanisms. Formal institutions range from constitutions, statutes, and bylaws to individual contracts and operational guidelines (North 1990). Formal institutions are often accompanied by informal practices (such as conventions and norms of behavior) that sup- plement and often contradict formal institutions, resulting in tensions, potential political instability, and change (North 1991, 1993; Kenny 2007). Once an institution has been created, it is perpetuated and reinforced through asymmetrical power relations, privileging certain groups at the expense of others and giving way to exclusionary practices in order to maintain the status quo (Kenny 2007; Kabeer and Sweetman 2015). The interaction between formal and informal structures can reinforce both privilege and unequal access to power. Institutions are gendered by their nature. Acknowledging that an institution is gendered implies that the social constructions of what is considered ‘masculine’ or ‘feminine’ are embedded in the daily life of institutions, shaping and constraining social interactions and outcomes such as policies and legislation (Mackay et al. 2010; Chappell and Waylen 2013). Historically, expectations about men’s and women’s responsibilities, abilities, and obligations have been ingrained into both formal and informal institutions in ways that have undermined women’s capa- bilities and their participation in various domains of life. Traditionally, ‘male’ characteristics and attributes have been considered appropriate (if not requisite) features for the design and maintenance of institutions and power over time (Tickner 2002; Padmanabhan 2010). The belief that any process which takes place within society can be gender-neutral lurks at the very core of exclusion, making it all the more challenging to overcome. By not considering the gendered nature of institutions and their practices, institutional analyses run the risk of disregarding the interplay between formal and informal institutions, and how gender directly affects the ways that men and women experience social life. Thus, it is possible to say that there is nothing gender-neutral about power relations, rules, or institutions. Gender-based exclusion is complex and tends to be the result of a layered set of institutions that infuence one another. ‘Symmetrical’ institutions, policies, norms, and practices can still have unequal effects, because they interact with highly asymmetrical structures that allow for male privileges to be protected and remain untouched (Yancey 2004; Padmanabhan 2010). For example, Kabeer and Sweetman (2015) talk 118 M. MORALES HIDALGO about the gendered outcomes that employment ‘inclusion’ policies can have, especially if their main purpose is that women become workers ‘like men’, which often results in additional burdens for women and limited opportunities to challenge the status quo (Jackson 1999). Other inclusion practices such as gender quotas in educational, political, or legal spaces do not guarantee that institutions will operate differently, or that female bodies in traditionally masculine arenas will necessarily transform practices of gender-based exclusion, especially when deep-rooted modes of discrimination toward women remain unchallenged (Chappell and Waylen 2013). Ecuador is among the countries in Latin America with the highest rates of gender inequality. Important state-led efforts have been conducted to redress this situation, especially during the past decade. Special emphasis has been given to increasing access to education and health for girls and women, as a way to reduce gender inequality. But upon closer examination, one observes that many of the reforms adopted in Ecuador in recent years have focused on the partial transformation of formal institutions (mostly policies and laws) without acknowledging or addressing the negative impacts of informal practices, or of other institutions such as religion, or the dominant moral values that perpetuate gender-based exclusion in the country. As the following sections will show, Rafael Correa’s government drew a clear separation between formal and informal institutional practices, thus allowing for the maintenance of male privilege and the mainstreaming of heteronormative views on gender and access to rights.

3 education in Ecuador: Access but Not Empowerment for Women Access to education has been one of the most salient and widespread strategies to promote gender equality and to empower women and girls around the world. It is widely known that the transformation of education systems to make them more inclusive and gender-aware can have long-lasting effects in transforming societies and eliminating exclusion. During the late 1990s and early 2000s, Ecuador had one of the lowest levels of educational attainment in Latin America (UNESCO 2014; Almeida Sánchez 2017). During this period, 58% of men and 48% of women did not complete primary school, and only 12% of the population had any secondary education (Correia and Van Bronkhorst 2000; 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 119

UNESCO 2014). While school enrolment rates at the national level did not at that time reveal signifcant differences between men and women, the dropout rates among women were higher than among men, and the main reasons for school abandonment by girls were family obligations (housework or care-related responsibilities) (Correia and Van Bronkhorst 2000). In 1998, the illiteracy rate for women was about 4% above that of men, and women averaged 7 years of schooling compared to 7.8 years for men, with more signifcant differences at the rural level. To address the precarious situation of education in the country, a state-led structural transformation of the education system was begun in 2006. In a matter of a few years, the country went from having almost no education policy to adopting a long-term education plan that acknowledged, for the frst time in history, the importance of eliminating all sources of gender-based exclusion, so that women could access opportunities under equal conditions. The education of girls and women was seen as a matter of national prosperity, and a series of changes were adopted at the institutional level in order to create mechanisms to implement this priority. The adoption of the Plan Decenal de Educación (Ten-Year Education Plan, or PDE) was the frst milestone in this process. The PDE defned eight policies aimed at improving the overall quality of the education system and put women and girls at the center of those policies. The policy guidelines outlined in the PDE were then enshrined in the 2008 Constitution. Soon after, the Plan Nacional para el Buen Vivir (National Plan for Good Living, or PNBV), adopted in 2009, established guidelines and goals for Ecuador’s economic and social development, and education was considered one of the fve pillars for attaining national development (SENPLADES 2013). Through the PNBV, the state was committed to overcoming and eradicating women’s conditions of inequality and exclusion through equal access to resources and opportunities, without discrimination (SENPLADES 2013). In 2012, the Ley Orgánica de Educación Intercultural (Organic Law of Intercultural Education) was approved; following similar policy lines, it guaranteed the existence and adoption of affrmative action to make access to education without discrimination an effective practice (Art. 2). The state strategy to bring gender-equality principles and policies into practice was mainly focused on large investments to improve conditions in order to increase access to education. Between 2007 and 2016, the average total social expenditure in Ecuador represented 8% of 120 M. MORALES HIDALGO

GDP, with the highest level of public investment occurring in 2013, at 12.1% of GDP. On average, 52.3% of this amount was allotted to education, representing 4.2% of the total GDP. As a result, between 2006 and 2015, Ecuador was among the Latin American countries that registered the highest investments in education, and these investments proved fruitful. By 2015, 94.5% of the population was considered literate, and the net primary and secondary education enrollment rates were at 96.3 and 67.9%, respectively, at the national level (INEVAL 2015). Overall student achievement in 2013 had improved by an average of 50 points over results from 2006 (UNESCO 2014). Gender parity was achieved in primary and secondary education in 2015, and the performance gap between boys and girls was signifcantly reduced. Today, women represent the majority of students enrolled in primary and secondary education across the country, and they achieve the highest levels in academic attainment (INEVAL 2015). However, girls and young women across Ecuador are still more likely to abandon the education system, mainly due to opposition by their families, household-related responsibilities, and pregnancy. Alongside gender, ethnicity is another powerful marker of exclusion. In Ecuador, women from an ethnic minority show a probability of completing only 4.8 years of schooling, in comparison to an average 8.3 years for mestizo women (Herdoíza 2015). Mathematics remains the main feld where boys outperform girls, and a connection could be established between this and the low number of women (37.4%) involved in the STEM felds (science, technology, engineering, and mathematics) in Ecuador (UNESCO 2017). Only 40% of Ecuador’s economically active population is female, and women’s unemployment is double than of men. Women in the labor force remain concentrated in areas of small-scale trade (23%), agriculture (23%), and services (10.6%). In 2017, 61.3% of women still worked in the informal sector, while only 17.4% worked in the formal sector (Almeida Sánchez 2017). Studies conducted in Ecuador have shown that women have lower likelihood of accessing quality employment due to workplace discrimination and the diffculty of combining productive and reproductive activities. Moreover, women earn between 18 and 30% less than men with an equivalent level of education (Fine-Dare 2014; Almeida Sánchez 2017). Despite the institutional transformation of the education system and the vast amounts of resources directed toward improving access to 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 121 education, investment in other areas aimed at supporting gender equality has been constantly diminishing. For example, investment in projects related to gender equality went from 0.21% of the General State Budget in 2007 to just 0.01% in 2015. On average, between 2014 and 2016, 46.7% of the resources destined for gender-equality programs went to health care (mostly maternal health), 33.6% went to women’s access to microfnance (solidarity economy), and 19.1% went to care and ‘co- responsibility’ systems. Other key areas related to the promotion of gender equality have also slowly lost funding over the years. For instance, public spending for the ‘generation of equal opportunities and employment conditions’ fell from US$1.29 million in 2014 to zero in 2016. Over the same time period, the ‘promotion of women’s political and citizen participation’ went from US$1.12 million to US$140,000, and the ‘promotion and development of institutional mechanisms and public policies for the promotion of gender equality’ went from US$1.27 million to just US$20,000 (Almeida Sánchez 2017). While the outcomes of institutional education reform have been positive overall, when these achievements are analyzed in relation to achievements in other felds, it is clear that gender still operates as a form of exclusion within the education system, as well as in relation to functions such as political representation or access to employment. This is particularly true when education is considered a capability that should allow women to develop their skills in order to improve their standing in society. This scenario illustrates how, despite efforts to increase the participation of women in the education system, not enough has been done to ensure that institutional transformations at the formal level can be put into practice and have a real impact on women’s lives and opportunities. Indeed, traditional expectations of outdated ‘female’ roles and male-centered approaches to sex and health were both maintained and exacerbated during Correa’s government, creating a double-sided illusion of gender equality: progress at the formal level, and setbacks at the informal and discursive levels.

4 sexual and Reproductive Rights in Ecuador The Ecuadorian Constitution has been recognized as ‘progressive’ in areas such as conservation (i.e., nature rights) and the adoption of social-equality principles based on the notion of Buen Vivir or ‘good living’ (Herrera 2016). According to some accounts, the 2008 Constitution 122 M. MORALES HIDALGO also represents one of the most advanced documents of its kind in Latin America in terms of race, ethnicity, and diversity rights (Shaw et al. 2018). However, in regard to sexual and reproductive rights, while the state has ratifed the majority of international treaties, the implementation of gender-equality principles remains restrictive and closely attached to traditional heteronormative gender roles, and to moralistic principles that have shaped debates around the expression of sexuality, sexual education, and abortion in Ecuador for decades. During the 2006 presidential campaign, then-candidate Rafael Correa acknowledged the importance of ensuring women’s rights as a central step toward the attainment of social, economic, and intergenerational progress (Palacios 2008). In line with this discourse, once Correa was elected, legal reforms and new bodies of legislation were adopted to improve the situation of women in the country. In 2007, the eradication of violence against women was declared state policy via Presidential Decree. According to Correa, the recognition of women’s rights was key to ensuring the construction of a nonauthoritarian culture that involved women as full-fedged actors who should be free from all violence (Palacios 2008). The implementation of this state policy was refected in the 2008 Constitution (Arts. 11, 66, 70, and 81) and in several pieces of secondary legislation, such as the 2007 Plan Nacional para la Erradicación de la Violencia de Género hacia la niñez, adolescencia y mujeres (National Plan for the Eradication of Violence against Women Teenagers and Children) and the National Plan to Eradicate Sexual Abuse in Schools (2006). In addition, in 2014 the term ‘femi- cide’ was included in the Penal Code as a punishable crime, and in the same year, the Consejo Nacional de Igualdad (National Council for Equality) was created to promote policies against all forms of discrimination in Ecuador. There are in fact fve Councils for Equality, and these focus on gender, intergenerational relations, peoples and nationalities, disability, and human mobility issues. These instruments came to com- plement existing legislation such as the 2005 Ley de Violencia Doméstica y Violencia contra la Mujer (Domestic Violence and Violence against Women Law) and the 2004 Plan Nacional Contra el Tráfco Humano (National Plan against Human Traffcking). In relation to sexual and reproductive rights, the Constitution of 2008 also gave place to policies and programs to guarantee access by men and women alike to culturally sensitive health services rooted in gender-equality principles. The Ley Orgánica de Salud (Public Health 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 123

Organic Law) of 2006 ensures fundamental conditions for sexual and reproductive health care, such as the right to information, confdenti- ality, equality, and nondiscrimination (Cifuentes 2016). This law guarantees the right of men and women to freely decide (without coercion, violence or discrimination) the number of children they want to raise, without the intervention of others (Ley Orgánica de Salud, Art. 23). The Plan Nacional para el Buen Vivir 2013–2017 (National Plan for Good Living 2013–2017, or PNBV 2013–2017) also includes specifc objectives related to sexual and reproductive health in which the right to sexual freedom is acknowledged. Despite the sense of novelty that these reforms brought to the public sphere, the struggles of Ecuadorian women for the right to freely and safely make decisions about their own bodies were neither new nor recent. What the reforms adopted during Correa’s government were trying to convey was a sense of renewal in terms of the state’s relationship with women and their rights. However, as these reforms transitioned into practice, worrying levels of disconnection and contradiction became evident between the political discourse, policies, and implementation. Ecuador is among the countries with the highest teenage pregnancy rates in Latin America. According to the Instituto Nacional de Estadísticas y Censos (National Institute for Statistics and Census, or INEC), two out of three teenagers between ages 15 and 19 in Ecuador are either pregnant or are already mothers (Carmenati and Gonzales 2017). Between 2000 and 2010, the pregnancy rate among teenagers between ages 12 and 19 increased by 74%, and the pregnancy rate among girls aged 12–14 increased by 78% in the same period (Herrera 2016). Data from the Encuesta Demográfca y de Salud Materna e Infantil 2004 (Ecuador Demographic and Maternal-Child Health Survey, or ENDEMAIN), quoted in Castello Starkoff (2008), show equally disturbing trends. Eight out of ten teenage girls who are sexually active become pregnant in Ecuador; 55.4% of pregnancies among teenagers and young women are not planned; 63% of sexually active young women do not use contraceptives; and 7% of teenage pregnancies are the result of rape. To address the rising rates of teenage pregnancy in Ecuador, Rafael Correa’s government adopted by Presidential Decree the Estrategia Nacional Interseccional de Planifcación Familiar y Prevención del Embarazo de Adolescentes (National Intersectoral Strategy for Family Planning and Teenage Pregnancy Prevention, or ENIPLA). This strategy 124 M. MORALES HIDALGO relied on articulated actions by the Coordinating Ministry of Social Development and the Ministries of Public Health, Education, and Social Inclusion. This was the frst-ever intersectoral strategy to prevent and reduce teenage pregnancies by ensuring access to sexual and reproductive health, and to provide information and assistance to adolescents in relation to contraception and family planning. The national strategy envisioned training for students, teachers, public offcers, and families, along with free and permanent distribution of contraceptives in clinics and schools and a toll-free information service for young people, among other services. ENIPLA intended to reduce the teenage pregnancy rates by 25% by 2015, especially in those sectors with higher rates of poverty and lower levels of education (Cifuentes 2016). More importantly, ENIPLA sought to bring discussions around sexuality and reproductive health into the public realm, where public health approaches, prevention, and information could be integrated into the discourse. However, three years after the adoption of ENIPLA, in 2015, President Correa acknowledged that teenage pregnancies were still rising across the country, and he attributed the failure of the strategy to the ‘hedonist’ nature of ENIPLA (Constante 2014; Herrera 2016; Cifuentes 2016). As a response to the ‘excesses’ of this strategy, the Ecuadorian government in 2015 adopted the Plan Nacional de Fortalecimiento de la Familia (National Plan for the Strengthening of the Family), or Plan Familia. This new strategy would differentiate itself from ENIPLA by focusing on values, responsibility, affection, and the role of the family. The Plan Familia (2015) proposed a sexual and reproductive health strategy based on abstinence and the postponement of sexual life. The strategy was proposed as representing ‘the center of society’, presented as a basic and natural environment in which children and adolescents can develop. Families, as indicated in the strategy, “can adopt different structures”. The Plan Familia (2015) mentions families with only one parent as well as families with absent members; it also recognizes the existence of “other forms of coexistence similar to families that the state seeks to support, as long as these contribute to the common well-being of society and its members”. Beyond the very limited description of diverse families that this document presents (mostly defned as ‘fragmented’ due to external factors such as migration), the Plan Familia draws a direct connection between the existence of ‘stable families’ and lower rates of teenage pregnancy and other high-risk behavior among adolescents. 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 125

The offcial strategy employed this logic to claim that, in order to reduce teenage pregnancies, state policies should focus on strengthening the family as an institution, and on concentrating sexual education efforts within the private realm of the family. Leaving aside the confictive defnition of family used by the Plan Familia, one can easily see the very limited impact that this strategy was bound to have among teenagers without a ‘traditional’ family. These children and teenagers are made invisible by a strategy that blatantly ignores the reality of thousands of Ecuadorian adolescents living in non- traditional settings and high-risk situations. In the pages of the strategy document, one sees how the state was openly shaping policy priorities based on notions of ‘moral superiority’ and conservative attitudes toward reproduction and the place of women in society. For example, when addressing teenage pregnancies in the document, the statistics provided are not disaggregated by socioeconomic level, or by level of education of the mother, but rather in terms of women’s marital status (p. 18) or the rate of sexual activity before marriage (p. 17). Sexual violence is also addressed in the document in relation to the family. While it acknowledges that sexual violence is among the causes of pregnancy in girls between 10 and 14 years of age, the strategy does little to provide clear policy guidelines to eradicate this problem, or to support the victims (including through the possibility of accessing free and safe abortion); instead, it presents statistics claiming that sexual abuse is less prevalent in traditional settings where the parents are married. The launch of the Plan Familia strategy raised criticism and concerns across the country, especially after statements made by the Secretario Jurídico de la Presidencia (Legal Secretary to the Presidency), Alexis Mera, who stated: “The state should teach women to prevent pregnancy. […] Women should know that a better option is to be able to go to college. The state should teach women that is better for them to postpone their sexual life, so they can have a professional career” (Estrella 2015). In relation to domestic violence, he said: “It is also the role of the state to educate to avoid violence within the family. This a problem of principles. […] Women do not value themselves and allow for violence to happen, and men have the wrong idea that violence is a mechanism for family development” (Estrella 2015). The Plan Familia was canceled in May 2017 after Correa’s successor Lenin Moreno became president. These discourses refect an absolute lack of understanding of sexual and reproductive health, and they replicate discourses of male domination 126 M. MORALES HIDALGO where women are considered passive subjects who need to ‘be taught’ and who are solely responsible for reproduction; as such, they are also to blame for the violence inficted upon them. One of the weaknesses of the Plan Familia was that it failed to address sexual violence or abortion, instead focusing on the role of the traditional nuclear family in the prevention of early pregnancies. Overall, the strategy failed to focus on the prevention of teenage pregnancy or to address sexual violence, or the coercion that a forced pregnancy during childhood or adulthood implies, and it did not provide the conditions necessary to fulfll the constitutional rights of every citizen to decide if or when to have children. In 2015, 3295 pregnancies were registered among girls between 10 and 14 years of age, and 7% of these pregnancies ended in abortions; in the same year, 20% of pregnancies were among girls between ages 15 and 19, and 5% of these ended in abortion (Carmenati and Gonzales 2017). The Ecuadorian Penal Code allows for abortion only in two cases: when the pregnancy endangers the life of the woman, and when the pregnancy is the consequence of rape in a woman suffering from mental disability. A study conducted by Ortiz-Prado et al. (2017) found that the highest number of abortions (42,500) was registered in 2011, and that between 2004 and 2014, the annual average of abortions in Ecuador was at 39,236. This rate declined in 2014 after approval of the new Código Orgánico Integral Penal (Organic Penal Code), which punished abortion with up to three years of jail time for the physician who practices an abortion, and up to two years for the woman aborting (Ortiz-Prado et al. 2017). According to INEC, in 2015 there were 18,746 abortions, representing 5.71% of registered pregnancies at the national level (Carmenati and Gonzales 2017). As early as 2005, legislative reform to expand the grounds for abortion in case of rape had been proposed in Congress; however, this motion was dismissed by a specialized commission, based on the argument that a law to decriminalize abortion would contradict the Catholic principles of the majority of the Ecuadorian population (Castello Starkoff 2008; Cifuentes 2016). Later, in 2014, National Assembly member Paola Pabon, who was also a member of Correa’s political party Alianza PAIS, attempted to introduce a motion for the de-penaliza- tion of abortion for all women in the case of rape, but President Correa halted this attempt, threatening to resign his position if the motion was approved. He later categorized the attempt as “treason” and “disloyalty” (Constante 2014). 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 127

In this context, the restrictive and morally loaded access to reproductive health and safe abortion only serves to deepen inequality in Ecuador. The cycle of sexual violence, early pregnancies, and unsafe abortions continues to be intrinsically linked to socioeconomic markers, further exacerbating the exclusion of the most vulnerable groups in society. According to Carmenati and Gonzales (2017), 56.7% of women between ages 12 and 19 with at least one child had some secondary education, while only 3.4% had access to higher education (estimates based on data provided by INEC). Moreover, the degradation of reproductive and sexual rights in Ecuador disproportionally affects poor women from ethnic groups. The systemic opposition to sexual education and access to contra- ceptive methods and the criminalization of abortion across the country reveal an institutionalized form of discrimination. When the president of a country ‘forbids’ the national assembly to discuss abortion and publicly ‘punishes’ a female legislator for expressing her political views, these actions do not merely express authoritarianism—they are a refection of an institutional structure that allows female bodies to be seen and controlled from a male and patriarchal perspective that focuses on women’s reproductive roles. This way of perceiving female bodies and their positioning in society undermines the possibility that the state will address pregnancy and abortion from a public health perspective, and it further impairs women’s ability to make informed choices about their own bodies. The dominant discourse has also justifed the preservation of a normative type of family: urban, heteronormative, ethnically homogeneous, and aligned with religious tradition in the country. The discursive practices of Correa’s government perpetuated social violence against women and were the refection of an ineffcient and patriarchal institutional system that naturalized misogyny and exclusion based on socioeconomic markers and ethnicity.

5 Political Representation The political participation of women is key to achieving gender equality and to building democratic and inclusive societies. Greater numbers of women in politics can contribute to the design and implementation of more gender-sensitive policies, as well as to the inclusion of voices and perspectives long overlooked by governments and societies. Political quotas and parity goals are the most widespread strategies to promote 128 M. MORALES HIDALGO women’s participation in political spheres. Quotas became popular in Latin America in the 1990s, to ensure women’s access and representation in politics and elections. Quotas seek to encourage more women to access their citizen’s right to run for offce without being excluded; they are also put in place to increase awareness of the gendered nature of the public sphere, and to bring attention to women’s issues in the policy-making process (Mansbridge 2005; Franceschet et al. 2009). Gender quotas are in many instances considered part of a larger mainstreaming goal that seeks to achieve parity or equal participation by men and women (Meier and Lombardo 2013; Archendi and Tula 2014; Albaine 2016). Ecuador is an interesting case in the realm of female political participation, as it was one of the frst Latin American countries to transition from a quota system to parity through constitutional reform, achieving important outcomes in terms of representation. However, while gender-equality objectives have indeed been formally adopted through various institutional practices and laws, the 50% target has not yet been met, due to deep patriarchal practices that undermine the representation and election of female politicians. Furthermore, the political discourse around female visibility in politics is ambivalent—although accepted in offcial discourses, it is constantly sabotaged through everyday practices. Between 2008 and 2014, under Rafael Correa’s government, the largest number of female legislators in Ecuador’s history participated in electoral processes at the national and local levels. Nevertheless, efforts in relation to women’s political participation were highly dispersed over the past decade. Discussions on gender equality and equal representation in politics in Ecuador gained momentum in 1997, when the Female Employment Protection Act was adopted to establish the inclusion of a minimum of 20% of female candidates in national and provincial electoral lists. In that same year, modifcations to the electoral regime were made to allow voters to select their candidates from among different party bal- lots, or to choose each candidate individually, in order to increase women’s possibilities for election even when they were not heading the party lists (Archendi and Tula 2014). The adoption of the Ley Orgánica de Elecciones (Organic Law on Elections) in 2000 formally represented the transition from quotas to parity in order to achieve gender balance and to prioritize the participation of women in politics. This law increased the minimum gender quota from 20 to 30% and adopted a system to 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 129 progressively increase the participation of women in politics by 5% in each subsequent election until parity was reached. In addition, this law included the principles of alternation (man-woman/woman-man) and sequencing (alternation between sexes for multimember lists) in electoral processes, in order to increase women’s chances to be elected (ECLAC 2010). The adoption of quotas and other mechanisms to increase the number of women in political processes tend to have a positive impact on the input side (the number of female candidates), but they still have a limited effect on the output side (the number of women elected to public offce). In the case of Ecuador, gender quotas and the subsequent adoption of parity had a positive impact on the number of female candidates. One observes a historical progression from 1979, when no women were represented in the National Assembly, to 2006, when 26 women were elected (Table 1). Despite the adoption of the parity law in 2000, the participation of women in the National Assembly until 2006 did not sur- pass 26%. In 2009, one year after parity became a requisite in political elections, female legislators only obtained 32.3% of the seats (National Electoral Council & Democracy Institute 2017). The numbers for other political candidacies (for mayoral, gubernatorial, and councilor positions) have slightly varied over the years. Women represented 24.6% of candidates in the year 2000, 21.1% in 2002, 26.5% in 2004, 26.4% in 2006, and 23.3% in 2009 (SENPLADES 2011). While the adoption of quotas did have a positive impact in terms of political candidacy in Ecuador, a gap is evident in terms of successful election. Despite the increased participation of women over the years, men continue to head the lists for positions with greater visibility, while women candidates are more likely to occupy alternate or less visible positions. In 2013, for example, men headed 85% of the lists for provincial representatives, while women were more likely to run for rural and urban councils (33.7 and 24%, respectively) or parochial boards (25%) (Archendi and Tula 2014; National Electoral Council & Democracy Institute 2017). Regarding the signifcant gap between the women who run for public offce and those who are elected, 42.1% of candidates for provincial elections in 2014 were women, but only 25.7% were elected; thus, men flled 74.3% of these positions (National Electoral Council & Democracy Institute 2017). State-led efforts to encourage participation by women appear to be limited to the formal and institutional realms (law and policy), neglecting 130 M. MORALES HIDALGO

Table 1 Evolution of female participation in the National Assembly, Ecuador 1979–2009

Year Female members Total members Percentage of participation

1979 0 70 0 1984 3 71 4.2 1986 1 56 1.8 1988 3 71 4.2 1990 4 60 6.7 1992 4 77 5.2 1994 3 65 4.6 1996 4 70 5.7 1998 16 121 13.2 2003 18 100 18 2006 26 100 26 2007 47 137 35 2009 40 124 32.3

Source Consejo Nacional Electoral. Author’s own classifcation and even perpetuating other factors that condition the achievement of gender equality in the political sphere. The impact of quotas on the electoral system has been constantly deterred by deep-rooted and self- replicating exclusionary and discriminatory practices against women. The political parties in Ecuador tend to be the primary spaces where female candidates and elected offcials experience discrimination and harassment, through practices such as the obligation to give up one’s prior position following successful election, the prohibition from self-expression, and tendencies toward defamation, insults, slander, and threats (Albaine 2016). In this way, political parties sustain the mechanisms that ensure the ongoing predominance of male leadership (Buendía and Calapaqui 2016; Albaine 2016). A macho conception of political participation by women—their capa- bilities and rights to participate—is extensively present in Ecuador. Paradoxically, the same political leadership that promoted the creation of institutions and mechanisms to foster gender equality has been the source of systematic attacks on and defamation of female politicians over the past decade. According to media-monitoring agencies, between 2013 and 2016, 95 situations ranging from slander to threats were identifed in which President Correa personally attacked women who opposed his policies (Fundamedios 2017). His comments included disparaging 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 131 remarks about the abilities of the only female candidate in the most recent presidential elections (“Cynthia Viteri shouldn’t talk about economics, she should talk about make-up”); he also made references to the physical appearance of female members of the National Assembly (“How beautiful! How do we choose our councilors? By beauty contest?”), as well as comments that clearly undermine the feminist agenda in Ecuador (“Certain feminist fundamentalists propose a nonsense notion of equality… well, I cannot breastfeed!”) (Loaiza 2017; Buendía and Calapaqui 2016). Discourse is a relevant factor with the potential to shape public perceptions and to perpetuate patterns of discrimination that deeply frus- trate the adoption of other mechanisms, such as quotas. These conditions prevent Ecuador from completing an institutional and organization shift where quotas are effective mechanisms that allow for electoral systems and their exclusionary practices to be challenged and transformed.

6 conclusion At an early stage, the strategy of Rafael Correa’s government to bring gender-equality principles and policies into practice was focused on increasing access to education, health, and various social programs. Despite the inclusion of gender-related considerations within the formal institutional framework, the majority of the gender policies adopted either ignored or failed to take into consideration the impact of informal institutions and practices, such as traditional expectations around roles that overburden women with household responsibilities, limit their access to sexual and reproductive health, and ultimately undermine both girls’ and women’s possibilities to study, pursue academic and professional careers, and actively participate in the public realm. While ostensibly focused on giving women a central role in the country’s policy-making, the government’s discourse did not necessarily view women as autonomous subjects but instead addressed them through their roles as mothers and caretakers (Guchín 2010; Lind 2012). Women who did not ft traditional roles were either made invisible in the legislation or were directly antagonized. These exercises of patriarchal imposition were commonplace during Correa’s administration, as described throughout this chapter. I have argued that in order for gender-based exclusion to be eradicated, increased attention should be given to the interactions and 132 M. MORALES HIDALGO connections between formal and informal institutions. The example of Ecuador’s institutional reform as a strategy to eliminate gender-based exclusion shows that, while institutional transformation at the formal level (law and policy) is crucial to ensuring a certain level of political commitment, it does not in itself ensure the elimination of exclusionary practices based on gender. More profound awareness of the impact of other institutions and informal practices (such as traditional perceptions of gender roles and discriminatory discourses in the public sphere) is required in order to design and implement interventions that can counteract the effects of informal practices and transversal institutions. Meaningful institutional change demands not only the modifcation of formal rules, but also the realignment of interests and power that are already embedded in social structures, produced and reproduced by gendered actors (individuals and organizations) that pursue their own interests within institutional contexts. Necessary to this understanding is the idea that institutions of gender equality in one sphere of life will not necessarily be able to compensate for asymmetrical institutions in others. Any efforts to eliminate gender-based exclusion will only partially address this problem if exclusively focused on the transformation of formal structures, ignoring the dynamics of informal institutions and their impacts on gender equality. One of the main obstacles to eliminating gender-based exclusion is that institutional arrangements tend to ignore the gendered nature of the very structures that shape life in society, and that determine access to employment, political participation, economic progress, sexual and reproductive independence, and so on. Some countries have focused efforts on transforming the formal institutional mechanisms to ensure access to education, but without paying careful attention to the differentiated impacts that these measures have on men and women, and without acknowledging that changes to formal mechanisms are not suffcient to reduce exclusion. By focusing only on the formal aspects of institutional transformation, the power dynamics and structures that reinforce gendered inequalities can go unchallenged and be considered ‘normal practices’. Women’s standing in Ecuadorian society and their ability to take advantage of opportunities continue to be subverted by practices and institutions not addressed by formal policy-making. In order for education, political representation, or reproductive rights to be effective, they must enable women to acquire skills and knowledge to make informed 6 A REVOLUTION WITH A FEMALE FACE? GENDER DEBATES … 133 decisions, to take advantage of opportunities, and to participate in society under equal conditions. Gender mainstreaming strategies or gender-transformative approaches can indeed be effective in generating a broader framework of action to reduce exclusion, since these would conceptually facilitate the consideration of a broader range of institutions and practices that permit or perpetuate discriminatory practices and exclusion (The Global Partnership for Education 2018). Such strategies can address the differentiated implications of legislation, policies, or programs for women and men, acknowledging that interconnected factors both create and maintain unequal relations. This would serve to confront patriarchal structures and to tackle gender bias with the purpose of avoiding the continuation of discriminatory practices in the public sphere. When broader approaches are taken to measure and evaluate interventions meant to eliminate exclusion, the structures and practices that sustain discrimination enter into the discussion, and opportunities to challenge the status quo may also arise. In that process, the role of the state will be crucial to ensure that formal mechanisms to transform laws and institutions remain available, and civil society will also have a key role in monitoring and raising awareness about ‘hidden practices’ that undercut gender-equality advances at the formal level. Only by addressing exclusion as a multidimensional phenomenon can interventions to eradicate gender exclusion and other forms of discrimination prove successful.

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Intellectuals, NGOs, and Social Movements Under the Correa Regime: Collaborations and Estrangements

Carmen Martínez Novo

1 introduction This chapter examines the production of knowledge and the relations between intellectuals, nongovernmental organizations (NGOs), and social movements under the semi-authoritarian or “hybrid” regime of Rafael Correa (2007–2017). This regime maintained a democratic façade by holding elections and following certain basic rules of democracy while simultaneously manipulating the public sphere, civil society, and social movements through a combination of co-optation, division, and repression strategies (Conaghan 2017). I will focus on the regime’s attempts to manipulate public debates and civil society, as well as on society’s differentiated responses. The governments of the so-called ‘Turn to the Left’ in Latin America found it important to control intellectual discussions as well as the interactions between intellectuals and social movements. Due to the

C. Martínez Novo (*) University of Florida, Gainesville, FL, USA e-mail: [email protected]

© The Author(s) 2020 137 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_7 138 C. MARTÍNEZ NOVO populist tendencies of some of these regimes, they wished to symbolically reinforce the fgure of the leader, the unifed concept of the people he or she represented, the idea of the nation, and the division of the public sphere into friends and foes (De la Torre and Arnson 2013). They also needed to articulate social movements to the state, and to discredit dissidents, and intellectuals were capable of playing an important role in all these tasks. For instance, Cristina Kirchner of Argentina created the Secretariat of National Thinking, which brought together politicians and scholars and received funds from the administration, and this secretariat often invocated the name of the leader (Finchelstein 2017). As Enrique Peruzzotti (2015) notes, Argentine intellectuals became polarized into two antagonistic camps, like the rest of society. In Bolivia, think tanks and NGOs that were originally sympathetic to Evo Morales’ government, and that later became critical of some of the regime’s policies, were threatened and accused of receiving funding from and furthering imperialist interests (Postero 2017). The strategy was to not allow any subtle criticism, particularly from within, in order to shape the friend/ enemy dynamic suitable to a populist rupture (Peruzzotti 2015). Intellectual subtleties that produced dissident factions of civil society needed to be subsumed. The Correa decade in Ecuador was also a time of political stability and economic strength. After a long period of economic and political disar- ray, the commodity boom of the early 2000s allowed for a stronger, better-funded state. Differently from previous Ecuadorian Presidents who were unable to fnish their terms, Rafael Correa’s administration (2007– 2017) lasted for ten years. Before becoming president, Correa had been an academic. In the context of reinforcement of the public sector and greater investment in education, the regime allocated more resources for long-term, basic research. On the other hand, academics suffered in an environment that restricted their freedom of expression. Furthermore, the government’s emphasis on the extraction of oil and minerals to fnance the budget produced violent conficts with indigenous and other civil society organizations seeking to defend their territories and the environment from predatory state and transnational interests. The regime, in an attempt to avoid political crises and to keep itself in power, was suspicious of any organizations or points of view that might threaten governability. This chapter analyzes how a peculiar combination of semi-authoritarian rule and economic bonanza shaped what anthropologists and nongovernmental organizations were able to say, as well as their 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 139 collaborations with indigenous movements. The chapter uses a political economy approach to examine the material construction of culture, and it considers how the political-economic conjuncture affected intellectual production and intellectual-social movement relations (Williams 1978; Grossberg 2006). Although the political-economic context is deemed fundamental, the chapter also highlights the agency of individuals who were able to make choices under specifc circumstances. The relationship between anthropologists and indigenous peoples has been described in recent decades as one of collaboration, with certain tensions (Briones 2015; Field and Rappaport 2011; Ramos 1990, 2007). Anthropologists have been understood as advocates for indigenous peoples who are sometimes compelled to step back when those peoples represent their own causes, as when they write their own ethnographies (Ramos 2007). It would seem as if the colonial origins of this discipline have become a thing of the past; however, this chapter argues that the story is more complex. Anthropologists have indeed been advocates for and collaborators with social movement struggles in Ecuador, and they were instrumental in the formation of a unifed and combative indigenous movement in the 1980s and 1990s. However, a few would later go on to work for transnational companies or the state in order to co-opt, weaken, divide, and demobilize indigenous organizations. Sometimes, academics have so acted simply because they needed a job. In other instances, they have acted out of conviction within their own normative visions or nationalist projects. The chapter also examines the trajectories of indigenous people who are part of both academia and social movements. Mallon (2011) has argued that indigenous intellectuals have not been able to fully join Latin American academia, due to discrimination. Although this characterization also holds true for Ecuador, things have started to change. The indigenous academics discussed in this chapter found openings within the neoliberal and semi-authoritarian conjunctures that made their insertion into academia possible, although precarious and confict-ridden. I understand the conjuncture here as not only “a slice of time or a period, but a moment defned by an accumulation/condensation of contradictions, a fusion of different currents or circumstances” (Grossberg 2006, pp. 4–5). For reasons of space, I here include the life history of only such one individual, but with references to other histories that cannot be recounted in full. This chapter is based on interviews and conversations with Ecuadorian anthropologists, a selective analysis of their texts, the 140 C. MARTÍNEZ NOVO life history of one indigenous academic, and participant observation with mestizo and indigenous intellectuals and in indigenous communities.

2 Anthropologists’ Insights on the Decline of the Indigenous Movement Ecuadorian anthropologists have recognized that the indigenous movement was weakened during the Correa decade, and some had an insid- er’s perspective on this process as advisors or consultants to indigenous organizations (Garcia, 7-28-2015; Ospina, 7-10-2015). An effective strategy of the Correa government was to fnancially asphyxiate indigenous organizations. Paradoxically, this happened during a period of economic plenty. Prior to the period, foreign and national NGOs had been an important source of funding and support for indigenous organizations and their academic allies, but such contributions dwindled after 2011. The Correa government regulated the fnancial operations and development work of foreign and national NGOs in order to control development moneys, as well as the ability of civil society to resist the regime (Conaghan 2017; Chiriboga 2014). Executive Decree 812, issued in 2011, required foreign NGOs to register with the government, to submit all projects for approval, and to align their plans with the government’s development priorities. The decree forbade all foreign NGO personnel and their families from joining activities deemed to be political. It also forbade international NGOs from channeling funds from bilateral or multilateral sources, over which the government had now established a monopoly (Conaghan 2017; Chiriboga 2014). In addition, the Correa government canceled the deductions for private busi- nesses that donated to NGOs or civil organizations, thus forcing national NGOs and organizations to downsize and reduce programming (Chiriboga 2014). Moreover, Executive Decree 16 established that the executive could close any civil organizations that engaged in political activities reserved for political parties, or that endangered public policies or national security (Conaghan 2017). In addition to these fnancial regulations and juridical insecurity, the post-2008 global economic crisis reduced the funds that donor countries made available for the purpose of international cooperation, caus- ing these countries to redirect their development efforts to the poorest 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 141 recipients. Simultaneously, some Latin American countries including Ecuador were reclassifed as middle-income due to the commodity boom, and thus they ceased to be a priority for international cooperation (Chiriboga 2014). Spain, which had been the main donor to Ecuador’s NGOs and social movements, accounting for 18% of Ecuador’s international cooperation money, was hit particularly hard by the crisis and sharply reduced its contributions (Chiriboga 2014). International assistance to Ecuador’s NGOs had decreased by half in 2014, compared to the 2011–2013 period (Conaghan 2017). Furthermore, cooperation from important donor countries such as the United States, Switzerland, and the Netherlands was completely with- drawn, and entities like Germany’s Konrad Adenauer Foundation pulled out of the country (Conaghan 2017). USAID pulled out in 2013 because the Ecuadorian government failed to renew their programs or to allow them to initiate new activities. Konrad Adenauer closed in opposition to Decree 16 and increasing government control over NGOs (Conaghan 2017). The Pachamama Foundation, a very active NGO that supported environmentalist and indigenous causes, was forced to close under Decree 16 for engaging in politics and opposing a round of oil concessions. Previously, the Correa government had tried to close Acción Ecológica, the oldest and most radical environmentalist NGO that had collaborated closely with indigenous movements. However, the order to close the NGO was revoked due to both national and international pressure. The majority of the cooperation money lost during the period had addressed environmentalist and social movement causes (Chiriboga 2014). The regime controlled other sources of income for indigenous activists as well. In 2009, the government ended the autonomy of the intercultural bilingual education system. This move terminated indigenous organizations’ control of intercultural education jobs and consultancies, which reverted to the Ministry of Education. The position of edu- cator had been the main job available for indigenous professionals in a very discriminatory labor market. The Correa government interpreted this change as a way to end special interest groups’ control of the state (Conaghan 2017). The new Código Orgánico de Organización Territorial, Autonomía y Descentralización de Ecuador (Organic Code of Territorial Organization, Autonomy, and Decentralization, COOTAD) issued in 2010 did not recognize the indigenous community, the backbone of the indigenous 142 C. MARTÍNEZ NOVO movement, as a fundamental unit of the state with a right to a budget allocation. The parishes, typically mestizo towns surrounded by indigenous communities, were recognized instead. Parish mestizos and parish councils were politically and fnancially rewarded under Correa, and these became an important social base for the regime (Córdova, conversation with author, 7-2-2015). As the autonomous indigenous movement lost control over prior sources of funding and jobs, anthropologists witnessed how the Correa government created parallel organizations that did receive funding and state support. The creation of social organizations from above is a common strategy for the manipulation of civil society in semi-authoritarian regimes (Ortiz Lemos 2015; Conaghan 2017). For instance, this strategy was particularly important in the Bolivarian regime of Venezuela, where the indigenous movement that barely existed before Chavez came to power was orchestrated from above (Angosto-Ferrández 2015). In 2014, the Federación Nacional del Organizaciones Campesinas e Indígenas (National Federation of Peasant and Indigenous Organizations, FENOCIN), a smaller and class-based indigenous group friendly to the Correa regime, took a leading role in bringing indigenous factions together to form a pro-government organization called Alianza Indígena para la Revolución Ciudadana (Indigenous Alliance for the Citizen’s Revolution). The Ministry of Peoples asked a foreign social sci- entist and expert on the African Diaspora who was also a grantee of the Prometeo Program1 to help create the Consejo Nacional de la Unidad Afro-Ecuatoriana (National Council of Afro-Ecuadorian Unity) (García, interview with author, 7-28-2015). These parallel social organizations were “made of paper” and very fragile; as soon as government funding ended, they would likely stop functioning (García, interview with author, 7-28-2015). Despite this situation, some leaders of the Confederación de Nacionalidades Indígenas del Ecuador (Confederation of Indigenous Nationalities of Ecuador, CONAIE), comuneros from the areas affected by resource extraction, schoolteachers affected by the changes in intercultural education, and peasants unhappy with the lack of comprehensive land and water reform fercely resisted the regime. Anthropologist Fernando García witnessed the struggle of indigenous

1 The Prometeo Program brought scholars to Ecuador for a year or more under excellent economic conditions to foster research collaborations. 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 143 organizations to counter the efforts of the Correa government to divide and co-opt them. For instance, Marcelino Chumpí, a Shuar leader affliated to Pachakutik party, won elections in Morona Santiago and became the province’s governor in 2009. Chumpí opposed oil drilling and open- pit mining in his province. Alianza PAIS, Correa’s political party, made great efforts to divide the Shuar organization by distributing computers, boat motors, and chickens to its membership. As a result, a group broke away and began to support Correa. The government also invested a large amount of money for public works in the region, and Correa himself traveled to the area several times to speak to the Shuar. Despite Alianza PAIS’ efforts to win over the province, Chumpí was reelected in 2014. Control of the Shuar territory was important to the Correa regime, which had granted important copper mining concessions to ECSA, a Chinese company there. Despite having been recognized in both the 1998 and 2008 Constitutions, indigenous systems of justice had their scope limited by the Correa government. A 2014 ruling by the Constitutional Court cir- cumscribed indigenous justice to minor, internal conficts that strictly relate to identity and culture. The coordination between indigenous systems and mainstream justice, particularly which system had jurisdiction over what issues, had been problematic since the recognition of indigenous legal autonomy. Anthropologist Fernando García, an expert on indigenous customary law (García Serrano 2002), was placed in charge of creating a proposal coordinating indigenous and ordinary justice for the Asamblea Nacional (National Assembly). Pachakutik assembly- woman Lourdes Tibán presented the draft to the Asamblea. However, the proposal failed to reach even a second debate because of a boycott by Alianza PAIS (García, interview with author, 7-28-2015). According to the anthropologist, the slogan of Alianza PAIS at the Asamblea Nacional at the time was “nothing for the Indians” (García, interview with author, 7-28-2015). The Correa regime’s encroachment of the indigenous movement was multifaceted, systematic, and highly effective, and it also affected this social movement’s academic allies. 144 C. MARTÍNEZ NOVO

3 intellectual Turns Under a Semi-authoritarian Regime Despite this situation, and with the exception of (Tuaza 2011), Ecuadorian anthropologists have not yet written a comprehensive account of the recent crisis of the indigenous movement, or of the challenges it faced under Correa’s government. Those who are concerned with indigenous rights are mostly working on localized environmental conficts triggered by the expansion of the mining and oil frontiers. Ecuadorian authors call this phenomenon “extractivism”, which they defne in its narrow sense as the mass-scale industrial extraction of nonrenewable natural resources such as oil, gas, and minerals (Junka-Aikio and Cortes-Severino 2017). On the basis of Gudynas’ ideas (2009), Vallejo (2014) discusses how the “new extractivism” of left-leaning governments differs from earlier forms of natural resource exploitation. ‘Turn to the Left’ governments still rely on and expand export-oriented primary economies, the difference being that the state now controls the process, rather than private companies. Moreover, extraction-oriented policies are justifed by a socialist rhetoric of national interests and overcoming poverty. Instead of working with transnational companies from the capitalist North, the government prioritizes doing business with public companies of socialist or so-called “progressive” countries, particularly those from China. Instead of oil companies discussing their social responsibility policies directly with affected communities, the government collects taxes from those companies and centralizes development efforts through a public institution called Ecuador Estratégico (Strategic Ecuador). The regime claims to have left behind the clientelism of the oil companies and the dependence of the population on NGOs. However, it has meanwhile defnitely increased the population’s reliance on—and gratitude for— the governing regime. According to Vallejo, these policies have created deep divisions in Amazon grassroots organizations. Some leaders hope to access the economic benefts of oil and believe that they will be able to control the environmental impacts. Others are fearful of pollution and decrease in agricultural production, fshing, and hunting, as well as the health problems that mining and oil operations bring. Other authors highlight the contradictions between the environmental and pro-indigenous rhetoric of the regime and its discourses and policies of extractivism and forced modernization on the ground (Uzendoski 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 145

2018; Espinosa Andrade 2017). Uzendoski shows how a leftist regime uses the discourse of sumak kawsay (good living), an ideology that promotes harmony with nature and indigenous ways, to project a progressive image, while also promoting extractivism and capitalist modernization. Throughout Amazonia, ‘good living’ is the label given to a series of emblematic government projects that create a moral debt that naturalizes extraction. In other words, the government expects Amazon dwellers to allow oil and mining operations out of gratitude for the public works they receive. In addition, this author shows how the state is intertwined with and inseparable from private companies, as well as the myriad ways in which the state micromanages populations. The changes in racism and discrimination under Correa are a topic of interest for some authors. Antón and García (2015) and Walsh (2015) have written about the limitations in the implementation of anti- discrimination and affrmative action policies during the past decade. Despite the existence of affrmative action regulations that require the administration to hire ethnic groups in the same proportion as their representation in population censuses (approximately 7%), less than 2% of government offcials are non-whites or non-mestizos. Most non-white government employees still perform humble occupations such as chauf- feur, security guard, or janitor (Garcia, interview with author, 7-28-2015). Given more funding for basic research and working in an environment that censors critical views, some authors have chosen to investigate what seem to be less contentious topics. A number of anthropologists have continued with, or turned toward, historical research, fostering a noticeable boom in historical studies in Ecuador over the past decade. The growth in the feld of ethno-history builds on a tradition that goes back to the origins of Ecuadorian anthropology, and to the legacy of authors like John Murra, Frank Salomon, Ann Christine Taylor, Segundo Moreno, and Blanca Muratorio. Some anthropologists have turned to history due to shrinking NGO funding and programming. In the previous period, NGOs and international cooperation funded ethnographic research on current issues. Moreover, the Correa decade saw government interest and available funding for the kind of work that Kingman (Kingman and Muratorio 2014) has called “the reactivation of memory”. Ministries, particularly of Patrimony and Culture, as well as municipal governments, are interested in promoting work on cultural history. This strategy makes sense for a nationalistic regime that was interested in rethinking the nation’s historical narrative. On the other hand, 146 C. MARTÍNEZ NOVO anthropologists argue that pursuing ethno-history is a way to engage in political arguments without being captured by the conjuncture (Teodoro Bustamante, interview with author, 8-5-2015). Avoidance of sole focus on pressing current issues only became possible due to greater institutionalization and the abundance of public funds for research. Kingman and Muratorio’s (2014) Los trajines callejeros: memoria y vida cotidiana en Quito siglos XIX y XX is one example of this intellectual trend. The authors write about popular material and intangible culture in Quito from the late nineteenth to the twentieth century. The Municipal Government of Quito, the Institute of Patrimony, and the City Museum sponsored the research, while UNESCO’s interest in the compilation of intangible culture also aided the endeavor. The book seeks to investigate popular memories and identities through careful examination of the material culture, testimonies, and ephemera of the urban poor, whom the authors describe as having strong roots in the indigenous world. In a chapter that discusses the organization of construction workers, Kingman explains that class and race cannot be easily disentangled in the city. Construction, street vend- ing, street cleaning, and other humble occupations have historically been perceived as “Indian” work. The authors emphasize the value, beauty, and right to exist of a popular culture that Quito’s elite have not suffciently appreciated, and that seems to be waning with modernization. The work is political in the sense that it seeks to counter the processes of displacement of the urban poor from the historic center of Quito by arguing that these groups are shapers of the city’s rich traditions. Quito’s municipal elites had historically sought to displace them from the capital’s touristic center and to substitute their culture with a folkloric and sanitized narrative. Another shift during the Correa decade was the adoption by Ecuadorian anthropologists of the “ontologies” paradigm. This intellectual current questions the Western separation between nature and culture on the basis of how other cultures understand their relationships with nonhumans. The paradigm also aims to study ways of being beyond the human (Kohn 2015). The adoption of this theory allows Ecuadorian authors to focus on environmental issues, which are central to the current conjuncture, while also avoiding any explicit political position. Although the ontologies paradigm promotes appreciation of the various entanglements between humans, nonhumans, and natural features, which may be considered a political pursuit in the context of the current 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 147 global environmental crisis, it is also highly philosophical and unconcerned with concrete political struggles. Similarly to ethno-history, this paradigm is grounded in Ecuador’s anthropological tradition. One of the pioneers of the ontologies approach is Philippe Descola (1986), an Amazonist and disciple of Claude Levi-Strauss who conducted feldwork among the Achuar of the Ecuadorian Amazon in the early 1980s. A more recent reference is Eduardo Kohn (2013), who has worked with the Kichwa of the northern Ecuadorian Amazon. Kohn’s grandparents migrated to Ecuador from Italy and the Czech Republic to escape the Nazis. However, he grew up in the United States and studied at the University of Wisconsin at Madison with Frank Salomon, noted ethno-historian of the Andes. Alexandra Martínez (2007) adopts the ontologies paradigm for reasons that are more immediate. She argues that questioning the dichot- omy between nature and culture strengthens the claims of indigenous organizations, and that such an approach will be useful to improve Ecuador’s public policies. Similarly, Vallejo (2014) contrasts government resource extraction practices with the worldviews of Amazonian people, who have sociability networks that include people as well as nonhumans, and even natural features such as mountains and rivers. Bustamante (interview with author, 8-5-2015), on the other hand, questions the uncritical way in which some Ecuadorian anthropologists have adopted the trend, which has allowed for an essentialist approach unconcerned with urgent problems. The ontologies paradigm, which understands nonhumans and natural features as capable of subjectivity and agency, infuenced the adoption of the rights of nature in the 2008 Ecuadorian Constitution via the advice of social scientists. Ecuador was the frst nation in the world to make nature—independently of the human beings that inhabit it—a subject of rights. Such an approach, however, raises questions. How will nature’s subjectivity and agency operate within the mainstream legal system? And if nature or nonhumans cannot represent themselves, who will represent them? In a 2018 dialogue between anthropologists and the Shuar and Achuar nations organized with the support of the French Institute of Andean Studies and other institutions, Phillippe Descola noted that neither humans nor nonhumans should be subjects of rights. The Constitution should rather protect their interrelations. He also suggested that ontological autonomy should be translated into political and 148 C. MARTÍNEZ NOVO juridical autonomy. This anthropologist added that if a policy grants rights to nature, it must also provide the means to implement these rights. Humans should not be the origin of all rights, Descola noted, but the representatives of a multitude of natures.

4 the Perverse Uses of Anthropology Under a Semi-authoritarian Regime Ecuadorian anthropologists acknowledge that there was a collaboration of anthropologists with the Correa regime for the purpose of containing and co-opting social movements. According to Bustamante (interview with author, 8-5-2015) those who had jobs in academia were able to remain somewhat independent, but the government monopolized other jobs and consultancies for anthropologists, particularly after the contraction of NGOs and international funding and programming. The anthropologists who worked for the government had two options: to try to work as technicians in their own nonpolitical projects, or to become politicized. According to this anthropologist, those who tried to work on purely academic or technical issues were not successful in the long run. He provided the following example:

Let’s say that somebody is working on a grammar of the Zaparo language for the Ministry of Patrimony and she only wants to work on that project. However, eventually she will be asked to provide people for a pro-government demonstration or to distribute resources among the people she is working with. Purely technical work is not possible. (Bustamante, interview with author, 8-5-2015)

The anthropologists who became politicized came to perceive those who did not support the regime as enemies. Government-affliated anthropologists had two sources of power, controlling public contracts and access to public data and information. They typically used government contracts to co-opt their peers. One way to silence those who were not affliated with the government was to deny them the economic means and/or the information necessary to conduct their research. Anthropologists working for the regime did not openly debate with the opposition, because debating was a form of recognition. One strategy used was to listen to the arguments of the opposition and then challenge those arguments with the regime’s own propaganda machinery, without 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 149 mentioning its source of production (Bustamante, interview with author, 8-5-2015). Tighter government controls of civil organizations as well as political polarization caused the closure of the Association of Anthropologists, Archaeologists, and Linguists of Pichincha, the only such entity operating in Ecuador. Executive Decree 16 required social organizations to have a certain amount of capital (US$4000) and to conduct a great deal of bureaucracy to keep the organization open. Since this was an association run by volunteers, this legislation made it too burdensome to continue operation. Furthermore, anthropologists were unable to unite in a single voice because they were divided over their support for Correa’s government or lack thereof (Bustamante, interview with author, 8-5-2015; Córdova, conversation with author, 7-2-2015). One anthropologist argues that intellectual repression was typically indirect. He noted, “you are not told what to research or what to write. However, those who criticize the government face the risk of losing their jobs” (Anonymous anthropologist, interview with author, 7-8-2015). This kind of indirect repression is typical of hybrid regimes, because it fosters the appearance of freedom while also limiting what can be said in the public sphere (Conaghan 2017; Ortiz Lemos 2015). The regime also used the expertise of anthropologists to reverse some previous gains by the indigenous movement, as well as to justify this reversal. Anthropologist Jose Antonio Figueroa played a leading role in the closure of the Universidad Intercultural de las Nacionalidades y Pueblos Indígenas, Amawtay Wasi (UINPI). UINPI was an institution of higher education sponsored by CONAIE and ICCI (Instituto Científco de Culturas Indígenas), an indigenous think tank led by historical activist Luis Macas. As a leading member of CEAACES (Consejo de Evaluación, Acreditación y Aseguramiento de la Calidad de la Educación Superior, Council for the Evaluation and Accreditation and Quality Control of Higher Education), Figueroa was in charge of applying the 14th mandate of the 2007–2008 Constituent Assembly. This mandate required the evaluation of institutions of higher education and the closure of those that did not pass. The 14th mandate was originally issued to protect students from failing, for-proft, “neoliberal” universities. However, the legislation was instrumental in closing the only indigenous-owned and -operated university. In order to evaluate UINPI and the Pedagogical Institutes that trained indigenous teachers for the intercultural bilingual education 150 C. MARTÍNEZ NOVO system, Figueroa hired Kichwa Ph.Ds. Armando Muyulema and Luis Alberto Tuaza, among other indigenous professionals. These academics were in charge of shaping the criteria for evaluation and of designing questions in the Kichwa language. However, Tuaza noted that the indigenous professionals were not told the purpose of the evaluation, and that they did not have any real decision-making power (Tuaza, interview with author, July 16, 2015). Both professionals eventually left CEAACES in disagreement, but their temporary participation was used to argue that the evaluation had been intercultural (Figueroa 2015). CEAACES ordered the closure of UINPI in October 2013. The reasons given for the act of suspension were that the state was interested in guaranteeing the quality of education for students, that the knowledge of UINPI students was defcient, and that UINPI did not represent the whole Kichwa and Shuar nations, but only a small, corporatist group of leaders.2 In a book chapter justifying his participation in the closure of UINPI, Figueroa (2015) claims that the University had used concepts of cultural difference based on the writings of Walter Mignolo and Catherine Walsh to justify its pedagogical defciencies and the exploitation of teachers and students. Mignolo (2003) and Walsh (2007) had argued that UINPI embodied nothing less than the epistemic autonomy of indigenous peoples and the end of intellectual colonialism. Figueroa, to the contrary, highlighted the importance of the intercultural alliances that had taken place in Ecuador since the Liberal Revolution: the alliances between indigenous people and socialists and communists in the 1930s and 1940s, as well as the indigenous-mestizo alliances that led to the creation of the Pachakutik party. Figueroa claimed that mestizaje was not only a Creole, but also an indigenous project. The anthropologist added that an emphasis on differences and the corporatist appropriation of the gains of indigenous peoples by a small group of leaders could only deepen social exclusion. Finally, he stated that “interculturality” was transversal to the overall project of Twenty-First Century Socialism, and very important to it. However, the government understood interculturality as an empty space for a group encounter. The intercultural project of the regime, as Figueroa explains it, seemed to be a continuation of the previous project of mestizaje.

2 Consejo de Educación Superior, República del Ecuador, Acta resolutiva sesión extraor- dinaria n. 12, 4 Noviembre 2013. 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 151

Encounter between groups may be encouraged, but the mestizo remains the leader and agent. To sum up, mestizo anthropologists were witnesses to the weakening of the indigenous movement during the Correa decade, but they have not yet written a comprehensive account of it. Critical anthropologists have focused instead on localized environmental conficts and on how these affect indigenous peoples. Hale et al. (2017) have argued that we are witnessing the emergence of a new racial formation in Latin America characterized by the retrenchment of indigenous rights and under- pinned by extractivism and mestizo backlash. In this context, the authors argue, indigenous struggles tend to become localized, and national level struggles lose their previous relevance. Perhaps the work of Ecuadorian anthropologists resonates with this shift. Meanwhile, other anthropologists have chosen to work on less controversial historical or ontological themes. Whereas anthropologists have been advocates of indigenous peoples, they have also used their expertise to co-opt and weaken indigenous movements and rights. This chapter has further shown that the Correa regime has utilized a multidimensional strategy to silence academia based on the control of funding and information and outright repression, while the regime cultivated an appearance of freedom of expression. In addition, pro-government or neutral academic positions were rewarded with funding and public recognition.

5 indigenous Anthropologists in the Transition from Neoliberalism to the Correa Decade: Openings and Drawbacks Despite the decline of the indigenous movement and the retrenchment of indigenous rights during the Correa decade, a few indigenous academics were for the frst time able to obtain full-time positions at Ecuadorian universities. They also enjoyed the time and opportunity to publish, which had been rare in the previous period. Interestingly, this did not happen because of the affrmative action and anti-discrimination policies of the 2008 Constitution, or subsequent secondary legislation, but rather due to the regime’s attachment to the concept of meritocracy. The government required universities to have as many professors as possible with Ph.D. degrees, so that the institutions could pass evaluations under the 14th mandate and avoid closure. However, many 152 C. MARTÍNEZ NOVO universities did not have suffcient professors with an advanced degree, particularly in the provinces, although a few indigenous intellectuals had been able to complete a Ph.D. with the funding and educational opportunities available in the prior neoliberal period. Here I will recount the story and briefy discuss the publications of one such indigenous intellectual: Luis Alberto Tuaza. Interestingly, Tuaza was able to secure a full-time position at the Universidad Nacional de Chimborazo (National University of Chimborazo, UNACH) in Riobamba. Riobamba is a provincial capital in an area of high indigenous population density. The hiring of indigenous professors was possible thanks to the regime’s requirement as well as through the intervention of Lexinton Cepeda, an open-minded Dean. However, the positions that indigenous professors were offered were not permanent, but based on yearly contracts. Luis Alberto Tuaza told of his experiences in studying for a Ph.D., fnding an academic position, and surviving in a mostly hostile academic world (interview held on July 16, 2015; translations by the author). Tuaza, from Rumicruz, an indigenous community in the Chimborazo province, studied at a single-teacher school in his community with 60 other students at six different grade levels. The Ministry of Education paid the teacher’s salary, and the community provided the building, which at the time was a small house with a straw roof. Having a school in the community was important, Tuaza recalled. It was nearby, and the students could speak among themselves and with the teacher in their native Kichwa. Until 1988, when the school joined the intercultural bilingual system, classes were given in Spanish. When Tuaza completed his elementary education,

There was only one high school. It had two specialties: agriculture and aquaculture. It also taught about irrigation projects. We, indigenous people, only had those options. If we wanted to study something else, we had to go to Riobamba. There were no roads in our community at the time. We had to walk for a kilometer and a half to be able to take the bus to Riobamba. So I had to study agriculture, and I liked it.

After fnishing high school, continuation of his studies was a challenge for Tuaza, particularly because his mother died and left him an orphan.

Before her death, my mother was part of the pastoral work of Monsignor Proaño in Riobamba. My mother used to host missionaries at her house. 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 153

A Laurita nun befriended her. The nun thought that I should join the seminary and study social sciences. At the time, the Church gave a small scholarship of 3000 sucres to Kichwa students. In exchange, we had to work for the dioceses. So I went to the seminary in the city of Cuenca. I could study and had the opportunity to attend the University. My grand- mother had had a bad experience with the old priests. She advised me not to waste my time with the priests.

That is how my passion for studying was born. Without the support of the Church it would have been very diffcult for me to study. The Laurita nuns corrected my writing and taught me public speaking. I suffered at the university because I was placed with students from private schools like Colegio Borja and Asunción. But thanks to the support of Father Fernando Vega, I was able to succeed. I had a special sensitivity for the indigenous world. Monsignor Alberto Luna encouraged me to dedicate myself to indigenous people and the poor.

After graduating with a degree in Theology, Tuaza became a priest in Riobamba. Then, he decided to pursue a graduate degree. He found the Facultad Latinoamericana de Ciencias Sociales (Latin American School of Social Sciences, FLACSO) through a Google search, took an entrance exam, and requested a loan from the government to pay tuition. He did not know at the time that FLACSO offered scholarships.

I did not have money for lodging or food, and Quito was very expen- sive. I asked the Laurita nuns if I could live with them at their hospice in the Tejar neighborhood of Quito. I slept with the market porters, on a mattress on the foor. Then, a priest hosted me in his house. In return, I worked at a retirement home. I made US$20 in alms, which was enough for copies. I was able to complete my M.A. and write my thesis. My Masters’ thesis was about the indigenous Pachakutik party. I had a roman- tic perception of the indigenous movement at the time.

After graduating with an M.A., Tuaza worked as a priest in the parish of Columbe in his native province of Chimborazo. During that time he became skeptical of the indigenous movement, development organizations, and the Catholic Church. He realized that the communities were quite disconnected from these institutions. When he attended meetings and mingas (collective work parties) and collaborated in public works, he realized that the NGOs, the indigenous organizations, and the Church 154 C. MARTÍNEZ NOVO had lost infuence over the communities. He found that these institutions had often abused the free labor of comuneros (Tuaza 2011).

The community became open to the Evangelical world, a fact that was not well received in the Dioceses. Evangelical Indians also needed support to get politically organized. I saw the need to work with the Evangelical world. However, after six months, I was punished because I was working outside of the lines of the Indigenous Pastoral. Then, I decided to continue studying for my PhD, and FLACSO accepted me.

Tuaza enjoyed his time at FLACSO. He liked doing research and writing and meeting other researchers. In addition, from 2009 to 2011 he was able to live from the research consultancies that he did for several FLACSO professors. Tuaza argues that

FLACSO helped me overcome racism. Thanks to academia, I have been able to fnd my space in the religious world. My pastoral work is the result of my academic refection. I learned what Monsignor Proaño used to say, that we need organization and to build communities. Without organization we cannot take care of our needs. Due to the absenteeism of the state, we indigenous people have to survive on the basis of our collective work.

Once he fnished his Ph.D., Tuaza looked for academic work. Instead, he received several offers to work for the Correa government:

I was asked to become a consultant for the Ministry of Politics under Minister Doris Solís [a mestizo former member of Pachakutik]. They paid US$2,500 a month. I worked there for only three days. My job was to read the newspapers and evaluate what they were saying about the government. Then, I was expected to prepare counter-arguments. I did not like it. There was a tendency towards lying and exaggeration. I rejected this proposal. Then CEAACES hired me. They paid US$2,000 a month. I was asked to write evaluation questions for the social sciences. I was also in charge of the evaluation of the Intercultural Pedagogical Institutes [the schools that educated intercultural bilingual teachers]. I created the questions in Kichwa. They did not explain to me the reasons for the evaluation. They said that it was to strengthen the institutes, but actually it was a strategy to close the institutes. All the decisions were taken by the white-mestizos of the regime. We were only peons. Once I realized that we were peons, I left that job. Later, CEAACES wanted to hire me to evaluate the indigenous Amawtay Wasi University [which they also planned to close]. 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 155

They paid US$3,700 a month. I decided to continue teaching instead of earning the enmity of the indigenous organizations.

Afterward, Tuaza joined the faculty at UNACH on a yearly contract. When a permanent position became available, he applied. He had a Ph.D. and numerous publications, including two books, a manuscript about to be published, and several scholarly articles and book chapters. Still, he was not successful:

I had the opportunity to join UNACH in Riobamba. The Dean, Lexinton Cepeda was interested in hiring me. I was hired in a temporary position, though. Then, the University posted a permanent position. I had many publications but they were worthless there. I had all the merits they requested. They argued that the copy of my ID was not properly legalized and sealed. I appealed, because I had enclosed another copy that was indeed legalized. They accepted the second copy, but declared the position vacant because one of the members of the tribunal did not have an M.A. and was not qualifed to judge me.

When Tuaza frst joined UNACH, he went to fll out the paper- work with the department’s secretary. He found that his last name had been changed to Torres. He told the secretary: “Miss, there is a mistake here. My name is not Torres, but Tuaza. Could you please change it?” The secretary responded: “No worries. I just changed your name to Torres on purpose. No Tuaza can be a Doctor here”. Tuaza requested to be shifted back to his original Kichwa family name. The secretary was just being “nice” and doing him a favor by upgrading him to mestizo. Tuaza’s Ph.D. dissertation, published as a book with FLACSO (Tuaza 2011), analyzes the organizational crisis of the indigenous movement from the perspective of the grassroots. While working as a priest in Chimborazo, Tuaza noticed the contrast between the glorious organizational past of the area—about which he had read in the pastoral reports of the 1980s and 1990s—and what he calls the “organizational exhaus- tion” of the present. The loss of interest by the grassroots in political participation had led to a decreased infuence of the indigenous movement in the national political arena. In order to understand this, Tuaza used Sidney Tarrow’s theory of social movements, and particularly his concept of the “collective action cycle”. 156 C. MARTÍNEZ NOVO

Given his rapport with indigenous communities and his knowledge of the Kichwa language, Tuaza was able to write an interesting critique of the bibliography on the emergence and decline of the indigenous movement. He argues that the bibliography praises the achievements of indigenous organizations, but fails to attain a wider perspective on the indigenous world. According to Tuaza, most authors have privileged the political over the economic, when the latter is of greater concern to indigenous people. In addition, the studies recover the voices of leaders while eschewing the points of views of regular folks. In contrast, Tuaza argues that the perceptions of the grassroots are what explains the decline of this social movement. According to Tuaza, the grassroots think that the leaders have asked for excessive collaboration but have provided little in the form of tangible results. Concepts used by the leadership such as plurinationalism and interculturalism have not been adequately explained or socialized within the grassroots. In addition, leaders stick to their positions and do not allow suffcient space for youth, and they seldom consult the grassroots when making a decision. For these reasons, community members do not want to participate in this social movement. If they collaborate, it is mostly out of fear because they are fned and/or their water and electricity services are suspended. Commoners complain that even the elderly and dispossessed are forced to work in mingas or else pay a fne, as leaders do not take personal hardship into account. Another problem, Tuaza notes, is that the cabildos, the traditional ruling bodies of communities, have lost much of their power. Historically, cabildos solved family conficts, distributed communal land, and applied justice. Today, development organizations have multiplied and have competed for the collaboration of the comuneros, weakening the cabildo structure. The creation of parish councils has also served to weaken cabildos, as the parishes (the mestizos) have become the main brokers with the central government and make the decisions for the communities. Another factor that explains the undermining of indigenous organizations at the community level is migration. The communities, once the backbone of the indigenous movement, lie empty today. At the national level, Tuaza fnds that the organizations have not fulflled the expectations of the grassroots. Leaders have focused on political participation and on fnding government jobs for themselves, and they have given less attention to the economic concerns of commoners. In addition, leaders have focused on rural issues, while the grassroots 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 157 do not necessarily live in the countryside or work only in agriculture. Temporary and permanent mobility are signifcant realities for communities. Therefore, according to Tuaza, a crisis of credibility has arisen for the leaders, who currently lack the ability to mobilize the grassroots. Tuaza’s book is methodologically strong; he uses an interdisciplinary approach that combines anthropology with the insights of history and political science. He proposes a holistic view of the indigenous world, avoiding the separation between politics, the economy, and cultural aspects. Tuaza recovers the voices of the grassroots through a combination of interviews, participant observation, and the use of the archives from the Catholic Church and development organizations, to which he enjoys ample access. Most of his interviews and observations are conducted in the Kichwa language. His long-term participation in the communities as a religious authority gives him strong rapport, and he highlights the importance of listening and maintaining a humble attitude. Looking at certain other life histories and the academic work of indigenous authors that cannot be included here for lack of space, we fnd some common patterns: the strength of Liberation Theology explains many trajectories propelled by the Catholic Church. Multicultural funding and support originating in international cooperation during the neoliberal period allowed some to receive advanced degrees. These authors endured crude racism but also enjoyed the support of key people in their native provinces. They felt more supported, although they also suffered what they saw as subtle discrimination, in the cosmopolitan universities of Ecuador’s capital city or abroad. When they returned to their native regions, they were able to obtain jobs thanks to the meritocratic policies of the Correa regime. However, there were limits to meritocracy, as the jobs they were able to fnd were based on renewable contracts, and permanent positions proved impossible to secure. Their universities strongly encouraged them to become mestizos, and to acculturate themselves in order to be able to conduct professional work. When they decided to keep their indigenous identity, they were confronted with hostility. Their academic work is enriched by a level of rapport and access greater than that of mestizo or foreign researchers. Thanks to this, they are able to raise important questions and discuss nuances that non-In- dian authors are not able to grasp. Indigenous academics are also interested in mastering Western theories while adding their own knowledge of the indigenous world. The relation of indigenous scholars to the 158 C. MARTÍNEZ NOVO

Correa government has been somewhat ambiguous. While focusing on indigenous politics, Illicachi (2014) chooses not speak directly about current politics. Tuaza, is more direct, but he struggles with government attempts to co-opt him and his arguments.

6 conclusion The Correa decade and the commodity boom offered both opportunities and constraints for white-mestizo and indigenous anthropologists: a stronger and better-funded state allowed academics to conduct the kind of basic, solid research that had not been possible in the prior period. On the other hand, authoritarian tendencies restricted freedom of expression. Within this constraining frame, anthropologists were faced with choices: some supported indigenous social movements at some personal cost; some wrote intercultural propaganda for the government; others weakened and co-opted social actors; still others decided to avoid open political discussion. Continuing with the legacy of Ecuadorian anthropology as a political and applied discipline, even works that eschewed current issues carried some political undertones (Martinez-Novo 2008). A material understanding of this intellectual production does not preclude awareness of individual and group agency. Despite the decade’s nationalist ideology, the tendency toward intellectual dependency persisted, as academics tried to keep pace with the latest foreign trends. However, Ecuadorian anthropologists adjusted novel paradigms to the national context and to their country’s disciplinary traditions. For instance, when they adopted the ontologies approach, they made it more applied and political. Moreover, Ecuadorian anthropologists were able to convince practitioners from the global North of the need to become more radical in view of the current dangers faced by indigenous peoples and the environment, which may be more noticeable in the global South. On the other hand, intellectuals were operating within an authoritarian context. Jobs, funds, and information were allocated selectively to those who supported—or at least did not oppose—the regime. Those who did not support the government were either marginalized or repressed. The Correa decade also had mixed effects on indigenous scholars. Post-neoliberal meritocracy allowed them to get full-time academic jobs, but the lack of a serious commitment to affrmative action and interculturalism constrained their job stability. Like other academics, 7 INTELLECTUALS, NGOS, AND SOCIAL MOVEMENTS UNDER … 159 indigenous anthropologists made choices within this constraining framework: whereas some feared discussing politics openly, others expressed their opinions more candidly. However, due to their economic vulnerability, they were at greater risk that their labor and arguments would be co-opted by the regime. Despite public statements about interculturalism, plurinationalism, and affrmative action, the Correa regime did not enforce these views in academia. On the contrary, if any affrmative action took place, it was due to the habits created in the prior period or to meritocracy. The Correa government closed the only indigenous institution of higher education with the argument that interaction under mestizo leadership was better than segregation. Interculturalism, as the regime defned it, was not different from the prior paradigm of mestizaje. Correa’s control, silencing, and co-optation of the public sphere and civil society also resonate with other processes in Latin American countries that turned toward the left in the early 2000s. In Bolivia, NGOs, think tanks, and the opposition lowland indigenous movement have been repressed and accused of promoting imperialist goals (Postero 2017). The Bolivarian regime of Venezuela also created social movements from above (Angosto-Ferrández 2015), the difference being that, while the indigenous movement was almost nonexistent in Venezuela before Chávez, Ecuador had robust and combative indigenous organizations (Lucero 2008). In Argentina, the most critical mapuche leaders were offered government positions in Cristina Kirchner’s regime (Briones 2015). Although other works on intellectual-social movement relations in ‘Turn to the Left’ regimes are few, some common elements stand out in how these governments have manipulated social movements and their intellectual allies, including both NGOs and academics (Conaghan 2017; Ortiz Lemos 2015). However, because Rafael Correa and many in his government were professors before becoming politicians, their grip on academia may have even been more insidious than in other cases.

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Interviews and Personal Communication Fernando García, Professor of Anthropology, FLACSO, Ecuador, July 28, 2015. Luis Alberto Tuaza, Professor of Political Studies, Universidad Nacional de Chimborazo, July 16, 2015. Marcelo Córdova, Anthropologist, conversation with author, July 2, 2015. Teodoro Bustamante, Professor of Environmental Studies, FLACSO, Ecuador, August 5, 2015. Víctor Jácome, Anthropologist, Professor of Social and Public Economics, IAEN, conversation with author on July 8, 2015. CHAPTER 8

The Macroeconomics of the Commodities Boom in Ecuador: A Comparative Perspective

Augusto de la Torre, Simón Cueva and María Alexandra Castellanos-Vásconez

1 introduction Over the 2003–2012 period, commodity-exporting countries in Latin American (mainly South America) beneftted from a powerful boom in prices. Being a major commodity exporter—principally of petroleum, but also of shrimp, bananas, and cacao—Ecuador was likewise swept into the commodities vortex and, since the price of oil did not begin declining

A. de la Torre (*) Columbia University, New York City, NY, USA e-mail: [email protected] S. Cueva Laureate International Universities, Baltimore, USA e-mail: [email protected] A. de la Torre · M. A. Castellanos-Vásconez Universidad de las Américas (UDLA), Quito, Ecuador e-mail: [email protected]

© The Author(s) 2020 163 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_8 164 A. de la TORRE ET AL. until late 2014, the country experienced a relatively longer boom phase. Largely overlapping with this commodities cycle was the administration of authoritarian President Rafael Correa (2007–2017), which essentially coincided with the upswing phase of the cycle (until 2013–2014) along with 2–3 years of the downswing phase. This chapter assesses macroeconomic management during the Correa administration. Given the overarching importance of the commodities cycle, such an assessment must overcome two important hurdles. The frst is an identifcation problem: when considering macroeconomic performance in Ecuador, it is diffcult to sort between outcomes that can be attributed to policy and outcomes driven by the sheer force of an exogenous factor unconnected to policy (namely, the commodities price bonanza). The usual approach of comparing macroeconomic developments during the Correa administration to those in prior years will not work here: it would yield misleading results due to the magnitude and economic signifcance of the commodity boom, which affected all commodity-exporting countries. Thus, to overcome this identifcation hurdle, the strategy in this chapter is to analyze macroeconomic developments in Ecuador (albeit without a full-fedge econometric model) by systematically comparing them—in terms of outcomes, determinants, and policies—to outcomes in relevant peer countries, which is to say other South American commodity-exporting countries. The second hurdle has to do with the relevant time horizon of the assessment. To avoid distortions, the focus should be not merely on the boom years, but also on the bust. This is because macroeconomic policies during a boom can amplify spending effects in an unsustainable fashion (as will be made clear in the chapter). Such amplifcation can make contemporaneous outcomes appear more impressive than they really are; in the end, they may instead adhere more closely to the adage “bread today, hunger tomorrow”. The larger the policy-induced boosts to expenditure during a boom, the higher the economic costs during the subsequent bust. These costs take the form of greater and more protracted adjustment pains (including in terms of consumption com- pression, employment losses, and growth slowdown), compared to countries where distinct macro-policies mitigated or prevented unsustainable spending amplifcations. Therefore, to assess the Correa administration’s macroeconomic management, this chapter examines macroeconomic developments in a comparative setting across the entire commodities 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 165 cycle, boom and bust, for the period from 2003 to the end of the Correa administration in 2017. The analysis shows that Ecuador’s macro-management of the bonanza phase of the commodities cycle had one important positive point: a high public sector savings rate. This proved a source of strength that helped dampen excessive growth in consumption, though it was overwhelmed by misguided macroeconomic management in other crucial respects, including the following:

• An unprecedented, highly pro-cyclical and unsustainable expansion in the size of the public sector during the boom years, from 25 to 44% of GDP. • A failure to take advantage of the (dollarization-driven) competitive real exchange rate (which materialized during the upswing phase of the commodity bonanza) to promote export expansion and diversifcation (at a time when the currencies of most other commodity-exporting countries in the region were losing competitiveness). • An imprudent decision not to build liquid fscal buffers during the boom, especially relevant considering the high volatility of oil prices, exacerbated in recent decades. The ample public sector savings were invested entirely into illiquid local assets (mainly transport or energy infrastructures), while preexisting liquid assets (international reserves and previously accumulated stabilization funds) were drained. Moreover, the surge in public investment was infected by an unprecedented level of corruption, seemingly orchestrated from the highest tiers of an authoritarian government that purposefully dismantled the system of checks and balances. • A reckless decision to default on the external debt based on pure “unwillingness to pay” (the default occurred in 2008, at a time when the country had a strong “capacity to pay”), which cemented the perception of Ecuador as a rogue debtor.

These basic ingredients of mismanagement greatly amplifed the spending effects of the commodities price boom but turned against Ecuador with a vengeance starting in 2014, when the bonanza came to an end. Thus, in the downswing of the commodities price cycle, Ecuador’s economic activity took a major hit and found itself trapped between a large fscal imbalance (ultimately driven by an unsustainable level of 166 A. de la TORRE ET AL. government expenditure) and an overvalued real exchange rate (with the dollar appreciating even as Ecuadorian export prices were collapsing). Once oil prices had collapsed, there were strong incentives to postpone the fscal correction, given the contractionary effect on economic activity (especially with an overvalued real exchange rate) and the well- known political constraints to adjustment. In fact, adjustment was postponed until mid-2018, the time of this writing.1 That, combined with the absence of liquid fscal buffers, fueled a spiraling rise of debt, with the government having to pay the cost associated with its reputation as a rogue debtor in the form of very high interest rates (similar to those paid by U.S. corporate junk bonds, and around 5–6 percentage points higher than those that Chile, Colombia, or Peru would pay for similar maturities). Moreover, the post-boom adjustment pains were exacerbated by the fact that during the boom, Ecuador’s productive structure was signifcantly tilted toward serving the local market (see below) not least because of an oversized government. As a result, the recovery of growth remains particularly challenging for Ecuador, even if its macro- imbalances were corrected. (As shown below, growth rates appear rather poor compared to other commodity exporters in the region, when the entire commodities cycle is considered.) The chapter is organized as follows. Section 2 discusses the historical and economic relevance of the recent commodities boom, focusing on the South American commodity exporters. Section 3 presents a bare-bones conceptual framework to understand the macroeconomic effects of a terms-of-trade windfall, including its transmission channels and sources of amplifcation. Section 4 presents evidence and discussion on the effects of the boom and its management from a macroeconomic perspective in a comparative setting, highlighting the Ecuador-specifc features.2 Section 5 examines key aspects of the “hangover” during the

1 This analysis does not include developments after May 2018, when important cabinet changes occurred under the Moreno administration, including the nomination of Richard Martínez as Finance Minister. These changes marked a reorientation in economic policy, greater transparency and frankness regarding the gravity of the macroeconomic situation, the introduction of some corrective fscal measures, alongside efforts to stimulate private investment while protecting vulnerable segments of the population, and a notable improvement in Ecuador’s relations with multilateral institutions. 2 See Fernandez et al. (2015) for alternative methodologies to identify commodity booms and their correlation with the business cycle and macroeconomic variables, and Fernandez and Villar (2015) for the negative impact on the manufacturing sector of commodity booms in South America. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 167 bust (in terms of contractionary spending adjustments and macroeconomic policy constraints after the boom) and links them to the excesses of the “party” during the boom. Section 6 offers our conclusions.

2 A Most Powerful Commodity Price Boom In a well-known yet often underestimated stylized fact, export- commodity dependence in South America ranks among the highest in the world. In some South American countries, exports are highly concentrated on a single mineral commodity (Chile, Peru, Venezuela) or a single agricultural commodity (Argentina, Uruguay); in others, exports remain commodity-dependent but concentrated into more than one commodity (Colombia, Ecuador, Brazil).3 In all South American countries, the terms of trade (the price of exports divided the price of imports) are highly and positively correlated with commodity prices (Fig. 1a), making South America the region where global commodity price fuctuations have the greatest impact on the terms of trade, even more than in middle-income African countries (Fig. 1b). That South America is greatly exposed to commodity prices is immensely relevant to our analysis, given that the recent boom has been the most powerful experienced by the region in at least half a century (i.e., since detailed trade statistics became available), if not a full century. The boom was not only potent in magnitude but was also the longest lasting and most comprehensive in terms of the commodities affected and the countries the benefted; the real prices of industrial metals and oil were higher than at any time since 1916 (Sinnott et al. 2010). The boom’s duration and strength were the direct result of the momentous rise of China, an economic ‘big bang’ entailing three major global shocks: a supply shock (Chinese manufacturing exports fooding

3 We follow the classifcation of De la Torre and Ize (2018) where a country is classifed as: (i) a “commodity exporter” if at least 55% of its exports originate from the primary sector (raw or processed commodities); (ii) a “specialized commodity exporter” when its exports in any given class of commodities (agricultural, mineral, hydrocarbons) exceed 45% of total exports (otherwise, it would be classifed as a “diversifed commodity producer”); and (iii) “beyond commodities” when commodities as a whole account for between 40 and 50% of exports. 168 A. de la TORRE ET AL.

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Fig. 1 Commodity price index and terms of trade in South America (Source World Bank’s GEM, Bloomberg, IMF, and national sources. Author’s own calculations. Notes Panel 1a: The Terms-of-Trade series is the average of standardized series for Argentina, Brazil, Chile, Colombia, Ecuador, and Peru, obtained by subtracting the mean and dividing by the standard deviation. Panel 1b: ECA Eastern and Central Asia; MCC Mexico, Central America and the = = Caribbean; SEA MICs South East Asia & Middle-Income Countries; Africa = MICs the average of 15 middle-income countries in Africa, following World = Bank classifcation)

the world); a demand shock (sharp rise in the demand for imports of primary products); and a fnancial shock (a global “savings glut” associated with huge current account surpluses in China and other emerging economies, coupled with insuffcient investment demand in advanced economies) (De La Torre et al. 2015). Between 60 and 100% of the 16 commodities most relevant to Latin America experienced strong and synchronized price increases over 2003–2008 (Fig. 2), in sharp contrast with prior commodity price bonanzas, which were of lesser duration and tended to cover a smaller fraction of the commodities relevant to the region. The impact of the surge in commodities prices on the terms of trade was extraordinary. The terms-of-trade index of South American countries (simple average) rose by nearly 65% between 2002 and 2012 (Fig. 1a), with deep and pervasive economic effects. Indeed, changes in the terms of trade seem to have infuenced virtually all the vital signs of the South American macro-economies, to an unsettling degree. Figure 3 displays the tight co-movement observed during the 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 169

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commodities cycle for South America between the evolution of the terms of trade and such key variables as economic growth (Fig. 3a), the investment rate (Fig. 3b), the stock exchange indices (Fig. 3c), and net foreign assets (Fig. 3d). Since the terms of trade is a fundamental variable for the macroeconomy, the message is sobering: an exogenous factor (commodity prices), independent of local economic policies and institutions, can vastly dominate the macroeconomic scene of a country. It is against the background of the commodities boom—which was a positive exogenous shock that hit the South American commodity-exporting countries with comparable force and duration—that macroeconomic management during the Correa administration must be evaluated. Before delving into comparative empirics, however, it is necessary to sketch the basics of a conceptual framework on the macroeconomics of a commodity boom (De la Torre et al. 2016). To this we now turn. 170 A. de la TORRE ET AL.

(a) Real Growth (b) Investment

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3 the Macroeconomics of a Commodity Boom In principle, the economic impulse from a terms-of-trade windfall can work through the supply or domestic demand sides. In practice, this works mainly through domestic demand effects. Let us explain. Consider frst the supply side. The rise in the price of a country’s major export can lead to an increase in the volume of that export produced, which can raise GDP growth via employment effects as well as forward and backward linkages. However, the volume (quantity supplied) of commodities exported during the recent boom rose 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 171

Fig. 4 Ecuadorian oil production and export volumes and prices (Source BCE and Author’s own calculations) little, relative to the price rise in most South American countries (De la Torre and Ize 2018). In the case of Ecuador, the volume of oil production remained basically fat throughout the 2004–2014 boom (Fig. 4). In practice, therefore, the impact of changes in the terms of trade on economic activity tends to be mostly channeled through domestic demand (i.e., spending) effects. Such effects tend to lead to what is known as a Dutch disease (Corden 1983; Corden and Neary 1982; Van der Ploeg and Venables 2013), a weakening of manufacturing production. The core reasoning behind spending effects is as follows. An increase in the terms of trade (that is, in the price of exports relative to the price of imports) raises the purchasing power of exports and, hence, the purchasing power of national income, even if the volume of exports remains constant. As a result, national income increases more than national output and the country (and its population) perceives itself to be richer, because it can now buy more imports with the same volume of exports. Simply put, the country can spend more without necessarily producing more. However, whether the country is indeed richer hinges 172 A. de la TORRE ET AL. on whether national wealth increases,4 and this is largely a function of the extent to which the improvement in the terms of trade (hence, national income) is permanent or transitory. While it may be diffcult to assess the permanence of a positive shock, that does not alter the fact that a bonanza can lead to a spending binge that results in a ‘hangover’ if the terms of trade suddenly decline to pre-boom levels, and if the country consumes the windfall in the interim, instead of saving and investing it effciently over time. Therefore, the cyclical (macroeconomic) consequences of a terms- of-trade improvement depend crucially on the extent to which policy actions magnify or cushion its spending (domestic demand) effects. The frst and most important source of amplifcation (or attenuation) is the savings rate. At one extreme, spending effects would be minimized if the entire terms-of-trade windfall is saved and invested in foreign assets (the Norwegian stabilization fund would be a proxy). At the other extreme, spending effects would be maximized if the entire windfall is consumed in local goods and services. In the middle is a continuum of outcomes depending on what fraction of the windfall is saved and how much, how fast, and how effciently such savings are invested locally (in machinery and equipment, infrastructure, human capital, etc.) versus abroad. Note that, from the point of view of short-run macroeconomic management, it is immaterial whether the windfall is consumed or invested locally, as both can create an excess of demand over output, with similar impacts on the external current account and the real exchange rate. However, from the point of view of wealth creation, they are not equivalent. Unlike consumption, local investment, if productive, would raise economic growth and therefore permanent income and wealth. Two caveats are worth mentioning regarding the savings rate at this stage. First, what matters for the amplifcation or cushioning of the spending effect is the structural savings rate, as well as the marginal propensity to save out of the windfall income. A country that enters a boom with a relatively high structural (or historical) savings rate would from the outset attenuate more of the spending effect. Also, the greater the marginal propensity to save from a windfall, the more the spending effect would be dampened. Second, observed savings rates can be

4 Given that oil is a nonrenewable resource, producing and exporting it depletes the country’s natural wealth, unless the income thus generated is effciently invested in projects with a high social rate of return. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 173

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Fig. 5 South America: terms of trade and nominal and real savings rates (Source De la Torre et al. [2016]. Notes Average standardized series for Argentina, Brazil, Chile, Colombia, Ecuador, and Peru. Standardized series are obtained by subtracting the mean and dividing by the standard deviation) highly misleading in times of signifcant terms-of-trade changes if the distinction between nominal and real savings rates is not adequately captured in the data. The nominal savings rate (nominal savings divided by nominal GDP) can overstate the country’s savings effort because the GDP defator rises faster than the savings (or consumption) defator during a terms-of-trade bonanza. The high share of commodity products in the country’s GDP pushes up its GDP defator during the boom faster than the average prices of its consumption or investment goods. Conversely, the GDP defator declines faster than the average price of consumption or investment goods when the terms-of-trade decline. Therefore, to appropriately assess macroeconomic management during a commodities boom and bust, the focus should be on real savings rates. South America illustrates well the importance of the distinction between nominal and real savings rates: the difference between these was not trivial, and its magnitude varied signifcantly, throughout the commodities cycle (Fig. 5). Both real and nominal savings rates rose 174 A. de la TORRE ET AL. in tandem in the initial years of the boom (until 2008). In the latter years, however, especially during 2010–2011, the nominal savings rate remained high (hence, the nominal current account did not show major defcits), creating the illusion of macroeconomic strength among many policy-makers. During the bust (after 2011), however, the GDP defator declined more rapidly than the savings defator, thus real savings rates declined sharply, refecting a South American spending binge, while the nominal savings rate appeared to be rather stable. A second source of attenuation/amplifcation is the degree of trade openness. The more open an economy, the less it will overheat under the pressure of a spending binge, because much of this spending would “leak” abroad via increased imports. Conversely, the lower the degree of trade openness, the more demand will remain “bottled up” inside the local economy, thereby creating more overheating and associated upward price pressures. A third and important source of amplifcation is the extent of real exchange rate appreciation during the boom. The real exchange rate will appreciate if the boom leads to a surge in spending on goods and services that not internationally traded (i.e., non-tradables), and that creates an excess demand in the non-tradable sector. (In the non-tradable sector, by defnition, imports cannot alleviate supply.) Under those circumstances, the price of non-tradables would rise relative to that of tradables, thereby appreciating the real exchange rate5 (a Dutch Disease- type problem that discourages the production of non-commodity tradables). Another windfall is generated in the process: A strong currency in real terms makes people feel rich, because their local earnings can now buy more tradable goods and services, including consumer imports, more and better tourism packages, etc. The magnitude of the amplifcation will depend not just on the extent of the real exchange rate appreciation but also on the marginal propensity to consume out of the windfall it generates. In societies with high poverty rates, that propensity is likely to be higher (a Kaldor-type effect), given that consumption by lower-income groups would tend to be repressed. Thus, an appreciated real exchange conveys the perception of increased purchasing power across all segments of the population which, combined with a higher

5 The real exchange rate is the ratio of the price of tradables to the price of non-tradables, with all prices expressed in the local currency. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 175 propensity to consume among the poor, exacerbates the consumption boom. However, as with the terms of trade, a mirage can also occur with appreciation of the real exchange rate: If not eventually backed by higher productivity, it will not be sustainable—the real exchange rate will depre- ciate toward its longer-run equilibrium once the boom is over, and the mirage will quickly disappear. Furthermore, for a given rise in spending, the extent of real exchange rate appreciation is not independent of the exchange rate regime: the more infexible the regime (with countries that have formally adopted the dollar as their currency, like Ecuador, at the extreme of infexibility), the lesser the extent of real appreciation during a boom. A fourth amplifying/attenuating factor relates to whether the terms- of-trade windfall in mainly appropriated by the private or the public sector. If one sector would induce greater amplifcation of the spending effect than the other depends on differences in terms of myopia and impatience. It may be that a well-run government with strong fscal institutions and properly designed stabilization mechanisms would likely save more from of the windfall than a liquidity-constrained or myopic private sector.6 In any case, for those economies where initial spending from a terms-of-trade windfall is mostly channeled via the public sector, the quality of fscal institutions will be a critical determinant of the amplifcation or attenuation impact of the windfall. A ffth and crucial source of amplifcation is the extent of pro- cyclical response in fscal expenditures. Major pro-cyclical fscal spending (whether for consumption or investment) during the boom would greatly magnify the expansion in aggregate domestic demand in relation to its sustainable long-term level, thereby intensifying overheating in the local economy and the surge in imports. This would require more extensive and painful fscal retrenchment when commodity prices decline. By contrast, a countercyclical fscal response would imply saving a large share of the windfall into a stabilization fund or sovereign wealth fund (as in Chile or Norway). The saved resources would be invested in foreign assets and used either to stabilize fscal spending once commodity prices fall or to fnance long-term public goods (in education, health, pensions, infrastructure, etc.) over prolonged time periods.

6 De la Torre et al. (2016) argue that the marginal propensity to spend from a windfall is very high for the private sector in the region. In the case of the public sector, however, the propensity to spend depends heavily on fscal institutions. 176 A. de la TORRE ET AL.

The sixth channel of amplifcation is the credit system. Barring the presence of strong macro-prudential/anti-cyclical regulations, a terms- of-trade bonanza may well unleash a credit boom that could greatly magnify spending effects, especially if the expansion is mainly concentrated on consumer credit. In the extreme, a credit bubble could end up badly if the share of nonperforming loans in total loans rises sharply once commodity prices decline, potentially adding a fnancial crisis to an already diffcult spending adjustment. The above conceptual considerations will guide our cross-country empirical analysis of the Ecuadorian boom and bust phases of the commodities cycle in the next two sections.

4 the Empirics of the Commodity Boom: Ecuador in a Comparative Perspective The contrast in the trajectory of domestic demand changes between commodity exporters and commodity importers was stark. The marked improvement in the terms of trade for the commodity-exporting countries (virtually all located in South America) was associated with a signifcant expansion in aggregate domestic demand (consumption plus investment) as a share of GDP (Fig. 6). In commodity-importing countries (Mexico and most of Central America), the terms of trade either did not change greatly and the increase in their domestic demand ratio was comparatively subdued. In the case of Ecuador, while its terms-of- trade improvement was close to the South American average, its domestic demand expansion was below the South American average. Note that the link between the terms-of-trade windfall and the increase in aggregate spending varies considerably across the South American commodity-exporting countries (Fig. 6). Ecuador appears with a rate of domestic demand expansion similar to that of Colombia and Brazil. The fact that the size of the windfall did not map the extent of domestic demand expansion on a one-to-one basis highlights the crucial role played by amplifying or attenuating policy-related factors, as explored below. Note that there was also considerable cross-country heterogeneity regarding the relative importance of investment versus consumption in the expansion of aggregate domestic demand (spending) (Fig. 7). When comparing 2004 (at the onset of the commodities boom) with 2012 (near the peak for several countries), we fnd at one extreme Paraguay, 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 177

Fig. 6 Latin America: changes in domestic demand and the terms of trade during the boom (Source ECLAC, UN National Accounts. Author’s own calculations. Notes Domestic demand expansion measured as the average annual growth rate of real domestic demand during the boom years for each country. Terms- of-Trade Improvement measures the percentage increase of the terms of trade between 2003 and the end of the boom for each country. The end of the boom varies from country to country between 2011 and 2013)

Argentina, and Brazil, with a large share of the demand increase accounted for by consumption, and at the other Bolivia and Peru, where investment played the dominant role (consumption as percent of GDP declined for Bolivia). Ecuador is at an intermediate position, similar to that of Colombia, with investment still playing a key role in the expansion of domestic demand; however, as explained below, Ecuador’s savings and investment rates are likely to be overestimated (see footnote 14), given that reported government capital spending includes some expenditures treated as current according to international protocols. Let us now consider the sources of amplifcation behind the increases in domestic demand, starting with the real savings rate. Figures 8a and 8b show a clear inverse relation between real savings rates and the extent of domestic demand expansion: South American countries with higher savings rates experienced a less vigorous increase in spending. Ecuador has historically registered high savings, comparatively speaking, in the 1990s as well as in the boom period (Fig. 8a). However, Ecuador 178 A. de la TORRE ET AL.

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Fig. 8 Savings rates and domestic demand in South American countries (Source UN National Accounts, IMF. Author’s own calculations. Notes Real Savings are period averages calculated as real GDP minus real consumption plus real net primary and secondary income) 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 179 differentiates itself from other South American countries with relatively high savings rates (Peru, Chile, Paraguay, and Bolivia) in three aspects: (i) a relatively higher level of domestic demand (Fig. 8b); (ii) faster expansion of domestic demand over 2003–2009, above even than that of the structurally low-saving countries (Venezuela, Brazil, Colombia, Uruguay, and Argentina); and (iii) a much larger collapse of domestic demand in the bust period, after 2013. These fgures suggest that, while one would expect a high-saving country to be comparatively less pro-cyclical in terms of domestic demand expansion, Ecuador’s fscal policies were such that, during the Correa administration, domestic demand pro-cyclicality was exacerbated (Cueva et al. 2018). Consider now the extent of real exchange rate appreciation across South American countries. This was clearly greater and more tightly and positively correlated with the evolution of the terms of trade in countries with more fexible exchange rate regimes (Brazil, Chile, Colombia) (Fig. 9a). Real appreciation was particularly stronger in countries where the expansion of aggregate domestic demand was dominated by consumption, with Brazil being the salient case (Fig. 6).7 Interestingly, in countries with less fexible (heavily managed or formally dollarized) exchange rate regimes, the extent of real appreciation was linked to their infation rates: in higher infation countries (Argentina, Uruguay), the real exchange rate appreciated more and in tandem with the terms- of-trade improvement (Fig. 9b), mostly through an adjustment in the denominator (i.e., infation). By contrast, in low-infation countries with heavily managed or dollarized regimes (Bolivia, Peru, Ecuador), the correlation between terms of trade and real exchange rate was negative, refecting mainly the fact that these countries’ nominal exchange rates closely tracked (or were) the U.S. dollar, which depreciated relative to other major currencies during the boom phase of the commodities cycle and appreciated in the downswing phase (Fig. 9c). The degree of trade openness played a sort of bimodal function across countries in amplifying or attenuating the spending effect of the terms-of-trade boom (Fig. 10). A lower degree of trade openness clearly favored amplifcation in the cases of Argentina, Brazil, and perhaps Colombia, which are the relatively larger South American economies. Openness played a more neutral role in the rest of South America,

7 De la Torre et al. (2016) estimate that the marginal propensity to consume from real appreciation in South American countries during the commodities boom was close to 1. 180 A. de la TORRE ET AL.

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Fig. 9 South America: terms of trade and real exchange rates (Source Bloomberg, national sources, and IMF. Author’s own calculations. Notes An increase of the real exchange rate means an appreciation. Panel 10a: Average standardized series for Brazil, Chile, and Colombia [9a], for Argentina and Uruguay [9b], and for Bolivia, Ecuador, and Peru [9c]. Standardized series are obtained by subtracting the mean and dividing by the standard deviation) where countries are more open relative to regional standards (although substantially less than in other emerging regions, particularly South East Asia). Ecuador ranks somewhere in the middle of this latter group: it is more open than Uruguay or Peru, but less than Chile or Bolivia. The credit system tended to act in a pro-cyclical fashion throughout South America during the boom, with the notable exception of Bolivia, where credit over GDP decreased (Fig. 11). At one extreme are Brazil and Paraguay, with an increase of nearly 30 percentage points in bank credit to the private sector as a percent of GDP, which greatly amplifed 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 181

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Fig. 11 South America: credit expansion and terms-of-trade improvement (Source ECLAC and World Bank. Author’s own calculations. Notes Credit expansion measures the percentage point increase in the ratio of private bank credit to GDP between 2003 and the end of the commodity boom [2011–2013]. The Terms-of-Trade Improvement measures the percentage point increase of terms of trade for the same period) 182 A. de la TORRE ET AL. the spending effect. Like Argentina, Chile, Colombia, or Peru, Ecuador was at an intermediate position. The credit/GDP ratio increased by nearly 10 percentage points during the boom, suggesting that it lacked signifcant amplifcation or attenuation effects. Policy changes in Ecuador had an ambiguous impact on credit, as rules limiting bank fees and setting interest rate ceilings probably dampened it, while measures forcing banks to repatriate liquid assets held abroad may have expanded it. So far, Ecuador gets relatively good marks in terms of its comparative macroeconomic management of the boom. Its relatively open economy was not a major source of amplifcation compared to Brazil and Argentina. Credit in Ecuador was pro-cyclical but not more than the South American average, and clearly not as much as in Brazil. Most importantly, Ecuador maintained a high savings rate (in real terms) during the bonanza, mainly due to an increase in the public sector savings rate. Ecuador also avoided a real exchange rate appreciation, although this was due to being formally dollarized rather than to policies undertaken by the Correa administration. Ecuador’s real exchange rate actually depreciated between 2003 and 2008 and remained quite competitive until 2013, thanks largely to the depreciation of the U.S. dollar against major currencies (Fig. 9c). Ecuador was thus able to avoid the headache of real exchange rate appreciation faced by central bankers in neighboring countries during the boom. The combination of a high savings rate and a competitive real exchange rate dampened the spending effects of the terms-of-trade bonanza.8 The competitive real exchange rate combined with low international interest rates created a unique window of opportunity for Ecuador to promote export expansion and diversifcation. Unfortunately, the Correa administration wasted that unusually favorable historical juncture by pursuing an acute version of state dirigisme in the economy, with a strong anti-private sector bias arising from policies that discouraged investment in the tradable sector, such as revising oil contracts, establishing a tax on foreign remittances, canceling investor-protection agreements, abandon- ing and postponing free-trade negotiations, and confronting investors in

8 Formal dollarization, adopted in 2000, worked especially well for Ecuador during the upswing phase of the commodity cycle. But, as discussed in Sect. 5, it added to the stress once the boom ended and the dollar had appreciated internationally. Typically, rising commodity prices are associated with a weak dollar (more competitive from the export perspective), and vice versa. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 183

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Fig. 12 Exports diversifcation for selected economies (Source UN Comtrade. Author’s own calculations. Note Concentration is measured by the Herfndhal- Hirschman index. Non-commodity exports exclude raw commodity exports) a number of international arbitration procedures.9 Indeed, the value of non-commodity exports scarcely increased during the boom, while FDI levels remained particularly subdued, consistently below 1.5% of GDP. One of the stated goals of the Correa administration was to engineer a “big push” toward economic diversifcation away from oil dependency, to break free from the economic matrix of natural resource exploitation and oil and mineral rents. However, compared to other commodity exporters in South America, Ecuador did not perform better in this regard, either in terms of non-commodity export product diversifcation (Fig. 12a) or in terms of export destination diversifcation (Fig. 12b). In fact, concentration increased in both dimensions for Ecuador, as it did

9 Over 2006–2010, legal changes introduced extraordinary charges on oil companies, and contracting modalities migrated shared-risk oil contracts into service-provision contracts. While some companies agreed, others disputed the changes and resorted to international arbitration procedures, which resulted in Ecuador having to compensate Occidental, Repsol, and Burlington for a combined total of US$1.4 billion, with other arbitrations still pending. In 2008, a tax on foreign remittances was introduced, initially set at 0.5%, but gradually increased to 5% by 2012. Following the 2008 constitutional ban on arbitration procedures in foreign jurisdictions, investor-protection agreements with 17 countries were canceled until 2017. In 2009, Ecuador quit negotiations with Colombia and Peru on a Free-trade agreement with the European Union. That agreement was signed in 2011 and Ecuador foolishly missed the opportunity to participate in it. It took until 2016 for Ecuador to fnally work out an agreement with the European Union on similar terms. Some timid incentives for FDI were introduced belatedly in the Correa administration, in 2012. 184 A. de la TORRE ET AL.

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Fig. 13 Relative importance of non-tradable versus tradable value added (Source UN National Accounts Statistics. Author’s own calculations. Notes Non- tradable GDP includes Construction, Wholesale and Retail Trade, Restaurants and Hotels, Transport, Storage and Communication, and Other Activities. Tradable GDP includes Agriculture, Hunting, Forestry and Fishing, Mining and Utilities, and Manufacturing) for Chile. Meanwhile, Peru managed to increase diversifcation on both counts, while Colombia diversifed its export destinations. Similarly, Ecuador was unable to shift its productive structure toward the tradable sector. As with other South American commodity exporters, the Ecuadorian ratio of non-tradable to tradable sectors increased (Fig. 13) during the boom. It is worth noting that the construction sector in Ecuador, which accounts for a very high comparative share of GDP, rose signifcantly during the boom. Hence, the rhetoric on productive matrix change did not lead to changes in the real economy. In any case, the good evaluation that Ecuador may obtain because of its high savings rate and competitive real exchange rate is more than offset by the low grades it receives regarding its fscal profigacy, its imprudent decision not to build liquidity cushions during affuent times, and its reckless decision to default on debt despite ample capacity to pay. To these aspects we now turn. Consider the comparative empirics of the fscal process. For starters, Ecuador is among the South America countries where the bulk of the 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 185

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Fig. 14 South America: change in government revenues and spending during the boom (Source IMF. Author’s own calculations) windfall was appropriated by the public sector, instead of the private sector. One measure of this is provided by Ecuador’s rather extraordinary increase in fscal revenues during the boom, which was the highest among South American countries (Fig. 14a).10 Whether the government-appropriated windfall led to amplifcation effects naturally hinged on how much of this revenue increase was spent. In this respect, Ecuador proved an extreme case of fscal profigacy and pro-cyclicality. It became a South American outlier (and even a world outlier) in terms of the expansion of total government expenditures during the bonanza (Fig. 14b). The size of the Ecuadorian government leaped dramatically from less than 25% of GDP in 2002–2004 to around 43% in 2012– 2015—the highest in the country’s post-WWII history, surpassing even the period of the 1970s oil bonanza.11 An estimate of the pro-cyclicality of Ecuadorian fscal policy is given by the correlation between the business cycle and the structural fscal balance or the fscal impulse. Such correlation was relatively low during

10 That the windfall mostly accrued to the private sector in other South American countries did not guarantee lower amplifcation effects. Indeed, the private sector seems to have used the windfall to go on spending binges, especially where the real exchange rate appreciated signifcantly, as in Brazil. 11 Historically, the size of the Ecuadorian public sector had hovered around 25% of GDP. Prior to the record-high 44% of GDP achieved in 2013, public sector spending in Ecuador had never exceeded 30% of GDP, except in 1977, when the spending effects of the 1970s oil bonanza hit a peak and public sector expenditure reached the equivalent of 32.5% of GDP (De la Torre 1987). 186 A. de la TORRE ET AL.

2000–2006, when the country adopted certain prudent fscal rules and stabilization mechanisms, but it rose sharply (implying a highly pro-cyclical fscal policy) over 2007–2016 (Cueva et al. 2018).12 The pro-cyclicality of Ecuador’s fscal policy is also evidenced by studies based on the non-oil primary fscal balance, which do not require assumptions on the defnition of structural revenues or long-term oil prices (see, for instance, Villafuerte et al. 2010). Although public consumption in Ecuador increased vigorously during the boom (current nonfnancial public sector spending increased on a comparable basis from 15% of GDP in 2004–2005 to 28.5% of GDP in 2013–2014), much of the massive pro-cyclical expansion of government spending took the form of increased public investment, which went from less than 5% of GDP in 2004–2005 to over 15% of GDP in 2013–2014. While most likely overestimated, public investment in Ecuador drove a remarkable increase in total investment from around 20% of GDP to a peak of 27% of GDP in 2013 (Fig. 15).13 During the same period, by contrast, private investment declined to around 13% of GDP after peaking at 16% in GDP in 2005–2006. This refected the mentioned aggressive state dirigisme, which asphyxiated private innovation and investment in the tradable sector, tilted whatever

12 After formally adopting the dollar as its currency in 2000, Ecuador implemented policies to reinforce prudent fscal management (it limited the annual growth of primary fscal expenditures to 3.5%; targeted the non-oil fscal defcit to annually decline by 0.2% of GDP until becoming a surplus; set the debt-to-GDP ratio to decline to 40% and then remain below that level). Most fscal rules were weakened in 2005 (mainly by allowing a rapid increase in capital spending) and were subsequently eliminated over 2007–2012, allowing a massive expansion of fscal spending. The sole fscal rule that was left in place during the Correa administration required that “permanent” fscal spending not exceed “permanent” fscal revenues, but this rule did not prevent Ecuador from reaching large fscal defcits starting in 2014 (Cueva et al. 2018). 13 The defnition of public investment was modifed during the Correa administration to include any spending or transaction with public funds aimed at maintaining or increasing the state wealth or social capacities to fulfll the national planning objectives, including salaries for staff associated with public investment projects, beyond the traditional international standard of net investment in non-fnancial assets. As a result, several spending items that would otherwise be considered public consumption were reported as public investment. According to data assembled by Jaime Carrera and the Observatorio de Política Fiscal (https://www.observatoriofscal.org), were those expenditures to be reclassifed as current, the central government would report about 1% of GDP less in capital expenditures per year. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 187

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14 Triggered in part by the Odebrecht scandal, evidence has been piling up since the end of the Correa administration on the extent and depth of corruption in Ecuador. The main episodes were related to Odebrecht, the Esmeraldas oil refnery, and some Panama Papers-related accounts, which resulted in the former Vice President and his uncle, a former Comptroller, three former Ministers, a former Central Bank President, and the former general manager of Petroecuador being jailed or made subject to arrest warrants. 188 A. de la TORRE ET AL.

The vulnerability engendered by Ecuador’s bout of fscal profigacy was exacerbated by a highly imprudent decision not to accumulate liquid fscal buffers in the good times (to protect the budget in the bad times). Instead, the Correa administration eliminated the existing macroeconomic stabilization funds in April of 2008 (and transferred the accumulated resources therein, equivalent to about 2.3% of GDP, to the Treasury spending accounts).15 Hence, while the public sector did indeed raise its savings rate signifcantly (which boosted the real national savings rate), it invested those savings solely in illiquid assets (mainly infrastructure). This is a third dimension in which Ecuador appears as an outlier during the boom: while other commodity exporters like neighboring Peru (bearing in mind the high volatility and oil and other commodity prices) invested the windfall in both liquid (fnancial and external) and illiquid (physical and local) assets, Ecuador actually reduced its holdings of foreign liquid assets (international reserves declined, preexisting stabilization funds were eliminated, and the liquid assets of the bank deposit guarantee fund were channeled into public bonds16) and put its windfall into illiquid investment (Fig. 16).

A sort of machinery of corruption, organized at the highest levels of government, was able to operate with great impunity in part due to major weaknesses in the procurement and control mechanisms, to legal and regulatory changes limiting the preventative role of the Comptroller’s Offce and its ability to assess the integrity of public spending, and the widespread use of exceptional procedures (such as emergency decrees that scrapped traditional competitive and transparent bidding practices). 15 The Fondo de Estabilización Petrolera (Oil Stabilization Fund, or FEP), created in 2000 to save oil revenues above budgeted levels, was complemented by the Fondo de estabi- lización, inversión social y productiva y reducción del endeudamiento (Fund for Stabilization, Social and Productive Investment, and Public Debt Reduction, or FEIREP), fed by heavy oil exports and replaced in 2005 by a Cuenta Especial de Reactivación Productiva y Social (Special Account for Economic, Productive, and Social Reactivation, or CEREPS) and a Fondo de Ahorro y Contingencia (Contingency Savings Fund, or FAC). In 2006, the Fondo Ecuatoriano de Inversión en los Sectores Energético e Hidrocarburífero (Investment Fund for Electric and Hydrocarbon Sectors, or FEISEH) was created to manage the revenues from oil felds previously managed by the U.S. Occidental oil company. All these funds aimed at saving at least a portion of oil-related windfalls, which could be used in the future to stabilize budgetary spending, to repurchase onerous debt, or to provide fnancing in case of natural disasters or other contingencies (Cueva and Ortiz 2013). 16 For a dollarized economy such as Ecuador, international reserves are not exactly comparable to those of Peru. In dollarized Ecuador, banks play a much larger role in building foreign assets; thus, the inclusion of both international reserves and net foreign bank assets in Fig. 16. While the Ecuadorian government imprudently got rid of liquid assets, 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 189

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This decision was even more misguided for a fully dollarized economy, where the countercyclical role of monetary and exchange rate policy is nonexistent, moving all the burden of any countercyclical policy to the fscal side. This highlights the limits of the Correa administration’s view that public investment (fxed capital formation) could be the main buffer for shocks, instead of stabilization funds or other liquid assets. A fnal component in the Correa administration’s mismanagement of the boom—and one that signifcantly boosted the fscal spending binge—was the reckless decision to default on its bonded debt. In December 2008, Ecuador declared a moratorium on US$3.2 billion of sovereign bonds, alleging that they represented an “illegitimate and illegal” debt. It was a remarkable act of hubris—the frst and only case in the region’s post-WWII history where a default was clearly based on “unwillingness to pay” instead of “lack of capacity to pay”. Subsequently, the Ecuadorian government bought back at highly depressed prices its own bonds in the market.17 Since it was obvious

the banking system prudently built its holdings of liquid assets abroad. Regulatory actions by the Correa administration, however, increasingly forced banks to repatriate their foreign assets. 17 This strategic default led to a reduction in the stock of public debt from US$10.3 billion (20.3% of GDP) at the end of 2007 to US$8.4 billion (13.7% of GDP) by the end of 2008, with a consequent large reduction in interest payments, which freed up considerable spending room within the budget. 190 A. de la TORRE ET AL.

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Fig. 17 EMBI spreads: Ecuador, junk bonds and the average of Colombia, Chile and Peru (Source Bloomberg and Reuters. Author’s own calculations)

to local and international analysts that Ecuador had ample liquidity and capacity to pay, so irresponsible a decision earned the country the reputation of a rogue debtor, thus signifcantly and durably raising Ecuador’s country risk premium during the boom to the second highest in the region (after that of Venezuela), comparable to premiums paid by so-called junk bonds. The consequences of this reckless default came back to haunt Ecuador after 2013, when the decline in oil prices forced it to pay extraordinarily high interest rates in order to borrow in the markets (Fig. 17). Table 1 summarizes the key quantitative elements of the above discussion, comparing Ecuador with several other South American countries. Estimates are shown of the terms-of-trade windfall which give a sense of the power of the bonanza as well as the potential spending effect. The table also presents estimates of the actual expansion of domestic demand and of main channels through which the spending effect was actually amplifed or attenuated. The light blue cells indicate an amplifcation direction, the white cells a neutral or attenuating direction. Brazil appears at one extreme as the country that mismanaged 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 191

Table 1 From terms of trade to domestic demand: amplifers and dampeners

Notes Terms-of-Trade Windfalls are calculated using the Courbis-Kurabayashi methodology, with constant 2003 volumes of trade fows and GDP. Demand Response corresponds to the percentage point increase of Domestic Demand to GDP between 2003 and the peak year of the boom for each country. Real Savings are calculated as real GDP minus real consumption plus real net primary and secondary income. Trade Openness is measured as the sum of exports and imports of goods and services as a percent of GDP, in constant 2010 dollars. Real Exchange Rate Windfalls come from De la Torre et al. (2016). Public Sector Revenue Capture and Public Sector Expenditure Expansion measure the percentage point increase of the Public Sector Revenue and Expenditure (as a percent of GDP) between 2003 and the peak year of the boom. Credit Expansion measures the percentage point increase of private banks credit to GDP ratio between 2003 and the end of the commodity boom (2011–2013) Source De la Torre et al. (2016) UN National Accounts, ECLAC, IMF and World Bank data. Author’s own calculations

the boom in most dimensions, with its low savings rate, low degree of trade openness, high real exchange rate appreciation, and expansionary credit arguably playing dominant roles in amplifcation. Peru appears at the other extreme, as the country that seems to have managed the boom most prudently, with all factors suggesting that macro-policies attenuated (rather than amplifed) the spending effects of the terms-of-trade bonanza. It is clear from Table 1 that the Correa administration’s management of the boom was lopsided. The attenuating effects of a high savings rate and a (dollarization-induced) competitive real exchange rate were swamped by substantial macroeconomic mismanagement in terms of a huge pro-cyclical expansion of government spending. The perverse effects of fscal profigacy were greatly exacerbated by Ecuador’s imprudent decision not to build liquid fscal buffers and the reckless decision 192 A. de la TORRE ET AL. to default on its external debt at a time of high capacity to pay. These were the basic ingredients of macroeconomic mismanagement that turned against Ecuador with a vengeance starting in 2014, when the oil price bonanza came to an end.

5 the Commodity Bust and Comparative Adjustment Pains The end of the commodity price boom was not synchronized across South American commodity-exporting countries. The downward price swing began earlier, at the end of 2011, in the case of industrial metals (Fig. 18a). Although the prices of cereals (such as soy, wheat, and corn) started weakening around the same time, they registered a short- lived rebound before entering a marked downward path from early in 2013. The decline in the price of oil started later, in 2014, but arrived with a fury. As a result, the terms of trade reached their peak at different times for different South American commodity-exporting countries, and the impact depended on the extent of commodity export concentration and on whether the main commodity export was mineral, agricultural, or oil. This section uses the peak of the terms-of-trade index as the dividing line between boom and bust. For each country in our comparative analysis, the “boom years” are defned as spanning from 2003 to the peak, and the “bust years” from the peak to 2016.18 To eliminate the distortion caused by the global fnancial crises, values corresponding to 2009 are excluded when calculating annual averages for the “boom years”. Following a brief downturn in 2009, emerging economies (including those in South America) registered a China-led robust recovery in 2010, well ahead of the advanced economies. While the terms-of-trade reversal swept through all South American economies, the magnitude of the reversal (from the peak year to 2016) varied considerably (Fig. 18b). Bolivia, Venezuela, Colombia, and Ecuador experienced greater terms-of-trade deteriorations (in the 30–50% range); Argentina, Chile, and Peru saw milder declines (in the 10–20% range). That negative shock introduced considerable

18 Specifcally, the terms-of-trade peak years used in this section (based on ECLAC data) are the following: 2011 for Bolivia, Brazil, Chile, Colombia, and Peru; 2012 for Argentina and Venezuela; and 2013 for Ecuador. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 193

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Fig. 18 Commodity prices and terms of trade boom and bust in South America (Source ECLAC, FAO and World Bank. Author’s own calculations. Notes Panel 17b compares the percentage change of the terms of trade in the boom years [2003 to the peak] and the bust years [peak to 2016]) macroeconomic stress and confronted countries with policy challenges whose diffculty depended on the magnitude of the required spending adjustment. This was not a time to rely solely on countercyclical fscal and monetary policy, since the collapse in commodity prices was not transitory. Although the terms of trade and oil prices did not decline all the way to the levels of pre-boom years, they declined signifcantly and durably. As the decline was here to stay, the current account and fscal imbalances it created called for adjustment. The key short-run macroeconomic policy challenge for Ecuador and other commodity-exporting countries was, therefore, to reduce aggregate domestic spending in line with lower export income while minimizing infation and unemployment. This section again uses a comparative approach to assess the macroeconomics of the bust in Ecuador. It focuses on the fscal and external adjustment processes, as well as on public debt trajectories and economic growth patterns. The underlying argument (in line with the conceptual discussion in Sect. 3) is that the adjustment pain (the intensity of the “hangover”) during the bust years was not independent of the extent of spending excesses during the boom years. Consider frst the adjustment on the fscal front, as summarized in Fig. 19. The defcits of most South American governments rose signifcantly between the terms-of-trade peak year and 2016. The most pronounced defcit increases, of about 10% of GDP, took place in Venezuela, Brazil, and Bolivia. Ecuador was in the middle of the pack: 194 A. de la TORRE ET AL.

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Fig. 19 South America: fscal defcits and sources of change in the bust years (Source De la Torre et al. [2016]. Notes The changes for each variable are calculated as the difference between its value in 2016, and its value in the year when the smallest fscal defcit was reported, prior to the terms-of-trade bust) its fscal defcit widened by about 4.5% of GDP, whereas milder defcit increases—of about 3%—were recorded in Chile, Colombia, Paraguay, Peru, and Uruguay. What is perhaps most notable about Ecuador, comparatively speaking, is that the widening of its central government defcit was driven by a huge reduction in revenues (see light blue segment of the bar in Fig. 19), which was only partly offset by a nontrivial reduction in government spending. Ecuador is indeed the only country in Fig. 19 that visibly cut fscal expenditures.19 Two other important messages emerge from Fig. 19. The frst is that virtually all South American countries postponed their fscal adjustment after being hit by the terms-of-trade reversal. The pending fscal adjustment as of 2016 was particularly large for Venezuela, Brazil, and Bolivia; of intermediate magnitude for Argentina and Ecuador; and of milder but still signifcant magnitude for Colombia and Uruguay. By contrast,

19 However, that feature would be different if the chosen peak year was 2012 instead of 2013. In that case, the fscal deterioration in Ecuador would have been larger, by about 3 percentage points of GDP, explained mostly by a fall in revenues. See Table 2 and the related footnote for more details. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 195

Table 2 Ecuador: nonfnancial public sector accounts as percent of GDP

2004 (%) 2012 (%) 2016 (%) Boom period Bust period

Percentage points

Total revenue 22 39 30 17 9 − Oil revenue 6 14 5 8 8 − Tax revenue 10 14 14 4 0 Other revenue 6 9 10 2 2 Public Ent. Net 1 3 1 2 2 − operational result Total expenditure 20 40 38 20 2 − Current 16 28 27 12 1 − expenditure Salaries 7 9 10 2 1 Goods and services 3 4 5 1 1 Interest payments 2 1 2 1 1 − Other 4 14 10 10 3 − Capital expenditure 4 12 11 8 1 − Overall balance 2 1 7 3 6 − − − − Source BCE. Author’s own calculations

Chile, Peru, and Paraguay, which managed their fscal affairs more prudently during the boom years, did not face the need for fscal adjustment as of 2016. The second message concerns Ecuador, the country where deterioration in the terms of trade jolted the fscal accounts with the greatest force. Given the massive overextension of the size of the Ecuadorian government and the failure to build liquid fscal savings during the boom, the hit to fscal revenues during the bust created so signif- icant a fscal problem that the Correa administration was compelled to curtail expenditures more than in neighboring countries. Table 2 provides greater detail on Ecuador’s fscal dynamics during the boom and bust, based on nonfnancial public sector fgures.20 It shows that the large increase in the fscal defcit during the bust

20 While the peak boom year for Ecuador was 2013 from the terms-of-trade standpoint, 2012 could be considered the peak year from a fscal perspective, as 2013 was characterized by stable revenues. 196 A. de la TORRE ET AL.

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Fig. 20 Ecuador: fnancing of fscal imbalances during the bust (Source BCE and Ministry of Economics and Finance. Author’s own calculations)

(from 1% of GDP in 2012 to 7% of GDP in 2016) resulted mainly from a sharp fall in oil revenues (8% of GDP, nearly half of additional revenues over the boom period), while public spending (which had doubled, increasing by 20 percentage points of GDP during the boom) was reduced only marginally, by 2 percentage points of GDP, as reductions in capital and “other” expenditures more than offset the growth in salaries and goods and services outlays. During the bust, Ecuador postponed fscal adjustment by resorting to copious borrowing, from both traditional and more creative sources (Fig. 20a).21 Ecuador returned to international markets in 2014, issuing sovereign bonds for a total of US$11.75 billion over 2014–2017, with 5–10 years’ maturity and yields in the range of 7.95–10.75%. These high fnancing costs by international standards (see Fig. 17) refected not only the effects of the 2008 “strategic” default episode, but also lower oil prices, high fscal imbalances, and growing debt levels. In addition to international debt issuances by public oil companies, Ecuador used external fnancing linked to either future oil sales contracts

21 Economic dependence on oil or minerals has been found to be correlated with authoritarian regimes (Frankel 2012). Sala-I-Martin and Subramanian (2003) and Bulte et al. (2005) fnd that the resources that undermine institutional quality include oil and certain minerals, but not agricultural resources. Barro (2000), Wantchekon (2002), Jensen and Wantchekon (2004), and Ross (2006) point to a link between natural resources and weak democracy. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 197

(especially with China) or oil feld exploitation contracts to cover its liquidity needs. Locally, the central government placed bonds with the Social Security Institute and obtained increasing fnancing from the Central Bank, reaching almost 6% of GDP in April 2017.22 Combined with a buildup of public sector payment arrears to suppliers and contractors, all these operations allowed Ecuador to postpone much of the fscal adjustment needed to deal with its permanent revenue reduction. The situation was further compounded by obligations related to international arbitration sentences against Ecuador, in most cases arising from prior actions of misguided showmanship taken by the Correa administration. As a result, government debt rose rapidly, whether offcially calculated as “aggregate” debt (i.e., including obligations to other public sector institutions, such as the central government debt with the Central Bank or Social Security) or as “consolidated” debt (where intra-public sector debt is excluded). The latter approach was preferred by the government given the 40% of GDP legal limit set for public debt. However, offcial debt fgures underestimate the actual debt, as several liabilities are not included in the offcial defnition.23 Offcial estimates indicate that the debt of the Central Government rose from 24% of GDP at end-of- December 2013 to 45% at end-of-December 2017 (Fig. 20b). Meanwhile, other obligations not included in the debt fgures (exclud- ing contingent liabilities) were estimated at about 10% of GDP by the Ministry of Finance. While Ecuador’s fscal imbalances mostly refect a permanent fall in oil-related revenues and the diffculty in reducing expenditures that

22 The Social Security system faces daunting actuarial imbalances but continues to beneft from short-term liquidity thanks to Ecuadorian demographics. The government’s debt with the Central Bank was reduced in an accounting sense by about 2 percentage points of GDP in April 2017, as the government repaid it with equity shares in publicly controlled banks (valued above market prices). In the process, the Central Bank’s balance sheet was severely weakened. 23 These include, depending on the defnition and institutional coverage, liabilities linked to future sales of oil or to oil feld operations, liabilities arising from international arbitration decisions, foating debt/arrears, public institutions’ obligations with third parties, historical central government debt liabilities with the Social Security Institute, short-term obligations to cover long-term fnancing needs, central government obligations with public banks, and the mismatch between the Central Bank’s enforceable obligations with third parties and its available liquid assets. In 2018, a special debt audit by the Contraloría General del Estado (Comptroller’s Offce) and IMF reports included some of these items in their assessments. 198 A. de la TORRE ET AL.

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Fig. 21 South America: current account defcits and real exchange rate in the bust years (Source De la Torre et al. [2016] and IMF. Author’s own calculations. Notes Panel 20a: the changes for each variable are calculated as the difference between its value in 2016 and its value in the year when the current account balance was lowest, prior to the terms-of-trade bust. Panel 20b: the fexible exchange rate regimes series is the average of the real effective exchange rate for Brazil, Chile, and Colombia) exploded during the boom, recent fscal developments also refect the temporary impact of a major earthquake that hit the Northern Coastal areas in April of 2016. Following this, the government announced several fscal measures24 that temporarily boosted revenues (by about 1.5% of GDP, of which 1.1% of GDP materialized in 2016) and, combined with exceptional external fnancing for the earthquake, provided some liquidity relief in the short run.25 Consider next the adjustment on the external front, as summarized in Fig. 21a and 21b. Except in Bolivia, current account defcits shrank considerably. By 2016, most South American countries, including Ecuador, had managed essentially to eliminate their current account defcits (or keep them below 2% of GDP), but Bolivia and, to a lesser extent, Colombia still faced a pending external adjustment of

24 Including a delay in the reduction in exceptional import tariffs, a 2 percentage points increase in the value-added tax rate, and exceptional taxes (one day’s salary for high wages, a charge on net wealth over a US$1 million, and a 3% tax on corporate profts). 25 Regarding growth impact, the earthquake likely had a much larger impact on the stock of infrastructure than on the fow of goods and services production. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 199 considerable magnitude (their current account defcits exceeded 5% of GDP) (Fig. 21a). Peru in 2016 had a current account defcit of nearly 4% of GDP, but this did not pose a major threat because it was being entirely fnanced by FDI. The adjustment of the current accounts, where it occurred, was not as healthy as it could have been. With the exception of Paraguay, such adjustment relied mainly on reductions in investment (instead of increases in savings), not a good omen for future growth (Fig. 21a). In addition, there was a signifcant difference in the quality of the current account adjustment. Countries with strong monetary policy frameworks (based on infation targeting cum exchange rate fexibility), like Chile and Colombia, were able to achieve a more effcient (less contractionary) external correction by relying more on real exchange rate depreciation; Brazil’s external adjustment was also helped by the depreciation of its currency (Fig. 21b). By contrast, Ecuador, being formally dollarized, experienced an appreciation of its real exchange rate at the worst time (i.e., when the terms-of-trade deterioration called for a depreciation); hence, absent a greater reduction in fscal spending, the narrowing of Ecuador’s current account defcit was driven by a recession (GDP contracted by 1.6% in 2016) and a rather desperate resort by the Correa administration to a barrage of distortive (and export discouraging) import restrictions.26 The fact that Ecuador’s current account has nearly been balanced does not imply that external adjustment is complete. Ecuador continues to face a pending external adjustment because its real exchange rate is overvalued. This can be easily gleaned by comparing the evolution of the terms of trade (Fig. 18b) with the evolution of the real exchange rate (Fig. 21b). In countries with fexible exchange rate regimes and low infation (mainly Chile and Colombia, but also Brazil and Uruguay, to a lesser extent), the real exchange rate moved swiftly toward its more depreciated equilibrium level following the deterioration of the terms of trade. In Peru, with a heavily managed exchange rate regime, the real exchange rate did not need adjustment because it did not appreciate during the boom—impressive evidence of Peru’s prudent macroeconomic management of the boom. At the other end of the spectrum are Ecuador

26 Exceptional tariffs were imposed in 2015 on nearly 3000 imported items; the tariffs’ planned expiration was postponed in 2016 after the coastal earthquake and fnally enacted by mid-2017. 200 A. de la TORRE ET AL.

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(a dollarized system) and Bolivia (hard-pegged to the dollar), where the real exchange rate moved in the wrong direction (i.e., away from its equilibrium level) by appreciating as the terms of trade collapsed. The underlying external disequilibria embedded in Ecuador and Bolivia’s overvalued real exchange rates were handled very differently (Fig. 22). Bolivia relied on the liquid savings it had accumulated during the boom to postpone adjustment and maintain (and even increase) the rhythm of aggregate spending during the bust. That enabled the country to prolong GDP growth through the bust, although this is unlikely to prove sustainable. Given the overvaluation rate in Bolivia, growth has been maintained at the expense of a widening current account defcit that will need to be corrected sooner or later. In Ecuador, by contrast, the reduction of aggregate spending and the introduction of high import restrictions combined to put a lid on the current account defcit, but given the overvalued real exchange rate, this was done at the cost of a major deceleration in growth. Thus, in the absence of real exchange rate adjustment, Bolivia will likely be unable to reduce its external current account defcit without a growth slowdown, whereas Ecuador will likely be unable to restore growth without generating a current account defcit. To facilitate macroeconomic adjustment while preventing a growth collapse, Ecuador will likely need to fnance a temporary current account defcit by attracting foreign direct investment and fnance on the strength of a credible economic program. Given its reputation of a rogue debtor in international fnancial markets, it will be diffcult for Ecuador to do this without resorting to longer-term low-cost fnancing from multilateral institutions in the context of an IMF-supported program. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 201

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Figure 23 and Table 3 jointly summarize the state of macroeconomic adjustment in a selected set of South American countries as of 2016. Three country groupings can be identifed. The frst comprises Chile and Peru, which can be said to have completed the required adjustment to the terms-of-trade reversal on both the fscal and external fronts (Table 3). By 2016, their fscal position was sound, their real exchange rates were not out of equilibrium, and their current accounts featured small defcits (or FDI-fnanced manageable defcits). These are precisely the countries that displayed the most prudent macroeconomic management of the boom, avoiding undue amplifcations (see Sect. 4). Partly as a result, they also experienced a relatively mild growth deceleration during the bust (Fig. 23). The rates at which their economies have been growing since the terms-of-trade reversal are acceptable and, most importantly, their growth is not constrained by macroeconomic imbalances. The second group is comprised by Brazil and Colombia. These countries seem to have completed their external adjustment, particularly considering that their real exchange rates have moved to a new equilibrium, although both need to raise their structural savings rates. Moreover, and especially in the case of Brazil, they face a pending fscal adjustment. Brazil underwent a prolonged recession (2014–2016) and is only now recovering. The protracted adjustment pains in Brazil are of course not independent of the amplifcation of spending effects that occurred in the 202 A. de la TORRE ET AL.

Table 3 Selected South American countries: macroeconomic balances and pending adjustments

Macro policy Policy adjustment

Average Exchange rate Fiscal balance Country Real Fiscal Structural savings regime exchange savings

High More fexible Fiscal equilibrium Chile Peru Less fexible Primary imbalances Bolivia X X Primary and debt Ecuador X X Low imbalances Argentina X X More fexible Debt imbalances Brasil X X Colombia X X Uruguay X X

Source De la Torre et al. (2016). Author’s own calculations

boom years. From the macroeconomic perspective, Colombia did not mismanage the boom, nor did it manage it as well as Chile and Peru. This has allowed Colombia to maintain reasonable growth rates during the bust, which nonetheless may be tested somewhat as Colombia com- pletes its fscal adjustment. The third group includes Argentina, Bolivia, and Ecuador. These countries face signifcant pending adjustments on the fscal and external fronts. Bolivia is unlikely to be able to sustain the current rhythm of its GDP growth, simply because the correction in its external current account and real exchange rate cannot be postponed indefnitely. Argentina is facing the additional challenge of bringing down infation. Its current strategy of a very gradual fscal adjustment is tantamount to a bet on “growing out” of its fscal and external defcits. However, the credibility gap that is naturally associated with too gradual a correction of fscal fundamentals exposes the Argentinian macroeconomic program to derailment due to investor mood swings and attacks. In both Argentina and Bolivia, the macro situation therefore remains a binding constraint on medium-term growth. Macro imbalances are also a binding constraint on growth in the case of Ecuador. So far, growth has been kept barely alive in an unsustainable fashion: aggressively resorting to costly debt fnance geared at 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 203 postponing fscal adjustment. The macro situation in Ecuador is further and dramatically complicated by the overvaluation of its real exchange rate. Absent fscal adjustment, and given the overvalued real exchange rate, in order to close the current account defcit and staunch the drain of international reserves (which in a dollarized economy can produce a credit crunch), the Ecuadorian government introduced import barriers and capital controls in 2015–2016, shifting the burden of adjustment to the private sector and generating a signifcant collapse in growth in 2016. However, the economy recovered mildly in 2017, pumped by the surge in foreign borrowing and by continued avoidance of fscal adjustment. In all, with large fscal and external adjustments still pending, the county’s macroeconomy remains caught in a sort of trap that “asphyxiates the Ecuadorian economy” (De la Torre and Hidalgo 2017). The needed fscal correction is likely to exert contractionary pressures on economic activity, especially considering the overvalued currency, which constitutes a major disincentive to reorienting production toward international markets. But given dollarization, the restoration of real exchange rate equilibrium will require a period of painful defation and wage containment/reduction which, in turn, will likely debilitate the political incentives to proceed with the fscal correction. This trap is of course a direct consequence of the macroeconomic mismanagement incurred during the boom years and discussed in Sect. 4. Macroeconomic policy is clearly not an end in itself, but a means to achieving the goal of raising social welfare (see Appendix 1). Such a goal is commonly assessed in terms of economic growth with social equity.27 To conclude this section, we present comparative growth performances across the South American commodity exporters, as well as comparative

27 The considerable social progress registered in Latin America since 2003 is well-known and has been amply documented in numerous World Bank, IDB, and CAF publications. What is perhaps less well-known is that social progress was substantially more pronounced in the region’s commodity-exporting countries. In particular, the commodities boom had a progressive impact on income distribution via its effects on labor market dynamics: it raised the wages of unskilled workers proportionately more than the wages of skilled workers, and that accounted for the lion’s share of the decline in household income inequality (De La Torre et al. 2015; Messina and Silva 2017). Appendix 1 describes the social progress (measured by poverty reduction, expansion of the middle class, and a decrease in income inequality) in Ecuador, which was indeed impressive, although not more so than in other South American commodity-exporting countries. 204 A. de la TORRE ET AL.

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“convergence” performances, over the entire commodities cycle (that is, the 2003–2017 period) (Fig. 24). “Convergence” measures the extent to which a country is able to sustainably close the gap between its per capita income and that of the advanced economies. In Fig. 24a, which excludes Venezuela, Ecuador appears as the third worst performer (after Argentina and Brazil) over the commodities cycle (2003–2017). Ecuador’s real GDP expanded by around 65%, slightly above Argentina’s and more than 20 percentage points above Brazil’s. That expansion, however, pales in comparison to those registered by the best performers: Peru (where GDP increased by around 110%) and Bolivia and Uruguay (were GDP expanded in the 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 205 range of 80–90%). Figure 24b, which also excludes Venezuela, incor- porates population growth and thus compares growth performances in terms of real per capita income. Ecuador emerges as the second worst performer (after Brazil), losing ground relative to Argentina, where population growth was lower. Taken by itself, the cumulative rise in Ecuador’s real per capita GDP by nearly 40% over the 2003–2017 period looks impressive, but it is dwarfed by that of Peru and Uruguay, where real income per person rose by more than twice as much (by around 80%). Finally, Figs. 24c and 24d present comparative statistics on convergence during 2003–2017. Clearly, different countries entered the commodities boom at different levels of economic development. Two groups can be distinguished: the frst comprising Bolivia, Ecuador, Paraguay, Peru, and Colombia, where per capita income in 2003 was no greater than 10% of U.S. per capita income; and the second, comprised of relatively richer countries, including Venezuela, Brazil, Argentina, Uruguay, and Chile, which entered the boom with per capita incomes in the range of 15–22% of U.S. fgures. Convergence performances varied considerably over the commodities cycle. At one extreme was Venezuela, which lost considerable ground relative to U.S. standards of living, diverging at a rate of about 2% per year. At the other extreme were Uruguay and Peru, which converged toward the United States at a rate of about 3% per year. Paraguay, Colombia, Bolivia, Chile, and Argentina were in the middle of the pack, with convergence rates of around 2% per year. Ecuador was among the worst performers, converging at a rate of only 1% per year, thereby gaining little or no ground relative to the United States. The message implicit in Fig. 24 must of course be complemented by a view of growth prospects going forward. In that regard, Ecuador again appears to have been wounded by the macroeconomic mismanagement of the Correa administration, which debilitated private investment and innovation and created a non-commodity productive structure heavily oriented toward the local market. A host of ambitious structural reforms will therefore be required for Ecuador to reach a higher growth path by reorienting its productive economic activities (in goods and services, including tourism) toward international markets. 206 A. de la TORRE ET AL.

6 concluding Remarks The pursuit of prudent, countercyclical macro-fnancial policies during a boom presents daunting challenges, both technical and political. Technical challenges stem from mirages that conceal realities and make it diffcult to distinguish the transitory and permanent components of the boom. Indeed, a sharp and sustained rise in commodity prices in a country rich in natural resources can easily mesmerize policy-makers and society at large into believing that prices will continue to rise or remain high for years to come. Moreover, fscal and external positions when measured as a percentage of nominal GDP appear strong, thus decep- tively suggesting that there is space to expand spending without incurring major macroeconomic disequilibria. The underlying truth can be detected, however, when fscal and external ratios measured in volume terms (i.e., eliding price effects) reveal widening real defcits behind the veneer of the bonanza. The political challenges are even more complicated. These mostly stem from the short horizon with which politicians operate in weak democratic settings. Short-sighted politicians experience strong incentives to seize the commodities-driven abundance in order to aggressively expand fscal spending and redistributive transfers, without regard to the adverse medium-term implications of such actions. The likelihood of giving into short-term binges is higher in unequal societies, where large segments of the population live with unsatisfed basic needs and, as a result, also operate with short-term horizons, greatly valuing present consumption while heavily discounting the future. In such contexts, populist politicians can easily lure the consumption-constrained poor into supporting pro-cyclical macro-policies; “why save in times of abundance”, the populist leader will ask, “when the social needs are so great?” And the masses will readily follow. The problem, of course, is that the greater the excesses during the boom, the costlier the adjustment in the bust, both in terms of growth losses and social stress, and it is the poor who are lamentably left holding the short end of the stick once the party is over. The diffculties inherent in exercising macroeconomic policy prudence during times of abundance highlight the importance of strong institutions, particularly in the fscal feld, but also in democratic checks and balances. Unfortunately, Ecuador moved backwards in both respects during the Correa administration. To be sure, democratic governance 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 207 had been weakened prior to the boom, in the late-1990s, not least because of the major fnancial crisis that erupted in 1999 and that led to the adoption of dollarization. Important steps toward fortifying fscal institutions (including via the establishment of an oil stabilization fund, and major improvements in tax administration) had been taken in the early 2000s, but the Correa administration aggressively dismantled institutionalized fscal constraints, obliterated the independence of the Central Bank and other regulatory agencies, and weakened democratic checks and balances across the board. In that context, the mentioned technical and political factors that militate in favor of fscal profigacy operated with little or no restraint and prudence was thrown out the window. Commodity-exporting countries are keenly exposed to very wide and externally driven economic fuctuations. They must rely on sound fscal and democratic institutions to consistently avoid the threat of the ‘natural resources curse’, tame macroeconomic pro-cyclicality, and harness appropriately their wealth in natural resources to sustainably raise their living standards. The premium on strong institutions is even higher in dollarized economies such as Ecuador, and greater prudence is needed during the boom because subsequent adjustment during the bust is signifcantly complicated by the absence of an independent monetary policy. 208 A. de la TORRE ET AL.

Appendix 1. Social Progress in Ecuador and its South American Neighbors During the boom period, the Latin American commodity-exporting countries experienced noticeable progress in terms of social welfare, and Ecuador was no exception. Considering that one of the key objectives of Correa’s administration was the reduction of poverty and inequality, this section aims to illustrate the evolution of key social indicators in a comparative approach. We use the World Bank’s defnition of ‘moderate’ poverty (set at $4.00 per person per day in 2005 Purchasing Power Parity, PPP, prices). Persons are defned as ‘vulnerable’ if they earn between $4 and $10 per day (2005 PPP), while the middle class comprises persons that earn between $10 and $50 per day (2005 PPP). Households that earn above $50 per day are considered rich.

Ecuador’s social gains are clearly refected in the reduction of poverty and inequality as well as the signifcant expansion of the middle class. As shown in Fig. 25, the share of middle-class population almost doubled, from 18.7 to 35.9%, between 2003 and 2014. During the same period, moderate poverty decreased by 26 percentage points, from 45.6 to 19.4% of the population. Although an important proportion of the population was able to escape poverty, not everyone made it into the middle class. By 2014, 42.7% of the Ecuadorian population was catalogued as vulnerable—almost 9 percentage points above the 2003 level—and

3RYHUW\ 9XOQHUDEOH 0LGGOH&ODVV

Fig. 25 Poor, vulnerable and middle-class population in Ecuador (Source World Bank. Author’s own calculations) 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 209 became the largest socioeconomic group in the country. While Ecuador presented considerable improvements in terms of declining poverty and inequality, its performance was comparable to other commodity exporters of the region. Figures 26 and 27 depict three key social progress indicators for Ecuador, Bolivia, Chile, Colombia, and Peru between 2003 and 2014. These indicators capture changes in poverty, middle-class growth, and income inequality across the selected economies. The message from these fgures is that social progress, although not identical in all countries, was common to all and of comparable magnitude. Bolivia and Ecuador experienced the largest decreases in poverty during the boom, with sharp declines of nearly 29 and 26 percentage points, respectively. While poverty reduction for these countries was greater than the group average (at 21 percentage points), Bolivia and Ecuador started with the highest poverty rates prior to the commodity boom (at 52% and 46%, respectively, in 2003). In contrast, the poverty rate in Chile dropped by only 11 percentage points, the smallest change within the group; but Chile had the lowest poverty rate at the beginning of the period (at 17% in 2003). The boom was also characterized by a signifcant expansion of the middle class in all the selected countries. Bolivia and Peru achieved the largest improvements in terms of middle-class growth,

&+/3(5 &2/(&8 %2/ 3RYHUW\ 9XOQHUDEOH 0LGGOH&ODVV 5LFK

Fig. 26 Poverty reduction (Source World Bank. Author’s own calculations) 210 A. de la TORRE ET AL.

[

,Q L *LQ 3(5&+/ &2/(&8 $YHUDJH%2/

Fig. 27 Inequality reduction (Source World Bank. Author’s own calculations. Note Data for Bolivia correspond to 2002 instead of 2003. Data for Chile correspond to 2013 instead of 2014) with an increase of 21 percentage points between 2003 and 2014. In Ecuador, the middle-class share rose by 17 percentage points, just below the group average (18 percentage points). The decline in poverty throughout the region was accompanied by a considerable reduction in income inequality, as measured by the Gini coeffcient (Fig. 27). Ecuador and Bolivia outperformed the other economies in terms of improvements to income distribution, with a 0.11 points decrease in the Gini coeffcient during the boom, much bigger than the average decline for the group (a 0.08 points decline). Although Bolivia showed the highest rate of inequality at the beginning of the period, Ecuador’s initial inequality level was close to that of Colombia or Chile. While the social progress achieved in Ecuador during the commodity boom cannot be denied, it was comparable to that of other South American commodity exporters, regardless of the ideological traits of the government in offce. De la Torre et al. (2015) and Messina and Silva (2017) suggest that the social gains (particularly the reduction in inequality and expansion of the middle class) were less due to social policy and more due to the labor dynamics generated by the commodities boom, which contributed to faster a rise in the wages of unskilled workers’ that in the wages of skilled workers. 8 THE MACROECONOMICS OF THE COMMODITIES BOOM IN ECUADOR … 211

Acknowledgements The authors would like to acknowledge excellent comments and suggestions from Felipe Burbano de Lara, Anna Ivanova, Pablo Lucio Paredes, Andrés Mejía Acosta, Roberto Mosquera, Abelardo Pachano, Lenin Parreño, María Laura Patiño, John Polga-Hecimovich, Juan Ponce Jarrín, Iliana Olivié, María Caridad Ortiz, José Samaniego, Francisco Swett, Marco Varea, Mauricio Villafuerte, and the participants at the May 2018 Seminar “Evaluando el giro a la izquierda latinoamericano: 10 años de la Administración Correa en Ecuador”, organized by the Instituto de Iberoamérica of the University of Salamanca and FLACSO Ecuador.

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Frankel, J. (2012). The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions. Boston: John F. Kennedy School of Government, Harvard University. Jensen, N., & Wantchekon, L. (2004). Resource Wealth and Political Regimes in Africa. Comparative Political Studies, 37, 816–841. Lane, P., & Milesi-Ferretti, G. (2007). The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities, 1970–2004. Journal of International Economics, 73, 223–250. Messina, J., & Silva, J. (2017). Desigualdad del ingreso en América Latina: com- prendiendo el pasado para preparar el futuro. Paper Presented at the Foro Latinoamericano de Desarrollo, Washington, DC. Ross, M. (2006). A Closer Look at Oil, Diamonds, and Civil War. Annual Review of Political Science, 9(9), 265–300. Sala-I-Martin, X., & Subramanian, A. (2003). Addressing the Natural Resource Curse: An Illustration from Nigeria. Washington, DC and New York: IMF. Sinnott, E., Nash, J., & De la Torre, A. (2010). Natural Resources in Latin America and the Caribbean: Beyond Booms and Busts? Washington, DC: World Bank. Van der Ploeg, R., & Venables, A. (2013). Absorbing a Windfall of Foreign Exchange: Dutch Disease Dynamics. Oxford: CEPR- University of Oxford. Villafuerte, M., Lopez-Murphy, P., & Ossowski, R. (2010). Riding the Roller Coaster: Fiscal Policies of Nonrenewable Resource Exporters in Latin America and the Caribbean (Vol. 10/251). Washington, DC: IMF. Wantchekon, L. (2002). Why Do Resource Dependent Countries Have Authoritarian Governments? Journal of African Finance and Economic Development, 2, 57–77. CHAPTER 9

Understanding Ecuador’s Growth Prospects in the Aftermath of the Citizens’ Revolution

Matias Bayas-Erazo

1 introduction Following a sharp reduction in commodity prices, Ecuador’s economy is undergoing an inevitable fscal and external adjustment that is hamper- ing economic growth. Long-lasting and widespread increases in export- commodity prices during the government of President Rafael Correa drove sustained growth in the public sector (relative to GDP) from under 25% in 2002–2004 to a staggering 43% in 2012–2015. This expansion was led by signifcant increases in public investment, which rose from 5% of GDP to over 15% between 2004 and 2014. In contrast, private sector investment decreased throughout Correa’s administration, refecting the former president’s statist views (see Chapter 9 in this book). Given the current and seemingly permanent reduction in commodity prices, public investment—the main engine of economic growth throughout the Correa period—is not an option for President Lenín Moreno.

M. Bayas-Erazo (*) Department of Economics, Northwestern University, Evanston, IL, USA e-mail: [email protected]

This chapter addresses the question of what the future holds for Ecuador’s economy by focusing on the interaction between private sector investment and fscal policy in the above-described context. Ecuador’s prospects hinge very considerably on whether or not private sector investment can dampen the contractionary effects associated with the necessary reduction in government spending. In practice, there are many ways in which to consider future economic outcomes. An empirical approach combines the data at hand with an econometric model to obtain forecasts for the variables in question. On the other hand, a theoretical approach relies on a coherent but simplifed description of the economy in order to understand how private investment interacts with government policy, to predict likely future outcomes. My interest here is in gauging how the private sector will ostensibly respond to policy changes in Moreno’s regime without imposing questionable restrictions, so I adopt the second approach. Understanding why and how private sector investment is affected by the government’s chosen fscal policy is arguably more useful to policy-makers than an accurate forecast of future GDP that relies on strong identifcation assumptions. In accordance with this, I present a stylized model that describes a simple macroeconomic game between the government and a large number of private agents that respond strategically to announced policies. Given the strategic nature of this environment, I move away from classical equilibrium analysis in macroeconomics and adopt a Nash-type concept of equilibrium originally introduced by Bassetto (2005) and refned by Atkeson et al. (2010), Christiano and Takahashi (2018), and others. By this approach, I intend to show why Ecuador’s growth prospects are linked to whether or not policy-makers can solve a nontrivial ‘implementation problem’. Due to the complementarity of investment decisions, equilibrium outcomes are heavily infuenced by agents’ expectations. The implementation problem refers to how government policy can select the ‘best’ outcome among those that could conceivably arise in equilibrium. Thus I conclude that the future of the Ecuadorian economy depends on whether policy-makers can construct feasible and credible ‘adjustments’ to fscal policy in order to steer the economy toward a more desirable (i.e., growth) outcome. Moreover, and most importantly, I will emphasize that this credible and feasible ‘adjustment’ should not be interpreted as an unconditional commitment by the government to lower government spending and encourage private investment. Indeed, I shall demonstrate how standard policy recommendations can 9 UNDERSTANDING ECUADOR’S GROWTH PROSPECTS … 215 potentially lead to undesirable equilibrium outcomes, and how this could be the reason that the economy is currently trapped in a low-economic-activity equilibrium. The remainder of this chapter is organized as follows: frst, I present an overview of Ecuador’s economic situation; Sect. 2 provides a brief summary of events that have been unfolding throughout the economy, leading to the current environment presented in Sect. 3. Having laid out the conceptual framework, I analyze in Sect. 4 the potential equilibrium outcomes by considering different policy regimes and preference structures. Finally, Sect. 5 discusses the main policy implications obtained from this analysis.

2 overview Fueled by the commodity price bonanza, Ecuador enjoyed a period of strong growth between 2007 to 2014, with an average GDP growth of 4.4% annually. Following the subsequent bust in commodity prices, there was a consolidated effort by Rafael Correa’s government to delay fscal and external adjustments, in order to sustain prior growth levels and to avoid the political costs associated with an economic downturn. On the fscal front, the government resorted to issuing signifcant amounts of debt through international markets, acting as if the decline in oil prices were a temporary phenomenon. External debt more than doubled at this time, from US $12.9 billion in 2013 to US $31.8 billion in 2016. As a result, the public debt-to-GDP ratio surged from 24% of GDP in 2013 to 45.2% in 2017 (Observatorio de Política Fiscal 2018). Moreover, there was a lack of transparency, with the government relying on tech- nicalities to avoid the inclusion of certain liabilities (like those linked to future oil sales contracts) in offcial debt statistics. Thus, the numbers presented above almost surely underestimate the actual amounts of liabilities issued by Correa’s government throughout this period. In addition to the high levels of public debt, servicing costs also increased signifcantly, highlighting the unsustainable path that the government chose to follow. Due to the country’s reputation as a rogue debtor, investors demanded increasingly higher yields near those of so-called junk bonds (De la Torre and Hidalgo 2017). Similarly, loans secured from China involved strikingly high interest payments. As a result, the total debt-service-to-GDP ratio increased from 3.6% of GDP in 2013 to 10.1% in 2017. Likewise, the total debt-service-to-exports 216 M. BAYAS-ERAZO ratio increased from 7.8% in 2013 to 24.3% in 2017 (Observatorio de Política Fiscal 2018). Having exhausted traditional sources of funds, Correa’s government began to rely on more creative means to fnance the public defcit. One example of this was the fnancing of the public sector through Ecuador’s Central Bank. The government essentially forced fnancial institutions to hold excess reserves at the Central Bank, which in turn used those resources to help fnance the government’s defcit. This weakened the Net International Reserves (NIR) of the Central Bank, which now faces a very low stock of NIR, leaving the country’s fnancial system vulnerable to liquidity constraints. On the external front, given the overvalued exchange rate, Correa resorted to an increase in tariffs and surcharges on a large number of goods. Indeed, as shown in Chapter 8 of this book, following the bust in commodity prices, surcharges and tariffs were imposed on 2800 products—equivalent to around 33% of the country’s total imports By incurring an unsustainable level of debt and resorting to the numerous measures described above, the government managed to postpone the adjustment and prevent an economic downturn despite the collapse in oil prices. In fact, the economy’s growth rate throughout 2014 was above the long-term trend. This can be seen in Fig. 1, which

Fig. 1 GDP and GDP per capita (Source BCE and Author’s own calculations) 9 UNDERSTANDING ECUADOR’S GROWTH PROSPECTS … 217 shows the actual growth rate of GDP and the long-term trend (gray line) obtained by “fltering out” the cyclical components of GDP: Clearly, the adjustment could not be postponed indefnitely, and Ecuador entered a period of recession in 2015 that lasted until 2017, when the country experienced a slight recovery. Despite this upturn, the above fgures suggest that Ecuador is now entering a period of low growth and declining living standards. This is consistent with the low- growth estimates for 2018 issued by international organizations such as the International Monetary Fund (1.1%) and the Economic Commission for Latin America and the Caribbean (1%). Given this context, President Moreno’s discourse has proven more cordial toward the private sector. His initial actions aimed to boost the economy through a number of measures to incentivize private economic activity, including the elimination of advances on income taxes for small frms and a move toward labor market fexibility in an attempt to boost employment. Moreover, Moreno introduced tax exonerations for frms that repatriated funds within the next twelve months. Moreno’s boldest effort materialized in August of 2018, when the National Assembly approved the Ley Orgánica para el Fomento Productivo, Atracción de Inversiones, Generación de Empleo y Estabilidad y Equilibrio Fiscal (Organic Law for Productive Development, Attraction of Investment, Employment Generation, and Fiscal Stability and Equilibrium). This constituted the current president’s most important economic legislation so far. First, it included amnesty for any outstanding interest, fnes, or surcharges owed to a number of government agencies. Small and large enterprises, government scholarship grantees, decentralized autonomous governments, and public companies, among others, are eligible for this exoneration. In addition, a 10-year income tax exemption was introduced for new investments in the industrial sector. Along the same lines, a 15-year exemption for investment in basic industries, and a 20-year exemption for investments located near the country’s border, were also specifed in the bill. Furthermore, exemptions were introduced to the tax on capital outfows for productive investments, and for frms that reinvest at least 50% of their profts in Ecuador’s economy. These measures all demonstrate an attempt to reduce the high-tax burden that private agents are currently facing, as can be seen in Fig. 2. Using a standard STL algorithm to decompose the path of income taxes into seasonal and trend components, one fnds that the share of income taxes relative to GDP has stabilized at around 0.3% of GDP. 218 M. BAYAS-ERAZO

Fig. 2 Income taxes relative to GDP (Source BCE and Author’s own calculations)

Thus, despite the government’s initiatives, the country does not seem to be moving toward the lower tax equilibrium that characterized the economy before the surge in commodity prices and Correa’s 10-year presidency. Additional reforms introduced in the aforementioned bill relate to guidelines that restrict the government’s budget defcit in order to regain fscal sustainability. First, a government budget cannot be approved if there is a primary defcit. Second, a limit of 40% of GDP was ratifed on public sector debt. Were the government to exceed that limit, authorization would be required from the National Assembly. However, over the next three years, while the government aims to close the fscal gap, the country can continue to issue debt so long as a plan is in place to create long-term fscal strength and sustainability. Finally, any income from the exploitation of nonrenewable natural resources will go toward the creation of a fund for fscal stabilization. The austerity measures announced by the current regime refect an attempt to reduce the government’s unsustainable spending, which peaked in 2014 at 43.6% of GDP, following a steady increase under Rafael Correa. President Moreno has announced (but not yet 9 UNDERSTANDING ECUADOR’S GROWTH PROSPECTS … 219 implemented) some of the necessary adjustments: reduction in the salaries of all high-ranking offcials, elimination of bonus payments for state employees, overall reduction in the number of public sector workers, unifcation of certain ministries, and the sale or privatization of state- owned companies. There has also been an attempt to reduce subsidies; for example, the government has eliminated the subsidy for high-quality fuel. But this appears to be backfring, as a signifcant number of people (around 50%) have switched to a low-quality fuel that is still subsidized. A clear example of the law of unintended consequences, this policy will likely end up costing the government more money than before. Further subsidy cuts are expected in the future, but the effects of such measures are unpredictable, if past actions are any indication. Offcial data shows that current government expenditures have increased while capital expenditures have declined. For example, in the frst eight months of 2018, current expenditures of the nonfnancial public sector (NFPS) increased from 17.3 to 18.8% of GDP. On the other hand, capital expenditures over the same time-frame have decreased, from 5.3 to 3.3% of GDP (Observatorio de Política Fiscal 2018). The sustained decline in capital expenditures has been driving the downward trend observed in Fig. 3.

Fig. 3 Government expenditures relative to GDP (Source BCE and Author’s own calculations) 220 M. BAYAS-ERAZO

This has important implications for future growth. As was mentioned in the introduction, the state under Rafael Correa became the main engine of growth in Ecuador’s economy, and public investment rose dramatically from 2007. A brief look at the numbers shows that investment climbed from around US $10 billion in 2007 to a peak of over US $25 billion in 2014. The share of private investment in total investment declined from 68% in 2007 to a meager 42% in 2014. Since then, the share of private investment has risen, accounting for 55% of total investment in 2016. However, the main concern is that aggregate real investment has fallen, proving that the private sector has not been able to carry the load as the driving force of the economy. The downward trend exhibited in Fig. 4 is worrying: as the state continues to reduce its capital expenditures, economic activity will continue to suffer unless private sector investment can counteract the contractionary effects associated with the fscal adjustment. For this reason, the analysis below will focus on how private sector investment responds to alternative fscal policy regimes, in order to gain a clearer view of what the future holds for the Ecuadorian economy.

Fig. 4 Real investment (Source BCE and Author’s own calculations) 9 UNDERSTANDING ECUADOR’S GROWTH PROSPECTS … 221

3 A Stylized Model of Investment and Government Policy The model used to guide this discussion is based on that of Bassetto (2005), who describes a simple game between the government and a large number of private agents that respond strategically to the decisions announced by the government. Despite its simplicity, a stylized economic model featuring strategic complementarity and uncertainty can help us to pin down future outcomes and shed light on the causes behind the current economic downturn. After describing the basic setup, I will explain how strategic complementarity can lead to multiple equilibria. Due to limitations on the scope of this chapter, most of the technical details have been omitted. Consider an economy in which a large number of agents must make a decision today regarding how much to invest tomorrow. When doing so, they know that the government tomorrow will have a given level of expenditure (call this G) that will have to be fnanced. To simplify the analysis, I assume that the only way the government can fnance its expenditures is by levying a proportional tax (t) on aggregate investment earnings, and by making use of resources obtained from commodity exports (which we denote as P). Since the government has no control over the price it receives for the commodities it exports, P will be treated as a parameter in the model. In practice, the government could potentially affect P by increasing the production of commodity exports, but it is reasonable to assume that this change will not be signifcant in the short run. Finally, due to the high levels of Ecuador’s public debt, described above, we assume that the government’s ability to borrow from international markets is limited. Given the timing described above, when making their investment decision, agents do not know what the effective tax rate will be: the government will choose the tax rate tomorrow, after aggregate investment decisions have been realized. However, the tax affects the marginal beneft of investment. Thus, in order for the agents’ decision to be well informed, they must gain a notion about what the marginal beneft of investment will be. I assume that agents form a belief and that, given this belief, they choose how much to invest. A general feature of investment decisions is that agents do not know what the state of the economy will be when the payoff from their investment is realized. The model captures uncertainty this by relaxing the 222 M. BAYAS-ERAZO assumption that agents observe the tax rate that will be levied on their earnings. If we impose the often-criticized assumption of rational expectations, we can easily circumvent this problem, since beliefs are assumed to be ‘correct’ in equilibrium. In other words, classical equilibrium concepts employed throughout macroeconomics are entirely silent when it comes to how agents come to know what this tax rate will ultimately be. By steering away from that assumption, this framework captures aspects that are absent from similar models that work with the standard assumptions. Now, in order to understand how agents form their conjectures, one must use game-theoretic tools. If we impose no structure on how agents form beliefs, then there is not much we can say. Following Christiano and Takahashi (2018), I assume that agents form their beliefs by thinking through a set of continuation equilibria associated with alternative policy regimes. For example, agents know that whatever the state of the economy tomorrow, the tax rate has to be such that the government’s resources are equal to its expenditures. Since the revenues the government receives from exporting commodities are beyond its control (as in our assumption above), and given the limited borrowing capacity, agents know that the government’s only option in balancing the budget is to adjust the tax on investment earnings. Thus, the government’s feasibility constraint informs the agent’s belief about what the tax rate will be. It immediately follows that this belief will depend on something else that agents cannot observe at the time they make their decisions: the aggregate level of investment in the economy. That is, aggregate economic activity determines the amount of resources the government receives for a given tax rate. Thus, if agents expect the aggregate level of investment to be high, it makes sense for them to expect a lower tax rate relative to the case where aggregate investment is low. Since beliefs about the tax rate ultimately depend on aggregate economic activity, I consider agents as making an initial conjecture about what the aggregate investment will be, and then—by reasoning through the equilibrium associated with that conjecture—they form their belief about the tax rate. This allows them to compute the aggregate investment implied by the tax rate associated with their initial conjecture. They iterate this process until they reach a fxed point (i.e., until the aggregate level of investment in the continuation equilibrium associated with their initial conjecture is equal to their initial conjecture). Alternatively, their conjectured tax rate is the tax rate implied by the continuation 9 UNDERSTANDING ECUADOR’S GROWTH PROSPECTS … 223 equilibrium. Once they have reached this fxed point, agents use this tax rate to guide their investment decisions. Figure 5 can help understand this introspective process and the idea of a continuation equilibrium. The illustration on the left plots an individual’s optimal investment choice as a function of aggregate investment, K, for a given parameter- ization of individual preferences. The best-response function is obtained by computing the continuation equilibrium for any feasible value of aggregate investment. The gray line is the 45-degree line from the origin. In simple terms, the introspective process described above can be thought of as agents iterating along their best-response function. The points at which the curves intersect are the fxed points, and these characterize the set of equilibria in this economy. On the right, we see how the individual’s conjectured policy rate is decreasing with the aggregate level of investment, as mentioned above. The complementarity between agent’s investment decisions and aggregate economic activity is what leads to multiple equilibria (notice that the best-response function crosses the 45-degree line multiple times). The reason behind this is very intuitive: If I expect that aggregate investment will be low, then I know that government revenues will be

Fig. 5 Best response functions and conjectured tax rates (Source Author’s own calculations) 224 M. BAYAS-ERAZO low, and hence I expect that the tax rate will be higher. This decreases my incentive to invest. On the other hand, if agents expect that aggregate investment will be high, then they will expect a lower tax rate and increase their investment accordingly. These situations are often referred to as ‘self-fulflling prophecies’ or ‘coordination failures’. An alternative way to observe the multiplicity that arises in such an environment is by plotting government revenues as a function of the tax rate, then looking at the tax rates that balance the budget for a given level of expenditures and revenues obtained from commodity exports. From Fig. 6 it is clear that two tax rates are consistent with the government’s budget constraint. The lower tax rate is associated with the high-investment equilibrium, and that the higher tax rate corresponds to the low-investment equilibrium. The implementation problem boils down to whether there exists a credible fscal policy that can be designed by the government in order to select the low-tax/high-investment equilibrium. By ‘credible’ I mean that the proposed policy be feasible for any possible level of aggregate investment (to satisfy the government’s budget constraint). If this is not the case, then agents will realize that the government will not be able to implement the proposed policy when the state of the economy evolves

Fig. 6 Government revenues and expenditures (Source Author’s own calculations) 9 UNDERSTANDING ECUADOR’S GROWTH PROSPECTS … 225 from the scenario contemplated by policy-makers at the time the policy was announced. When this occurs, government policy may fail to select the desired equilibrium. The implementation problem is nontrivial in the sense that the existence and characterization of such a policy depends on the preference of private agents, and whether or not fscal authorities have the necessary tools to respond strategically to the state of the economy without being constrained by political pressures. Taking this into account, the above-described model provides a very intuitive explanation of the economic downturn that the Ecuadorian economy is currently facing: following the bust, and thinking through the continuation equilibrium associated with ‘austerity’ measures that Correa was forced to adopt near the end of 2014, private agents realized that the tax rates announced by the government and the revenues obtained from exports would not suffce to cover expenditures given the poor fscal management under Correa’s 10-year presidency. As a result, agents’ expectations of the tax rate to be imposed on investment earnings increased, potentially explaining why private sector investment has not been able to mitigate the contractionary effects associated with the reduction in public investment. It goes without saying that the scenario presented above is an extreme simplifcation of the interactions that occur throughout the Ecuadorian economy. However, it captures the essential ingredients that determine how private sector investment responds to fscal policy by highlighting the role of agents’ expectations when it comes to equilibrium outcomes. Again, I make no claim that this model captures all the interactions that occur within a country’s economy. But if one wants to climb a mountain, one doesn’t need an accurate map of the entire world—just an account of the situation and paths around that mountain. With this in mind, I now turn to analysis of the potential equilibrium outcomes under alternative policy regimes and preference structures, conducted through the lens of the framework described above, in order to offer some likely future economic outcomes.

4 equilibrium Selection and Government Policy in the Ecuadorian Economy I begin by considering the implications of an unconditional commitment from the government to lower spending and to incentivize private investment (tax reductions, subsidies, etc.) in the case where individual 226 M. BAYAS-ERAZO preferences are separable from government expenditures. By ‘separable’ I mean that the trade-off between consumption today and consumption tomorrow is not affected by the level of public spending. Gauging from the events described in Sect. 2, the government seems to be adopting this strategy: the recent announcement by the Ministerio de Economía (Minister of Economics) of plans to close the fscal defcit in three years can be interpreted as an unconditional commitment to reduce government spending. Moreover, some of the reforms introduced by Moreno in the Ley Orgánica para el Fomento Productivo, Atracción de Inversiones, Generación de Empleo y Estabilidad y Equilibrio Fiscal can be thought of as reducing the effective tax rate on investment earnings in order to stimulate private investment. Now we consider how agents in the model would respond to a fscal policy announcement characterized by the features mentioned above. In terms of the given environment, we can interpret this as a downward shift on the gray line in Fig. 7 and a commitment to set the lowest tax rate consistent with the budget constraint (black line). To see how individual investment decisions would respond to this change in policy, I compute the continuation equilibria under this policy regime in order to obtain the best-response function. As shown in Fig. 8, this policy announcement does not eliminate the high-tax/ low-investment equilibrium: an unconditional commitment to lower expenditures and reduced taxes does not solve the implementation problem. This result is intuitive: despite the government’s commitment, the complementarity between agents’ investment decisions remains in effect. Thus, even if individuals believe the government, by considering off-equilibrium paths, they realize that when the state of the economy is such that aggregate investment is suffciently low, the proposed policy will not be feasible (i.e., the government’s budget constraint will be violated). Given this, one cannot rule out the possibility that agents will behave as if the government were going to set a tax rate higher than the one announced. Moreover, under this new policy regime, the economic activity in the undesirable equilibrium would be even lower relative to the case presented in Sect. 3. This shows how ill-advised fscal policy can lead to undesirable outcomes, preventing the economy from entering a period of sustained growth. Moreover, one can see that advocates of these unconditional commitment policies are implicitly assuming that agents will not consider engaging in off-equilibrium behavior. Therefore, these advocates conclude that reducing government 9 UNDERSTANDING ECUADOR’S GROWTH PROSPECTS … 227

Fig. 7 Fiscal policy under unconditional commitment (Source Author’s own calculations)

Fig. 8 Best response function under unconditional commitment policy (Source Author’s own calculations) 228 M. BAYAS-ERAZO expenditures and incentivizing private investment will suffce to steer the economy toward a more desirable outcome. In the case of separable preferences, there is a solution to the implementation problem that can help the government to select the low-tax/ high-investment equilibrium. In order for this to be the case, policy design must be contingent on the state of the economy. For example, an announcement similar to that described above must be coupled with an ‘escape clause’ when the state of the economy is different than that contemplated by policy-makers (Cochrane 2011; Christiano and Takahashi 2018). In the case of Ecuador, this escape clause can take several forms. For instance, policy-makers can commit to this policy regime as long as economic activity is high, but in the case of low economic activity, rather than increasing taxes, policy-makers are prepared to resort to long-term, low-cost fnancing from multilateral institutions like the IMF, the World Bank, or the Inter-American Development Bank. This ‘kills’ the complementarity of investment decisions, because agents realize that the government’s announced policy is feasible regardless of the state of the economy tomorrow: the funds obtained from multilateral institutions will allow fscal authorities to balance the budget without increasing the tax rate on investment earnings, even if aggregate investment is low. Therefore, individuals behave as if the tax rate that to be imposed on their earnings will be equal to that initially announced by the government. It is worth emphasizing that an escape clause that resorts to issuing debt through international markets would not select the desired equilibrium. Due to the high interest payments the country is currently facing, and the level of debt accumulated throughout Correa’s administration, agents would realize that the announced policy is not feasible. I now turn to the case where agents’ preferences are not independent of government expenditures. If the trade-off between consuming today and consuming tomorrow depends on how much the government spends, then constructing a policy that implements the desired equilibrium is signifcantly more complex. The possibility that preferences are as described above seems reasonable if we take into account the possibility that certain forms of government spending may ‘crowd-in’ private investment. In fact, the existence of such a policy is not guaranteed, since adjustment distorts investment decisions when preferences are not separable (Bassetto 2005). For example, if we take the policy described above, the government cannot rule out 9 UNDERSTANDING ECUADOR’S GROWTH PROSPECTS … 229 the possibility of a high-tax/low-investment equilibrium: by announc- ing the reduction in expenses, the government will affect individual decisions regardless of whether the announcement involves an escape clause. When such a policy does not exist, “policy advice calls for giving the government more tools than it already has” (Bassetto 2005). For instance, the creation of a strong sovereign wealth fund could help the government select the desired equilibrium, as this would allow fscal authorities to minimize the distortion induced by the cut in expenditures. In this sense, the introduction of a fscal stabilization fund in the economic reforms announced by President Moreno constitutes an important step toward designing a policy that selects the low-tax/ high-investment equilibrium. Despite the diffculties of characterizing an optimal policy, the discussion above suggests that in addition to a strategic design of fscal policy, the reduction in government expenditures should be focused on areas that are unlikely to distort agents’ investment decisions. In other words, to the greatest extent possible, adjustment should be focused on current expenses rather than capital expenses. Moreover, strengthening the stabilization fund should be a priority for policy-makers given the potential distortions induced by continuous adjustments to government expenditures.

5 conclusion The analysis carried out in this chapter sheds some light on the prospects for the Ecuadorian economy in the aftermath of the Revolución Ciudadana (Citizens’ Revolution). Given that the economy’s progress is contingent on whether or not private sector investment can take over and replace the public sector as the main engine of the economy, I have focused on how fscal policy can affect private investment decisions. The main takeaway from this analysis relates to the importance of solving the implementation problem in order to ensure that the economy move toward a period of growth and increasing living standards. Whether fscal authorities manage to construct a credible and strategic fscal policy will determine the economic outcomes to be realized in the future. Due to the complementarity of investment decisions, we have seen how equilibrium outcomes are heavily infuenced by agents’ expectations, and why it is crucial to design a policy that is contingent on the state of the economy. 230 M. BAYAS-ERAZO

Moreover, given the possibility that individual preferences are not separable from government expenditures, the need to create a fscal stabilization fund has been emphasized, as well as the importance of focusing adjustments on current rather than capital expenditures. While exploring potential tools, fscal authorities should be guided by the general principle that any policy that selects the desirable equilibrium must ‘kill’ the strategic complementarity that drives investment decisions. The importance of public announcements and how they can encourage coordination among private agents has been extensively studied in the literature on imperfect information and public communication (Bayas- Erazo 2017). The government should use this to its advantage in order to rule out the possibility of coordination failures in the economy, and to steer the economy toward a more desirable outcome.

Acknowledgements The author acknowledges the excellent research assistance contributions of Tomas Bayas.

References Atkeson, A., Chari, V., & Kehoe, P. (2010). Sophisticated Monetary Policies. Quarterly Journal of Economics, 125(1), 47–89. Bassetto, M. (2005). Equilibrium and Government Commitment. Journal of Economic Theory, 124(1), 79–105. Bayas-Erazo, M. (2017). Public Communication with Endogenous Information Precision (Working Paper). N. University, Chicago. Christiano, L., & Takahashi, Y. (2018). Discouraging Deviant Behavior in Monetary Economics. (NBER Working Papers). National Bureau of Economic Research (NBER). Cochrane, J. (2011). Determinacy and Identifcation with Taylor Rules. Journal of Political Economy, 119(3), 565–615. De la Torre, A., & Hidalgo, J. (2017). La trampa que asfxia a la economía ecuatoriana. Quito: CORDES. Observatorio de Política Fiscal. (2018). Transparencia Fiscal (Vol. 145). Quito, Ecuador. https://www.observatoriofscal.org/publicaciones/transparencia- fscal/fle/184-transparencia-fscal-no-148-diciembre-2018.html. CHAPTER 10

The Political Management of the Oil Bonanza During Correa’s Government

Andrés Mejía Acosta and Vicente Albornoz

1 introduction Between 2005 and 2014, the Ecuadorian government benefted from unprecedented fscal wealth accrued from soaring world prices for crude oil. President Rafael Correa was able to push for legal, budgetary, and political reforms to maximize his control over fscal and budgetary matters. According to the conventional public fnance literature, greater legal and political control over the budgetary process would allow a ‘fscal

A. Mejía Acosta (*) Department of International Development, Kings College London, London, UK e-mail: [email protected] Associate Researcher, FLACSO-Quito, Quito, Ecuador Associate Researcher, UDLA-Quito, Quito, Ecuador V. Albornoz The School of Business and Economics, Universidad de las Américas, Quito, Ecuador e-mail: [email protected]

© The Author(s) 2020 231 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_10 232 A. MEJÍA ACOSTA AND V. ALBORNOZ entrepreneur’, or else a ‘fscal leviathan’, to promote greater fscal discipline across budgetary actors and to punish defections from agreed fscal targets (Hallerberg et al. 2009).1 This chapter shows how President Correa amassed the necessary prerogatives to become a powerful fscal manager; but contrary to expectations, the president maximized the government’s share of oil revenues, increased the amount and discretionally of government spending, and raised debt restrictions to increase borrowing. Furthermore, Correa’s fscal expansion took place in the context of dollarization, which eliminated the immediate threat of devaluation. As illustrated by various chapters in this volume, the end of a decade of Correismo left a signifcant fscal gap and an excessive foreign debt. On the political side, the President’s control over public fnances allowed him to maintain some (limited) political control over his cabinet members and to condition their political advancement to spending patterns. However, the President was not able to effectively utilize fscal resources to consolidate his party’s political presence at the local level. To illustrate these effects, this chapter uses existing and newly created databases on fscal expenditure, budgetary volatility, inter-government fscal transfers, and the political careers of cabinet ministers and elected politicians. The chapter illustrates a paradox of governance. Although the government gained unprecedented control in the management of public fnances, the political leverage and excessive spending were not suffcient to consolidate the party’s electoral strength or the Presidents’ political infuence in the long run. The chapter proceeds as follows. The frst section briefy reviews the political and institutional determinants of fscal governance and discusses how the abundance of natural resource revenues undermines such governance. The second part discusses the case of Ecuador and shows the country’s growing dependency on commodity exports, particularly during the Correa period. The third section discusses how the Executive strengthened its political and constitutional powers for decision-making. The fourth part uses two examples to illustrate how greater control of fscal revenues and transfers (control of cabinets and allocation of municipal spending) did not help to consolidate the president’s party. The ffth part concludes with a discussion of the main fndings.

1 The notion of a fscal leviathan illustrates the citizens’ delegation of fscal powers to a higher authority in order to deliver on good fscal outcomes, reward compliance and punish defectors. 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 233

2 the Governance of Public Finances During a Resource Bonanza This section reviews the political economy context in which Correa’s administration took place. The review is composed of two sections: a discussion of the resource bonanza and its governance implications, and of the management of public fnances during the boom.

2.1 Commodities Boom and the Emergence of Resource Nationalism The global surge in the prices of oil, minerals, and other agricultural commodities from the early 2000s triggered a period of economic growth and fscal expansion beyond any that Latin American countries had experienced in at least 70 years. Not only did the sudden abundance of fscal revenues accrued from exports of high-demand natural resources help to reverse the (negative) terms of trade, but in some countries it helped to revive the state as the main engine for promoting economic growth and social development. From the beginning of their return to democracy, Latin American governments had struggled to implement a Washington-inspired set of policy reforms to reduce the size and infuence of the public sector and to adopt market-oriented policies. New wealth fostered a signifcant degree of economic sovereignty, and in many countries, this was accompanied by an equally transformative shift toward left-wing politics. This is not to say that the commodities boom triggered a political shift toward resource nationalism across the board. While it provoked “a wholesale reversal of trade liberalization and privatization” policies in more radical cases such as Argentina, Bolivia, Ecuador, and Venezuela, it produced in Brazil, Chile, and Uruguay a more moderate shift toward “center-left reforms within free-market parameters” (Mazzuca 2013). What is more puzzling is that resource abundance did not necessarily foment an ideological or radical policy shift in resource-rich countries like Colombia, Mexico, or Peru, which continued to operate under market-oriented principles. But in all cases, resource abundance triggered an expansion of the state and its infuence on markets. This shift to the left was particularly strong in Argentina, Bolivia, Ecuador, and Venezuela, all of which featured cases of “rentier populism”, a coalition between a central state with (quasi) monopolistic access to natural resource revenues and a large sector of informal workers and unemployed voters demanding greater and more direct government 234 A. MEJÍA ACOSTA AND V. ALBORNOZ spending (Mazzuca 2013). In a more elaborate way, this rentier coalition has also co-opted, undermined, or even openly intimidated and marginalized other intermediate policy actors and veto players such as business groups, opposition parties, local governments, urban voters, and the media. Mazzuca argues that the abundance of natural resource revenues further helped to consolidate the predominance of the state through three channels (also called “the three temptations”). The frst channel is to centralize and accumulate budgetary control over the extraction, management, and allocation of revenues, mostly through discretionary means; the second channel is to make selective and targeted use of such government funds to privilege short-term spending over long-term saving or investment, particularly to leverage and secure pro-government support during electoral years; and the third channel is the temptation to transform fscal and electoral strength into nondemocratic control of political institutions (Mazzuca 2013). In this sense, the extreme cases of rentier populism consolidated an institutionalized form of delegative democracy, where the vertical loyalty between the leader and the marginalized poor became more important than the relatively liberal notion of (horizontal) checks and balances among government branches (O’Donnell 1994). In all countries, fscal recentralization helped presidents to establish and fnance conditional cash transfer schemes that reinforced the direct link between the Executive and the voters, thus bypassing the infuence of subnational authorities (Eaton 2014).

2.2 The Fiscal Leviathan In the context of a commodities bonanza, the management of public fnances becomes a fundamental condition to translate the unexpected wealth into growth and well-being for the population. Conventionally, the specialized public fnance literature has systematically argued in favor of a strong fscal authority with the power to make effcient public investments, prevent wasteful spending, and maximize the redistribution of wealth (Schick 1998; Von Hagen 2006). In a state of “fscal nature”, where there is no centralized authority, different actors would have all the incentives to spend and advance their own political agendas, without raising the necessary revenue to balance public fnances. Such collective behavior would lead to a depletion of resources and poor fscal outcomes 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 235 that would eventually be punished by voters in the next election (Hallerberg et al. 2009). To avoid the problem of collective action, it is argued that political actors would empower a ‘fscal leviathan’ endowed with the institutional, political, and legal mechanisms to set fscal targets and ensure compliance from all budgetary actors involved (Hallerberg et al. 2009; Schick 1998). Much like its Hobbesian counterpart, the fscal leviathan would have the electoral and political incentives to ensure fscal targets and succeed in order to remain in offce. Certain conditions needed to empower a fscal leviathan. The frst is to control more hierarchical budgetary rules, which can be useful in imposing strict spending rules and legal borrowing limits to prevent escalating defcits (Alesina et al. 1999; Hallerberg et al. 2009; Filc and Scartascini 2006). The second is to gain the support of majoritarian political institutions, such as a majoritarian legislative party, which would tend to limit the number of possible veto players and reduce transaction costs, which would in turn facilitate budget bargaining (Hallerberg et al. 2009). Thirdly, a fscal leviathan should have the ability to appoint cabinet ministers within its own party, monitor their spending targets, and impose rewards and sanctions to cabinet ministers (Amorim Neto 2006; Camerlo and Martinez-Gallardo 2018; Wehner 2010). When these conditions are taken together, the fscal leviathan would have the instruments, strategies, and incentives to improve fscal governance. Conversely, a ‘fscal entrepreneur’ that faces multiple veto players, commands legislative minorities, or has weak enforcement mechanisms, would fall hostage to the collective action dilemmas described above. To accommodate the growing transaction costs, it is likely that this fscal leviathan would allow higher spending, incur in higher fscal defcits and/or seek external fnancing (Hallerberg et al. 2009).

3 the Case of Ecuador This section discusses the case of Ecuador its growing dependency on commodity exports, particularly during the Correa period. Ecuador presents an interesting case of changing fscal governance. During the post-transition years (1979–2006) Presidents confronted multiple regional and partisan players throughout the budget bargaining process, with increasing transaction costs and a volatile fscal performance. The victory of Rafael Correa in the 2006 general election signaled a fscal 236 A. MEJÍA ACOSTA AND V. ALBORNOZ strengthening of the Executive. As we demonstrate in following sections, Correa gained control over strong budgetary rules, a majoritarian legislative party, and unilateral powers to appoint and dismiss cabinet ministers.

3.1 Ecuador’s Oil Dependency and Fiscal Outlook Since the 1970s, oil has played a critical role in the Ecuadorian economy, the policy-making process, and even regime change. During the two oil bonanza periods (1972–1983 and 2005–2014), oil represented approximately 57% of total exports, but its contribution to economic growth during the more recent boom reached approximately 14.7% of GDP (up from 8% GDP in the previous bonanza) (Creamer and Becerra 2016). Oil dependency, particularly during price fuctuations in international commodity markets, has had a dramatic impact on public fnances. Over the past two decades, oil prices have gone from an all-time low of $6.9 dollars a barrel during the 1998 crisis to a peak of nearly $117 in July 2008. During the boom years, record-high oil prices translated into fscal revenues that could not have been imagined years earlier. Between 2005 and 2014, oil prices grew at an average annual rate of 13%, contributing 26% of central government revenues; in absolute terms, the Ecuadorian state received more than $37 billion during this period. In relative terms, nonfnancial public sector expenditure grew from 20% of GDP in 2001 to 44% of GDP in 2014. However, like other resource-dependent countries, Ecuador could not resist or protect itself from oil price volatility, nor it was able to maintain stabilization or savings funds to minimize the adverse boom/bust effects associated with resource dependency (Mejía Acosta et al. 2009). Rather, the country suffered from the temptation of pro-cyclical spending, thereby growing debts and defcits. In the aftermath of the collapse of oil prices in 1998, Ecuador adopted some fscal and monetary measures to dollarize the economy in order to confront its escalating fscal defcit, ballooning debt, and a lack of credibility with business sectors and foreign investors. But certain fscal measures to create a savings and stabilization fund, as well as the adoption of a fscal responsibility law, were summarily abandoned after 2005, when oil prices began to recover (Mejía Acosta and Albornoz 2010). Another observed feature of oil dependency was the rigidity of government expenditure. Despite the fscal contraction caused by falling oil prices both in 2009 and after 2014, central government expenditures continued to grow, particularly within 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 237 certain budget lines such as salaries, interest payments on debt, and government transfers. For example, government salaries during this period grew threefold, from around $2.5 billion at the start of the boom in 2004 to $7.5 billion (real) in 2014. Similarly, government transfers tripled from $1.2 billion (real) in 2004 to $3.6 billion in 2014, only beginning to decrease in 2015. Interest payments on debt varied inversely with changes in oil revenues, with debt (and debt payments) increasing during periods of oil revenue contraction. Central government transfers to Gobiernos Autónommos Descentralizados (Decentralized Autonomous Governments, or GADs) also continued to grow compared to central government expenditures, even in times of low oil prices. For example, while central government expenditures contracted by 2% in 2009, and by 8% in 2015, GAD transfers grew by 9% in both periods. Oil wealth has also played an active role in shaping democratic institutions and political incentives (Dunning 2008). High oil prices and the abundance of oil revenues in the 1970s were key to facilitating the transition to political democracy during that decade, but they also contributed to political stability by strengthening Executive authority and allowing the president to recentralize the policy-making process at the turn of the millennium (Conaghan 2008; Aldaz 2018; Mejía Acosta and Albornoz 2010). Conversely, a collapse in oil prices like that of the late 1990s helped to intensify distributional disputes and eventually contributed to the social and political unrest that ousted President Mahuad in 2000 (Mejía Acosta 2009). After the fall of Mahuad, the interim government of Gustavo Noboa saw a signifcant recovery in the price of oil, albeit from a low level, averaging almost twice as much during this government (2000–2002) as during Mahuad’s term. The next president, Lucio Gutierrez, was ousted in April 2005 after a series of constitutional violations that triggered his dismissal (Mejía Acosta and Polga-Hecimovich 2011). During the interim government of Alfredo Palacio, between April 2005 and January 2007, the continued growth of oil prices both fomented political instability and contributed to economic growth. Rafael Correa’s government began in January 2007.

3.2 Amassing New Wealth: Higher Oil Prices and Increased Production Valued at market prices, Ecuadorean oil production grew from $3.1 billion in 2002 to a record $18.3 billion in 2014. This sixfold growth 238 A. MEJÍA ACOSTA AND V. ALBORNOZ within 12 years gave the country a signifcant and partially unexpected wealth that shaped its economy and, clearly, its politics. This strong increase in the value of production occurred thanks to the combination of two factors: an increase in production volumes that began in 2003, and an increase in the price of oil from 2005, according to a calculation with data from Ecuador’s Central Bank, based on Albornoz (2015). Additionally, the government was able to appropriate a larger share of the oil wealth than it had in the past (see Chapter 8 of this book). Furthermore, when in 2011 oil prices began to stagnate (at a high level, but stagnant nevertheless), the government loos- ened the legal restrictions to issue new public debt. This meant that when the oil wealth stopped growing, the government was able to replace that needed income with additional debt. After the political shock caused by dollarization and the fall of the Mahuad regime in January 2000, a series of signifcant legal reforms were made between 2000 and 2002, one of which allowed the construction of private oil pipelines. In Ecuador, oil is produced in the Amazon basin and has to be trans- ported to the Pacifc Ocean via pipelines. Oil production in Ecuador had previously been capped by dependence on a sole pipeline built in the early 1970s. This “old” pipeline, known as the SOTE (for its Spanish acronym), was by the end of the twentieth century at full capacity, and any increase in oil production was deemed uneconomic due to the costs of transport by road. Reforms made in 2000 through two laws (known as Trole I and Trole II) allowed the private sector to build and operate new pipelines. This triggered the construction of a pipeline known as the OCP (for its Spanish acronym); it was fnished in late 2003 and allowed oil production to grow signifcantly for the frst time in almost two decades. Ecuadorean oil output rose from an average of 393 thousand barrels per day (kbpd) in 2002 to 536 kbpd in 2006. Production remained more or less stable from that year on. Prices for Ecuadorean oil thereafter grew at a rate similar to most international benchmark prices. From a nominal average of $25.8 per barrel between 2002 and 2004, prices increased to an average of $83.4 between 2008 and 2014 and reached their highest level of $117 in June 2008, as shown in Fig. 1. 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 239

Fig. 1 Price for Ecuadorean crude oil, dollars per barrel (Note Showing the average for January 2002 to December 2004 and January 2008 to December 2014. Source BCE and Author’s own calculations)

3.3 Government Appropriates a Larger Share of Oil Production Revenues Starting in 2004, the Ecuadorean government made a series of legal modifcations that allowed it to retain a growing share of the oil production. The Ecuadorean government benefts from oil production in two ways: via direct production through its state company, Petroecuador (and its affliates), and by claiming a “royalty” from oil extracted from private felds. The level of this royalty is set in every contract signed with private companies, and it may vary widely. It is important to remember that both production of oil and its value were increasing over the same period. The expulsion of the American oil frm Occidental in 2005 (due to problems originated in 2003) and the creation of a windfall income tax for oil companies started a process that reduced the share of oil production kept by private companies from 49.7% in 2004 to 9.5% in 2015, as shown in Fig. 2. The expansion of the government’s share was the result of rising production by Petroecuador and its affliates, mostly through the control of formerly private oil felds (like those previously controlled by 240 A. MEJÍA ACOSTA AND V. ALBORNOZ

Fig. 2 Share from oil production kept by private companies (Source Observatorio de Energía y Minas, based on date from the BCE)

Occidental), and through increases in the royalties collected by the government from the remaining private oil felds. In 2004, the proportion of total production generated by Petroecuador amounted to 37%; by 2015 that had expanded to 78%. At the same time, the share of production kept by the private frms from (falling) production shrank from 78% in 2004 to just 43% in 2015. As a result of all this, the government had at its disposal 97.9 million barrels in 2004 and 179.3 million in 2015—a change that ultimately increased the government’s income. Nevertheless, this additional income came at a price. Ecuadorean oil production, which had grown by 36% between 2002 and 2006, has remained at roughly the same level ever since. In other words, oil production did not grow during the years of high prices (2006–2014), despite Ecuador being one of the countries where proven reserves increased most in global terms. According to British Petroleum (2018), proven oil reserves in Ecuador grew by 58% from 2004 to 2015, giving Ecuador the 7th largest growth rate in a sample of 48 oil-producing countries. Considering that oil reserve capacity did not pose a limitation, the stagnation of production in Ecuador despite persistently high prices can 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 241 be explained only through insuffcient investment in the sector. The World Bank links this stagnation specifcally to the decline in private oil investment (World Bank 2018), also related to private investment being “more uncertain and challenging”. Private investment in the oil sector could have been replaced by public investment, but in fact it was not, because the government’s priorities in expenditure were somewhere else, as explained both here and in Chapter 8 of this book. The scarcity of oil investment was acknowledged by Correa’s successor Lenin Moreno in Executive Decree No. 449 (on oil regulation) of July 2018, where he stated that “investment in oil exploration in recent years has been almost non-existent”. At the same time, this lack of growth in oil production highlights both the shortcomings of public investment in the sector and the shortsightedness of the government’s priorities. This stagnation occurred despite vast unused capacity in the OCP, as the dearth of oil pipelines no longer presented a bottleneck for production. A logical inference would be that oil production in Ecuador stagnated from 2006 onward because of distorted incentives created by government behavior.

3.4 Loosening Rules on Expenditure As already stated, during the boom years, Ecuador could not protect itself from oil price volatility, nor was it able to create or maintain any savings. In 2002, the Ley Orgánica de Responsabilidad, Estabilización y Transparencia (Fiscal Stabilization Law, or LORET) was approved, but its savings-generating effects lasted only until 2005, when reforms rendered the law essentially innocuous. From November 2002, the LORET provided three “macro- fscal rules” meant to cap expenditure rises. The frst rule limited the real growth of current expenditure to 3.5% annually, while the second obliged the government to reduce its non-oil defcit to zero in the span of 20 years. Both of these key rules were abolished in 2005 during Correa’s 110-day stint as Finance Minister. Had these rules been in force between 2005 and 2015, the government would have spent $40.8 billion less than it did, according to a counterfac- tual calculation by Albornoz (2016). This is equivalent to roughly 27% of total central government expenditure for those years (i.e., had both “macro-fscal rules” been maintained intact until 2015, then the government’s expenditures would have been 27% under what they actually were). 242 A. MEJÍA ACOSTA AND V. ALBORNOZ

3.5 Loosening Rules on Debt Issuance The third “macro-fscal rule” initiated by the LORET set a limit for public debt of 40% of GDP. Since the rule’s inception, there have been many changes to the legal framework for public fnances in Ecuador, but despite those changes this specifc rule has survived almost untouched. By December 2006, just before Correa assumed the presidency, public debt was at $13.9 billion. As of May 2017, when his government ended, public debt was at about $47.8 billion, according to the Observatorio de Política Fiscal (2018), an independent think tank in Quito. That sum amounted to roughly 50% of GDP, or 10 percentage points over the legal limit. Note that the debt fgure for May of 2017 is an approxima- tion based on the limited public information available. For reasons that will be explained presently, the precise amount of public debt in Ecuador remains a debatable issue. This section will review how public debt quadrupled in less than ten years and surpassed the legal limit by a wide margin. This is essential to understanding how Correa kept the government’s expenditure high despite oil prices that were stagnant (2011–2014) and later declining (2015–2017). It also seeks to illuminate the importance given by the Correa government to maintaining public expenditure at the highest possible level. The strategy to facilitate the contracting of debt had four main components: (1) declaring portions of existing debt to be illegal or illegitimate, thereby “freeing” space in order to contract new debt; (2) changing the legal defnition of debt so that specifc portions would not count toward the limit of 40% of GDP; (3) simplifying public debt contracting procedures; and (4) declaring any information related to debt negotiations as “secret”, thus contributing to the lack of transparency. As part of component 1, in December of 2008 the Ley de Seguridad Financiera (Financial Security Law) declared $1 billion of the government’s debt with the Central Bank to be “non-existent”, so the amount of debt was artifcially lowered. Then in late 2008 came the declaration of more than $3.5 billion in sovereign bonds as “illegitimate”, followed by a forced renegotiation with debt-holders, also lowering the debt level. As regards component 2, the defnition of debt, in December 2016 the president via Executive Order declared that government debt to the Central Bank, the social security system, and local governments (among other entities) did not count as debt. At the same time, debt 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 243 contracted through the use of oil as collateral was never registered as debt, but only as “pre-sales” of oil—thus not applying to the 40% limit. Additionally, through reforms made to the Código de Finanzas Públicas (Public Finance Code) in 2010, short-term debt was excluded from the calculation. Regarding component 3, reforms made to the Código Orgánico Monetario y Financiero (Monetary and Financial Code) in 2014 allowed the Central Bank to lend money to the government—which had been specifcally forbidden by the original “dollarization law” (known as Trole 1) from 2000. Central Bank lending to the government is harmful in any economy, but worse in a dollarized economy where the Bank is not allowed to issue money. Regarding component 4, the LORET of 2002 allowed the government to declare debt negotiations as “secret” throughout their duration. This was meant to be a brief interim of secrecy, and all information was supposed to be made public as soon as negotiations ended. However, during the Correa administration, the period of secrecy was declared to last until the completed repayment of the debt—thus erasing any transparency on how the debt was contracted during Correa’s government. Thanks to all these reforms, public debt could be allowed to grow during the Correa government, in turn allowing public expenditure to remain high or expand, even when oil prices were stagnant or falling.

4 the Political Management of Oil Wealth We have illustrated how the Correa Administration continued and increased the adoption of a series of reforms to gain greater control and discretionality of fscal revenues, expenditures, and fnancing decisions. Although the Executive had greater leverage to infuence the political careers of national and subnational elites, it appears that the president was either unable or unwilling to consolidate control over his party in terms of portfolio allocation, or the allocation of municipal spending and the advancement of political careers.

4.1 Cabinet Management A powerful fscal leviathan with a legislative majority and greater fscal and budgetary prerogatives is expected to centralize and control budgetary spending through its Minister of Finance, as well as across cabinet 244 A. MEJÍA ACOSTA AND V. ALBORNOZ ministers. All things being equal, this should have three implications for the political management of public fnances. First, a president with strong legislative support should face fewer transaction costs when assembling a ministerial cabinet; the president should be able to unilaterally make ministerial appointments from his or her own party ranks, or through personal connections, without the need to share power with other parties. Secondly, government ministers would ostensibly have incentive to observe and enforce the president’s fscal targets. Finally, because of their predominant position, presidents should be able to control political fortunes, rewarding and advancing the political careers of (disciplined) cabinet ministers and thus ensuring cabinet stability. The management of public fnances under President Correa offers a much more complex picture than that predicted by the literature. First, in terms of cabinet volatility, the data shows that the political dominance of President Correa between 2007 and 2016 did not necessarily produce more stable cabinets, as compared to the prior two decades (1979–2006) of political instability. On average, a cabinet minister lasted approximately 10 months in offce during this period, compared to an average of 14 months during the Correa administration (Basabe et al. 2018). One interesting note is that ministers during the Correa administration were also more likely to be reshuffed into other cabinet posts than under previous administrations. A second fnding is that on average, budgetary changes measured at the cabinet level decreased during the Correa administration, as compared to budgetary shifts during more fragmented political periods. This is consistent with the idea that President Correa faced fewer transaction costs during budgetary processes, while the more confictive and volatile post-transition years were associated with greater budget volatility. Figure 3 shows the average budgetary reallocations across all ministries for every stage of the budget process. Lower reallocation values suggest that there was greater agreement (fewer reallocations) between the Executive, the Legislature, and the cabinet ministers (Mejía Acosta 2009; Abuelafa et al. 2005). The fgure also shows a growing predominance of the Executive over budgetary negotiations, with larger reallocations across branches during the frst two years of the Correa government (2008–2009) but very little or no variation after 2010. Thus lower volatility means that President Correa’s budget proposals were fully adopted by Congress and executed entirely by the cabinet. We take this indicator of low budget volatility to represent greater political convergence, both 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 245

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ŵŽ Ϭ͘Ϭϱ ^Ƶ

Ϭ ϭϵϵϬ ϭϵϵϱϮϬϬϬ ϮϬϬϱϮϬϭϬϮϬϭϱ

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Fig. 3 Budget reallocations at different stages of the budget process (Notes CBL total change in the composition of spending between the Executive’s = proposal and the budget law approved by Parliament. This is a measure of the relative power of Parliament, compared to the Executive. CLV total change in = the composition of spending between the budget law approved by Parliament and the detailed budget released by the Finance Ministry. This is a measure of the relative power of the Finance Ministry, compared to Parliament. CVD total = change in the composition of spending between the detailed budget released by the Finance Ministry and the actual expenditure by the government. This is a measure of power struggles between different government sectors or ministries. Source Mejía Acosta et al. [2018]) across government branches and within the cabinet. Despite an expecta- tion that greater political consensus should translate into greater cabinet stability, particularly if the budget process is relatively noncontentious, we did not fnd this to be the case. A third feature is that not only was ministerial spending not curbed, but high-spending cabinet ministers were actually rewarded with longer political tenures. In previous research we have argued that the oil bonanza did in fact increase the budgetary allocations given to cabinet portfolios, and that budgetary execution also increased at the ministerial level (Mejía Acosta et al. 2018). More interestingly, we fnd 246 A. MEJÍA ACOSTA AND V. ALBORNOZ

ZŝĐĂƌĚŽ WĂƟŶŽ :ŽƐĞ ^ĞƌƌĂŶŽ ϯ͘ϲϯϴĚşĂƐ ŽƌŝƐ^Žůŝǌ Ϯ͘ϳϭϭĚşĂƐ DĂƌşĂ ƵĂƌƚĞ Ϯ͘ϯϮϴĚşĂƐ tĂůƚĞƌ ^ŽůŝƐ ϯ͘ϭϵϰĚşĂƐ WĂƚƌŝĐŝŽ ZŝǀĞƌĂ Ϯ͘ϳϴϳĚşĂƐ :ĞĂŶŶĞƩĞ ^ĂŶĐŚĞǌ Ϯ͘ϰϰϴĚşĂƐ &ĞƌŶĂŶĚĂƐƉŝŶŽƐĂ Ϯ͘ϮϴϰĚşĂƐ ZŝĐŚĂƌĚƐƉŝŶŽƐĂ Ϯ͘ϭϮϲ ĚşĂƐ EĂƚŚĂůŝĞ ĞůǇ Ϯ͘ϬϱϱĚşĂƐ WŽůşƟĐŽ ϭ͘ϵϱϱĚşĂƐ ĞƩǇ dŽůĂ WƌĞƐƚĂĚŽƌĚĞ ^ĞƌǀŝĐŝŽƐ /ƐĂďĞů ^ĂůǀĂĚŽƌ ϭ͘ϰϳϳĚşĂƐ ϭ͘ϯϯϰĚşĂƐ dĠĐŶŝĐŽ 'ƵŝůůĂƵŵĞ>ŽŶŐ ϭ͘ϯϯϮĚşĂƐ &ĞƌŶĂŶĚŽ ƵƐƚĂŵĂŶƚĞ ϭ͘ϬϰϲĚşĂƐ ĞƌůŝƐ WĂůĂĐŝŽƐ ϵϱϵĚşĂƐ 'ĂůŽ ŚŝƌŝďŽŐĂ ϵϱϮĚşĂƐ sŝŶŝĐŝŽůǀĂƌĂĚŽ ϵϮϳ ĚşĂƐ ϬϭϮϯϰϱ

Fig. 4 The loyalist cabinet: Duration and portfolio of most stable ministers 2007–2016 (Source Mejía Acosta et al. 2018) that ministers who effectively executed above 85% of their budgets were more likely to remain in offce. Moreover, high budgetary execution during the Correa years was a condition for political advancement. Figure 4 presents the names and average cabinet duration of Correa’s highest-spending ministers. Summarizing the fndings from this section, we conclude that contrary to the predominant public fnance literature, the Ecuadorian leviathan did not lead to improved fscal outcomes, nor did it ensure greater cabinet stability. President Correa gained unprecedented control over the accrual and allocation of abundant fscal revenues, and he held a legislative majority to support his decisions. We argue that two factors undermined the effectiveness of this fscal leviathan. The frst was the context of a commodities bonanza, which provided the president with fscal and political incentives to pursue a more expansionary fscal approach, regardless of ideal fscal targets. Secondly, the lack of checks and balances from other parties allowed the president to increase overall expenditure 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 247 and to selectively reward his own high-spending ministers while dismissing ministers who underperformed. This pattern of selective appointments and dismissals partly helps to explain the cabinet’s volatility during the Correa period. The next section examines the relationship between the central government and subnational governments during the Correa administration.

4.2 Municipal Transfers The commodities bonanza gave Correa the opportunity to enhance, regulate and target the allocation of intergovernmental transfers (IGTs) to subnational governments. It is estimated that between 2004 and 2014, central government transfers increased from $902 million (real) in 2004 to $1.771 billion (real) in 2014 (Mejía Acosta and Meneses 2019). Interestingly, IGTs continued to grow even during the slowdown in oil prices, and at a much greater pace than central government spending. Paradoxically, these IGTs did not help the GADs to gain more fscal or political autonomy to make spending allocations (Mejía Acosta and Meneses 2019). Fiscal decentralization in Ecuador had commenced in the late 1990s with the adoption of a Special Law which allocated 15% of central government spending to subnational governments. The Correa administration adopted further reforms to the 2008 Constitution and the 2010 Código Orgánico de Organización Territorial, Autonomía y Descentralización de Ecuador (Organic Code of Territorial Organization, Autonomy and Decentralization, or COOTAD) to enhance effciency, subsidiarity, and equity in the distribution of central government revenues to local governments (Mejía Acosta and Meneses 2019). Paradoxically, the adoption of fscal decentralization reforms were offset by the fscal abundance of the commodities bonanza. Given that oil revenues were not earmarked for devolution to subnational governments, President Correa had the opportunity to manage IGTs in a more centralized and discretionary way (Mejía Acosta and Meneses 2019). This strategy of recentralizing transfers is also consistent with a broader political strategy by the central government to gain leverage over the workings of local (municipal) governments (Eaton 2014; Falleti 2010) This recentralization process gave the GADs unequal and relatively constrained access to IGTs. The share of central transfers varied signif- icantly; in municipalities with a population smaller than 20,000, IGTs 248 A. MEJÍA ACOSTA AND V. ALBORNOZ

Fig. 5 Sources of GAD income according to revenue type (index, base 2007 100) (Source Mejía Acosta and Meneses 2019) = represented more than 70% of their budget, whereas it represented less than 50% of the budget in municipalities with a population over 50,000 (Mejía Acosta and Meneses 2019). Over time, the internal composition of IGTs also changed, particularly after the 2009 drop in oil prices. Figure 5 shows that public fnancing (such as public loans, pending transfers, outstanding accounts receivable, and contractual advances) became a predominant component of IGTs (República del Ecuador Art. 176). In other words, the central government began to make subnational transfers in the form of fnancial obligations to compensate for its decreasing revenues, therefore translating fnancial liabilities to local governments. The composition and management of IGTs had two relevant implications for the balance of political power between the central and subnational governments. First, mayors were only allowed to make limited, nondiscretionary use of budgetary allocations. Most of the revenues accrued were already earmarked or executed by ministries at the national level, or else faced considerable administrative barriers for their use. Whenever they could, mayors sought to make strategic allocations for electoral gain by investing in the provision of basic public services. An empirical study of budgetary allocations since 2000 shows that mayors were more likely to invest in the provision of basic public services (including investments in water, sewage, groundwater, solid waste, health, education, and electricity) at the beginning of their terms. 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 249

Table 1 Municipal Party competition 2009 2014 elections and reelection rates—2009 and 2014 Alianza País (government) 63 (29%) 43 (19%) Government coalition parties 11 25 Reelected 71 (32%) 49 (22%) Reelected for Alianza País 19 19 Reelected with coalition 2 8

Source Mejía Acosta and Meneses (2019)

By contrast, they invested in more visible infrastructure projects (such as roads and public spaces such as cemeteries, market places, transport terminals, or agricultural facilities) toward the end of their tenures (Mejía Acosta and Meneses 2019). The second political implication of fscal recentralization was that mayors and their parties did not enjoy an incumbency advantage when running for offce. It is expected that a government party will have the fnancial resources and political clout to beneft local mayors who seek reelection, to advance their political careers and consolidate electoral strongholds. As illustrated by Table 1, this effect was partly corroborated during the 2009 local elections, when more than a third of the total number of mayors were reelected (32.1%), and the majority of these were affliated to the government party (28.5%). Paradoxically, however, the incumbency advantage of 2009 evaporated in the next local election, in 2014, despite an 8.1% increase in the total amount of government transfers during the interceding fve years (Mejía Acosta and Meneses 2019). In the 2014 election, approximately one out of fve mayors were reelected and only 19.4% were affliated with the government party. The data analyzed and subsequent qualitative interviews suggest that mayors may have in fact suffered from an incumbency disadvantage, particularly during the 2014 election. Scholarly explanations suggest that elected offcials were open to challenge by a coalition of (anti- incumbent) opposition parties (Klasnja and Titiunik 2017; Lucardi and Rosas 2016). Another source of incumbency disadvantage for mayors may have come from upper-tier politicians, when the latter blocked or conditioned the effective transfer of resources in order to undermine the electoral chances of the former in an upcoming election (Lucardi and Rosas 2016). Ecuador presents a strange case where the incumbency 250 A. MEJÍA ACOSTA AND V. ALBORNOZ disadvantage of mayors came from their own party; in other words, the dominant national party was either unable or unwilling to secure the electoral success of its own mayors, particularly during a commodities bonanza (Mejía Acosta and Meneses 2019). Certain interviews with Ecuadorian mayors suggested that the president made sure that local governments “were neither autonomous nor decentralized”, because they were perceived as a threat to his political authority (Mejía Acosta and Meneses 2019).2 It appears that President Correa used fscal transfers to test and ensure the loyalty of local governments. Some of these mechanisms included delays in the effective disbursement of VAT receipts, the allocation of transfers through fnancing mechanisms (debt), or the selective application of administrative constraints on procurement. In all of these cases, mayors who wanted to ensure successful management of their public fnances had to cultivate a personal relationship with the president. The case of fscal recentralization during a commodity boom illustrates both a paradox and a missed opportunity. From a fscal perspective, the commodities bonanza opened the way for a genuine devolution of abundant resources to the local level, and the government adopted the necessary legal reforms to make this possible, according to technical criteria meant to ensure equity and fairness. But President Correa also sought to recentralize administrative prerogatives and to curtail mayors’ decision-making abilities, to ensure that none would gain greater political infuence. The paradox is that the president, by undermining the electoral success of local elites, further weakened the political structure and the territorial presence of his own political party across Ecuador. The lost opportunity was that fscal decentralization in the context of a commodities boom offered a unique chance to strengthen the autonomy of municipal governments and to encourage more accountable public spending modalities for the beneft of the population; but this opportunity was not seized.

2 Interview with an opposition mayor of a Decentralized Autonomous Government (GAD), September 25, 2017. 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 251

5 discussion and Conclusion: A Leviathan in the Tropics Our evaluation of Rafael Correa’s political management of public fnances during a commodities boom leaves us with three valua- ble insights as well as some questions for future research. The frst salient feature was the continued strengthening of Executive powers over fscal matters. The strengthening of the Executive was in this case the result of adopting ambitious legal and constitutional reforms (with the support of a reliable partisan majority in Congress) and, for the most of the period, rising oil prices (Aldaz 2018). The result was a powerful fscal leviathan with the legal instruments, the political support, and the fnancial resources to heavily infuence the nature and direction of domestic politics. Paradoxically, these enabling conditions helped to produce quite the opposite effect. President Correa did not use his extensive fscal powers to curb spending, to balance defcits, or to prevent further indebtedness; instead, his administration oversaw the continued increase of government spending, fscal defcits, and foreign indebtedness. We refer to Correa’s administration as a case of a tropical leviathan in the sense that, in the absence of effective institutional checks and balances, an incumbent president behaved against the predictions of the specialized public fnance literature. Correa’s fscal expansionism is not an isolated case, as several other presidents in the region (from both the left and right of the ideological spectrum) used and abused their own stronger fscal status to worsen— not improve—fscal governance. A more compelling explanation might be the presence of a ‘political resource curse’, which undermined incentives for transparency and accountability and proliferated spaces for rent-seeking and corruption (Ross 2001). The conditions, workings and fscal outcomes produced by such tropical leviathans deserve further research. A second feature of Correa’s management of the bonanza is that it enabled the president to have greater and more direct control over the political careers of national and subnational elites, through the allocation of resources, unilateral appointments to cabinet portfolios, and the manipulation of incumbency advantages for mayors seeking reelection. Although Correa had effective political leverage over these elites, it later became evident that his fscal and political infuence was directly connected to the fuctuation of international oil prices. Toward the end of 252 A. MEJÍA ACOSTA AND V. ALBORNOZ the bonanza in 2014, it became apparent that his infuence was neither sustainable nor suffciently powerful to consolidate the overall position of his Alianza PAIS party in Ecuadorian politics. Correa did manage to secure an important legislative plurality in the 2009 elections, as well as a single-party majority in 2013, but Alianza PAIS split and dismantled soon after Correa left offce in 2016. At the level of cabinet appointments, Correa did reward the most effective “fscal managers”—those cabinet ministers who consistently spent their allocated (and growing) budgets. But there is no systematic evidence that accelerated spending translated into quality investments, or was effectively used to improve infrastructure projects or the quality of citizens’ lives in the long run. Further research is needed to empirically validate this assessment. At the level of subnational governments, research shows that a nominal increase in IGTs to subnational governments may have temporarily boosted the political careers of incumbent mayors in 2009, but by the time of the next local election in 2014, executive interference was partly responsible for an incumbency disadvantage working against mayors who sought reelection. This fnding nevertheless appears counterin- tuitive, as it is diffcult to understand why resource-rich mayors were not voted back into offce. More puzzling, this is not an isolated factor, as there is growing evidence of a similar incumbency disadvantage in Brazil, Mexico, Peru, and other American states (Klasnja and Titiunik 2017; Lucardi and Rosas 2016). Further research is needed to systematically comprehend the causes and mechanisms of incumbency disadvantage. The third feature of Correa’s management of the boom was the lost opportunity for advancing development in Ecuador. In comparative perspective, the Correa Administration represents another case of a political resource curse, in the sense that the abundance of natural resource revenues further undermined the quality of democratic representation and created incentives for rent-seeking by elites. However, in the Ecuadorian experience, Correa’s Revolución Ciudadana also represented a lost opportunity for the adoption of long-term economic and social reforms. Perhaps with the exception of liberal governments at the turn of the twenty-frst century, never in the history of Ecuador has an Executive had so clear an opportunity to shape a political Constitution in its favor, with the support of a majoritarian political party and an abundance of natural resource revenues. However, as other contributions to this volume eloquently suggest, there is no systematic evidence that the unprecedented commodities bonanza left visible improvements in terms 10 THE POLITICAL MANAGEMENT OF THE OIL BONANZA … 253 of Ecuadorian development, whether in education, nutrition, infrastructure, or economic development. In short, this chapter argues that a highly centralized and short-sighted approach to managing the commodities boom was directly responsible for a lost decade of development in Ecuador.

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Buen Vivir: A Reference for Public Policies and Development in Ecuador and the Governments of the Latin American Left

Antonio Luis Hidalgo-Capitán and Ana Patricia Cubillo-Guevara

1 introduction Buen vivir (good living) is one of the most innovative concepts in the feld of the Political Economy of Development that emerged at the beginning of the twenty-frst century (Hidalgo-Capitán 2011). This concept, of Ecuadorian origin (Cubillo-Guevara and Hidalgo- Capitán 2015), can be defned as that political proposal which aims to achieve ‘life in harmony with oneself, with society, and with nature’ (Cubillo-Guevara et al. 2016).

A. L. Hidalgo-Capitán (*) Department of Economics, University of Huelva, Huelva, Spain e-mail: [email protected] A. P. Cubillo-Guevara Transdisciplinary Research Group, University of Huelva, Huelva, Spain e-mail: [email protected]

© The Author(s) 2020 257 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_11 258 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA

Referring to the Ecuadorian case, some authors have interpreted buen vivir as that model of ‘progressive alternative development’ (Ramírez 2008) implemented under the governments of the Revolución Ciudadana (Citizens’ Revolution) led by the economist Rafael Correa and his Movimiento Patria Altiva y Soberana, (Proud and Sovereign Homeland Movement, or PAIS) between 2007 and 2017. This would represent a structural transformation model, meant to generate a transition from the enclave variant of the primary-export model known as extractivism to a variant of the multi-export model known as post-extractivism, in such a way that life in harmony may be achieved. In this sense, good living formed the backbone of Ecuador’s Plan Nacional para el Buen Vivir (National Plan for Good Living, or PNBV) between 2007 and 2017, although its relevance within the different plans was variable (Manosalvas 2014; Caria and Domínguez 2016; Vega 2014; Arteaga-Cruz 2017; Hidalgo-Capitán and Cubillo-Guevara 2018). Buen vivir, as a model of development and reference framework for public policies, should involve: frst, the implementation of de-colonialist sociocultural and socio-educational policies to contribute to the achievement of personal harmony (Mignolo 2007), being the political strategy of de-coloniality of power and knowledge aimed at eliminating political discrimination and at valuing the knowledge and identities of subaltern social groups in society; second, the implementation of post-capitalist socioeconomic policies to help to achieve social harmony (Mason 2015, 2016), considering post-capitalism as a socioeconomic system in which the market does not lead the allocation of scarce resources among alternative uses to meet the basic needs of the population, private property is not the main form of ownership, and the pursuit of proft and maximization of utility are not the only rational behaviors of people; and third, the implementation of bio-centric socio-ecological policies to contribute to environmental harmony (Gudynas 2010), biocentrism being a worldview which places nature at the center of people’s concerns, considers people as part of nature itself, and recognizes intrinsic values in nature that, regardless of its utility for humans, should be protected. However, the implementation of such policies has been very uneven and irregular, and the relevance of buen vivir to public policies overall has been variable, partly because buen vivir has experienced a constant process of resignifcation by Ecuadorian public institutions. The objective of this chapter is to describe how the concept of buen vivir was resignifed as a development model and reference framework 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 259 for public policies during the Correa administrations. To achieve this, we carry out a theoretical-conceptual analysis of buen vivir as it has been included in the main offcial documents prepared by the Asamblea Nacional Constituyente del Ecuador (Constituent Assembly of Ecuador, or ANCE), by the Secretaría Nacional de Planifcación y Desarrollo (National Secretariat of Planning and Development, or SENPLADES), by the Vice Presidency, and by the Secretaría del Buen Vivir (Secretariat of Good Living, or SBV). We undertake this analysis in full consideration of the political context in which resignifcation has been carried out, the roles played by instrumental political actors, and the most relevant public policies implemented during this period of government. While Ecuador offers the paradigmatic example of buen vivir as a development model and reference framework for public policies, buen vivir is not an exclusively Ecuadorian phenomenon; there are other cases in Latin America where the concept has played a similar role. These include three countries with leftist governments, all of them ´Bolivarian´: Bolivia under Evo Morales; Nicaragua under Daniel Ortega; and El Salvador under Salvador Sánchez Cerén. In all of these cases, as in Ecuador under Rafael Correa, the concept of buen vivir was resignifed from its original indigenous conception, whether once or multiple times, in order to serve a national project of ‘21st century socialism’ (Dieterich 2002), or else to serve the personal projects of national leaders. Here we focus on the Ecuadorian case as the most relevant.

2 background of the Political Concept of Buen Vivir The concept of buen vivir in Ecuadorian public policy derives from translation and especially adaptation of the indigenous kichwa concept of sumak kawsay. This was originally understood as ‘limpid and harmonious life’ in the Ecuadorian Amazon, and it was part of the Amazanga Plan of the Organización de Pueblos Indígenas de Pastaza (Organization of the Indigenous Peoples of Pastaza, or OPIP) (Viteri et al. 1992) as an alternative political approach to sustainable development (Cubillo-Guevara and Hidalgo-Capitán 2015). This concept of sumak kawsay was disseminated by kichwa-amazonian anthropologist Carlos Viteri (2000), who translated it as ‘buen vivir’ and proposed it as an alternative to the prevailing concept of development. Dissemination took place both within the Ecuadorian indigenous 260 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA movement and among progressive academics and intellectuals close to that movement (Cubillo-Guevara and Hidalgo-Capitán 2015). From here, buen vivir—understood as an alternative to ‘development’ and way of life in harmony with people and nature—was incorporated as a political concept by Alberto Acosta into the Alianza PAIS Government Plan 2007–2011 (Alianza PAIS 2006). This plan was led by Correa with observations by Acosta, Fander Falconí, and René Ramírez, among others (Harnecker 2011). The inclusion was cursory and offered as a hybrid of contributions from various Ecuadorian alternative social movements which, therefore, transcended the indigenous proposal of sumak kawsay (Cubillo-Guevara and Hidalgo-Capitán 2015). This was the starting point for using the concept as a model of development and reference framework for public policies. In its origins and early evolution, the character of the concept included aspects defnable as: de-colonialist (‘Sacha Runa Yachai’) (Viteri et al. 1992), ‘philosophy of life of indigenous societies’ (Viteri 2000), ‘in the popular, dispossessed, and marginalized sectors’ (Alianza PAIS 2006); post-capitalist (‘egalitarian, community, and reciprocal principles’) (Viteri et al. 1992), ‘building an equitable, right, free and competitive society’ (Alianza PAIS 2006); and also bio-centric (‘there is no Sumak Kawsai without Sumak Allpa’ (Viteri et al. 1992), ‘in harmony with nature’ (Alianza PAIS 2006).

3 Buen Vivir as a Model of Development and Reference Framework for Public Policies in Ecuador (2007–2017) Throughout the three mandates of Correa, seven resignifcations of the original concept of buen vivir were made; these can be distinguished in their use by Ecuadorian policy-makers as a development model and a reference framework for public policies. In this process, the concept’s de-colonialist, post-capitalist, and bio-centric dimensions exhibited variable relevance.

3.1 Buen Vivir During the First Correa Administration The frst Correa administration, which should have lasted from 2007 to 2011, was shortened to 2009 as a result of the new Constitution of 2008. During this administration, the political concept of buen vivir 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 261 underwent two resignifcations, one in the Plan Nacional de Desarrollo 2007–2010 (National Development Plan 2007–2010, or PND 2007– 2010) (SENPLADES 2007) and another in the new Constitution. Most of the public policies implemented in Ecuador during this period derive from the frst resignifcation.

3.1.1 Buen Vivir as Human Development and Its Appearance in the PND 2007–2010 After the electoral victory of Alianza PAIS in 2006, with Rafael Correa as president and Lenín Moreno as vice president, the idea of buen vivir as life in harmony with others and with nature was introduced into the PND 2007–2010 and was incorporated as an element of reference for public development policies. The PND was prepared in 2007 by a team of intellectuals and offcials led by Ramírez, a subordinate of Falconí at SENPLADES, and Ramírez included the concept of buen vivir into that plan. However, the concept was not yet a prominent element in Ramírez’s thinking about development, which owed more to the Centro de Investigaciones Sociales del Milenio (Center for Social Research for the Millennium, or CISMIL). CISMIL was an Ecuadorian public body fnanced by the UNDP and integrated into SENPLADES in 2007, where Ramírez had worked on sustainable human development as a form of alternative development. When he coordinated the drafting of the PND 2007–2010, he proposed human development and, to a lesser extent, sustainable development as guiding concepts for public development policies. Buen vivir, although resignifed as human development, was introduced as an alternative to the neoliberal economic approach that had previously marked development planning. Therefore, the role played by buen vivir in the PND 2007–2010 was clearly marginal; it was cited only 3 times in 458 pages, in the chapters ‘Presentation’ and ‘What do we understand by development?’, indicating its scant relevance to the design of public development policies at that time. Thus in the PND 2007–2010, buen vivir is identifed with human development (UNDP 1990) and equated with the idea of desirable life or well-being, with references to peace, nature, and culture.

We understand by development the attainment of buen vivir by everyone, in peace and harmony with nature, and the indefnite prolongation of human cultures. Buen vivir presupposes that the real liberties, opportunities, capacities, and potentialities of individuals be broadened in such a way 262 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA

that they can simultaneously achieve what society, territories, diverse collective identities and each individual (…) value as desirable life objectives. (SENPLADES 2007)1

In this sense, the frst resignifcation of the concept maintained a certain character both de-colonialist (‘indefnite prolongation of human cultures’) and bio-centric (‘harmony with nature’), while its post-capitalist dimension (‘diverse collective identities’) was not very evident.

3.1.2 Buen Vivir as the Social and Environmental Dimension of Development, and Its Emergence in the Constitution of the Republic of Ecuador Following the elaboration of the PND 2007–2010, the National Constituent Assembly of Ecuador, saw the formation of different coalitions under Alianza PAIS, both national (Acuerdo PAIS, PAIS Agreement) and provincial, incorporating such political forces as Nuevo País (New Country, NP), Alternativa Democrática (Democratic Alternative, AD), Partido Socialista—Frente Amplio (Socialist Party— Broad Front, PS-FA), Movimiento Popular Democrático (Democratic Popular Movement, MPD), Movimiento de Unidad Plurinacional— Pachakutik (Movement of Plurinational Unity—Pachakutik, MUP- Pachakutik), among others. Thus, the members of the Constituent Assembly elected by Alianza PAIS and their associated parties became an offcial bloc within the ANCE, led by Acosta. The constitutional aspects of the ‘regime of development’ were discussed at a table chaired by the manager of Riobamba Saving and Loans Union and the Pachakutik Assemblyman Pedro Morales, and Acosta was a member of this group. Morales proposed including the concept of sumak kawsay in the Constitution, under the advice of Pablo Dávalos (Cubillo-Guevara et al. 2016), who proposed that the future national development plan be replaced by a Plurinational Plan for Sumak Kawsay (Dávalos 2007). The proposal was well-received by Acosta, who appreciated the opportunity to give the indigenous concept of buen vivir a broader meaning, through a participatory process and under post-developmentalist logic. However, Alianza PAIS and the Pachakutik experienced a distancing within the ANCE in 2008, which led to the breaking of the offcial bloc. Estrangement likewise occurred between Correa and

1 All translations of governmental documents in this chapter are the authors’ own. 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 263

Acosta, ending with the latter’s resignation from the ANCE presidency. Thus, the drafting of the Constitution in 2008 presented only a very vague and imprecise concept of buen vivir, comparable to the social and environmental dimensions of development and identifed with welfare (Cubillo-Guevara et al. 2016). However, despite the fact that Correa approved the inclusion of buen vivir in the Constitution, the concept and especially its implications were never really assumed by him. Subsequent resignifcations given to the concept by the Correa government under- lined this fact. Within the ANCE, buen vivir was understood as the ultimate goal of development—something like welfare, or the social and environmental dimensions of development.

Development is a dynamic and permanent process for the attainment of buen vivir by all, in common, according to their diverse collective and individual aims, in peace and harmony with nature and between cultures, so that their existence extends over time. (ANCE 2008, Minutes 107)

This notion became one of the main conceptual innovations of the Constitution of the Republic of Ecuador of 2008; it was cited 23 times in the text. The Constitution recognized the existence of: (1) certain “derechos del buen vivir” (rights of good living)—water, food, healthy environment, communication, information, culture, science, education, habitat, housing, health, work, social security—; (2) a “regimen del buen vivir” (regime of good living), including all social and environmental public policies; and (3) a “régimen de desarrollo” (development regime), including all economic public policies. The text clearly links development (of economic nature) and “buen vivir” (of social and environmental nature), positing development as a means to achieve good living.

The development regime is the organized, sustainable, and dynamic set of economic, political, socio-cultural, and environmental systems which guarantee the realization of buen vivir, sumak kawsay (…). Planning will promote social and territorial equity, promote concertation, and be participatory, decentralized, deconcentrated, and transparent. Good living will require that individuals, communities, peoples, and nationalities effectively enjoy their rights and exercise responsibilities within the framework of interculturality, respect for diversity, and harmonious coexistence with nature. (Art. 275) 264 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA

This second resignifcation of buen vivir reinforced the de-colonialist character of the frst (‘harmony […] between cultures’, ‘sumak kawsay’, ‘communities, peoples and nationalities’, ‘framework of interculturality, respect for their diversity’) and maintained the bio-centric approach (‘harmony with nature’, ‘harmonious coexistence with nature’), including now a certain post-capitalist character (‘the planning will promote social and territorial equity, promote concertation, and be participatory, decentralized, deconcentrated, and transparent’). However, the impact of this second resignifcation did not materialize in Ecuador’s public policies, as it was soon replaced by a third resignifcation following the 2009 elections.

3.1.3 Ecuador’s Public Policies, 2007–2009 Ecuador’s public policies during the frst Correa administration were implemented in a political context of collaboration between Alianza PAIS, alternative social movements (indigenous, peasants, workers, ecologists, feminists, and others), and progressive political parties (PS-FA, MPD, Pachakutik) and populist parties like Partido Roldosista Ecuatoriano (Ecuadorian Roldosist Party, PRE). This collaboration was shaped in the Congreso Nacional (National Congress) (2007), in the ANCE (2007–2008) and in the Comisión Legislativa y de Fiscalización (Legislative and Oversight Commission) (2008–2009). The implementation of public policies also occurred in an economic context of strong public revenues derived from high oil prices, especially in 2007 and 2008. These public policies resulted from the development of the NDP 2007–2010 and responded to the logic of the frst resignifcation of buen vivir as human development. We can classify these into three main axes, taking into account the three dimensions of public policies for buen vivir. Regarding the de-colonialist axis, highlighted in this period was the inclusion of indigenous intellectuals and politics in the Correa government, as Acuerdo PAIS candidates for Constituyente and as candidates for judges of the constitutional court, such as in the cases of Ariruma Kowii, Mónica Chuji, and Nina Pacari, representing a de-colonialization of power. Also highlighted were the inclusion of the kichwa expression ‘sumak kawsay’ in the fnal draft of the Constitution; the recognition of Kichwa and Shuar along with Spanish as offcial languages of intercultural relations; and continuous references to interculturality and plurinationality, including bilingual intercultural education. Beyond these elements, however, cultural and educational policy did not undergo 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 265 substantial change compared to prior governments (promotion of folkloric multiculturalism, bilingual education). As regards the post-capitalist axis, this period saw an increase in the relevance of the public sector in the economy, with a signifcant rise in public revenues and expenditures: renegotiation of royalties with oil and mining companies; renegotiation of external debt; restructuring and reform of public fnances; reorganization of the State; promotion of large highway infrastructure projects; nationalization of private companies in bankruptcy; establishment of compulsory social insurance for all workers; prohibition of labor outsourcing; application of affrmative action to public employment for the disabled and ethnic minorities; increases in social spending; implementation of assistance programs to fght poverty, and more. However, domestic private production of primary goods, manufactures, and services was also encouraged through, among others, the restriction of imports, the promotion of exports, subsidies for the purchase of agricultural inputs, reform of the private fnancial system. In terms of the bio-centric axis, this period was notable for the Yasuní- ITT Initiative. Led by Acosta as Minister of Energy and Mining in 2007, this project was supported by Falconí at SENPLADES and implied the nonexploitation of oil reserves located in the subsoil of the Yasuní National Park, given the biodiversity of this territory and the presence of indigenous peoples living in voluntary isolation. The proposal consisted of a commitment by the Ecuadorian State to leave the oil underground in exchange for compensatory donations from the international community equivalent to 50% of lost profts. Also notable was the inclusion in the Constitution of ‘rights of nature’, a clear innovation in the bio-centric perspective. However, the value of the Yasuní-ITT Initiative (and of the rights of nature) were largely symbolic, since Ecuador continued to exploit natural resources (hydrocarbons and minerals) as well as to develop large highway infrastructure projects. In general terms, we can affrm that Ecuador’s public policies in this period were characterized by an interventionist and nationalist strategy, post-neoliberal in approach and somewhat post-capitalist, with de-colonialist and bio-centric overtones.

3.2 Buen Vivir During the Second Correa Administration During the 2009–2013 administration, the political concept of good living went through three new resignifcations: one in the Plan Nacional para el 266 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA

Buen Vivir 2009–2013 (National Plan for Good Living 2009–2013, PNBV 2009–2013) (SENPLADES 2009); another in the document Socialismo del sumak kawsay o biosocialismo republicano (Socialism of Sumak Kawsay or Republican Bio-socialism) (Ramírez 2010); and the third in the document Transformación de la matriz productiva (Transformation of the Productive Matrix) (SENPLADES 2012). In principle, most public policies implemented in Ecuador in this period derive from the second resignifcation.

3.2.1 Buen Vivir as an Alternative Model of Development and Its Omnipresence in the NPGL 2009–2013 After approval of the Constitution, Alianza PAIS won the 2009 presidential and legislative elections, and Correa and Moreno were reelected. However, while the new PNBV was being drafted in 2009, relations between the Correa government and indigenous movements began to deteriorate to such an extent that the Pachakutik political party gradually ceased to support the government, becoming instead one of the most belligerent opposition actors. Ramírez as National Secretary of SENPLADES headed the team that drafted the PNBV 2009–2013 in a climate of political exaltation stemming from conceptual innovations in the new Constitution (‘buen vivir’, ‘rights of nature’, ‘universal citizenship’, ‘plurinationality’, and others). Ramírez sought to incorporate these innovations into the new plan: Building the Plurinational and Intercultural State, and he chose the concept of buen vivir as a central and ubiquitous element for that reason. Furthermore, incorporation of the terms ‘plurinational’ and ‘intercultural’ into the subtitle implied an attempt to include certain indigenous postulates, at a time when the indigenous movement was still close to Alianza PAIS, though they were no longer political allies. Prioritization of the expression ‘buen vivir’ in the PNBV 2009–2013 was unquestionable. Not only was the expression part of the title, it was the most cited term in the document (428 references in 520 pages). The expression appears in every chapter of the PNBV 2009–2013, as well as in many chapter titles, as in ‘A Paradigm Shift: from Development to Buen Vivir’, which introduced the meaning of the concept, and in ‘National Objectives for Buen Vivir’, where the concept is confgured as vital to the articulation of public development policies. Buen vivir, as it appears in the PNBV 2009–2013, is more developed than in the prior PNBV 2007–2010 or in the Constitution of 2008. An earlier text by Ramírez (2008) is quoted to clarify the notion of buen vivir, and this would become the frst governmental conception: a sort of 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 267 post-modern collage comprised of many desirable outcomes which could present an alternative to development (Oviedo 2011).

We understand buen vivir as: ‘the satisfaction of needs, the attainment of a quality of dignifed life and death, loving and being loved, and the healthy fowering of all in peace and harmony with nature and the indefnite prolongation of human cultures (…). This supposes free time for contempla- tion and emancipation, and that the real liberties, opportunities, capacities, and potentialities of individuals expand and fourish, allowing simultane- ous achievement of that which society, the territories, the diverse collective identities, and each individual (…) value as desirable life goals –both materially and subjectively, and without fostering any type of domination over one another (…). It forces us to reconstruct the public to recognize, understand, and value each other (as diverse but equal) in order to ele- vate the possibility of reciprocity and mutual recognition, and thereby to enable self-realization and the construction of a shared social future’. (SENPLADES 2009)

In fact the NPGL 2009–2013 ‘proposes displacement of the word “development” to incorporate into the debate the concept of buen vivir’ (SENPLADES 2009). In this sense, buen vivir became the new paradigm for Ecuador’s public policy planning. This third resignifcation of buen vivir was made in accordance with indigenist, ecologist, and post-developmentalist postulates (Dávalos 2008a, b; Kowii 2009; Acosta and Martínez 2009) and placed more emphasis on its de-colonialist character (‘indefnite prolongation of human cultures’, ‘plurinational and intercultural state’), maintained its bio-centric character (‘harmony with nature’), and slightly reinforced its post-capitalist character (‘reconstructing the public’, ‘diverse but equal’, ‘reciprocity and mutual recognition’, ‘shared social future’). However, its impact on Ecuador’s public policies proved very insignifcant, since buen vivir as an alternative to development was quickly replaced by a new resignifcation of the expression as ‘the socialism of sumak kawsay’.

3.2.2 Buen Vivir as the Socialism of Sumak Kawsay Although the conception of buen vivir as collected in the PNBV 2009– 2013 supposed an appropriation by the Alianza PAIS government, Correa never liked the concept. He understood that it might limit his margin for political action, especially when Ecuador joined the Alianza Bolivariana para los Pueblos de Nuestra América—Tratado de Comercio 268 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA de los Pueblos (Bolivarian Alliance for the Peoples of Our America— Treaty of Peoples Commerce, ALBA-TCP) in 2009. This integration meant the de facto ascription of the Ecuadorian government to the neo-Marxist political stream known as ‘21st century socialism’ being promoted by the government of Venezuela. The treatment of buen vivir in the PNBV 2009–2013 no longer refected the government’s interpretation of the concept, and so a new process of resignifcation of the term was fostered within SENPLADES. In the 2010 essay entitled ‘Socialism of Sumak Kawsay, or Republican Bio-socialism’ national Secretary Ramírez sought a new resignifcation of buen vivir as an Ecuadorian variant of ‘21st century socialism’. He also organized an international event with the participation of neo-Marxist intellectuals from around Latin American to refect on The New Challenges of Latin America: Socialism and Sumak Kawsay (SENPLADES 2010). By this route, buen vivir came to be understood after 2010 as the socialism of sumak kawsay, forcing subsequent public policies (deriving from the PNDBV 2009–2013 and the conception of buen vivir as an alternative to development) to follow this fourth resignifcation of the concept.

The new coexistence pact of the 2008 Constitution, the socialism of sumak kawsay, or republican bio-socialism, recovers a bio-centric ethic of coexistence (…).This pact begins from the abysmal inequality, exclusion, and discrimination that exists in (…) Ecuador (…). A frst point of the proposal is to reduce such gaps through processes of (re)distribution of the benefts of development (…), through the recognition of intergenerational justice and considering nature as subject to rights (…). This pact begins from the objective of seeking the buen vivir of citizens and groups without discrimination, which is not viable without the goals of guaranteeing the rights of nature, reduction of social inequalities, elimination of discrimination and exclusion, and construction of a cooperative and solidary spirit that facilitates mutual recognition among ‘diverse equals’ in the framework of a bio-strategy of wealth generation. (Ramírez 2010)

This fourth resignifcation of buen vivir moved away from the indigenist and post-developmentalist postulates and led various intellectuals and politics, such as Luis Macas (2010), Luis Maldonado (2010), or Acosta (2010) to begin disputing the meaning of buen vivir and to generate a trifurcation of the concept (Cubillo-Guevara et al. 2014). 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 269

This resignifcation played down the de-colonialist dimension of buen vivir (using only the expression ‘sumak kawsay’), emphasized its bio-centric character (‘bio-socialism’, ‘bio-centric ethics’, ‘guarantee of the rights of nature’, ‘bio-strategy of generation of wealth’), and above all reinforced its post-capitalist character (‘socialism’, ‘(re)distribution of benefts’, ‘intergenerational justice’, ‘reduction of social inequalities’, ‘elimination of discrimination and exclusion’, ‘construction of the cooperative and solidary spirit’). In this case, the impact on Ecuador’s public policies was very signifcant, since the post-capitalist dimension of the socialism of sumak kawsay became the main reference during this period.

3.2.3 Buen Vivir as the Purpose of the Transformation of the Productive Matrix However, not all sectors of the Correa government were comfortable with the resignifcation of buen vivir as the socialism of sumak kawsay, and one faction, led by Falconí (the new National Secretary of SENPLADES) and Santiago León (the Coordinating Minister of Production, Employment & Competitiveness) promoted a ffth and more moderate resignifcation of the concept. This ffth resignifcation had a more neo-structuralist character, being oriented to ‘the transformation of the productive matrix’ as a variant of productive transformation with equity (ECLAC 1990). This new concept, which had already appeared with little relevance (cited 4 times) in the PNBV 2009–2013, would later become a central concept of Ecuador’s development planning. To enhance the relevance of the transformation of the productive matrix as a benchmark for public development policies for buen vivir, SENPLADES under the direction of Falconí, SENPLADES published in 2012 a briefng paper whose title can be translated as “Transformation of the Productive Matrix” (SENPLADES 2012).

The pattern of primary export and extractivist specialization has been (…) the most serious problem in the Ecuadorian economy (…). To overcome it is to give a total turn in the structure of the country and (…) to allow (…) the construction (…) of buen vivir (…). The government (…) has taken important steps towards a new equitable and inclusive economic and social order, decisively promoting the transformation of the productive specialization pattern of the economy. There are substantial improvements in the 270 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA

indicators of capacity building in the context of education and in the use of connectivity and telecommunications technologies, as well as achievements in infrastructure for systemic productivity such as roads, scientifc development, change of energy matrix, and endowment of essential goods and services. However, the fulfllment of this historic challenge demands a deepening of the results achieved by the planned long-term and coordinated efforts of all. The transformation of the productive matrix will turn the country into a generator and exporter of greater added value by the use of knowledge and human talent, including new actors based on adequate redistribution and equity, thus ensuring buen vivir. (SENPLADES 2012)

This ffth resignifcation of buen vivir defnitively moved away from the indigenist, ecologist, and post-developmentalist postulates and sup- pressed the de-colonialist and bio-centric dimensions, also qualifying in a signifcant way its post-capitalist dimension (‘new economic and social equitable order’, ‘planned long-term and coordinated efforts’, ‘adequate redistribution and equity’) and compensating with an even more capital- istic dimension (‘transformation of the productive specialization pattern of the economy’, ‘capacity building’, ‘use of connectivity and telecommunications technologies’, ‘infrastructure for systemic productivity’, ‘change of energy matrix’, ‘endowment of essential goods and services’, ‘turn the country into a generator and exporter of greater added value’). The relevance of this concept in public policies would be fnalized one year later in the next NDP (SENPLADES 2013).

3.2.4 Ecuador’s Public Policies, 2009–2013 Ecuador’s public policies during the second Correa administration were implemented in a political context of diminished political support from the Asamblea Nacional (National Assembly), especially after the constitutional reform of 2011, with the exceptions of Alianza PAIS, a weakened PS-FA, and some provincial political parties. Implementation also took place in an economic context of high oil prices, especially during 2011–2013. These public policies took as a frame of reference the socialism of sumak kawsay, and we can classify them into three main axes, taking into account the three dimensions of public policies for buen vivir. Regarding the de-colonialist axis, most notable at the beginning of this period were the publication of summarized versions of the PNBV 2009–2013 in the Kichwa and Shuar languages, and the nomination of some indigenous intellectuals and politics to high-level public offce, 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 271 such as Viteri at Instituto para el Ecodesarrollo Regional Amazónico (Institute for Amazonian Regional Ecodevelopment, or ECORAE). However, reforms of education policy included the dismantling of intercultural bilingual education through the dismissal of hundreds of indigenous teachers and the expulsion of indigenous organizations from the management of bilingual schools (under the control of the Ministry of Education, which hired mestizo teachers as replacements). Something similar occurred around the promotion of culture and the arts, which overlooked almost all aspects related to indigenous practices. As regards the post-capitalist axis, the 2009–2013 period saw even greater reinforcement of the role of the public sector in the economy, both quantitatively and qualitatively. First, from a quantitative point of view, with an increase of public investment in hospitals, schools, prisons, airports, roads, and housing, as well as an increment of public social spending on education, health, and social inclusion. Mining, hydrocarbons, and food companies were nationalized, and Ecuador, supported by the high incomes from the oil bonanza, renegotiated the external debt and the increased indebtedness with the Inter-American Development Bank (IDB) and China. Second, from a qualitative perspective, coordinating ministries were created and social spending was decentralized. Price regulation served to avoid speculation and regulatory measures were adopted to reduce informal economy; cooperative economy and micro-credits were promoted. In addition, reforms were implemented in order to increase the State control over justice, public safety, private media, private banking, and public and private education. Among the qualitative changes were also tax reform and labor reform in the public sector. Casinos and gambling were prohibited, and various measures were aimed at fghting against informal labor, child poverty, child labor, and teenage pregnancy. At the same time, domestic private production was also encouraged with a policy of import substitution and promotion of exports, especially to ALBA-TCP countries, but in contrast to the attraction of direct foreign investment in mining, manufacturing, and services, mainly from Mexico, Canada, the United States, and China. Also noteworthy were initial attempts to transform Ecuador’s productive matrix, promoting industries geared toward the transformation of raw materials (refnery, petrochemical, metallurgical, steel, shipbuilding) as well as reform in the banking sector. In terms of the bio-centric axis, beyond measures such as the prohibition of animal-abuse spectacles, projects around open-pit mining and the 272 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA construction of communication roads caused a great impact on the environment. Most signifcant in this area was the progressive abandonment of the Yasuní-ITT Initiative due to a lack of international compensation for losses incurred by leaving the oil underground. In general terms, we can affrm that Ecuador’s public policies were characterized in this period by responses to a highly interventionist and moderately nationalist strategy—post-neoliberal and increasingly post-capitalist, but losing some de-colonialist and bio-centric character.

3.3 Buen Vivir During the Third Correa Administration During 2013–2017 administration, the political concept of buen vivir suffered two more resignifcations: one in the Plan Nacional para el Buen Vivir 2013–2017 (National Plan for Good Living 2013–2017, PNBV 2013–2017; and another in the document entitled El Buen Vivir. ¿Qué, por qué, para qué y cómo? (Good Living: What, Why, to What Purpose, and How?) (Secretaría del Buen Vivir 2015). However, the public policies implemented in Ecuador during this period appeared to be disconnected from both resignifcations.

3.3.1 Buen Vivir as the Socialism of Buen Vivir, and Its Loss of Relevance in the PNBV 2013–2017 in Favor of the Transformation of the Productive Matrix When Ramírez left SENPLADES and Falconí returned as National Secretary in 2011, Falconí offered the sixth resignifcation of buen vivir within the framework of ‘21st century socialism’. That same year, Acosta promoted the creation of a left platform to oppose Alianza PAIS, the front Montecristi Vive (Montecristi Still Lives) integrated by former ANCE members as well as some founders of the Alianza PAIS, such as Manuela Gallegos; Betty Amores; Gustavo Darquea; Fernando Vega or Pedro Morales. Its members tried to recover the ideals and values (buen vivir among them) of the 2008 Constitution that, according to them, had been abandoned by the Correa government. In 2013, in a context of strong and sustained economic growth driven by price rises in oil and other mineral commodities, Alianza PAIS again won presidential and legislative elections in Ecuador, and Correa was again reelected President while Jorge Glas was elected Vice President. In these presidential elections Acosta ran and lost against Correa while leading the Unidad Plurinacional de las Izquierdas (Plurinational Unity of the Lefts), a coalition of leftist social movements and parties that included Pachakutik and Montecristi Vive. 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 273

In this context, Falconí led the team that wrote the PNBV 2013– 2017: Everyone Better. This subtitle immediately indicated a certain displacement of the concepts of indigenous origin (interculturality and plurinationality) by new ones closer to socialism (growth and equity). Thus, Falconí introduced in Chapter 2 of PNBV 2013–2017 a new version of buen vivir, now resignifed as ‘Socialismo del Buen Vivir’ (Socialism of Good Living). Although the chapter was inspired by the essay of Ramírez (2010) and the Alianza PAIS Government Program 2013–2017 (Alianza PAIS 2013), this resignifcation process further distorted the concept, no longer synonymous with alternative development but rather with socialist development, supported by growth, productive transformation, and equity. Transformation of the productive matrix thereby became the leading concept of PNBV 2013–2017, further reducing the relevance of the resignifed and distorted concept of good living.

The (…) socialism of good living (…) articulates the struggle for social justice, equality, and the abolition of privileges with the construction of a society that respects diversity and nature (…). The purpose (…) is to defend and strengthen society, work, and life in all its forms. The frst step is to resolve access to goods, opportunities, and conditions that guarantee –to the individual, to the community, and to future generations– a dignifed life without harming nature (…). Our fundamental challenge is to universalize the rights and opportunities for all Ecuadorian citizens to live in fulfllment. Individual fulfllment and happiness go hand-in-hand with collective welfare, mutual recognition and solidarity, respect for the dignity of others, and care for nature. Thus we must: create the conditions to constantly improve our lives, without damaging the opportunities of others; build a plurinational and popular state that protects the interests of major- ities with the capacity to govern and to modify capitalist domination; and build a popular organization that prevents domination by particular interests. (SENPLADES 2013)

This latest concept theoretically maintained its environmental dimension via inspiration from the European conception of eco-socialism, following the essay by French academics Matthieu Le-Quang and Tamia Vercoutère (2013) entitled Ecosocialismo y buen vivir (Eco-socialism and good living). In the PNBV 2013–2017, the expression ‘buen vivir’ continued to be the most cited—228 citations in 600 pages—although to a lesser extent than in the previous plan. It appears in all chapters of the PNBV 274 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA

2013–2017, as well as in the titles of some; for example, the chapter entitled ‘El Socialismo del Buen Vivir’ resignifes the concept of as part of a socialist political program, while the chapter ‘Objetivos Nacionales del Buen Vivir’ confgures the resignifed concept as an articulator of public development policies. Meanwhile, the new expression ‘transformation of the productive matrix’ (with 101 citations) rivaled the preeminence of Socialism of Good Living in the PNBV 2013–2017. In fact this newer concept proved to be the lynchpin political strategy of the third Correa administration, because the PNBV 2013–2017 posited transformation of the productive matrix as a means to achieve the purpose of buen vivir (Caria and Domínguez 2016), thereby displacing the erstwhile orientation of a large part of Ecuador’s public policies. The increased relevance of transformation of the productive matrix became clear when Correa commissioned Glas to coordinate all public policies around that purpose. Thus in 2015, the Vice presidency (2015) published the document Estrategia nacional para el cambio de la matriz productiva (National Strategy for the Change of the Productive Matrix), in which the expression ‘buen vivir’ loses weight with respect to ‘transformation of the productive matrix’ (13 citations versus 44, respectively, in 120 pages). The resignifcation of buen vivir as Socialism of Good Living provoked a reaction on the part of certain indigenist, ecologist, and post-developmentalists Ecuadorian intellectuals, which in turn generated an explosion of literature on buen vivir (Lang and Mokrani 2011; Lang et al. 2013; Hidalgo-Capitán et al. 2014) and consolidated the conceptual trifurcation (Cubillo-Guevara et al. 2014). This sixth resignifcation of buen vivir continued to move away from the postulates of indigenists, ecologists, and post-developmentalists, ignoring the de-colonialist and bio-centric dimensions of buen vivir. The socialism of sumak kawsay was largely abandoned, with brief references to ‘a society that respects diversity and nature’, and to building ‘a Plurinational and Popular State’. Some relevance is given to the post-capitalist dimension: ‘socialism’, ‘social justice, equality, and the abolition of privileges’, ‘hand-in-hand with collective welfare, mutual recognition, and solidarity’, ‘modifying capitalist domination’, and building ‘a popular organization that prevents domination by particular interests’. But this dimension admits shades of capitalism in the drive to ‘produce more, produce better, produce new things’. The relevance of 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 275 this new resignifcation of the concept of buen vivir in terms of public policies would persevere only until the outbreak of fscal crisis in 2015.

3.3.2 Buen Vivir as Happiness Almost simultaneously with the drafting of the PNBV 2013–2017, the Correa government created in 2013 the Secretariat of Good Living, headed by the journalist Freddy Ehlers. This secretariat was dedicated to promoting the ‘happiness’ of Ecuadorians and the social achievements of the Alianza PAIS government in the media. From the SBV, Ehlers promoted the seventh and fnal resignifcation of the concept of buen vivir as ‘happiness’, thus simplifying its meaning to the maximum. This resignifcation was included in an informational document published in 2015 by the secretariat whose title can be translated as “Good Living: What, Why, to What Purpose, and How?”

Good Living is a synonym of happiness, not in a momentary sense, but in life as a whole; the happiness that life represents in fullness, understanding harmony in three dimensions: people, community, and nature (…). The cultural transformation that we are promoting requires a change in the values, attitudes, and practices of all people. Re-fnd yourself, recognize all the good that we have, our unlimited capacity to love, understand the inti- mate relationship that binds us to all human beings, link our happiness to that of others and feel that we are all part of nature –so that we cannot hurt nature without simultaneously destroying ourselves– are steps on the path to a conscious life. (Secretaría del Buen Vivir 2015)

The SBV also encouraged frequent appearances by Ehlers in the national and foreign media, spreading a vitalist (new age) version of buen vivir as happiness. This secretariat produced two weekly programs for the public television broadcasting El Ciudadano, called Ama la vida— Buen Vivir (Love Life—Good Living) and Acuerdo Buen Vivir (Good Living Agreement). The creation of the SBV (separate from SENPLADES, and dependent on the Presidency), together with the functions assigned to it (dis- seminating the concept of buen vivir, encouraging its practice, and promoting conscious living for achievement of happiness) meant a defnitive departure from the concept as any sort of development model or framework of reference for Ecuador’s public policies. This was its fnal 276 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA conversion into an instrument of ‘political marketing’ (Acosta, quoted by Fernández et al. (2014) under the government slogan buen vivir is the happiness of citizens’ (Ehlers, quoted by EFE [2015]) This ultimate resignifcation of buen vivir as happiness, carried out by the SBV, generated widespread social rejection, and critical essays proliferated regarding Correa’s increasingly autocratic style of government (Cuvi et al. 2013; Dávalos 2014; Muñoz-Jaramillo 2014). It also meant emptying the concept of its three original dimensions (de-colonialist, post-capitalist, bio-centric) and its transmutation to a new age philosophy that had nothing to do with buen vivir as sumak kawsay—except in terms of a certain spiritual character, now based on Western vitalism.

3.3.3 Ecuador’s Public Policies, 2013–2017 The public policies during this period were implemented in the context of increasing social and political protest. Alianza PAIS had an overwhelming absolute majority in the National Assembly, with the initial support of the Social Democrat party Avanza, but all other political forces formed an opposition bloc (including Avanza from 2015). In addition, many of the ruling party’s former collaborators, such as Moreno and Falconí, had moved away from its hard core, while others formed the Montecristi Vive, bringing together a large part of the left-intellectual opposition to Correa’s government. This social and political reaction to the government intensifed in 2015, when an economic crisis broke out, stemming from the fall in oil prices and appreciation of the dollar. That same year, Correa pushed for a new constitutional reform that would allow for his indefnite reelection, precipitating the break between Alianza PAIS and Avanza. Indeed, 2015 marked a turning point in the implementation of Ecuador’s public policies. During the years 2013, 2014, and part of 2015, public policies took as a framework of reference the Socialism of Good Living and the transformation of the productive matrix; afterward, for most of 2015, all of 2016, and the beginning of 2017, public policies abandoned that framework and focused on adapting to the new context of economic crisis, reducing buen vivir to a mere slogan of political marketing aimed at generating a positive image for a government overwhelmed by the economic situation. The public policies of the frst part of this administration, taking into account the three dimensions of buen vivir, can be classifed into three main axes. Regarding the de-colonialist axis, outstanding 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 277 were the publication in Kichwa and Shuar of summary versions of the PNBV 2013–2017. Likewise, some indigenous intellectuals were appointed to powerful posts of State, as was the case with Viteri, elected to the National Assembly for Alianza PAIS and appointed president of its Biodiversity Commission. However, in 2013 the Universidad Intercultural Amawtai Wasi (private university controlled by the indigenous movement) was closed, under the argument that it failed to meet the quality criteria required by the government. As a counterbalance, four large public universities were created (Yachay, Ikiam, UNAE and UniArtes), two of them with indigenous Kichwa and Shuar denom- inations (Yachay or City of Knowledge, in Imbabura, and Ikiam or Amazonian Regional University, in Napo). All of these universities employ both foreign and mestizo-national staff (see Chapters 7 and 13). With regard to the post-capitalist axis, notable were the strengthening of the regulatory aspect of the State, with new laws regarding the media, banking, stock exchange, currency, water, and the penal code, as well as the creation of Consejo Nacional de Igualdad (National Equality Councils), and an increase of public spending on productive investments in the energy sector (hydroelectric dams, electricity distribution companies, wind farms, refneries) and infrastructures (ports, government buildings, roads, etc.). Policies aimed at transforming the country’s energy matrix in favor of hydroelectric and wind power were also launched, as were attempts at initiating transformation of the knowledge-based production matrix through the creation of the four new public universities mentioned above. At the same time, national private production was also encouraged, through the promotion of tourism and public incentives for Ecuadorian exporters harmed by international trade agreements signed by the government. Also encouraged was the attraction of direct foreign investment, especially in order to exploit the country’s resources by way of fscal incentives for foreign mining companies. Regarding the bio-centric axis, worthy of mention are the promotion of electricity production through hydroelectric plants and wind farms, as well as the use of that energy in Ecuadorian homes. Meanwhile, the Yasuní-ITT Initiative was defnitively abandoned, opening the Yasuní oil reserves for exploitation. However, during the second part of this administration, following the outbreak of fscal crisis of 2015 and exacerbated by the economic effects of a 2016 earthquake (see Chapter 8) all public policies were subject to funding that was not always available. Thus, the Ecuadorian State lost 278 A. L. HIDALGO-CAPITÁN AND A. P. CUBILLO-GUEVARA quantitative relevance: privatization of public communications, energy and food production companies; reduction of public investments in infrastructure; reduction of salaries for public workers or reduction in public employment. In addition, social contributions and taxes—on value added, on wealth or on income—were increased. Extractive activities were encouraged in the Amazon—oil from Yasuní, mining in Shuar territory— and more direct foreign investment was attracted for increased mining. In order to encourage domestic production and to curb a rise in imports due to appreciation of the dollar, duties were increased and import safeguards were established, although a commercial agreement with the European Union was also signed. In addition, the public defcit was fnanced through expanded indebtedness to China and to international fnancial organizations. Furthermore, the functions of the Consejo de Desarrollo de las Nacionalidades y Pueblos del Ecuador (Development Council of the Nationalities and Peoples of Ecuador, CODENPE) were suspended, and an attempt was made to expel the Confederación de Nacionalidades Indígenas del Ecuador (Confederation of Indigenous Nationalities of Ecuador, or CONAIE) from its offces in a state-owned building. In summary, Ecuador’s public policies sought to take as reference socialism of good living and the transformation of the productive matrix for barely a year and a half, under a questionable de-colonialist impulse (more folkloric than real), a timid post-capitalist drive (greater regulatory intervention of the State in markets), and a contradictory bio-centric nature (renewable energies mitigated by exploitation of Yasuní). During the balance of third Correa administration, however, policies failed to take any of these concepts as a reference framework, and buen vivir was reduced to a political marketing campaign with new-age overtones, while public policies jettisoned their prior (less and less obvious) de-colonialist, post-capitalist, and bio-centric character.

4 conclusions Buen vivir, through its seven resignifcations from the original concept of sumak kawsay, has been viewed as the model of development and reference framework for public policies throughout the Correa administrations. However, the public policies implemented in Ecuador were not always in accordance with the three original dimensions of good living: de-colonialist, post-capitalist and bio-centric. In spite of this, buen vivir as it has been resignifed in Ecuador remains a model of development 11 BUEN VIVIR: A REFERENCE FOR PUBLIC POLICIES AND DEVELOPMENT … 279 and a reference framework for public policies in other countries of the Latin American revolutionary left, especially in Bolivia, Nicaragua, and El Salvador. In the case of Bolivia, buen vivir (adapted as vivir bien, ‘living well’) has likewise been considered a model of development and reference framework for public policies; and it has also suffered at least two signifcant resignifcations since 2010 under Evo Morales and the MAS administrations: one carried out by Vice President García Linera (2010) as ‘Andean community socialism’, and another by Foreign Ministers David Choquehuanca (2010) and Fernando Huanacuni (2010), as ‘suma qamaña’. In Nicaragua, under the latest Daniel Ortega and FSLN administrations, buen vivir was adapted as ‘living clean, living healthy, living beautifully, living well’, as resignifed by the First Lady of the Republic and Coordinator of the Communication Council, Rosario R. Murillo (2013), in a national strategy of social policy launched in 2013. In El Salvador, under Salvador Sánchez Cerén and the FMLN administration, good living was adapted (as in Ecuador) as socialism of good living, according to the resignifcation made by the government adviser Iosu Perales (2016). In these four cases of Latin American countries with left-wing governments (all of them Bolivarian), the concept of buen vivir has thus been resignifed once or several times, from its original indigenous conception (sumak kawsay) to serve national projects of ‘21st century socialism’, or in the service of the personal projects of national leaders.

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Educational Policy in Ecuador During the Citizens’ Revolution

Juan Ponce Jarrín

1 introduction This chapter presents an analysis of the effects of policies implemented in Ecuador during the Revolución Ciudadana period (Citizens’ Revolution, 2007–2017) in both primary and secondary public education. This study is based on data including impact studies carried out by the research department of the Ministerio de Educacion (Ministry of Education, or MINEDUC), responsible for the design and application of relevant public policy. The chapter begins with an analysis of the cost-effectiveness of the main education policy projects undertaken during Rafael Correa’s government. Next, we evaluate the outcomes of those policies, using enrollment and quality indicators to obtain a general view of the changes induced; references to other countries in the region allow for comparison in terms of student performance. The fnal section summarizes the most signifcant successes and failures of education policies enacted under the Revolución Ciudadana.

J. Ponce Jarrín (*) FLACSO Ecuador, Quito, Ecuador e-mail: [email protected]

2 education Policy in the Revolución Ciudadana: A Cost-Effectiveness Analysis During the ten years of Rafael Correa’s presidency, education policy at the pre-primary, primary, and secondary levels had as a basis the following central points:

• A signifcant increase of investment in education and the improvement of school infrastructure. • The elimination of “barriers to access” to the system through provision of textbooks and uniforms, as well as the suspension of the so-called “voluntary contribution” paid by parents despite a lack of legal basis. • Improvement in the conditions and quality of teaching practice.

Under this third aim, teachers’ salaries were raised from a starting wage of US$290 per month in 2006 to US$1055 in 2014; at the same time, a retirement program was implemented, along with staff reforms that included a meritocratic system for the appointment of new teachers. The appraisal of teacher performance was also introduced, and the political lobbying power of the teachers’ union was sharply diminished. The main educational programs implemented during the 2007–2017 decade will be considered as follows: for each program, a brief description is provided, together with its budget and the results observed by impact studies carried out by the aforementioned MINEDUC. Based on this information, we conduct a comparative analysis to identify those programs that produced the best cost-effective results. The programs analyzed fall into three groups: (a) infrastructure and technology programs including the Unidades Educativas del Milenio (Millennium Educational Units, or UEMs) and programs for tablets, laptops, and connectivity; (b) teacher-focused programs, including teaching awards and Master’s programs; and (c) teaching materials and programs for curriculum reform, such as the International Baccalaureate, the school meals program, and initiatives around school textbooks and school uniforms.

2.1 Infrastructure and Technology Programs This frst group of programs was characterized by investment in the construction of large educational infrastructures ftted with such 12 EDUCATIONAL POLICY IN ECUADOR DURING THE CITIZENS’ … 285 facilities as thematic classrooms, modern equipment, community libraries, laboratories, sports pitches, and cultural spaces. These improvements covered the entire educational cycle, from primary education (EGB) to High School (Bachillerato), either with its own enrollment or through “annex” institutions, with importance given to the use of technology in learning processes. The UEMs, tablets, laptops, and connectivity programs were all focused on technology and have thus been grouped under this heading.

2.1.1 Millennium Educational Units (UEMs) First introduced in 2008, the UEMs are integral educational centers that bring together different educational levels into a large facility featuring open spaces and laboratories. There are two types of UEMs: the Larger Educational Unit, with a capacity for 1140 students per day, and the Smaller Educational Unit, with a capacity for 570 students per day. Both types of units operate in two daily shifts, morning or evening, and at all levels: pre-primary, primary, and secondary education. In 2016, there were 65 UEMs in operation with a total reported enrollment of 83,425 students and a managed budget of US$803,511,096. The average construction total cost of each larger UEM is US$6.3 million dollars, whereas the cost of a smaller UEM is about US$4 million. Repayment of the average investment in a larger UEM over 20 years at 5% annual interest yields an annual rate of US$505,528.30. At an average enrollment of 1140 students per year, this represents an annual unit cost of US$443.45, under the assumption that the UEM is operating at full capacity. The impact study on UEMs conducted by MINEDUC evaluates the effects of this program via the academic advancement of senior students in High Schools, measured with the Ser Bachiller tests, which evaluate students’ performance in mathematics, language, natural sciences, and social studies. Since the 2014–2015 academic year, the Instituto Nacional de Evaluación Educativa (National Institute for Educational Assessment, or INEVAL) has held standardized examinations for all students in the third year of their Bachillerato course who have passed the subjects in their respective curriculum and who attend publicly funded schools (including ecclesial mission schools) as well as municipal and private educational establishments. The Ser Bachiller is a nationwide assessment aimed at students working toward the bachiller qualifcation. The years 2015, 2016, and 2017 have been estimated using a methodology that combines “difference in differences” (DID) with baseline 286 J. PONCE JARRÍN propensity score matching. The DID method compares the change in the success rates of the treatment group of schools (those included in the project) with the control group (those not included). At least two data sets are required in order to carry out that comparison; the 2008 national achievement test is here taken as the baseline, while the Ser Bachiller tests are employed as the second set. In addition, schools are matched with baseline data to make them comparable and to ensure that they began from equal positions before implementation of the program. According to the data, there was no signifcant effect on language attainment in any of the years analyzed. On the other hand, the impact on mathematics takes the shape of an inverted U: there was no effect in 2015, an important effect in 2016 (0.49 standard deviation), and a lesser effect in 2017 (0.18 s.d.) (Ponce and Drouet 2017).

2.1.2 Tablets This project started in the 2015–2016 academic year and consists of pro- viding an electronic tablet to each student to be used in teaching and learning processes, with the same teacher presiding during three consecutive school years. Use of the device is controlled by the teacher with support from an information technology (IT) platform. In a pilot experience, the project was focused on 4426 second- to ffth- grade primary education students in 58 public schools located in four provinces (Pichincha, Sucumbios, Tungurahua, and Zamora Chinchipe). The control group consisted of 4055 students in the same grades from 53 educational institutions in provinces different from those of the treatment group, except in the case of Pichincha. At the same time, using an experimental design for impact evaluation, in fve schools within Pichincha, two parallel classes at the same grade were chosen as a treatment group and another two parallel classes at the same grade as a control group. The impact study was focused on analysis of students from Pichincha chosen at random, including those beneftting from the program and those who were not. The program had a signifcant impact on language (around 0.24 s.d.) but no impact on math (Ponce and Rosales 2018). The unit cost per tablet was US$300; that is, an annual cost per machine of US$100, given that each tablet was used for three years.

2.1.3 Laptops The Ministry of Education in 2010 launched the Comprehensive Technological System for Schools and the Community (SITEC) project 12 EDUCATIONAL POLICY IN ECUADOR DURING THE CITIZENS’ … 287 with the aim of implementing a comprehensive technological system for the public educational community. Three objectives were established within the framework of SITEC: the frst consisted of the provision of technological tools (laptops) to teachers, principals, and students, to allow interaction in the teaching/learning process, as well as for use in administrative tasks related to the Ministry’s educational platform. The second and third objectives are related to the development of virtual content with educational purposes, along with training processes around the use of technological tools and platforms and virtual content for those involved in education. Through the Ministry, the government distributed 199 laptops to teachers in 2011 as part of the SITEC project. In addition, 46,150 new laptops were provided in 2014 within the framework of the objectives of the investment program, but these were fnanced from current expenditure. It was expected that the remaining teachers would have received a technological pack (laptop, lock, carry-case, mouse, and insurance policy) by 2017, although as of 2018 this measure had not been completed. The executed budget for the program between 2010 and 2017 was US$107,605,712.75 using funds from the state budget, the budget for cooperation, and credit from the World Bank. The unit cost per laptop was US$860. Assuming that each laptop lasts for three years (like the tablets), the annual cost per laptop is US$286.60. As with the UEMs, the impact study evaluating the laptop programs used a DID approach with baseline propensity score matching. When measuring the impact of the laptop programs on senior Bachillerato students for 2015–2017, the only positive effect was found in mathematics for 2015 (0.18 s.d.). There was no effect found in other years, and no change was observed in the language performance indicator (Ponce and Rosales 2018).

2.1.4 Connectivity Access to the internet was made available in all public school buildings as part of the SITEC program. Once again, the impact study used a DID strategy with baseline propensity score matching. The evaluation of the effect of this measure on senior Bachillerato students using the Ser Bachiller tests for 2015–2017 showed a signifcant impact on language and mathematics in the frst year (0.08 s.d. and 0.077 s.d., respectively), but that impact was not sustained in subsequent years (Ponce and Intriago 2018). The annual cost of the connectivity program is US$2880 per school. 288 J. PONCE JARRÍN

2.2 Teacher-Focused Programs

2.2.1 The Teaching Award In 2009, MINEDUC issued Acuerdo Ministerial (Ministerial Agreement) 0025-09 with the aim of regulating the implementation of the Sistema Nacional de Evaluación (National Appraisal System) project. This regulation establishes the processes of performance appraisal—internal and external—for teachers and managers of educational establishments, as well as the rating methodology applied. It also organizes the implementation of incentives granted by the Ministry of Education for both categories and the appraisal levels awarded. The appraisal levels are:

• Excellent: total internal and external appraisal of 90% or above • Very Good: total internal and external appraisal between 80 and 89% • Good: total internal and external appraisal between 60 and 79% • Unsatisfactory: total internal and external appraisal of less than 60%.

The Agreement also stipulates the incentives corresponding to each performance level achieved: a fnancial incentive of US$1200 per year for four years for teachers who rate the level of Excellent in their appraisal, and of US$900 for those deemed Very Good. In total, 673 teachers received the US$900 incentive for achieving scores between 80 and 90, while only 29 scored over 90, receiving US$1200. The total annual cost of the program was US$640,000. But the evaluation based on the DID method with baseline propensity score matching using the Ser Bachiller tests for 2015–2017, for senior Bachillerato students, found no effect of these teaching awards on their performance (Ponce and Yépez 2018).

2.2.2 Master’s Program The purpose of this program, launched in 2014, was to enable teachers to obtain a level-four (Master’s) degree in order to improve the quality of teaching as well as the teaching category on the professional career ladder. For implementation of the program and throughout the period a series of agreements was signed with internationally recognized overseas universities. Campuses included (in Spain) the Universidad Autónoma de Madrid (Autonomous University of Madrid), the Universidad Complutense (Complutense University), the Universitat de Barcelona (University of 12 EDUCATIONAL POLICY IN ECUADOR DURING THE CITIZENS’ … 289

Barcelona), the Universidad Nacional de Educación a Distancia (National University of Distance Learning, or UNED), and the Universidad Rey Juan Carlos (King Juan Carlos University), and (in Argentina) the Universidad Nacional de la Plata (National University of La Plata). From the beginning of the program to its end in 2017, a total of 4668 teachers benefted from the initiative and graduated with a Master’s. The total cost of the program was US$30.8 million, with an average cost per degree of about US$6600. Although in this case we found no methodological strategy to confrm a causal relationship, a Ministry of Education study used as a control group those teachers who did not participate in the program, but who obtained a Master’s during the same period. Using this information, it was found that the Master’s program was indeed associated with increases in language and mathematics aptitude (of 0.08 and 0.05 s.d., respectively) (Ponce and Drouet 2018).

2.3 Teaching Materials and Curriculum Reform Programs

2.3.1 International Baccalaureate (IB) The Ecuadorian government, via the Ministry of Education and the International Baccalaureate Organization in Geneva, Switzerland, signed a Memorandum of Understanding on February 9, 2006, with the objective of implementing the project “Incorporation of the International Baccalaureate into publicly funded schools in Ecuador”. The International Baccalaureate Diploma Program is an educational program offered to Bachillerato students in public education establishments accredited as United World Colleges. Its aim is to develop and promote knowledge, skills, and abilities in students which lead to proactive, cooperative, public-spirited work through meaningful and continuous appren- ticeship, thereby promoting the training of enterprising individuals with an investigative and innovative mind, ethical values, moral principles, and social, cultural, and environmental awareness. In order to implement this project of national scope, the Ministry of Education carried out a study to select schools in different provinces of Ecuador according to criteria of pedagogical, management, and educational relevance. The International Baccalaureate Project consists of approximately 201 publicly funded schools in 19 provinces. In this case, a positive impact was found in performance in both language and mathematics, maintained over the period. According to data from the 290 J. PONCE JARRÍN

Ministry’s study, which measured the effects of this program on senior Bachillerato students using the Ser Bachiller tests for 2015–2017 (again, DID strategy with a baseline propensity score matching), the impact was of 0.16 and 0.17 s.d., respectively (Ponce and Intriago 2017). Between 2010 and 2017, a total of US$29,197,758.25 was invested in this program. As many as 4024 students took part, of whom only 711 gained the IB Diploma. The average cost for a school to enter the IB system is US$94,000; once the accreditation has been obtained, the school is required to pay US$11,500 to the International Baccalaureate Organization to retain its IB status. Accreditation lasts for six years, after which the organization makes an assessment of the school to decide whether it can maintain its IB status.

2.3.2 School Food Program (PAE) The general objective of this program is to improve the distribution and coverage of food service in schools, to boost student performance at publicly funded pre-schools, primary schools, and high schools nationwide. The program began in 1999 and was initially targeted in scope, but from 2000 the aim was to make the program universal. As a result of this change, the number of benefciaries reached 2,369,172 students in 2014; however, universal coverage has not yet been achieved. In 2016, the MINEDUC became responsible for further implementation of the PAE, which had previously been administered by the Ministerio de Bienestar Social (Ministry of Social Well-Being). It is not possible to evaluate the impact of the program in terms of academic achievement, since it does not cover senior Bachillerato students. Nevertheless, the PAE’s impact was measured using the rate of progression among primary school students. The results show a positive and signifcant impact of around 9% on the average rate of progression from the frst to seventh grades (Ponce and Rosales 2017). The annual budget for the program was about US$110 million.

2.3.3 Student Textbook Program This educational policy started in 2006 with the free distribution of textbooks to students enrolled in publicly funded schools and mission schools (Spanish language and bilingual). These books covered the cur- ricular areas of language and literature, mathematics, natural sciences, and social studies. At the primary education level, teachers received pedagogical support texts and guides related to their subjects. 12 EDUCATIONAL POLICY IN ECUADOR DURING THE CITIZENS’ … 291

At Spanish-speaking institutions, the packs consist of textbooks and exercise books; starting at the seventh grade, students also receive books in English. At bilingual schools, students receive Spanish and bilingual texts and (like in Spanish-speaking schools) they are provided with books in English from the seventh grade onward. The Bachillerato packs only contain textbooks, not exercise books. Teachers receive textbooks, a teaching guide, and for English a guide and CD. The cost of each pack varies from US$1.82 to US$8.22, while the cost of exercise books ranges from US$2.49 to US$2.55. The cost of each textbook is US$1.77. From 2010 to 2016, the implementation of the Free School Books project entailed a total cost of US$156,241,611.90, and 22.6 million textbooks were distributed. In addition, teachers receive teaching guides and a packet of texts related to the subjects they teach. The guides belong to their schools and are renewed each year. The cost of the teaching guides and pack- ets ranges from US$2.18 to US$6.85 for frst- to seventh-grade primary education. From the eighth grade onward, the cost ranges from US$1.77 to US$2.05. For Bachillerato teachers, each text has a unit cost of US$0.42, except for the guides in English, with a unit cost of US$2.05. The impact study (DID baseline propensity score matching strategy; senior Bachillerato students, using the Ser Bachiller tests for 2015–2017) revealed a positive effect of 0.07 s.d. in language performance, but no effect in mathematics in any of the years (Ponce and López 2017).

2.3.4 School Uniform Program The program Hilando el desarrollo (“Weaving Development”) seeks to contribute to the elimination of entry barriers to the education system through the free supply of school uniforms to children and adolescents in publicly funded and mission educational institutions, promoting a local model of socioeconomic development supportive of the artisan tex- tile sector. The average unit cost of a uniform is US$26.21. By 2016, the program had provided free school uniforms to about 8.5 million students. The implementation of Hilando el desarrollo between 2009 and 2016 cost a total of US$280,174,754.27. Based on the impact study (DID and baseline propensity score matching strategy; senior Bachillerato students, using the Ser Bachiller tests for 2015–2017), this program had no impact either on academic achievement or on the rate of student progression. In addition, according to 292 J. PONCE JARRÍN

Hidalgo et al. (2013), who evaluated the effect of the program on school attendance in rural and marginal urban areas using an experimental study, the supply of free school uniforms had a negative impact, with an increase in the rate of absenteeism of around 25%.

3 Analysis of the Cost-Effectiveness of the Programs In order to carry out a comparative analysis between the programs, we use a cost-effectiveness approach. To make this comparison, all costs and impacts must be in comparable units; given that all impacts have been reported in terms of standard deviations, the annual cost of each program per student is calculated. The results are presented in Table 1. As already indicated, using parameters of government accounting, the investment in infrastructure for the UEMs was to be paid of over 20 years with an annual interest rate of 5%. With this repayment it is possible to obtain the annual cost (pro-rated over 20 years) of the total investment in UEMs, which gives an annual cost of comes to US$505,528.30; this divided by the number of students beneftting from the program (1140) yields the annual average per capita cost of US$443.45. For the tablets, we used the average cost of each (US$300) divided by three, given that they are used for three years—i.e., US$100. Similar criteria were used for laptops, with an average cost of US$860 per unit, divided by the average number of students per teacher (20), giving us an annual per capita cost of US$14.3 (the useful life of the laptop being estimated at three years). For the connectivity program, closely linked to the tablet and laptop programs, the calculation was made by dividing the average annual cost of the internet connection per school (US$2880) by the average number of students per school (1012), resulting in an annual per capita cost of US$2.85. As for the Master’s program, a repayment calculation was also applied. It was assumed that the teacher obtaining the qualifcation will continue teaching in the education system for an average of 15 years. Thus the average annual investment per Master’s (US$3300) was repaid over 15 years with a 5% rate of interest. This amount was divided by the average number of students per teacher (20),1 resulting in an annual per capita cost of US$16.

1 This is the offcial number from the MINEDUC database used for the impact evaluation studies. 12 EDUCATIONAL POLICY IN ECUADOR DURING THE CITIZENS’ … 293

Table 1 Analysis of the cost effectiveness of the programs

Program Subject Impact on Annual Cost per student standard cost per of increasing deviation capita scores by 0.1 (s.d.) (s.d.)

UEM Mathematics 2016 0.5 $443 $88.60 Mathematics 2017 0.18 $443 $246.11 Tablets Language 2015 0.23 $100 $43.48 Laptops Mathematics 2015 0.185 $14.33 $7.75 Connectivity Language 2015 0.08 $2.85 $3.56 Mathematics 2015 0.07 $2.85 $4.07 Teaching bonus No impact Masters Language 2015 0.079 $16 $20.13 Mathematics 2015 0.048 $16 $33.13 IB Language 2015 0.096 $29.66 $30.90 Mathematics 2015 0.187 $29.66 $15.86 Language 2016 0.164 $29.66 $18.09 Mathematics 2016 0.171 $29.66 $17.35 PAE Impact cannot be measured in achievement Texts Language 2015 0.073 $8.00 $10.96 Uniforms No impact

Source MINEDUC. Author’s own classifcation

Regarding the IB program, given that the initial investment for the accreditation lasts 6 years (US$94,000), repayment over 6 years at 5% interest was applied to obtain the annual cost, which was divided by the average number of students per school (1012). The annual payment required for each school to continue offering the IB (US$11,500) was added, yielding an annual per capita cost of US$29.66. For the textbooks, we consider the annual cost for books for students as well as for guides for teachers. Given that we are measuring the impact on the Bachillerato programs, the average cost per student is US$8, including both books and teachers’ guides. With these unit costs, we calculate the cost of increasing the score in academic achievement by 0.1 s.d., facilitating a better comparison of the cost-effectiveness of each program. With regard to the infrastructure and technology programs, it should be recalled that, in order to increase standard deviations by 0.1 in mathematics, the costs are as follows: US$88 to US$246 for the UEMs; US$7.75 for the laptop program; and US$4 for the connectivity 294 J. PONCE JARRÍN program. On the other hand, the cost of increasing standard deviations by 0.1 in language is US$43.48 for the tablet program and US$3.56 for the connectivity program. Thus the best educational program implemented during the Citizens’ Revolution in terms of cost-effectiveness was the connectivity program. Among the teacher-focused programs, the cost of increasing the result in mathematics and language by 0.1 s.d. by way of the Master’s program is US$33 and US$20, respectively. As noted before, the incentives programs for teachers (teaching award) based on their appraisal had no effect on academic achievement. Finally, in order to increase the scores in language by 0.1 s.d. through the school materials and the curriculum reform programs, the costs are between US$18 and US$30 for the International Baccalaureate and US$11 for the school textbooks program. On the other side, the costs to increase the scores in mathematics by 0.1 s.d. are between US$15 and US$17 per student for the IB program. Thus the best program for increasing scores in language in terms of cost-effectiveness is the school textbook program, whereas for mathematics the IB program is best. The impact on academic achievement of the school food program could not be evaluated, while the school uniforms program had no impact on achievement and a negative impact on attendance.

4 evolution of the Educational Indicators During the Revolución Ciudadana in a Comparative Perspective Having presented the educational policies implemented in Ecuador during the Revolución Ciudadana and their individual outcomes, in this section we offer an analysis of the general performance of state education in Ecuador, and a comparison of the situation with other countries in the region. Enrolment in pre-school education, which covers children aged 4 and 5, is the indicator used for this analysis; pre-school attendance is key to preparing children for entry into the school system, because it con- tributes to their process of socialization as well as management of their motor skills and basic learning skills at later levels. Table 2 presents the rates of enrolment in pre-school education disaggregated by area, quintile, and ethnic self-identifcation. Pre-school registration at the national level increased from 51% in 2006 to 74% in 2014, which is clearly a solid achievement. However, 12 EDUCATIONAL POLICY IN ECUADOR DURING THE CITIZENS’ … 295

Table 2 Pre-school net ECV 2006 (%) ECV 2014 (%) registration rate National 51.1 74.2 Area Urban 59.9 79.2 Rural 35.4 63.1 Take-up per quintile Q1 35.0 57.4 Q2 43.3 69.6 Q3 51.4 76.2 Q4 68.3 82.6 Q5 70.3 88.4 Ethnic identity Indigenous 0.0 63.5 Non-Indigenous 51.1 75.2

Source Living Standard Measurement Survey (LSMS), 2006 and 2014, INEC. Author’s own classifcation disparities among areas, quintiles, and ethnicities are obvious, despite the signifcant reduction in gaps from 2006. In 2014, registration in the poorest quintile was at 57%, compared to 88% in the richest. Similarly, major differences are observed by area and ethnicity. In terms of the quality of pre-school education, Cruz-Aguayo and Schady (2015) report the result of applying two instruments to measure different aspects of quality in the classroom in the frst and second grades in a sample of 78 pre-school centers in three countries: Brazil, Chile, and Ecuador. The frst instrument examines what occurs in the classroom at a given moment. The results show that most teaching time in these three countries is dedicated to tasks performed as a class (copying sentences from the board or reproducing letters of the alphabet) or else individual tasks (all students working individually on the same page of the text). Tasks in groups, which would encourage interaction among children, are rarely found. In all three countries the authors observed that much of the class time is inactive. The second instrument is the Classroom Observation Scoring System (CLASS), a method of observation and grading for pre-school children that evaluates the interaction between them and the teacher, taking into consideration three important elements: emotional support to the children by the teacher (the greater the level of emotional support, 296 J. PONCE JARRÍN the more positive the relationship between students and teachers, and the more they beneft from their time together); class organization (in highly organized classes, teachers are more proactive, and children spend most of the time on learning activities); and learning support (implying that teachers provide children with adequate feedback for their learning). In their study, Cruz-Aguayo and Schady (2015) fnd that learning support—most important for pre-school children—is the dimension showing the worst results in the evaluation. Finally, of the three countries studied, Ecuador came out lowest in all areas, especially in learning support. In summary, there was an increase in pre-school enrolment in Ecuador during the Revolución Ciudadana, but signifcant disparities between groups persist and the centers in charge of pre-school development face serious issues of quality. Regarding primary education, the country nearly achieved universal enrolment, which rose from 92% in 2006 to 97% in 2014. As shown in Table 3, there was a remarkable reduction of inequities among social groups, with a narrowing of the gap between urban and rural areas and an increase in enrolment among people self-identifed as Indians.

Table 3 Net registration rate for primary and high school

ECV 2006 primary ECV 2014 primary ECV 2006 high ECV 2014 high education (%) education (%) school (%) school (%)

National 91.5 97.0 54.3 64.1 Area Urban 94.7 97.9 63.1 67.5 Rural 86.3 95.2 38.8 56.2 Take-up per quintile Q1 84.3 94.0 25.7 48.0 Q2 88.4 96.0 40.0 55.3 Q3 94.5 97.5 53.2 62.2 Q4 95.9 98.4 69.3 68.9 Q5 98.2 99.1 85.6 80.1 Ethnic identity Indigenous 64.7 95.1 38.9 60.0 Non- 92.4 97.2 55.6 64.4 Indigenous

Source Living Standard Measurement Survey (LSMS), 2006 and 2014, INEC. Author’s own classifcation 12 EDUCATIONAL POLICY IN ECUADOR DURING THE CITIZENS’ … 297

Table 3 shows an increase in high school (Bachillerato) enrolment as well, up almost 10% (from 54.3% in 2006 to 64.1% in 2014). Data also confrm a signifcant reduction in disparities between social groups; for example, the high school registration rate for the poorest quintile is 48%, compared to 80% for the richest quintile. However, registration rates remain low when compared to the rest of the region (around 80%). With regard to quality indicators, Ecuador has taken part in two regional studies measuring academic achievement (UNESCO 2014), namely the Second Regional Comparative and Explanatory Study (SERCE) in 2006 and the Third Regional Comparative and Explanatory Study (TERCE) in 2013, both carried out under the auspices of the United Nations Educational Scientifc and Cultural Organization (UNESCO) regional offce for Latin America. Ecuador’s results in 2006, both in language and mathematics in the third and sixth grades, were far below the regional mean; in 2013 the country achieved a performance level similar but inferior to the Latin American average. In spite of this improvement in the TERCE, almost half of Ecuadorian students remain at the lowest levels of achievement in mathematics in the fourth and seventh grades, compared to only 15% of Chilean students. In addition, only 3% of Ecuadorian children reached the “outstanding” level, compared to 7% in Peru, 14% in Mexico, and 18% in Chile. Finally, profound differences by ethnicity, area, region, and socioeconomic level still persist.

5 conclusions Signifcant increases in social expenditure during the Citizens’ Revolution were in the case of education refected in higher investment, which rose from 2.3% of the GDP in 2006 to 4.8% in 2014. This investment resulted in signifcant advances, both in levels of enrolment and in quality. The cost-effectiveness study presented in this chapter shows that the most effcient interventions were the distribution of textbooks, the connectivity program, the Master’s program, and the International Baccalaureate program. On the other hand, other measures such as the teaching award had no signifcant effects (or even negative effects, in the case of the school uniform program), although these programs represented high expenditure for the government; still, it could be argued that despite a lack of impact on student performance, these measures were further aimed at creating employment or fostering local industry. 298 J. PONCE JARRÍN

However, despite improvement in enrolment rates and instructional quality, the Ecuadorian educational system continues to face relevant challenges. For example, a signifcant number of young people still do not complete the Bachillerato; public policies implemented during the 2007–2017 decade have proven unable to address the variety of reasons that these adolescents remain outside the education system. Moreover, illiteracy remains an issue in Ecuador, even though the country offcially claims to have eradicated it. One of the reasons that these problems persist is that no attention was paid to the quality of the expenditure when the programs were designed and implemented. Decisions were taken without technical studies that might have indicated the most effcient types of investments in education. The Citizens’ Revolution had an obvious preference for investment in infrastructure, but as shown by this analysis, investment was not successful in terms of cost-effectiveness. In addition, the literature on education economics has proven that investment in infrastructure alone is not suffcient to improve the quality of an educational system, which further requires improvement in teaching processes and investment in teacher training.

References Cruz-Aguayo, Y., & Schady, N. (2015). Early Schooling: Teachers Make the Difference. In S. Berlinski & N. Schady (Eds.), The Early Years: Child Well-Being and the Role of Public Policy. Washington, DC: IDB & Palgrave Macmillan. Hidalgo, D., Onofa, M., Oosterbeek, H., & Ponce, J. (2013). Can Provision of Free School Uniforms Harm Attendance? Evidence from Ecuador. Journal of Development Economics, 103, 43–51. Ponce, J., & Drouet, M. (2017). Evaluación de impacto del programa escuelas del milenio. In MINEDUC (Ed.). Quito: Dirección Nacional de Investigación. Ponce, J., & Drouet, M. (2018). Evaluación del programa de apoyo a la obtención de título de maestría a docentes del sistema público de Ecuador. In MINEDUC (Ed.). Quito: Dirección Nacional de Investigación. Ponce, J., & Intriago, R. (2017). Evaluación de impacto del programa de bachillerato internacional. In MINEDUC (Ed.). Quito: Dirección Nacional de Investigación. Ponce, J., & Intriago, R. (2018). Evaluación del programa de conectividad. In MINEDUC (Ed.). Quito: Dirección de Investigación. 12 EDUCATIONAL POLICY IN ECUADOR DURING THE CITIZENS’ … 299

Ponce, J., & López, M. (2017). Evaluación de Impacto del programa de uni- formes y textos escolares. Dirección Nacional de Investigación. Documento de Política No. 03–2017. In MINEDUC (Ed.). Quito: Dirección Nacional de Investigación. Ponce, J., & Rosales, C. (2017). Evaluación de impacto del programa de ali- mentación escolar. In MINEDUC (Ed.). Quito: Dirección Nacional de Investigación. Ponce, J., & Rosales, C. (2018). Evaluación de impacto del programa de entrega de laptops y tablets. In MINEDUC (Ed.). Quito: Dirección Nacional de Investigación. Ponce, J., & Yépez, J. (2018). Evaluación de impacto del programa de evalu- ación e incentivos a docentes. In MINEDUC (Ed.). Quito: Dirección Nacional de Investigación. UNESCO. (2014). Comparison of Results Between the Second and the Third Regional Comparative and Explanatory Studies: SERCE and TERCE 2006– 2013. Santiago de Chile: UNESCO. CHAPTER 13

Far from Becoming the Jaguar of Latin America: The Ecuadorian Science, Technology and Innovation Policy Turn

María Belén Albornoz

1 introduction Following decades of poor planning in Science, Technology, and Innovation (STI) in Ecuador, Rafael Correa’s government (2007–2017) designed a new set of public policies aimed at stimulating scientifc production and technology transfer. The government chose a state-led strategy to conduct these policy changes based on the resurgence of a model that centralized policy processes within the state apparatus. This chapter explains Ecuador’s paradigmatic STI policy change through analysis of the most salient moments and instruments of the policy-making process. Given the importance of STI policy to Correa’s presidency, it is fundamental here to understand the role assigned to science and technology in the ten years of his mandate. While it is vital to study the key actors in the STI policy-making process, it is equally

M. B. Albornoz (*) FLACSO Ecuador, Quito, Ecuador e-mail: [email protected]

© The Author(s) 2020 301 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_13 302 M. B. ALBORNOZ vital to understand the visions on technology and social order that shape policy actions, as well as the reasoning of the actors themselves. For these visions are embedded in the process through which various roles and purposes of both science and technology become closely intertwined with broader conceptions of national identity, history, and the future. This chapter is organized into four analytic levels: (1) paradigmatic policy change; (2) the construction of new STI institutions and the transformation of law; (3) the implementation of the linear model focused on government/academia relations, and the sequence from sound science to innovation; and (4) policy instrument design and its most iconic projects, including the evaluation and standardization of the university system, an aggressive program of scholarships and student grants, the Prometeo (Prometheus) and Viejos Sabios (Old Wise Men) programs, and the Yachay City of Knowledge.

2 Paradigmatic Policy Change Science and technology have been part of the struggle to reimagine societies because knowledge is a fundamental element in achieving those desired futures. Such dominant imaginaries often see science and technology as instruments to serve state-led national development, in order to attempt a technological catch-up (Kim 2015). In other words, science and technology “operate as political agents” because they have the capacity to reorder society (Jasanoff 2004). Public servants use science and technology to ground a new sense of national identity; and to break from old bureaucracy they build a state apparatus run by technocrats. In the case of Ecuador, technocracy draws upon scientifc discourse “to represent the concerns of the citizens […] and imposes itself gigantic missions such as the building of the nation, the accomplishment of a new economic development model by means of sumak kawsay, and the republic of bio-socialism” (De la Torre 2013). STI initiatives “continue to play diverse legitimating functions in the world’s newer democracies” (Jasanoff 2015b), since they play an instrumental role in legitimizing liberal democracies (Ezrahi 1990). The policy window originated by the new government in 2007 facilitates the notion of STI as centered in the state, derived by way of national development plans, the foundation of new institutions, changes in regulations, and greater location of resources. Thus, it combines contexts and structures within which decision-makers consider 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 303 how to design STI policy, since it is the government that defnes what STI signifes from a top-down policy strategy. Hence a direct relation is established between science and technology and economic growth under the supposition that scientifc research is the engine of technological progress and technological innovations that lead to economic growth. While it is important to study the key actors in the STI policy-making process, it is equally vital to understand the so-called imaginaries of technology and social order that shape policy actions, as well as the reasoning of the actors. These visions are “embedded in the processes through which meanings, roles, and purposes of science and technology become closely intertwined with broader conceptions of national identity, history and future” (Kim 2015). Imaginaries can show the dynamics of co-production between science, technology, and nation; hence they serve as an interpretative framework to analyze how STI is planned in Ecuador. Once an imaginary of development is collectively held, it can work as an apparatus to perpetuate power and authority. In this context, the STI policy change begun in 2007 represented a paradigmatic change, in the terms set out by Hall (1993). The new STI policy designed during Correa’s presidency went deeper than a simple adjustment or selection of instruments—it was about the replacement of systems of ideas and rules in order to redefne policy issues and their objectives. Before Correa, two belief systems coexisted within STI policy: Import Substitution Industrialization (ISI), as led by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) during the 1970s, and the neoliberal approach of the 1990s, where science and technology were fnanced by Inter-American Development Bank loans. In both cases, policy implementation was weak due to the lack of policy instruments that could actually link science and technology to knowledge production and markets. Within Correa’s government, a new role was conceived for science and technology with technological catch-up and knowledge transfer at the core of the STI policy. Since 2007, various agencies and enterprises from Europe, the United States, and South Korea have become STI consultants to decision-makers, assisting Ecuador toward lessening the knowledge divide (Bilateral KSP 2009). Thus, the technical rationality of the experts in cognitive and normative terms is here assumed by the Ecuadorian government, which begins a process of delegation in the terms posited by Jasanoff (2012) on three levels: (1) the expert as an individual; (2) knowledge relevant to 304 M. B. ALBORNOZ politics; (3) and groups of consultants who contribute to policy design. Institutionalized expertise is translated into new ways of doing politics and into new knowledge, since the state becomes not only the planning axis for STI, but also the main actor in the innovation system. In a pivotal moment of the construction of a new imagined nation, President Correa and other public servants designed an STI policy that represented a desirable future including a knowledge economy, technological catch-up, and sumak kawsay. The Yachay City of Knowledge was the crown jewel, producing a potent narrative on the relationship between science, technology, and development within a top-down decision-making system. According to Correa, Ecuador needed to become a producer and exporter of knowledge, and Yachay was an essential axis in the second most important phase of the Revolución Ciudadana (Citizens’ Revolution): The Technological and Scientifc revolution. This is how the technological catch-up was envisioned—where Ecuadorian actors aspire to transform Ecuador into the ‘Jaguar of Latin America’, in analogy to the so-called Asian Tigers (South Korea, Singapore, Taiwan, and Hong Kong). STI models are able to travel, largely thanks to the role of memory in the practices that sustain and perpetuate a particular socio-technical imaginary. Memory allows us to analogically reregister the past in the present, and to reproduce specifc forms of power and authority in reference to technological developments. Once an imaginary of development is highly shared, it can work as an artifact capable of reproducing innovation models through historical repetitions. Best-practice models “derive their authority, and their ability to circulate, from the efforts of translocal communities of practice to instrumentalize perceived success stories and to apply them to other contexts” (Pfotenhauer and Jasanoff 2017). STI public policies constantly evoke imaginaries about science and technology and how they should be implemented. These imaginaries are key to the understanding why Ecuador transformed its STI policy following a best-practice transfer model (Wessner 1999).

3 new STI Institutions and the Transformation of Law In the Latin American context, the planning of science and technology arrived in Ecuador with signifcant delay. Elsewhere, Argentina (Consejo Nacional de Investigaciones Científcas y Técnicas, or CONICET, 1958), 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 305

México (Consejo Nacional de la Educación Superior y de la Investigación Científca, 1935), and Brazil (Conselho Nacional de Pesquisas, 1951) promoted in the 1930s an industrialization process that created the conditions for the institutionalization of science and technology in the 1950s (Feld 2015). Ecuador incorporated the value of science and technology for economic growth beginning in 1973, under two military dictatorships led by Rodríguez Lara (1973–1976) and the Military Junta (1976–1979). The Division for Science and Technology was created as an offce within the Junta Nacional de Planifcación (National Planning Board, or JUNAPLA), created in 1954 with the purpose of contributing to the economic growth of the country by formulating, planning, and coordinating scientifc and technological activities. During its six years of operation, the Division did not have a specifc budget, nor did it design or implement any policy instruments. From the beginning, science and technology funding bypassed the central state institutions and was directly allocated to universities and research centers. The transition to democracy included the enactment of the new Constitution of 1979, as well as the recognition of scientifc research (Art. 26). The Consejo Nacional de Ciencia y Tecnología (National Council of Science and Technology, or CONACYT) was created by law just three days prior to the end of the Military Junta, when the Ley del Sistema Nacional de Ciencia y Tecnología (National System of Science and Technology Law) was published (1979). The new institution was again part of the national planning agency, the Consejo Nacional de Desarrollo (National Council of Development, or CONADE), which replaced the JUNAPLA. CONACYT included members of academia, government, and the productive sector in order to undertake activities related to policy design, technology transfer, and the promotion of science and technology through infrastructure and human resources. Yet again, resources were poorly allocated, and CONACYT closed in 1994, after having participated in the formulation of Science and Technology Action Plans that were never implemented. Another reason CONACYT was unable to succeed was because the university system lobbied for enactment of the University and Polytechnic Schools Law of 1982, and the creation of the Consejo Nacional de Universidades y Escuelas Polítecnicas (National Council of Universities and Polytechnic Schools, or CONUEP). Financing scientifc research became one responsibility of the CONUEP, through the Commission for Scientifc and Technological Research, with funds allocated directly from the national general budget. 306 M. B. ALBORNOZ

Because of CONACYT’s failure, President Durán Ballén in 1994 created (by Executive Decree No. 1603) two new institutions designed to implement science and technology policies directly supported by the Vice Presidency of Ecuador: the Secretaría Nacional de Ciencia y Tecnología (National Secretariat for Science and Technology, or SENACYT) to run the public policy, and the Fundación Nacional de Ciencia y Tecnología (Foundation for Science and Technology, or FUNDACYT) as a private and autonomous entity in charge of fnancing research projects, with funds from the Inter-American Development Bank. For the next twelve years, the STI policy focused on managing Calls for Research with BID funding and the new CEREPS State Fund. In 2006, the National System of Science and Technology was reformed and FUNDACYT was eliminated, while CONACYT was again situated to rule the STI policy of the country (Executive Decree No. 1829, 2006). With a new government in place in 2007, an Asamblea Nacional Constituyente (Constituent Assembly) was drawn up to draft the new Constitution (2008), thereby opening a window to modify the STI policy in the country (Kingdon 2011). That same year, the Sistema Nacional de Ciencia, Tecnología y Saberes Ancestrales (National System of Science, Technology, Innovation, and Ancestral Knowledge) was created, moving from a policy of weak institutionality to the strengthening of more centralized institutions. The Vice Presidency of the Republic ceased to be in charge of STI policy, and the entities responsible for policy implementation disappeared, to be replaced by a new institutional framework. In 2009, the Secretaría Nacional de Planifcación y Desarrollo (National Secretariat of Planning and Development), or (SENPLADES) published the Plan Nacional para el Buen Vivir 2009–2013 (National Plan for Good Living 2009–2013, or PNBV 2009–2013). This policy instrument became a crucial reference for organizing the new higher education system, since the Constitution (2008) indicates that this system must be articulated with the national development plan. The Ley Orgánica de Educación Superior (Organic Law of Higher Education, or LOES), in Article 182, established a new institutional design for higher education and created the following public bodies: (1) Secretaría Nacional de Educación Superior, Ciencia, Tecnología e Innovación (National Secretariat for Science, Technology, and Innovation, or SENESCYT), in charge of executing public policy on higher education and scientifc and technological research; (2) Consejo de Educación 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 307

Superior (Council of Higher Education, or CES), whose mission was the planning, regulation, and internal coordination of the system of higher education; (3) Consejo de Evaluación, Acreditación y Aseguramiento de la Calidad (Council for Evaluation, Accreditation, and Quality Assurance of Higher Education, or CEAACES), which undertook the task of evaluating technical and technological institutes, universities, and polytechnic schools. The autonomy of the university sector was vastly affected by the shutting down of its governing body, the National Council for Higher Education (CONESUP), whose functions were transferred to the CES. Moreover, Ecuador’s National Council of Evaluation and Accreditation of Higher Education (CONEA) was replaced by the CEAACES. Before Correa, the STI policy had been poorly designed, with very weak institutional support. Most of the policy funding came from international loans, and no specifc STI model was implemented. A path-dependence of instability and continuous change characterized the trajectory of this public policy. Furthermore, with no strong state institution leading the policy design, Ecuador’s System of Science, Technology, and Innovation was scarcely existent. With Rafael Correa in power, STI became a relevant issue, and his government launched a state-led and top-down policy model in order to organize decision-making related to policy change through the redesign of strategic instruments and institutions (Hall 1993). For the frst time, STI policy was centralized in the state apparatus with all the power to constrain, infuence, and dominate the STI policy actors. Other left-wing governments in Latin America such as Argentina or Uruguay were consistently funding and implementing an STI policy based on the Higher Education System, while Bolivia was developing policy instruments to include ancestral knowledge and indigenous universities as a fundamental core of STI. No other country in the region invested as much as Correa in designing a specifc STI model and making it central to the national identity.

4 implementation of the Linear Model One of the frst theoretical frameworks produced to understand the dyadic relationship between science/technology and economy was the linear model of innovation (Fig. 1). The model presupposes that innovation starts with basic research, then adds applied research and 308 M. B. ALBORNOZ

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Fig. 1 Linear model of innovation (Source Godin [2005, p. 6]) development and fnally ends with production and diffusion. From the 1940s, this model was disseminated to justify government support to science. This was due to lobbying by academic organizations for research funds and to the role of economists as expert advisors to policy-makers. A causal link was established between science (namely, basic research) and socioeconomic progress, with the help of statistical categories for counting resources and allocating money to science and technology, and using the methodological manuals of the OECD (2015) to standardized such procedures.1 According to Godin (2005), the linear model “functioned as a social fact”. Based on a scientifc discourse of the superiority of pure over applied research, basic research was considered the seed from which applied research grows. Basic research “creates the fund from which practical applications of knowledge must be drawn […] basic research is the pace- maker of technological progress” (Bush 1945). After World War I, large frms along with the government began building laboratories out of a conviction to invest in research. Thus National Research Councils started encouraging industrial research due to the great importance of promoting the application of science to industry. The relationship between science and progress is established thus as a linear sequence, where universities defne themselves as the natural home for the production of pure science, and frms put emphasis on applied science within their R&D departments. Economists later extended this model in one more dimension using Schumpeter’s notion of innovation (2002). Schumpeter formulates a distinction between invention (initial) innovation, and (innovation by) imitation (or diffusion). While invention is an act of intellectual creativ- ity, innovation and diffusion are defned as economic decisions, being proximate to economic use (Schmookler 1962). Elsewhere, Maclaurin (1947) broke the process of technological advance into fve steps: pure

1 The Frascati Manual, issued in 1963, was the frst standardized methodology to measure scientifc and technological activities; this was followed by the Oslo Manual in 1992. 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 309 science, invention, innovation, fnance, and acceptance (of diffusion). Literature from the OECD (1966) stabilized the notion of invention as ‘the development of a new idea for a product or process, and its reduction to practice’; innovation was ‘the process of bringing invention into the commercial realm’; and diffusion was ‘the spread of innovation in industry’ (Godin 2005). Following the linear model, Ecuador’s STI policy was placed under the direction of SENESCYT, creating the structure needed to implement it: basic research/applied research/development/production and dissemination (Ames 1960; Bush 1945; Rogers 1962). The higher education system became the center of public policy, focusing on the frst two phases of the linear model to ensure that universities and technical institutes be able to generate knowledge and technology aligned with the PNBV. Although the linear model offered clear orientation in terms of the allocation of funding to R&D, offcial statistics were needed to crystallize the model. For this reason, SENESCYT was forced to produce data on scientifc, technological, and innovation activities in order to evaluate STI policy. The new STI policy was in fact a science and technology policy. Most of the policy instruments were designed to fund the academic sector, with no inclusion of the private sector. SENESCYT, as the agency in charge of STI policy, based production of knowledge and technology in universities and public research centers, and the challenge of technological catch-up was given to state-led projects like the Yachay City of Knowledge. No public institutions related to the private sector were included in any phase of linear model implementation. Correa’s government did not embrace the possibility of implementing a more updated STI strategy, such as the Triple Helix (industry-university-government) model or the Double Helix (university-industry) formation, where conditions of innovation can be fulflled through interactions among these entities (Etzkowitz and Leydesdorf 2000; Cho 2014). The Double Helix formation is often the preferred option in developing countries, given the inherent limits on public funding. Corporations must bring to the table important investments and support systems, while universities are required to undertake organizational restructuring to incorporate fnancial investment and entrepreneurship. With the Double Helix formation, the university acquires the capacity to launch strategies for collaborating with both government and industry. Here it is of paramount importance that technological, 310 M. B. ALBORNOZ innovative, and scientifc developments be encompassed in the long run, and that new specializations be added to attract research opportunities. Because innovation and private frms were pushed to the periphery of public STI policy in Ecuador, the choice of a Double Helix formation was not possible. Instead, a centralized policy was adopted, with the state at the core of the STI system.

5 Policy Instruments and Iconic Projects STI policy aimed to improve the country’s STI indicators. Public policy was designed by the SENESCYT, bearing the OECD indicators and methodology in mind so that effciency of the policy could be easily evaluated. SENESCYT privileged research and development expenditure (in % of GDP), researchers in R&D (per million people), and scientifc and technical journal articles. For the frst time, the country produced data about STI activities in order to quantify the policy outcomes using international models for measuring STI activities. The frst National Survey on STI activities was published in 2013, in a joint effort between SENESCYT and the Instituto Nacional de Estadísticas y Censos (National Institute for Statistics and Census, or INEC). Between 2009 and 2014, the total spending on STI activities grew by 122%, and the number of researchers reached 1.59 per 1000 persons in the economically active population, exceeding the average rate of Latin America (1.30) (INEC (2014). By 2014, the government was responsible for 63.80% of overall R&D spending (Fig. 2). Instrument selection for STI policy had as its context a stronger and more centralized institutionality (Bressers and O’Toole 2005; Howlett and Giest 2013; Elmore 2000; Howlett et al. 2006) where the chief programmatic belief was that the development of science and technology must be promoted from the higher education system in order to achieve innovation in productive structures. Hence, instruments were designed to promote the production of basic and applied research. This included new budgets for the higher education system, an aggressive program of scholarships to enable Ecuadorian students to study abroad (Hitner and Tapia López 2018), and a signifcant investment to attract researchers worldwide through the Prometeo and Viejos Sabios projects. The latter intended to contribute to the training of researchers and to increase the number of indexed publications. 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 311

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Fig. 2 Total expenditure on science and technology, 2009–2014 (Source INEC—National Survey of Science, Technology, and Innovation 2014)

One of the most important instruments implemented by the government was the budget for higher education. Between 2007 and 2015, the Ecuadorian state allocated US$11.4 billion to this sector. This investment raised the percentage corresponding to GDP from 0.8 to 2.0% during Correa’s government. Universities received state resources according to criteria of excellence, and so the best education centers were those that received the largest budgets (Presidencia de la República 2014). One method for measuring the expected excellence was the number of publications in indexed journals by Ecuadorian researchers. It is worth noting that in this period, the annual number of relevant publications in Scopus went from 344 to 1237, according to SENESCYT data. Within the Fellowship Program to Study Abroad (undergradu- ate and graduate studies), a total of 18,645 scholarships were awarded between 2007 and 2015, at an investment of US $402.32 million. This was 42 times greater than the investment made between 1995 and 2006 (SENESCYT 2015). The selection of international universities was based on criteria of institutional excellence that referred to global rankings including Shanghai, Times Higher Education, and the QS World University Ranking (SENESCYT 2013). The Prometeo project was a SENESCYT initiative, the purpose of which was to strengthen the institutional capacities of universities, research centers, and public entities in the country by linking them 312 M. B. ALBORNOZ to researchers with Ph.D. degrees from different parts of the world. As of December 2015, a total of 1014 of researchers from 48 countries had been approved for basic sciences (57%), production and innovation (17%), and social sciences, art, culture, and education (26%). Ten public research institutes, 43 universities, and 48 public bodies benefted from this project. Researchers under this program received salaries within a range of US $4320 to $6000, depending on research experience, degrees achieved, and publications, with a contract lasting between two months and a year (SENESCYT 2015). The Prometeo project website (http://prometeo.educacionsuperior.gob.ec) does not provide updated information. In order to deepen the linear model (government/academia), four new public universities were funded in 2013: the Amazon Regional University (IKIAM), the University of Experimental Technology (YachayTech), the Arts University (UArtes), and the National University of Education (UNAE). This represented a further attempt to organize higher education around a vertical strategy. Each of these universities was supported by a National Secretariat or Ministry: Yachay was promoted by SENESCYT, IKIAM by the Coordinating Ministry of Knowledge and Human Talent, UArtes by the Ministry of Culture, and UNAE by the Ministry of Education (SENESCYT 2013). The Higher Education System played no part in the design and implementation of these four new universities, nor were they sponsored in any way by the private sector. The linear model thus came to act as a barrier against other strategies such as the Double Helix formation. On the same note, the government planned Ecuador’s frst national technology cluster in order to deepen its innovation policy, making Yachay the most ambitious STI project in the country by far. Conceived by the central government as a means of moving beyond the extractivist model of development to a knowledge-based economy, the project aimed to foment production based on high tech, to attract international enterprises to partner with Ecuadorian business, and to develop patents in order to commercialize technological innovations. With a budget of over US$624.5 million for the 2013–2016 period, the Yachay project supplemented an innovation policy focused on the promotion of knowledge gathered from public universities and research centers. The SENESCYT-SENPLADES relationship was strengthened through the Yachay City of Knowledge project. Within the framework of change to the productive matrix, SENPLADES took the experience 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 313 of South Korea as a reference, and in 2009 the Knowledge Sharing Program (KSP) was signed—a cooperation program with a duration of three years (2012–2015). This program contained a fve-point agenda to enable the transformation of productive matrix: (1) development of the petrochemical industry; (2) applied biotechnology to agriculture and food processing; (3) development of human resources; (4) research and development; and (5) resource mobilization (SENPLADES 2012). As of 2013, the South Korean policy recommendation was to reinforce the design of each of these areas, to transform the productive matrix, and to develop a University-Industry-Research (U-I-R) collaboration model for the promotion of research and development. This model was inspired by Silicon Valley as the most advanced type of technological cluster with built-in innovation capability. Yachay was designed on the basis of the South Korea’s Innopolis- IFEZ project, and its master plan became part of the Memorandum of Understanding signed by both governments. The project was frst promoted from SENPLADES, then hosted by SENESCYT; later, it began to operate autonomously following the establishment of Yachay as a public company in March of 2013. Built in the Urcuquí Valley in the north of Ecuador, some 90 minutes from the capital city of Quito and its international airport, the Yachay development plan included 4000 hectares (10,000 acres) of land, a Research University known as Yachay Tech, and the Yachay public company. Following the Innopolis-IFEZ model, subsequent initiatives at Yachay invited experts from other technology parks such as Tecnalia (Spain), Skolkovo (Russia), Sophia Antipolis (France), the Australian National University, and the Hebrew University of Jerusalem (Guchamín and Paladines 2014). This project was frmly in the hands of the state, with a budget of over US $624.5 million for the 2013–2016 period, and Yachay remains by far the most ambitious STI project in the country. Commitment to the linear model of innovation was confrmed in the Yachay project through the approval and construction of the University of Experimental Technology (Yachay Tech). It should be noted that other institutions of the state previously in charge of programs to promote innovation were ousted from their roles within STI policy. This was notably the case for the Coordinating Ministry of Production, Employment, and Competitiveness of Ecuador, which had designed three projects under the Agenda for Productive Transformation 2010–2013, aiming to promote innovation in the 314 M. B. ALBORNOZ country. These were: (1) EmprendEcuador, which supported seed capital of up to US$50,000 to dynamic enterprises, to convert them into medium-sized enterprises able to impact productive transformation; (2) CreEcuador, which made high-impact investments of up to US$600,000 in medium-sized companies belonging to the 14 productive sectors prioritized in the Agenda2; and (3) InnovaEcuador, which fnanced up to US$300,000 for high-impact technology to be used freely in those same 14 productive sectors. Meanwhile, in 2014, SENESCYT inaugurated the Banco de Ideas (Bank of Ideas) initiative, a platform to register innovation projects for access to various services, including the building of innovation networks, the exposure of projects to potential investors, support for the business model, technical support through incubators (until the marketing phase), and seed capital.3 To summarize, the institutionalization of STI public policy ranged from SENPLADES to the Coordinating Ministry of Knowledge and Human Talent, and to SENESCYT, CES, CEAACES, and Yachay. The new model promoted by the government excluded other institutions and actors such as the private sector, the Ministry of Foreign Trade, and the Coordinating Ministry of Production, Employment, and Competitiveness, to name only a few of the most important. In this way, STI policy focused on the higher education system—above all on the Yachay public enterprise project and Yachay Tech. Yachay is an iconic project embedded with socio-technical imaginaries around nationhood and the future of Ecuador as an innovation and development cluster. President Correa defned Yachay as “the frst city in the history of Ecuador that has been designed from scratch […] It is the most important project of this government, and it will become the best university of the country” (El Telégrafo 2012). These imaginaries found a perfect mirror in the innovation path of South Korea, and the Ecuadorian government elected to follow this trajectory by hiring a South Korean Advisory Group to acquire the requisite know-how to become an innovation cluster.

2 Production sectors: (1) Fresh and processed food, (2) Biotechnology, (3) Clothing and footwear, (4) Renewable energy, (5) Pharmaceutical industry, (6) Metalworking, (7) Petrochemical, (8) Wood products, (9) Environmental services, (10) Technology, (11) Vehicles, automotive, bodies and parts, (12) Construction, (13) Transportation and logistics, and (14) Tourism (SENPLADES 2012). 3 http://senescyt.boostlatam.com/index.php?r usuario/bancodeideas. = 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 315

This South Korean Advisory Group aimed to demonstrate their country’s trajectory in becoming an innovation cluster, and to recommend how Ecuador ought to transform its productive matrix, with Yachay as the most visible (but not necessarily the most important) element of transition. The South Korean trajectory had been characterized by an upsurge in economic growth in the mid-1960s, in contrast with the import-substitution-for-industrialization strategy that prevailed in Latin American. The success of South Korea’s industrialization was related to an export-oriented policy to overcome the bottleneck of local markets, with heavy intervention by the South Korean government via the award- ing of benefts to export industries by means of credit, tax reductions, and the protection of international trade through trade barriers in markets for goods (Kim 2008).4 While South Korea in the 1960s sought the expansion of its export-oriented light industries of low technological level, in the 1970s it focused on industrial technologies and skilled labor. Government Research Institutes (GRIs) were strengthened and began to redress the technical diffculties that industries faced. These institutes were operated as independent NGOs fnancially supported by the government, and they were responsible for about half of government R&D. Knowledge cities such as Daedeok were initially planned as universities and research spaces, then later developed into industry/academy research complexes and innovation clusters. Until 1970, South Korea made efforts to ensure human and institutional capacities to develop R&D, but it was not until 1980 that real collaboration began to emerge among various actors of the R&D system. The government assumed the role of establishing legal and institutional frameworks to deliver R&D programs within U-I-R collaboration. Clusters such as Daedeok Innopolis, Gwanggyo Technovalley, Pangyo Technovalley, and Ansan Science Valley were constructed, frst through successful university-industry cooperation, and later through the U-I-R model. Usually, industries have relatively suffcient fnancial and human resources, but not enough creative ideas; universities have theoretical scientifc knowledge but lack feld knowledge; and government-fnanced

4 It is worth noting that the international legal framework applied to South Korea in the 1960s to 1980s was different than that applied to Ecuador in the 2000s. World Trade Organization (WTO) rules limit the country’s freedom to impose barriers to trade, or to subsidize exports. 316 M. B. ALBORNOZ research institutes are not aligned to the needs of industries. U-I-R collaboration and R&D can overcome these barriers. In this way, the university model for R&I was transformed into a Silicon Valley-type project, where all institutions are globally competitive and seek independent innovation, thereby creating new technology and industry (Kook Ahn 2014). In the terms employed by Fujimura (1992), Yachay used the Innopolis-IFEZ model as a ‘standardized package’, working hand-in-hand with innovation experts who advise their local counter- parts, and requiring the reorganization of local structures to be implemented. Best-practice transfers operate in the form of standard packages that allow for the consolidation of collective work among actors from different social worlds, as well as their stabilizing factors (Star and Griesemer 1989). Standardized packages are interfaces between multiple social worlds that facilitate the fow of resources—concepts, skills, materials, techniques, tools—and the construction of knowledge (Fujimura 1992). They also encapsulate a concrete theoretical proposal and a set of shared technologies when adopted by members of different social worlds in the construction of a new world. Throughout policy networks, they are more likely to be transferred once they have succeeded in creating intersecting points between actors from diverse worlds. While innovation models can be explained in these terms, more importantly, they can also help to elucidate the reasons why such models are successful (or fail) when implemented in other countries. STI imaginaries bring forth ways to reinvent certain regions of the world into clusters for future innovation, as is the case with Yachay. This quasi-automatic reimagination of innovation was carried out by local policy networks whose actors shared certain programmatic ideas with other global actors. Because best-practice models can produce innovation transfer through government alliances and signifcant allocation of state funds, the Yachay City of Knowledge used the Innopolis-IFEZ model, because “best-practice models of innovation derive their authority, and their ability to circulate, from the efforts of translocal communities of practice to instrumentalize perceived success stories and to apply them to other contexts” (Pfotenhauer and Jasanoff 2017). Yachay opened a controversy in Ecuador about the role of the state leading the science and technology agenda and technological catch-up in the building of nationhood. This technology project demonstrates “the institutionalized practices by which members of a given society 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 317 test and deploy knowledge claims used as a basis for making collective choices” (Jasanoff 2005) on the trajectories of public STI policies, political culture, and the innovation programs they pursue. Science and technology continue to play a legitimatizing role in new democracies (Jasanoff 2015a).

6 conclusions When imaginaries of innovation are embedded into best-practice models, new representations of innovation are produced and settled through a common language between distinct worlds (political, economic, community, business, academic). Thus, knowledge stabilization has to do with the rhetorical, geographical, and architectural construction of a ‘truth- spot’ based on the presumption of equivalence (Gieryn 2002). This ‘truth-spot’ becomes a kind of record of authenticity that must be rep- licated, because it is seen as vital to the construction of scientifc knowledge and the development of innovation. That is how Silicon Valley and Innopolis-IFEZ operated in the design of the Yachay project. Policy-makers assume that innovation can occur anywhere based on the presumption of equivalence. Once the model is applied, it entails an organization of space and institutions to replicate the innovation process (in this case, from South Korea to Ecuador). This presumption erases differences of local cultures and the social behaviors of scientists and innovators, since it is assumed that it is possible to standardize objects and social norms. This is because the model can perform equivalently in both countries, so long as it is based on a ‘truth-spot’. It also creates a “normative landscape in which certain practices or behaviors are presumed to prevail” (Gieryn 2002). For example, laboratories have the ability to purify nature and culture due to their space design, the standardized production of knowledge, the production of felds of practice, and routine discipline (Pickering 1995). Since Ecuador lacked an STI policy trajectory to set the direction of innovation, experts were called upon to mark the road map and to consolidate a relationship with another government willing to offer an innovation model to be implemented. The South Korean government worked with its consultant team on the construction of a ‘truth-spot’ for their innovation model, via two different strategies: giving direct advice to SENPLADES and Yachay, and inviting Ecuadorian offcials to attend their Science and Technology Parks Training Program. 318 M. B. ALBORNOZ

Innopolis-IFEZ performed as a ‘truth-spot’ in establishing its credibility through the on-site display of effectiveness to Ecuadorian decision-makers invited to visit this South Korean City of Knowledge. “Knowledge is made credible and disseminated as it is shown to visitors – see: it works!” (Gieryn 2002). Demonstration of the model is one of the most important elements in the construction of a ‘truth-spot’ and the presumption of equivalence. This explains why South Korean advisors were hired to design Yachay’s Master Plan, to accomplish a best-practice transfer with “standardized contexts” of knowledge production (Shaping 1988). This imaginary promotes the idea that an innovation space will generate innovation processes; that is, a normative landscape will produce specifc practices and behaviors, no matter where it is located (Cresswell 1996). Since private sector actors were more focused on competitiveness and production, the Ecuadorian government intended to develop, on its own, an innovation agenda aligned with technological innovation processes (Vizioli 2015). The state assumed the planning of the innovation system instead of complementing the actions of the private sector through an innovation policy that supported the kinds of learning and adaptation that frms need in order to compete in a global context (Borrás 2009). Ecuadorian frms and their innovation processes were not taken into account, nor were government institutions (such as the Coordinating Ministry of Production, Employment, and Competitiveness, the Ministry of Foreign Trade, or the Sectorial Council of Production) placed in charge of the productive sector. Innovation policy was fostered by SENPLADES and SENESCYT, shunting aside those government institutions involved in the Agenda for Productive Transformation. This policy gap became evident when it was found that the policy could not be implemented without the active participation of the private sector. Attempts were thus made to include new entrepreneurial actors through the Bank of Ideas project and Technology Fairs. In this context, an opposition to the Yachay City of Knowledge was forged based on the large investment of public funds, the lack of dialogue to recognize the needs of Ecuadorian frms, and the emphasis on R&D activities in public universities and public research centers (and not on the R&D processes of the private sector). The U-I-R collaboration recommended by South Korean advisors became diffcult to achieve in the context of a top-down policy planned by the state and based in the building of infrastructures and institutions, with a predominant role played by academies and the public sector. 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 319

In attempting to replicate the South Korean “big push”, the fact was ignored that in Ecuador there are no Chaebols (large family business conglomerates), which in South Korea are funded by private and public capital and protected by the government (in order that they be developed in a quasi-monolithic way, as with Dewoo, Samsung, or Hyundai). Ecuador’s government also lacked a strategy for promoting exports, for attracting foreign or national investment, or for creating partnerships crucial to research, market opening, and production linkages. Yachay still represents a technological catch-up project that, according to the government, will produce a knowledge society with high-tech projects. Nevertheless, it remains unclear how industries will be created in felds such as biotechnology, nanotechnology, or the petrochemical industry in order to transform the productive matrix. Yachay has been heavily criticized during the last few years, not only because of its lack of long-term economic sustainability, but given its loss of government support in the face of a possible change in political forces in the near future.5 In addition, many of the project’s most salient features are being questioned, such as: (i) Why was a rural model chosen over an urban model, when most City of Knowledge projects have taken advantage of existing urban planning?; (ii) Why start a technology cluster from scratch, when most clusters evolve from a preexisting entrepreneurship and business paths, often with the support of the state but not as a result of government resolution?; and (iii) Why is it claimed that foreign investment will be promoted when Ecuador is not pursuing tax cuts or reducing barriers to trade or other regulations in order to boost competitiveness? Yachay’s development agenda has been controlled completely by the government. Public servants decided what academic programs would be opened at Yachay Tech, what felds of research would be prioritized, and how business would be promoted in the free-trade zone. The risk of such a top-down strategy with no participation by private frms was that the research carried out at Yachay could not respond to the specifc needs of the productive sector. Therefore, the project encountered great diffculties in promoting business networks, producing specialized labor, or creating the necessary infrastructure to support productive linkages.

5 The government of Lenín Moreno already has announced intentions to close the Yachay Public Company by 2021. 320 M. B. ALBORNOZ

In other words, Yachay’s critics have maintained that it was not a good idea to build an entire city and then wait for enterprises to invest, thereby incurring the high risk of never obtaining the capital necessary to make the project viable over the long run. Ecuador’s recent STI policy has refected both Correa’s fascination with technology and his authoritarian style of leadership. During his ten- year presidency, he promoted Millennial Schools, invited Ecuadorians to participate in the Constituent Assembly of 2007 via YouTube video (referring to them as “dear cyber friends”) (Correa 2007b), promoted the use of blogs by the constituent assemblers, fnanced troll centers, and relied heavily on social media. Correa became the designer, spokesperson, and implementer for the new STI government regime. He personally advertised his STI projects all over the world and per- meated the policy with his own views of what technological change should be. The technological and scientifc revolution announced by President Correa was strongly based on the idea that innovation could be repli- cated in a new corner of the world with the right recipe and recommendations. For Ecuadorian decision-makers, technology transfer worked under the presumption of equivalence, where experts function as capable predictors and governors of positive futures. A linear model was at the core of the socio-technical imaginary of Yachay: in a predictable and orderly way, emergence was expected to unfold from science to technology, from present to future, and from a City of Knowledge to the nation. By virtue of own existence, a City of Knowledge can enable people to behave as innovators. Yachay represented a new vision of technological determinism where innovation models work as standardized packages. This vision evokes an autonomous technological order with science and technology at the center of economic and social change, representing a deterministic version of technology. Under a quasi-automatic strategy, the City fosters linkages between universities, public and private research institutes, technology transfer centers, high-tech companies, and agriculture. In Winner’s terms (2017), this reformulated vision of determinism is a “cult of innovation” that steadily expands and acquires a mass of true believers. 13 FAR FROM BECOMING THE JAGUAR OF LATIN AMERICA … 321

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Rafael Correa’s Foreign Policy Paradox: Discursive Sovereignty, Practical Dependency

Grace Jaramillo

1 introduction The assertion of autonomy and sovereignty in foreign policy decisions within the context of economic dependency is hardly novel in the modern history of Ecuador. According to Hey (2003)—the most rigorous scholar of Ecuadorian foreign policy—the country has always opted for active participation in international and hemispheric affairs, often assert- ing its autonomy despite an economic dependency on the fnancial and export markets of the global center, especially the United States. Within this arena the Executive and Legislative branches employ foreign policy as a Trojan Horse for their own party interests (and in many cases, class interests). The return of democracy in 1979 different dilemmas to Ecuador’s foreign policy. Even though a game of split interests has been played throughout the nation’s history, it had not generally been played

G. Jaramillo (*) University of British Columbia, Vancouver, BC, Canada e-mail: [email protected]

© The Author(s) 2020 325 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_14 326 G. JARAMILLO along ideological divides: for instance, in the 1980s, right-wing President Febres Cordero opened relations with Cuba, while socially progressive President Osvaldo Hurtado condemned the Sandinista Revolution in Nicaragua and accepted a new investment law to favor transnational companies, against his professed political preferences. The dilemmas around Ecuador’s foreign policy continued throughout that decade: realism versus counter-dependence, consensus versus Executive fait accom- pli. These dilemmas ultimately delivered a contradictory foreign policy, sometimes profoundly dependent on U.S. hegemony and surprisingly emancipated at others (Hey 1992). One clear example of the oscillations at the historical backbone of Ecuador’s foreign policy was its unresolved border with Peru. Many foreign policy decisions around this issue served either to advance postures and negotiating stances against this southern neighbor (Pineo 2007) or else to address recurrent economic crises. Alongside its economic dependency on exports, the confict with Peru was a source of long-standing vulnerability for Ecuador (Bonilla 2002). Once a peace settlement with Peru was secured, Ecuador’s foreign policy was ripe for reinvention (Hey and Klak 1999), but the years of economic and political instability that ensued (with three presidents ousted in less than ten years) shattered the country’s ability to advance any agenda internationally. Rafael Correa seized this opportunity to reshape and rebrand Ecuador’s foreign policy. Under the discourse of “Para volver a tener Patria” (To reclaim the Fatherland), Correa overhauled Ecuador’s foreign policy priorities, traditional allies, and foreign-service practices to serve a counter-hegemonic agenda marked by his personal and ideological imprint. In the terminology of Hey’s ‘levels of analysis’ assessment (1997), at the individual level, the defnition of foreign policy priorities by the aggregation of domestic preferences was replaced in Ecuador by a highly personalized delimitation authored by Correa and his personal entourage. At the state level, and for the frst time in the new democratic era, the Executive did not have to juggle ideological priorities in the face of a defant Legislature or lobbying interest groups. Correa enjoyed a supermajority in Congress, meaning that the institutional bureaucracy that managed Ecuadorian diplomacy could be changed at will, along party lines or (at the very least) in tune with the new ideological project at hand. At the systemic level, the context could not have been better for Correa’s radical foreign policy change: the commodities boom in 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 327 the 2000s reversed the terms of global trade for both Ecuador and the rest of the region. In addition, protracted U.S. wars in the Middle East turned that nation’s attention away from Latin America. Furthermore, following the collapse of the Free-trade area for the Americas in 2003, the region found itself with a clean slate on which to write international policy on its own terms. How transformative was Rafael Correa’s foreign policy? How did his presidency shift traditional Ecuadorian priorities at the bilateral, multilateral, and regional levels? This chapter contends that Correa’s foreign policy was indeed transformational, but in paradoxical ways. While cham- pioning sovereignty and autonomy, it also entrusted Ecuador’s external insertion to new allies that imposed new priorities and new dependen- cies. Counter-hegemonic discourse was not accompanied by actual practices and achievements, and centralized policy decisions from the offce of the Presidency replaced the prior aggregation of interests. In short, promises largely outperformed actual accomplishments during the decade of Correa’s administration. In the following section, I review how different theories of Foreign Policy Analysis (FPA) might explain the changes under the Revolución Ciudadana (Citizens’ Revolution) in Ecuador. In the subsequent sections, I use institutionalist perspectives to provide an overall assessment of Rafael Correa’s foreign policy, and to explain specifc changes in the bilateral, multilateral, and regional arenas, along with two of the most controversial foreign policy decisions of his presidency. The chapter concludes with some refections on expected versus actual outcomes in foreign policy under the Revolución Ciudadana.

2 An Institutionalist View of Foreign Policy Change There are many ways of analyzing disruptive foreign policy. The frst alternative is to use the traditional dyad of ‘autonomy versus dependence’, that has informed recent decades of FPA of Latin America, including from the school of Dependent Realism which emerged from an ascending epistemic community called RIAL Group Relaciones Internacionales para América Latina (International Relations for Latin America) (Bonilla 2002; Muñoz and Tulchin 1984; Jaguaribe 1982). Analyses by Hey (1992, 1997, 2003). Zepeda’s (2011) work on 328 G. JARAMILLO

Correa’s foreign policy during his frst term test Constructivism as a theoretical framework to understand his approach. However, neo-Gramscian critical theory can also provide a suitable framework of analysis for a self-proclaimed progressive revolution. The Citizens’ Revolution framed their international approach within a counter-hegemonic narrative that included members of the government talking about themselves as engaged in a war of movement, and not a war of position,1 to paraphrase Cox (1983) and his view of International Relations. As Cox puts it, the Revolución Ciudadana also believed in “building a counter-hegemony within an established hegemony while resisting the pressures and temptations to relapse into pursuit of incre- mental gains…within the framework of bourgeois hegemony” (Cox 1983). Paradoxically, the Revolución Ciudadana’s essay in counter- hegemony would not fare well under Cox’s neo-Gramscian method of analysis; and yet Correa fts perfectly into Cox’s description of passive revolution and Caesarism—a situation in which “a strong man inter- venes to resolve the stalemate between equal and oppose social forces” (p. 166). Even when the strongmen in this model are progressive, the disconnection from actual social forces is clear and leads inevitably to transformismo, or the co-optation of leadership of the poor in order to prevent the organization of social forces. A neo-Gramscian approach will inevitably lead to the dead-end of explaining Caesarism in a regime that promises exactly the opposite, leaving other narratives of foreign policy aside. To assess long-term policy change in this context, it is probably sim- plest to take seriously the central campaign promise of Rafael Correa to “defend sovereignty and reclaim the Fatherland” and contrast it against actual policy actions. An institutional approach would therefore be best ftted to understand the extent to which the Correa’s foreign policy views and norms became institutionalized, routinized, and structured into the different organizations in charge of international interaction in the name of the state. Since the goal here is to explain not only the actions but also the legacy of Correa’s international insertion in the world, an institutional approach provides the best tool for understanding the dynamics of

1 Línea Sur, a magazine launched in June 2011 by then-Foreign Affairs Minister Ricardo Patiño, praised in its frst issue the “counter-hegemonic character” of the administration. The editorial (pages 8, 9, and 10) is full of Gramscian evocations about consensus, common sense, hegemony, subordinate classes, and alternative positions. 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 329 change, including ways of reasoning, norms, policy decisions, practices, and actions within their context (March and Olsen 1998). An additional beneft of assessing Correa’s foreign policy on its own terms is to focus on processes and outcomes, rather than on ideologies or motivations. Moreover, this approach interconnects agents of change and structures, and considers the feedback loops between the two. Two sets of logic inform the bases of action in this approach: the logic of appropriateness, and the logic of consequence (March and Olsen 1998). Krasner (1999) applied these to the study of sovereignty and observed how the logic of appropriateness understands actions as a set of norms, identities, and aspirations, and how the logic of consequences prioritizes outcomes, usually decided upon contingent calculations of short-term gains or risks. States could conceivably achieve a diffcult balance between the two, if the logic of appropriateness defnes clear rules and roles for the actors involved, and if the expected benefts are com- patible with these. While such a balance is possible in domestic environ- ments, it is practically impossible in international relations, where the logic of consequence dominates the logic of appropriateness. The main thesis of this chapter is that this is precisely what happened to Rafael Correa’s foreign policy during his ten years in power. The more radical his logic of appropriateness (absolute self-determination, rejection of traditional hegemonic power by the United States, peace and prosperity in world affairs, and democratization of all international institutions, including radical reform of the international fnancial architecture), the more his actions responded to a logic of consequences completely at odds with what he promised (sovereignty and autonomous prosperity). The present inquiry uses process-tracing techniques, including sequencing of the main foreign policy events and decisions, archival research, and in-depth interviews with key decision-makers.

3 the Political Economy of Counter-Hegemony The quest for an autonomous, anti-hegemonic foreign policy was how the Revolución Ciudadana summarized its foreign policy. The logic of appropriateness defned and promoted by Correa’s Alianza PAIS party was a Westphalian concept of sovereignty, where absolute authority is granted over the territory and every decision that concerns it, while global power interests (and especially the United States) are held at bay (SENPLADES 2007). Without citing prior international interventions 330 G. JARAMILLO specifcally, the diagnostic presented in the Plan Nacional de Desarrollo 2007–2010 (National Development Plan 2007–2010) represented an almost complete erosion of self-determination on all fronts—a capitu- lation by the elites of national sovereignty and dignity, especially vis-à- vis the United States and Colombia (p. 174) but also with multilateral banks and corporations (p. 167). It is not surprising, then, that the call to arms in Rafael Correa’s inaugural address of ≪ was for “reclaiming the Fatherland”—a goal that remained present in all subsequent foreign policy discourses and interventions (Zepeda 2010). According to all documents (offcial and unoffcial) regarding foreign policy during the Revolución Ciudadana, the central goal was the defense of this notion of absolute sovereignty. The idealization of the capacity of Ecuador’s foreign policy to reform even the United Nations’ Security Council, and to realign regions and power-brokers such as Russia, Brazil, and the European Union to conform to its own worldview, was present from the beginning. The ultimate broker of this man- datory ideal of absolute sovereignty was the 2008 Constitution, where all these ideas were elevated to the law of the land. Consensus is a necessary condition to building policy around the logic of appropriateness, and thus it was part of the program of every Foreign Affairs Minister to “contest traditional consensus and build a new one in the public space” (Patiño 2011), especially as regarded founding members of the movement like Fander Falconí and Ricardo Patiño. But the idea of absolute sovereignty did not fare well by the end of Correa’s decade in power. The decision-making process was dominated the logic of consequence, understood as the action driven by rough estimates of costs and benefts, by short-term assessment of gains, and by an individual rather than a collective sense of utility maximization (Krasner 1999). Unsurprisingly, the logic of appropriation clashed with the actual executions of foreign policy, as the below sections explain. To better understand the decade, it is useful to divide it into three distinct periods, from Correa’s inauguration in 2007 to the end of his presidency in 2017. As shown in Fig. 1, these periods marked contrast- ing differences in tone, strategy, and policy executions, as well as in outcomes. The frst turning point took place on March 1st, 2008, when Colombian forces attacked a guerrilla camp of the Fuerzas Armadas Revolucionarias de Colombia (Colombian Revolutionary Armed Forces, FARC) in Angostura, in Ecuadorian territory. Neither the government of Colombia nor its armed forces had notifed or asked permission 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 331

Fig. 1 Correa’s foreign policy timeline, 2007–2017 (Source Author’s own data) of the government of Ecuador; much less did they ask assistance in coordinating the attack. This became the most fagrant violation of territorial sovereignty in Ecuador’s history after the Peruvian incursions in the Amazon that sparked the Cenepa War of 1995. The attack in Angostura changed everything for President Correa. After an 18-month crisis with Colombia, the police rebellion of September 30, 2010, provoked a second drastic change in all domestic and international priorities. The government redoubled its pressure against Ecuadorian activists, NGOs, and journalists, and this translated into international confrontation with the Inter-American Commission on Human Rights (IACDH), the United States, and any other Western democracy echoing their displeasure (Fundamedios 2016). The counter-hegemonic postulates of this third period materialized into a close alliance with authoritarian and semi-authoritarian regimes that were pursuing the same strategies vis-à-vis the international community. Toward the end of the decade, international public relations efforts to boost the name recognition not only of President Correa but of members of his entourage over- shadowed all international insertion strategies then underway. Agents of foreign policy intensifed their lobbying and marketing campaigns while reducing efforts toward diplomacy and negotiation. Changes made in key foreign policy issues are detailed in the sections that follow.

4 bilateral Relations

4.1 Colombia: The Beginning of Counter-Hegemony Ecuador’s foreign policy had been dominated by the border confict with Peru for at least four decades. However, following the Peace Treaty of Itamaraty, signed in 1998, neither the Ministry of Foreign Relations nor the military realigned their agendas in time to confront the spillovers 332 G. JARAMILLO from the Colombian armed confict. Thus, when the Andres Pastrana peace process failed in 2000, to be was replaced by a securitized Plan Colombia, Ecuador was not ready to respond. The Plan Colombia included a program of systematic destruction of coca plants through massive aerial spraying with glyphosate, the damages of which inevitably pushed guerrilla groups and civilian victims alike into Ecuadorian territory. By 2007, public opinion was massively against the Plan Colombia. For the Ecuadorian Armed Forces, nonintervention and contention were the only ways to prevent retaliation and further infl- tration into the country with bombs, assaults, and kidnappings (Bonilla 2002), thus dispelling the image of the country as an “island of peace” previously held Ecuadorians. When Correa took power, he continued the policy of contention, unaware of the actions by one of his cabinet members in support of Colombia’s internal warfare. President Alvaro Uribe of Colombia moved his counteroffensive south, cutting all offcial communications regarding his operatives and even entering Ecuadorian territory to attack FARC. After the Angostura attack, the Revolución Ciudadana successfully constructed an image of Colombia as the Trojan Horse of U.S. imperialism. The attack became a self-fulflling prophecy of unlawful intervention in the affairs of another state. Ecuador paid a hefty price. Colombia curtailed the intelligence information shared with its neighbor and, in the absence of shared intelligence and police coordination, criminal bands crossed the border at will, increasing the levels of violence inside Ecuadorian territory. Facts overwhelmed the Correa’s administration capacity to replace in a timely and effcient way the cooperation lost with the United States and Colombia, thereby further harming the sovereignty that Correa sought to defend. For the rest of Uribe’s presidency, the confict persisted—and became personal. President Correa decided to resume diplomatic relations with Colombia in full only when a UN mechanism for rapprochement convinced both parties to accept their mistakes and work together to solve their common problems at the border. By that time, President Juan Manuel Santos had replaced Uribe.

4.2 The United States as an All-Too-Convenient Foe By and large, Ecuador’s relationship with the United States represented the central confict of Correa’s foreign policy. For all the ink deployed against the hegemon by Correa’s campaign team and the authors of 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 333 his Plan Nacional de Desarrollo, Correa did not harbor any personal animosity against the United States—at least not in 2007. His personal experiences living and obtaining his doctoral degree in the United States (Correa 2009) certainly played some role in this confict. Indeed, Correa managed to avoid rather well any possible confict related to the cancela- tion of the contract for U.S. use of the Manta Air Base in its counter- narcotics programs. The Angostura attack, however, changed the relationship dramatically. From that time on, President Correa made a point of advancing partnerships with notorious adversaries to the United States, and he pushed a counter-hegemonic strategy not only in discourse but in practice. After a long absence of foreign policy issues in his weekly addresses, on November 29, 2008, he clearly laid out his vision:

“Ecuador’s foreign policy, the one that the media insists does not exist… what really happens is that they would like to submit to the U.S., these people who talk in Spanish but clearly think in English. I don’t have anything in particular against the U.S. – in fact, I love the U.S. – I even lived there, studied there… But our foreign policy must look to other places, countries like Russia, which is reassuming its position as superpower; it has an enormous market and the political will to get close to Latin America. Well, some are furious because we did not insist on the usual suspects: the U.S., Europe, Japan… 200 hundred years of doing just that, and what have we gained? It was about time to look away. Even if we are wrong, we don’t have much to lose; we have not obtained anything looking up to them.2

Correa’s administration pushed his appropriateness agenda to the top, and he moved straightforwardly to reassert his defense of sovereignty, at least in the public eye. His frst move was to publicly blame the United States for its supposed direct participation in the Colombian attack. Second was the eviction of two security attachés from the U.S. Embassy in Quito in February of 2009. The third and most dramatic event was the decision to expel ambassador Heather Hodges from Ecuador in April of 2011.

2 Correa in “Enlace Ciudadano 139”, broadcast on November 29, 2008. The defen- sive remarks were a response to media criticism after his frst state visit to Iran, his political endorsement of Mahamoud Ahmadinejad, and the offcial visit of Russian Foreign Minister Serguei Lavrov to sign a controversial military agreement. 334 G. JARAMILLO

On their face, these events were the utmost demonstration that President Correa was ready to go to any length in defense of sovereignty and self-determination and, thus, to uphold his logic of appropriateness. In reality, President Correa worked hard behind closed doors to clear his image and to appease the administration in Washington, and this included sending secret missions to improve the failing relationship.3 If this reaction by Ecuador resembled a common exercise of political realism in international relations, that’s because it was: the logic of expected consequences dominated these actions. Correa was willing to work side-by-side with the United States in the fght against drug traffcking if by doing so he could humiliate Colombia in every multilateral organization on the continent and maintain his image of progressive leadership. Notwithstanding, the relationship with the United States deteriorated quickly amidst distrust, especially from the government side. In February of 2009, the government demanded the expulsion of two United States diplomats, accusing them of undue interference in the affairs of the Ecuadorian state. However, President Correa was not ready yet to let the relationship break down completely. On April 1, 2009, he sent a secret mission to Washington to “clarify the incident and fnd closer paths to cooperation”, as expressed by then-Minister of the Interior Gustavo Jalkh, head of the delegation (Wikileaks: Cable Misión Quito 000246, 2009). The mission’s only goal was to explain to Thomas Shannon, the U.S. Under Secretary for Hemispheric Affairs, the “real reasons behind the decisions”, implying that the proximity of presidential elections had been closely correlated with the diplomatic expulsions. The delegation’s closing remarks included the offer of a closer relationship, not only in security and counter-narcotics issues but in a broader agenda of mutual interest, conducted through direct access to Washington. This unorthodox visit, outside regular diplomatic channels, did not ft with the aspira- tional ideal of dignifed sovereign decisions against an abusive hegemon.4

3 As Wikileaks Cable 219977 of August 7, 2009 reveals, the Ecuadorian Embassy in Washington had instructions to approach U.S. Senator Dodd and Representative Engel, in addition to Thomas Shannon, to engage their support for a public condemnation against Colombia at the OAS, and to leverage that support to obtain economic reparations and guarantees from Colombia. 4 Although analysts knew about the “high-level mission”, it was not made public until leaks emerged from the U.S. State Department. The offcial El Telégrafo newspaper did not report it, and more tellingly, the mission is never mentioned in the memoirs published by 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 335

The relationship recovered, and Secretary of State Hillary Clinton paid a visit to Ecuador on June 8, 2009. Clinton had strategic reasons for this visit, since the stability of the U.S. alliance with Colombia was then on the line. But the gesture did not prevent Ambassador Heather Hodges’ expulsion from Ecuador in April of 2011, immediately after a Wikileaks cable was published in the Ecuadorian press. The cable revealed Ambassador Hodges conviction that the soon to be Commander in Chief of the Police has links with drug traffckers. After a year of such leaks, the only country other than Ecuador to expel a U.S. diplomat was Mexico, although the Mexican government downplayed the incident as strictly procedural. Ecuador’s government did the opposite. Again, the logic of consequence overruled all attempts to maintain a dignifying image vis-à-vis the U.S. Even Ricardo Patiño—Correa’s foreign minister most patently against U.S. hegemony—gave reassurances that the relationship with the United States was as stronger as ever. The money invested in lobbying Washington provides more evidence of the extent of this public-hate/private-love approach to relations with the United States. From 2008, the government of Ecuador had advanced some US $10.4 million toward this end (Department of Justice, 2018).5 It is worth noting that such lobbying tended to spike during crises such as the 2009 expulsion of two diplomats. Between 2008 and 2009, the Correa administration spent a total of $1,532,780 on lobbying in the United States, of which only $46,775 were directed to preferences related to ATPDEA.6 The rest was registered as serving

then-Foreign Minister Fander Falconi (2010). In his chapter on the relationship with the United States, he claims that there were two reasons for non-retaliation. “First, Ecuador was right; second, the government had the correct strategy and Ecuadorian diplomacy worked hard to block any attempt at retaliation” (p. 85). However, the decision to not retaliate was taken within four days during which there were no signifcant contacts with Ecuadorian diplomats. 5 Foreign Agents Registration Act (FACA) database, contract information under Sec. 22 U.S.C. § 611 et seq. (https://www.justice.gov/nsd-fara). The contract with MCSquared Inc. is here taken into account. Additional information about types of lobbying, contractors, and names of client agents have been traced by the Sunlight Foundation Project, the Foreign Lobbying Tracker. 6 ATPDEA began in 1990 as the Andean Trade Preferences Act, or ATPA. This was not an initiative by the hegemon, but the result of a coordinated effort and tough negotiations by all foreign ministers of the Andean Community to make the United States open its trade in exchange for Andean cooperation on the war on drugs. 336 G. JARAMILLO to “promote bilateral relations and the image of the government of Ecuador in the U.S.”. The amount invested following Ambassador Hodges’ expulsion spiked considerably, confrming the central thesis of this inquiry. For what it is worth, the costs of lobbying the U.S. government pale in comparison to the dramatic reduction in the rate of exports to the United States, and in investments received over the decade. Against the predictions of the Plan Nacional de Desarrollo, non-oil export dependency to U.S. markets remained unchanged—no markets replaced the weight of U.S. purchasing power, despite the best efforts of “intelligent insertion design”7 to attract investments from and to promote exports in ideologically kindred countries like Russia, Iran, Turkey, or China. Incidentally, Ecuador lost in this process two of the most important achievements of Ecuadorian foreign policy in the democratic era: bilateral cooperation for development8 and the ATPDEA trade preferences.

4.3 Balancing Hegemonic Power with China Instead of expanding alliances and market insertion, Correa decided to shift the pendulum of dependency and embraced China as the infuenc- er-in-waiting for Ecuador. As in other foreign policy issues, it was the crisis with Colombia and the Angostura attack that put the counter- hegemony strategy into full swing. Paraphrasing Arlene Tickner (2007) when talking about Colombia, Correa’s rapprochement with China was a case of ‘hegemony by invitation’. China became the hegemon of choice for the president, effectively shoving the United States out of diplomatic, economic, and even military cooperation. More importantly, China became a dependable source of funding for the Revolución Ciudadana. By the end of the decade, Ecuador received 30% of total Chinese lending to Latin America (Ellis 2015), following the same path as Venezuela.

7 Intelligent Insertion was the name of the strategy to diversify export and investment partners within the global political economy. The initiative was presented by Hector Rodríguez, then-advisor to SENPLADES and later CEO of Yachay Tech. 8 The United States Agency for International Development (USAID) left Ecuador at the end of fscal year 2013. Correa’s administration had protracted the renewal of its contract of operations for two years, until the situation became untenable and the government asked USAID to leave after more 60 years of cooperation, since the Point 4 initiative under President Truman (U.S. Department of Diplomatic Cables archive, 2016). 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 337

Table 1 Loans contracted with Chinese fnancial institutions, 2007–2017

Total external debt with China at December 2006: 10,214,866 USD

Total external debt contracted during Correa’s decade: 15,307,929 USD

Years Amount Percentage increase per year (%)

2010 2,682,745 USD 59.7 2011 2,571,363 USD 74.5 2012 2,000,000 USD 59.1 2013 690,900 USD 37.32 2014 821,197 USD 8.4 2015 85,710 USD 2.2 2016 3,438,183 USD 33 2017 350,000 USD 7.5 Total from China 12,640,098 USD 82.5 Total external debt at December 2017:25,522,795 USD

Sources Ministerio de Finanzas, Boletines Deuda Externa (2018) Author’s own calculation Note From 2007 through 2009, no loans were contracted with the People’s Republic of China’s fnancial institutions. This table compiles the amounts of loans contracted from the Export-Import Bank of China, the China Development Bank (CDB), the Industrial and Commerce Bank of China (ICBC), and the Bank of China Limited

By the end of Correa’s decade in power, the bilateral portfolio was a complex mix of loans, most with stringent conditions attached, especially in public procurement by Chinese companies serving all stages of project development and fnancing, including engineering services, apprais- als, design, and even fnancial insurance which increased the credit costs for Ecuador as a whole (Contraloría General del Estado 2018). China, through different public fnancial institutions, became the lender of choice, as shown in Table 1. The central aspect of this relationship revolved around credit fows, usually at higher interest rates than those offered by traditional international fnancial institutions (IFIs)—at around 7% annually in some cases, with additional charges and commissions, and others involving added Libor rates. Some credits were tied to collateral of crude oil exports, with interest attached at discounted prices (El Universo 2017). More seriously, investigative reports denounced Correa’s administration as having committed 1129 million barrels of oil (to 2024) in exchange for $18 billion in credit lines with Chinese banks (Villavicencio 2017). 338 G. JARAMILLO

The complex web of relationships included open lines of credit for fnancing targeted infrastructure projects, always with ‘buy Chinese’ conditionality. By 2014, there was not a single major infrastructure project in Ecuador where Chinese companies were not involved, including municipal projects of interest in major cities such as Quito, Guayaquil, and Cuenca. Ecuador became the second-largest strategic partner to China in Latin America after Venezuela, and its second-largest debtor as well. Notwithstanding, China did not become a major market for Ecuadorian exports (other than oil), nor had there been signifcant foreign direct investments made. The asymmetry in this relationship was already obvious during one of the offcial visits of Rafael Correa to Beijing in January of 2015. Alongside the President a team from the Ministry of Finance traveled in the same airplane with the secret mission of speeding up the disbursement of a credit requested long ago, over which Ecuador was already paying in commissioning fees and interests. However, the team was greeted with cold responses that China’s processing times would have to be respected, along with a warning that China’s State Council had yet to decide whether or not to proceed with the credit (Contraloría General del Estado 2018). The peak of Ecuador’s relationship with China was the offcial visit by Xi Jinping in November 18, 2016, on his way to the APEC Summit in Lima—the frst-ever by a leader of the PRC. President Correa asserted that the visit “sealed an already comprehensive relationship with more than 200 bilateral instruments that have helped to transform Ecuador” (El Universo 2016). However, the asymmetry in the relationship only became more evident, and even the Chinese-Ecuadorian Chamber of Commerce was quick to point out that the visit should have been used to lower long-standing trade barriers to Ecuadorian products, including bananas and shrimp, as exports of mangoes had taken ten years to get the green light to enter Chinese markets (El Universo 2016). Correa’s words against hegemony at his frst inauguration had come full circle in terms of China’s new role in the international insertion of Ecuador:

There is no longer need for aircraft carriers or air-bombers – credits are enough: they induce us to get into debt and to then pay them, so they can set the conditions. And they want us to act in favor of their interests, and not in favor of our own national interests. This has to end. (Correa 2007) 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 339

If anything, the severing of ties to United States infuence did achieve the goals of the frst National Development Plan in breaking with traditional political and economic dependence, albeit in unexpected ways, since the dependence had been moved elsewhere under identical prem- ises (SENPLADES 2007). The strong relationship with China consolidated Ecuador’s role as a primary producer of commodity exports, and the conditionality in infrastructure projects with Chinese companies closed the sector to signifcant use of procurement incentives to boost national industries, especially metalworking factories and products.

5 multilateralism The democratization of international organizations was among the frst foreign policy aims when the Revolución Ciudadana took power in 2007. Signifcantly, the Foreign Policy Agenda approved in 2011 (but never offcially released) stated that Ecuador’s priority was to “reinvent the organization of the UN, since it is now impossible to make any changes, because all must be approved by a Security Council of just fve members” (Ministerio de Relaciones Exteriores Comercio e Integración 2011). This text proposed the creation of a new organization without a Security Council that would become a “true parliament of the world” (p. 35). The means to achieving such a diffcult task were less clear. The original diagnosis of the crippling dominance of hegemonic powers (and especially the United States) within the United Nations system, the Breton Woods organizations, and other IFIs did not prevent Correa’s administration from engaging with all these entities, albeit with caveats attached. However, the UN became the central locus for pursuing a more aggressive counter-hegemonic agenda over the years, including by negotiating positions within the organization (like the Presidency of the Group of 77, also known as the Non-Aligned Movement, assumed by Guillaume Long in 2016), by working with the different agencies (especially the Economic Commission for Latin America and the UN Development Program), and even by assigning UN agencies the role of fundraising and administration of the future Yasuní-ITT conservation effort. Apart from effusive discourses against hegemonic powers and the asymmetric organization, the Revolución Ciudadana did not make substantive diplomatic moves to re-found or replace the UN. The General Assembly was also an arena where Rafael Correa might thrive and enjoy personal recognition from the rest of the world. 340 G. JARAMILLO

His discourses during the General Assembly’s ordinary sessions each September were carefully staged, alongside rounds of bilateral meetings with like-minded foreign leaders or New York investors, and concluding with Correa’s usual Saturday Enlace Ciudadano broadcast, with Ecuadorian immigrants as his guests. It was also here that initial meetings took place in view of future alliances with leaders like Mahmoud Ahmadinejad (Iran), Alexander Lukashenko (Belarus), and Recep Tayyip Erdogan (Turkey). Global IFIs faced a rather different treatment under the Revolución Ciudadana, with Correa rubber-stamping the same policy he had followed as Minister of Finance. It took him years to accept a new World Bank representative in Quito. Besides occasional grants of support, activities by the IMF and World Bank were all but frozen in the country. The World Trade Organization received less attention and, more tellingly, less animosity from Rafael Correa, in part because the administration soon realized the WTO’s importance in solving a contentious dispute over banana quotas against the European Union, with which they a free-trade agreement (FTA) was being negotiated (Spurrier Group 2012). Notwithstanding the crisis of multilateralism denounced by the foreign policy front-liners of the Revolución Ciudadana,9 the government did not desist from treading multilateral avenues to pursue its objectives. Among these, the most relevant during the frst part of Correa’s decade in power was the intention to change the international fnancial architecture (SENPLADES 2007). Diplomatic and fnancial resources were spent in promoting reform of the Breton Woods institutions and, more importantly, the return of public fnancial development to regional stakeholders. The proposed Banco del Sur (Bank of the South) became the star project in this endeavor (Paez 2008); this effort materialized with the support of Brazilian President Lula Da Silva, but the initial enthusi- asm diminished over the years. As of 2018, the fate of Bank of the South remains unknown.

9 The small entourage advising President Correa on foreign policy changed over time. At the beginning this entourage included Fernando Bustamante and Decio Machado; later, Javier and Franklin Ramírez gained prominence; then Guillaume Long, Xema Guijarro, Héctor Rodríguez, and Ricardo Patiño advised Correa until the end of his tenure. 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 341

6 A Complex View of Regional Integration Rafael Correa began his tenure as president with a call to rebuild Latin American integration as a priority of foreign policy. The Comunidad Andina (Andean Community, or CAN), which had been the bed- rock of regional integration since 1969, presented Correa with an opportunity to infuence this process. CAN facilitated trade among the most important consumers of Ecuadorian exports, especially manufacturing exports (Jaramillo 2010). Liberalization had not diminished its importance: CAN oversaw the region’s best commercial years between 1995 and 2005, where (for the frst time) intra-communitarian trade surpassed 10% of total exports. Notwithstanding, the decision in 2003 by three of the fve member states (Colombia, Ecuador, and Peru) to begin free-trade negotiations with the United States triggered grievances within the group. Ultimately, Venezuela left the organization for good in 2005, and Bolivia began to threaten departure the moment Evo Morales became president in January 2005. In January 2007, it was Ecuador’s turn to appoint CAN’s Secretary General. Rafael Correa chose Freddy Ehlers, a well-known journalist and former presidential candidate who had been elected an Andean Parliamentarian in 2002, but who neither understood nor believed in free-trade negotiations. Fander Falconi (2010) in his memoirs of his time as Foreign Affairs Minister recognized the stress of the (already rat- tled) organization under Ehlers and anticipated his resignation in 2010. Most importantly, Falconí asserted that CAN had defaulted on its original mandate by embracing free trade, arguing that the imbalance could only be resolved through reinvention of the organization: “If we are to persevere in our regionalist disposition, this cannot just concern one organization” (p. 157). Meanwhile, CAN’s most enthusiastic detractor was President Correa himself. At every setback related to common tariffs, trade negotiations, or retaliatory measures against his frequent decisions to impose trade safeguards against his neighbors, Correa raised the possibility of withdrawal from the CAN pact. In June of 2009, his reasons became clear: Correa had decided to join the Bolivarian Alternative for the Americas (ALBA), created by Venezuela and Cuba and led by President Hugo Chávez. At this time, the regional projects of UNASUR (South American Union) and ALBA (Bolivarian Alliance for 342 G. JARAMILLO the Americas) became his priorities in regional integration (Ministerio de Relaciones Exteriores Comercio e Integración 2011). In the face of a deep distrust in regional partners not aligned with the ‘pink tide’, the ALBA countries represented a useful group of like- minded political, social, and economic negotiators and, with the help of President Lula from Brazil, they sped up the launch of UNASUR. The idea was not merely to replace CAN but also the Organization of American States (OAS), and to thwart the unwanted intervention of the United States through that organization. UNASUR was so important to President Correa that Ecuador moved fast to secure the location of its headquarters, and Correa was personally involved in negotiating the naming of the new Secretary General. To his mind, this leader should always be a former president and, more importantly, be aligned with the progressive wave sweeping Latin America. Correa proved successful, securing Néstor Kirschner to the position in May of 2010, but this tenure was cut short by Kirschner’s untimely death. Notwithstanding, the high-stakes game of putting UNASUR front and center in the regional discourse alienated both friends and foes for the subsequent policy goal of building alternative regional organizations. That was the case for yet another integration project cherished by President Correa, the Community of Latin American and Caribbean States (CELAC). Like UNASUR, CELAC sought to replace the political authority of the OAS while dispensing with the uncomfortable presence of the United States. While this counter-initiative was both daring and interesting, the majority of members shied away from overlapping functions with the OAS and cautiously elected not to commit substantive fnancial resources to consolidate CELAC’s institutionalization. This was in part the reason that foreign minister Ricardo Patiño spent the fnal years of his tenure negotiating votes within the OAS to reform the prerogatives of the IACDH and to dismantle the program of special rap- porteurs. Of particular importance to the Revolución Ciudadana was the Freedom of Expression Special Rapporteur, after damaging reports on the situation of civil liberties and, more specifcally, freedom of expression in the country (Alarcón 2014). In hindsight, regional integration became a zero-sum game for Rafael Correa and his administration. The plurality of organizations had rendered regional integration both elusive and unfocused. 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 343

7 free Trade or No Free Trade with the EU? “The idea that free trade is always good and benefts everybody is simply a fallacy or ingenuity more closely related to religion than to science, and it does not hold up to serious theoretical, empirical, or historical analysis”, stated Correa in his collection of essays entitled Ecuador: de Banana Republic a No Republic, published in December of 2009. Following the theoretical need to understand the logic of appropriateness that informed Correa’s foreign actions, it is important to cite his vision of ‘free-tradism’, as he usually called it:

While some set the discussion in ideological terms, trying to justify extreme trade openness using narrow concepts of freedom and the supposed supremacy of the consumer, probably the most they would achieve is to condemn national consumers and producers to the supremacy of foreign producers… Few people have denied these dangers; it is better to see the opportunities, not the problems, they say. Notwithstanding, when making a risk decision, everything is about probabilities, and holding on to opportunities, independently of meek probabilities, is simply an economic absurdity. (Correa 2009)

Negotiations toward a FTA with the United States ended abruptly in March 2006 during the presidency of Alfredo Palacio, Correa’s predecessor, under whom he briefy served as Minister of Finance. Neither the export-oriented elites nor the media and public opinion leaders exhibited any hope that the upcoming, left-leaning government would pursue any further free-trade negotiations, even with the EU. Correa had plenty of time and arguments to back-track on any previous commitment, but he allowed negotiations to continue, albeit with crises, throughout the decade. However, the process was anything but smooth. It seems that Correa’s logic of appropriateness (and that of his fellow advisors) proved counterproductive at every step. As with the United States, Ecuador became a contradictory partner in trade with the EU, comfortable pretending umbrage and making defamatory claims in public, but ready to work behind closed doors in order to return again to the negotiating table. The decade-long negotiations and fnal signa- ture and ratifcation of an FTA with the EU confrms our initial hypothesis: in spite of public discourses against FTAs, the logic of consequences pertained, and in fact at least 30% of Ecuadorian exports now go to European markets (Spurrier Group 2012). Moreover, Ecuador ended 344 G. JARAMILLO up adhering closely to the FTA documents signed four years earlier by Colombia and Peru, adding little to the country’s advantage beyond four ‘red lines’ drawn by the president just six months before negotiations concluded (Rivadeneira, personal communication, May 2018).

8 shooting One’s Own Foot

8.1 The Yasuní-ITT Initiative10 Historically, Ecuador had no consistent environmental policy beyond certain protected areas and national parks. Since 1994, 41 state-owned and many more privately owned areas have become formally protected reservations. These protected areas now account for almost 40% of the country’s total territory and have been at the center of political disputes between governments (national and local), indigenous communities, and environmental organizations from civil society (Oilwatch 2007). The Yasuní National Park provided an opportunity for a radical change in approach, not only in terms of protection of biodiversity, but in patterns of oil production and exploitation. Yasuní-ITT advocates proposed using the park’s biodiversity as a negotiating chip to keep petroleum deposits in the ground and thus seriously limit potential carbon emissions. With this radical idea, the Correa administration aligned all stakeholders—including indigenous communities—under the dream of preserving a unique national park while raising considerable fnancial resources in the process (Larrea and Warnars 2009). What about the logic of consequences? It was only a dream. While diplomatic and foreign policy resources were mustered to sell the revolutionary idea of raising $3.6 billion to keep 920 million barrels of oil in the ground, a second team at the Ministry of Energy and Petroecuador (the state-owned oil company) busied themselves canvassing companies interested in starting operations (Martin 2011). A demanding logic of appropriation ran up against extremely high demand for consequence. In spite of all the public investment in this effort (surpassing $3 million), expected donations barely reached $1 million. On top of that, human- rights advocacy networks began to lobby donor governments against this initiative coming from a government that was meanwhile violating

10 The oil patch’s name is Ishpingo-Tambococha-Tiputini simplifed as ITT, since the patch is located in Yasuní National Park, the name of the project became Yasuní-ITT. 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 345 human rights such as freedom of the press, freedom of association, and even ancestral aboriginal rights in the Amazon, as was argued by the Sarayacu community during the initiative’s 2012 promotional tour in New York (Celi 2014).

8.2 The Julian Assange Affair On August 16, 2012, the well-known hacker and leaker of U.S. state secrets Julian Assange was offcially granted political asylum by the Ecuadorian government. It was a controversial move for a government that by that time built a solid reputation as an authoritarian suppressor of civil and political liberties—especially the rights to freedom of speech and the press. Although the government never acknowledged it, the decision to grant Assange political asylum was a self-inficted shot in the foot that attracted worldwide scrutiny of practices that the Correa administration had sought to hide. For the frst time, human-rights activists and organizations in Ecuador (like Fundamedios and the Mil Hojas Foundation) were given a window of opportunity for revealing Correa’s systematic attempts to crush freedom of expression (Fundamedios 2012). Nonetheless, instead of seizing this opportunity to change its tone and practices at home, and to reset its relationship with the press, the government went all in and fought (alongside its ALBA friends) to reform the Inter-American Commission of Human Rights, where such battles against civil society and the press were being aired. In essence, Assange’s asylum had a boomerang effect in the remaining days of Correa’s presidency. For one thing, Correa’s logic of appropriation lost ground in the face of persistent curtailment of freedom of expression. Diplomatically, it created an inevitable crack in relations with the UK and Sweden, which were simultaneously processing charges against the hacker. As the case evolved, Assange’s presence at the Ecuadorian Embassy in London became a geopolitical problem. It became clear that Assange began cooperating with Russian President Vladimir Putin’s bid to engage in cyber-warfare and to infuence elections in the Western Hemisphere. Correa could pursue neither the logic of appropriateness nor the logic of consequence by helping Assange. Moreover, his traditional conception of sovereignty was turned on its head by allowing Assange to determine Ecuador’s course of action in matters of foreign policy, including the 346 G. JARAMILLO country’s relationship with Spain during its unauthorized intervention in the Catalonia referendum, or Russia’s purported meddling in the 2016 U.S. presidential elections in favor of Donald Trump, making diffcult for Ecuador to resume trade or investment relations with the United States.11

9 conclusion: Institutional Change Without Institutions The drastic changes in Ecuador’s foreign strategy and policy under President Correa were accompanied by a systematic plan to change all the historical institutions of the nation’s foreign policy. Correa, consistent with his derision toward any corporatist body that challenged his authority, dismantled the Junta Consultiva de Relaciones Internacionales (Consultative Council of Foreign Relations), a body founded in 1906 in order to institutionalize and depoliticize foreign policy decision-making in the face of persistent threat of war with Peru. Over the century of its existence, the body also served as the ministerial panel of last resort to accept or decline political nominations to crucial diplomatic posts and to discuss offcial positions and postures regarding new policy issues (Ayala, personal communication, 2013). However, the dismantling of the Junta was perhaps the least important of the problems faced by the diplomatic service as an institution. What followed was a consistent and systematic de-professionalization of the Foreign Service, traditionally in charge of preserving the long-term features of Ecuador’s foreign policy implementation. The intricacies of Ecuadorian border dispute with Peru kept politicians away from inter- vening or co-opting the foreign service for political gain. The typical career bureaucrat in diplomatic service built his/her reputation around a mastery of international law and border history. Correa’s administration was convinced that the diplomatic service was part of the “old country” and should be distrusted. Dismissing diplomats as “cocktail mummies”, he politicized their career paths through arbitrary and discretionary political appointments at all levels of hierarchy, and in any policy position, especially when a post dealt with delicate matters. The slow movement toward co-optation of the Foreign Affairs Ministry

11 The relationship with Trump’s campaign entourage has been confrmed by multiple sources and reports. The most important include Kurt Eichenwald in Newsweek (January 2017) and Natasha Bertrand in The Atlantic (February 2018). 14 RAFAEL CORREA’S FOREIGN POLICY PARADOX … 347 reached its peak under Ricardo Patiño, the minister who broke all records for offce stability as the head of Ecuadorian Foreign Relations for six years. Under Patiño, the diplomatic service became an employment offce for loyal members of the offcial Alianza PAIS party, regardless of their qualifcations: the service expanded from around 300 to 1282 members by the end of Patiño’s term. Of these numbers, around 740 were appointed as career diplomats and 108512 as professional civil servants, thus creating a parallel career path where political affliations were paramount in the ascent to positions of power and privilege. Comparatively, Bolivia maintains a body of around 295 career diplomats, Chile 477 (including 130 dedicated to trade negotiations, which in Ecuador fall under a different ministry), and Peru 702, including all career personnel. Political appointments had been prevalent during previous administrations, but the Revolución Ciudadana ended any notion of a Weberian state in Ecuador—at least on the foreign front (Evans and Rauch 1999). These bureaucratic reforms did include some progressive measures during Patiño’s term, such as affrmative action measures long neglected by previous administrations and by the career service. However, these were soon used for political advantage, assigning more points to candidates affliated to organizations supportive of the government. This lenience was not extended to indigenous postulants, with more academic and language achievements, who were critical of the government (career diplomat, personal communication, 2017). In closing, it is important to stress the extent of institutional changes made during Correa’s decade in power. Foreign policy was obsessively guided by a general mistrust of the United States and its traditional allies, and it was employed to aggressively build a counter-hegemonic front that did not hesitate to embrace authoritarian practices to maintain power. Correa’s initial logic of appropriateness, focused on overcoming underdevelopment and on creating a sustainable and equitable economy, took a back seat to self-preservation as the likelihood of power shifts became a danger for Alianza PAIS. Even the consistent support for regional integration ultimately suffered in this process. President Correa did not hesitate to turn on his prior regional allies if they contradicted his objectives of sustaining his popularity in order to remain in power.

12 Numbers obtained from the Transparency portal of the Ministry of Foreign Relations under the Transparency law, LOTAIP of 2006. 348 G. JARAMILLO

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Conclusions: Assessing the Left Turn in Latin America—10 Years of the Correa Administration in Ecuador

Francisco Sánchez and Simón Pachano

1 Presentation Twenty years have passed since February 2, 1999, when Hugo Chávez assumed the presidency of Venezuela, taking his oath before God, the Homeland, the people, and a moribund Constitution. Two decades have elapsed since the convocation of a Constituent Assembly that would re-found Venezuela, giving a symbolic start to the political cycle that came to be known as the ‘left turn’ in Latin America, in accordance with ideologies shared among several presidents (Cameron and Hershberg 2010; Levitsky and Roberts 2011; Weyland 2010). Beyond their embrace of similar positions in terms of social and international politics,

F. Sánchez (*) Instituto de Iberoamérica, University of Salamanca, Salamanca, Spain e-mail: [email protected] S. Pachano Political Science, FLACSO Ecuador, Quito, Ecuador e-mail: [email protected]

© The Author(s) 2020 351 F. Sánchez and S. Pachano (eds.), Assessing the Left Turn in Ecuador, Studies of the Americas, https://doi.org/10.1007/978-3-030-27625-6_15 352 F. SÁNCHEZ AND S. PACHANO these presidents also shared an abundance of economic resources thanks to a boom in raw materials that then prevailed (see Chapters 8–10, as well as Sánchez and García Montero 2019). In spite of exceptions of change impressed on these ‘left turn’ governments, whether by local populations or at the international level by political activists, public opinion, or academia, it remains diffcult even at present to make a positive evaluation of the period in question. Consider, for example, the situation of the Fifth Republic founded by Chávez, now plunged into a deep economic crisis that is feeding massive emigration of the same people who gave Chávez so many electoral victories. Or consider the situation in Ecuador, forced to request an emergency loan from the IMF (an institution once spurned by the Citizens’ Revolution) despite having enjoyed superlative economic revenues during the prior period, when prices for oil, its main export product, reached historic highs. The panorama worsens when taking as an indicator the many ongoing allegations of corruption and judicial proceedings against high-ranking offcials and ex-presidents, which in the case of Ecuador surpasses all previous governments because a real corruption system was installed (see Chapter 4). While corruption has notably affected governments of all orientations, the current spate of allegations has hurt the left more, weakening the arguments of moral superiority and ethical difference on which leftist discourse is often constructed. Although supporters and activists point out that trials and judicial inquiries may refer to the mechanism of instrumentalization of judicial power known as “lawfare” (Proner et al. 2018; Converti and Wahren 2018), there is no doubt that statements by the former directors of the corrupt Oderbrecht corporation highlight the general lack of public control over the use of public resources, as was determined in the conviction of Ecuador’s Vice President Jorge Glas. Under the assumption that “lawfare” is indeed at play, and with former President Rafael Correa denouncing another former Vice President—the current president, Lenín Moreno—the indication seems to be that the economic boom of the early 2000s increased the possibility of corruption, if only through linkages to increased public spending and, therefore, the contracts by which illegal payments were obtained. More fagrant cases have also come to light, further tainted by suspicions of conspiracy, such as that involving an ex-director of the Petroecuador oil company, who hid large amounts of cash on the roof of his house, or that of José López, former secretary 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 353 of Argentina’s Public Works during the Kirchner administration, who sought to hide more than $9 million in a convent. It might be argued that these are isolated events that cannot detract from a rich and complex process lasting more than ffteen years; most surprising is that the idea of transformation for the better has failed to penetrate more deeply into society, or to change perceptions on prevailing social inequalities, racism, or machismo. In the absence of systematic studies, this notion can perhaps be confrmed by recent electoral results that show a shift in political preferences, where candidates with proposals most distinct from those advocated by the left governments are now on the rise. Here the case of Brazil seems paradigmatic: after three successive Workers’ Party governments, the voters have opted for the likes of Jair Bolsonaro, who preaches and represents values that are radically contrary to those of the previous 13 years. The above analysis, focused on negative aspects, refects growing public opinion suggesting that the opportunities for change in political practice and socioeconomic structure offered by the ‘left turn’ and economic boom were not suffcient to provoke sustained and lasting modifcations. So as not to descend into generalizations, we offer this volume in order to evaluate these phenomena from a comprehensive and comparative perspective, with particular focus on the performance of one of the most representative leftist governments of the period and the region— that of Rafael Correa in Ecuador (Conaghan 2011; Mantilla and Mejía 2012). The following conclusions present a comprehensive overview of our analysis organized along nine thematic axes that run through the chapters of this volume.

2 new Constitutions and Institutional Reforms Like Hugo Chávez in Venezuela, Rafael Correa ‘re-founded’ Ecuador by way of a Constituent Assembly convened in 2007,1 resorting to a mechanism for ‘left turn’ reform and construction of legitimacy that

1 In his inauguration speech on January 15, 2007, Correa stated that “This historic moment for the country and the entire continent demands a new Constitution for the 21st century, to overcome neoliberal dogma and the plasticine democracies that subject people, lives, and societies to the exigencies of the market. The fundamental instrument for such change is the National Constituent Assembly”. 354 F. SÁNCHEZ AND S. PACHANO was also used in Bolivia in 2006 (Nolte and Schilling-Vacafor 2012) and attempted in Paraguay and Honduras, the latter two without success. Viciano and Martínez Dalmau (2010), who in addition to being theo- reticians of new Latin American constitutionalism also participated in the Constituencies of Venezuela, Bolivia, and Ecuador, note that a rupture with the past was fundamental to motivate within those Assemblies the express desire to overcome inequalities, and to forge a new role for the state in the economy. The fact that this process was conducted through plebiscites reveals it as a mechanism for legitimation (Martínez Dalmau 2016). Where results were positive, the interpretation that power is del- egated via presidential performance was reinforced. In short, these constitutions sought to increase the state’s capacity for interference in the economy and in society, marking a tendency contrary to that of the neoliberal period, in which constitutional reforms sought to eliminate normative barriers in order to liberalize the economy. Another similarity is that presidents under such reform are alien to the status quo and lead a radical project of change, for which they require indisputable mechanisms of legitimation and social support, such as the Assembly and the plebiscite. The call for Constituent Assemblies in the three countries mentioned was moreover a form of internal reconstruction in the wake of three institutional crises: the Masacre de Octubre and Guerra del Gas, which led to the fall of Sánchez de Losada in Bolivia, the Rebelión de los Forajidos in Ecuador, and the Caracazo in Venezuela. In the case of Venezuela, the country showed no sign of recovering from the social rupture that the massacre and destruction of Caracazo had caused, despite the fact that some ten years had elapsed; and to this was added an economic crisis during the Caldera government. In sum, these new governments were convinced that the transformation they sought would necessarily involve the concentration of power into the hands of the president, for which a change in institutions would be essential. Notwithstanding this, it should be noted that not all countries that turned to the left convened constituent assemblies or resorted to profound institutional changes in order to implement redistributive policies, or to increase public investment. Chile, for example, has not substantially modifed its Constitution (designed under the neoliberal dictatorship of Pinochet) as regards economic institutions. Also, many governments in the region have remained very supportive of free-trade agreements. In Brazil, President Lula da Silva promoted his transformation plan without constitutional reforms, and in Uruguay, governments as diverse as that of 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 355 neoliberal Luis Alberto Lacalle and the three Frente Amplio administrations have all exercised power within the same institutional framework. In the discourses of Bolivian President Evo Morales, Rafael Correa, or Hugo Chávez, constituent assemblies were also a symbolic moment for construction of a new national identity that breaks with neocolonial and oligarchic legacies, and that seeks to embrace a new mestizo citizen who lives in harmony with indigenous peoples and those of African descent. In the case of Ecuador, all these people together form “La Patria”, understood as a symbolic space of common identity (Zepeda 2010). Institutional novelties were introduced into these new constitutions, and in the cases of Ecuador and Bolivia, rights for nature itself and respect for other cosmovisions under the paradigm of ‘good living’ (sumak kawsay in Ecuador, or sumak kamanñag in Bolivia) were incorporated as a basis for rights and as an axis for the development model (see Chapter 11). Institutional similarities among these countries include the return of planning agencies (SENPLADES in Ecuador, see Chapters 2, 3, and 11), reclaiming models from post-World War II developmentalism. But most novel was what became known as the ‘citizenization of political control’, basically consisting of the election of institutional and control authorities not by the Legislature, but by an ad hoc organism that in Venezuela was termed Citizen Power (or Fourth Power) and in Ecuador the Council of Citizen Participation and Social Control. However, instead of making the mechanisms of control and accountability more effcient, these organizations were captured by the Executive, who had the capacity to intervene and to select candidates, increasing the concentration of power while reducing citizen control. In Ecuador, three central aspects of the neoliberal agenda enshrined in the 1998 Constitution were modifed: the independence of the Central Bank, labor liberalization, and free trade (Sánchez and Polga- Hecimovich 2019). Changes to the Central Bank followed the rationale that independence both violates democratic legitimacy and limits the government’s capacities in priority issues such as monetary policy (Correa 2009a). The premise of democratic legitimacy was also used by Correa to censure political participation by civil and social organizations, on the argument that they had not participated in elections and were therefore not authorized to engage in politics or decision-making (see Chapter 7). All these arguments ft with a plebiscitary and delegative vision of democracy. 356 F. SÁNCHEZ AND S. PACHANO

In short, the new constitutions served not only as a symbolic space for re-founding, thus returning the Homeland to all citizens (as offcial propaganda claimed), but as a way to lay the foundations for counterreformation of the state, moving from regulation that guaranteed vital aspects of the neoliberal agenda to another range of norms that instead validated a model permitting greater state planning, intervention, and capacities for regulation, thereby putting politics ahead of the economy.

3 Authoritarianism and Democracy Some countries that turned to the left (including the extreme cases of Venezuela and Nicaragua) devolved into authoritarian practices; others (such as Ecuador) placed serious restrictions on freedoms, as described in this work, or else saw ferce confrontation between the state and media (as in Argentina under the Frente para la Victoria governments). But was a tendency toward authoritarianism necessarily characteristic of leftist governments in Latin America? No, it was not. Certain governments (like Brazil, Chile, or Uruguay) opted instead for the strengthening of democratic institutions. Analysis of the case of Ecuador helps in understanding how authoritarian drift was sometimes justifed from the left. The Citizens’ Revolution in Ecuador vindicated the revolutionary left, a political sector that occupies an ambiguous position vis-à-vis pluralist democracy as the only mechanism for processing confict, given that it considers transformation and change to be possible through nonconven- tional political means. In this way, even the use of violence can be justifed, if circumstances require, under the euphemism of Lucha Armada (Armed Struggle). A revolution is understood as a process of change in which the exercise of a strong authority is permitted, so long as it propi- tiates transformation of structures and superstructures. Another hypothesis to explain authoritarian tendencies focuses on governments that see an opposition between redistribution and equality on the one hand, and freedom on the other, thus feeding to some extent an old philosophical debate between communitarianism and individual- ism. However, if we take as reference the constant allusions to religion in speeches by leaders like Correa2 or Chávez (Zúquete 2008, 2013),

2 In the Enlace Ciudadano broadcast of March 10, 2009, the president spoke for over ten minutes on impacts that the Gospel, committed religion, and religious missions in which he participated had had on his life. On the other hand, at the University of Oxford, Correa (2009b) presented a conference about his experience as a leftist christian in a secular world. 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 357 one could argue that their idea of community derived from Catholicism and other Christian dogmas—already hegemonic creeds in the region, responsible for a great deal of education in both values and intellectual formation. This is a communitarian vision of society in which the individual submits to the group in favor of a common teleological goal. Thus, those who through the exercise of liberties would question this objective, or the means of achieving it, are taken to be enemies of the community as a whole. Even in a context of conficting power and interests (Waisbord 2014), this confrontational dynamic between group and individual helps to explain the virulence with which certain governments have acted against the media, which are capable of penetrating dissent, freedom of expression, and opinion in general. In addition, such governments can incorporate a structure of authority like that of churches transmitting to their faithful: absolutely vertical, and based on unquestionable dogmas of faith to which believers must submit. Moreover, the outlook of Catholicism is pre-Machiavellian, where evaluations and diagnoses tend to be moral rather than political or economic. For many, the communitarianism of Correa’s political project was consistent with the idea of the leader as a guide who reveals goals and values for society as a whole.3 As De la Torre points out (see Chapter 5 and Weyland [2019]), populist governments are characterized by a strong charismatic leader who personalizes power and maintains a confictive relationship with the pluralism implicit in democracy, which con- tradicts his Manichean vision of the world. This dichotomous approach, typical of populism, is easily connected with the values and political cultures of Catholic societies, socialized through an interpretation of reality as a confrontation between good and evil, to be resolved in favor of good thanks to divine intervention (recall Weber’s defnition of charismatic legitimacy) by a savior (a charismatic leader) (Weber 1968). At a less symbolic level, Correa’s authoritarianism was refected in his instrumentalization of the powers of state, and in the use of institutional prerogatives in order to avoid mechanisms of control.

3 “In the absence of motivated and cohesive societies, solid formal institutions, and the need to create values and attitudes that accelerate progress, the role of adequate leadership is fundamental. Leadership is simply the ability to infuence others – it can be used to serve others, or be abused – which, unfortunately, has been common in Latin America, whenever strong leaders have appeared” (Correa 2009a, p. 195). 358 F. SÁNCHEZ AND S. PACHANO

It should be recalled that democracy requires not only the process of election, but also the rule of law, the division of powers, and mechanisms for control and accountability. Chapter 2 clearly examines the ways in which the fgure of the Executive Decree can be instrumen- talized to facilitate actions by the president, the concentration of decision-making, and the evasion of control mechanisms. All this may be justifed by the need to implement changes and public policies more rapidly. Montúfar (in Chapter 4) goes further to point out that legislative changes in Ecuador did not merely favor the concentration of power in the Executive, but allowed an elite class to deplete public resources by eliminating control mechanisms.

4 relations with Social Organizations In contrast to the caution shown by the Bolivian government, Ecuador under Correa moved away from and even confronted social movements (especially indigenous movements) and other collective actors such as nongovernmental organizations, trade unions, and student associations, despite their left-militant stances (see Chapters 6 and 7 of this volume; also Lalander and Ospina Peralta (2012) and Collins (2014)). In addition to specifcs indicated throughout this book, we can say in general terms that the bad relationship between Correa and these groups was due to the fact that the government and social organizations were responding to two different models of the political left. Such social organizations were characterized by Correa as the “infantile left”, coming from the anti-neoliberal left that peaked in the 1990s and that developed a distinct vision of economic development and the exploitation of natural resources, also demanding the participation of minorities in decision-making processes, questioning the hegemonic role of rulers and the centralization of political power, and requiring new forms of political participation and accountability (Sánchez 2008). In contrast, Rafael Correa and his movement were closer to a model that retains discursive elements of the ‘revolutionary left’ but with strong leaders who concentrate power and use the electoral mechanisms of democracies as systems of legitimation by plebiscite. The verticalist and messianic visions indicated above are consubstantial with this left. It should be recalled that the social movements and organizations that enjoyed a cycle of collective action in the 1990s had the merit of introducing new practices and discourses that enriched the left and the 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 359 democratic praxis, demanding that the socioeconomic welfare of the population be considered a right, even as they claimed distinctive and post-material values, such as sexual and reproductive rights, or identity and gender diversity (see Chapter 6). This was anathema in many ways to the government of the Citizens’ Revolution, which was deeply conservative in the normative sense, with President Correa engaging in a macho discourse. The concept of buen vivir or the Yasuní-ITT environmental initiative did not indicate a clear commitment on the part of the government to an alternative development model, nearer to postulates defended by social movements (see Chapter 11). On the contrary, nongovernmental environmentalist organizations were persecuted (see Chapter 7). The differences between the government and social organizations were also evident in their differing views of development: the government’s extractive model, allowing access to vast economic resources with which clientelism and redistributive policies were fnanced (see Chapter 10), versus a sustainable development model based on the utmost respect for nature and the populations (usually indigenous or peasant) living in resource- exploitation zones (Lewis 2016).

5 recentralization and the Strengthening of the State One successful effect of the Citizens’ Revolution was the reinforcement of the state as a mechanism for social intervention and economic regulation (Sánchez and Polga-Hecimovich 2019). Beyond the results of public policies or the impact on public spending and social structures (see Chapters 6–10, 12, and 13), the creation of new state institutions represents another variable from which the ‘left turn’ can be studied. Just as deregulation or privatization were symbols of the neoliberal period, the return of the state is a symbol of post-neoliberalism. While the state was reformed in the 1990s through reduction of the public sector and its impact on the economy, in the twenty-frst century, counterreform of the state commenced with the return of regulation and public investment in productive and strategic sectors of the economy. A strong state also serves as a mechanism for the concentration of power (see Chapter 2). But the strength of any state is constructed, and in Ecuador, thanks to the leadership of a president with clear 360 F. SÁNCHEZ AND S. PACHANO objectives in this regard, a process of institutional reform was launched with the new Constitution and creation of the planning apparatus through which new agencies and organisms were convened and directed. This process was fnanced through the economic boom, which allowed for increases in public spending (see Chapters 8 and 9) and which was used instrumentally by the government through what Mejía Acosta and Albornoz term “the fscal Leviathan” (that is, a system wherein public spending is used for instrumental purposes, here made possible by reforms that allowed increases in discretional spending and in Executive control over the budget) (see Chapter 10). Another success of the Citizens’ Revolution government was its construction of creative mechanisms to increase state presence, such as the Enlaces Ciudadanos programs and the itinerant cabinet (see Chapter 3 and Muñoz [2010]). Not only was it necessary for state institutions to grow in accord with widening spaces for state action but, as above, symbolic resources of state presence were installed to transmit and demonstrate to citizens and authorities alike that “the Homeland had been returned” by way of a strong state. The system of promoting the presence and strength of the state was closely linked to the presence of Correa himself as leader of the process, reinforcing a personality cult that, ironically, weakened the state and its institutions (understood as mechanisms for regulated procedure that depend on laws, and that persist beyond those currently in power). Such a link between state and leader is considered typical of populist regimes (see Chapter 5).

6 state/Government/Leader/Party As collective action theory would argue (Olson 1971), in order to launch a social and political process like the Citizens’ Revolution, a group with common objectives and interests is required, and such a group was constructed around Alianza PAIS, the party through which President Correa supported himself during his ten years of tenure. To understand this party, we must analyze it as an electoral and political machine built from the state apparatus through the use of state resources. During the ten years of Correa’s presidency, a kind of merger occurred among between state, government, leader, and party (Pachano 2012). This quadriga pulled the revolutionary vehicle in which Rafael Correa was the driver and quasi-unique decision-maker, not subject to questioning 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 361 by the state, the government, or the party. This situation allowed the different aspects to function as a whole, focused on meeting the objectives of the leader and the revolution alike. One very convincing proof of the party’s dependence on this leader and on public resources was that Correa’s departure, and the break between his successor Lenín Moreno and the Citizens’ Revolution, brought about the virtual disbanding of Alianza PAIS. When the line separating political organization and state institutions is erased, a set of vices are produced that erode democracy, as occurred in Mexico under the hegemonic PRI party (Woldenberg 1993). Effects range from the disappearance of the basic principle of equality among competing parties to the use of state resources, to the loss of independence by electoral and control bodies, to the restriction (or even elimination) of pluralism. This blurring of lines was defended by Correa throughout his government as natural, and even positive. In Enlace Ciudadano 236 of September 15, 2012, the president pointed out that the political bureau of the Alianza PAIS movement was composed by two or three Ministers, the President of the Republic, the president of the Legislative Assembly, representatives of local governments (at that time, the mayor of Quito and prefect of the Pichincha province), and the Secretary of the Alianza PAIS party. This scheme made it impossible to determine where the political movement ended and where government began. Moreover, according to Correa, the organism had no source other than his own will, since he had created the body and, therefore, had the power to invite only the faithful into the project, and to exclude those with divergent opinions (who might inspire perverse incentives of non-conditionality). To illustrate this power, Correa pointed to the specifc case of an Assembly member who had deviated from the established party line, dismissively saying “I will not have a person I do not trust”— and always speaking in the frst-person singular. In summary, this was not a stable organ, nor was it subject to any oversight, being purely and simply dependent on the leader’s personal will. This process shared similarities with what transpired under Chavez, especially after the creation of the United Socialist Party of Venezuela (PSUV in Spanish), but with the difference that the PSUV resulted from the merger of several preexisting political groups that had supported Chávez. As Álvarez (2007) indicates, there was internal resistance among the leaders and militants of these merged parties, but the strength of Chávez’s leadership and his control over the government and state 362 F. SÁNCHEZ AND S. PACHANO resources facilitated the consolidation. Elsewhere, in the case of Bolivia, despite the supremacy of Evo Morales’ MAS party in the Legislature, no process like that seen in Ecuador has occurred as regards the undisputed leadership of the president, perhaps because Bolivian social organizations continue to maintain quotas of power and autonomy (Collins 2014). This has given the MAS party a solid and autonomous social base that Alianza PAIS never acquired, assisted by institutional mechanisms such as the mixed electoral system, which diminishes control by the leadership over political processes and results (Corral et al. 2016).

7 the Bonanza Period and the Macroeconomic Balance One advantage enjoyed by the governments of the ‘left turn’ was their coincidence with one of the greatest periods of prosperity in the history of Latin America and the world (see Chapters 8 and 9). The commodities boom allowed these governments to fnance public policies clearly distinct from the neoliberal economic model, and to promote greater presence of the state as a regulatory element in social and economic relations. In addition, in cases like Ecuador, Bolivia, or Argentina, governments sought to increase their revenues through renationalization of the oil industry, or through changes to exploitation contracts (Grugel and Riggirozzi 2012); together with their economic effects, such measures served to present these governments as defenders of national sovereignty. From a critical perspective, it can be said that these good economic times were not directed toward changing the basic productive model; indeed, a model based on the primary sector was strengthened, leaving these countries highly exposed to external factors. Without problems of fnancing (due to the liquidity obtained from export revenues), and able to attract resources from international fnancial markets or from new lenders like China, the left-wing governments avoided the conditionalities of international organizations like the IMF and World Bank. Liberation from those agencies produced further revenues at the ideological level, not only because of their association to neoliberalism, but because it allowed governments to reinforce messages of anti-imperialism and national sovereignty, and preclude intervention by the United States—all central elements in the ideology of the Latin American left (García Montero et al. 2019). 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 363

As during the neoliberal period, a kind of ‘contagion effect’ spread throughout the region, and governments applied very similar public policies irrespective of their political slant. Where the neoliberal paradigm had been privatization and deregulation, in the post-neoliberal era, measures increased social spending and sought the redistribution of income and the modifcation of the fscal and tax structures, to improve the capacity to collect revenues. The construction of new infrastructure and new public investment were also enabled. Together with redistributive policies, the most obvious being monetary transfer systems, improvements were made in education, health, and maternity and child- care systems (Antón et al. 2009; Rodrigues-Silveira 2011), and poverty levels were reduced (see Chapter 8). Some of these programs had been launched under neoliberalism, to compensate for the elimination of subsidies, but the ‘left turn’ governments maintained and strengthened them. These governments also took advantage of the bonanza to transmit to voters an image of ‘good managers’, thereby propagating the idea that the prevailing state of well-being was the result of their own effcient management, and not merely an effect of some global phenomenon. This message has penetrated deeply in Ecuador, thanks to the propaganda apparatus of the Correa government; it was used as an argument during the February 2019 elections, as part of a bid for his return to power, now that the effects of the crisis had diminished. Such a positive perception of governments, and especially of the presidents who lead them, goes far in explaining the wave of reelections experienced at the beginning of the twenty-frst century (Treminio 2014). However, within this general context, the Ecuadorian case presents some specifc features. Unlike other countries of the ‘left turn’ phenomenon, the Ecuadorian and Venezuelan economies shared a high dependence on oil, exposing them to what is known as the natural resources curse and, eventually, instances of Dutch disease (see Chapter 8). These are mono-productive economies over-exposed to international fuctuations that limit the political space of national authorities. In Ecuador, that limitation has been reinforced by an absence of national monetary and exchange policies, given the dollarization of the economy. In this diffcult context for macroeconomic management, the Ecuadorian government sharply increased its public spending, fnanced in part by tax revenues accumulated through the rise in oil prices, as well as through indebtedness. The revitalization of public spending required 364 F. SÁNCHEZ AND S. PACHANO legal, budgetary, and political reforms to increase control by the Correa government over fscal and budgetary matters and to relax restrictions on debt expansion (see Chapter 10). Macroeconomic management of the boom in Ecuador did achieve a high savings rate in the public sector, but it also presented the following weaknesses: (1) a failure during the boom to exploit a competitive real exchange rate to promote productive diversifcation; (2) the pro-cyclical expansion of public spending; (3) the missed opportunity to build fscal stabilization mechanisms; and (4) nonpayment of the external debt by the government, with excuses that were considered insuffcient. As a consequence of the above, during the phase of falling commodity prices, macroeconomic management as of 2014 was also necessarily pro-cyclical, which led in turn to deep fscal and external imbalances (see Chapter 8). The governmental objective of transforming the production matrix led to vegetative economic growth (due to increased imports and control over exports, at least in volume) and a sustained fscal defcit (due to spending and public investment), to be fnanced through indebtedness. In short, the “big push” came at the price of macroeconomic stability. Different from an ‘orthodox’ approach, macroeconomic management distanced itself from the objective of macroeconomic equilibrium and aimed instead for real economic growth and changes to the productive matrix (see Chapter 13). However, once the economic cycle entered its recessionary phase, a fscal adjustment became inevitable, since a fall in commodity prices makes fscal balances diffcult to maintain—especially when the growth of the public sector is taken into account in relation to GDP (up from 25% in 2002–2004 to 43% in 2012–2015, due mainly to public investment and current expenditure). Furthermore, this occurred in a context in which public activity had displaced private investment (see Chapter 9).

8 construction of Political Stories Another strong aspect of the Citizens’ Revolution government was its capacity for construction of identities and narratives, not only among supporters but for all citizens. Like other populists, Correa built a narrative that, in addition to bolstering legitimacy and exciting mobilization, served to segregate society by identifying his supporters and detractors, characterizing the latter as enemies of the revolutionary process (see Chapter 5). 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 365

Thus, in addition to serving as national categories (Zepeda 2010), the concepts of La Patria (Homeland) or La Revolución Ciudadana (Citizens’ Revolution) as a process proved reliable aggregators that allowed President Correa to include within them a series of loosely defned elements which gave meaning to his actions or those of other political actors. Following Laclau (1996), these are signifers without signifcance, artic- ulatory practices that work to structure collective identities and that can be flled with distinct content depending on who uses them, according to detected demands by the masses. Thus, followers of the Citizens’ Revolution followed by identifcation, without clearly understanding what the Citizens’ Revolution or the Homeland might mean at any given moment. By identifying people or groups as anti-patria (anti-Homeland), Correa could signal them as being not just in opposition to the government, but visible enemies of the interests of the majority, to be included in the group of all accomplices who had worked to generate all crises in Ecuador. Correa’s weekly Enlace Ciudadano broadcasts, in addition to being effcient systems for the construction and propagation of identities and fdelities, were also a space in which to generate specifc content for the coming week, thereby saturating the news agenda (see Chapter 3 and Cervino et al. [2016]). The need to construct signifers that would legitimize and justify the actions of the government—and to not have them questioned—was refected in the construction of a vast propaganda apparatus composed of radio stations, newspapers, television channels, and news agencies in what was termed the ‘public media group’. In this sense, we might propose the hypothesis that the government’s objective was to build a solid account of the virtues of its process that simultaneously legitimized its actions—even those bordering on authoritarianism or corruption (see Chapter 4). This contributed to fomenting confron- tations and attacks against the unoffcial media as mechanisms that questioned the offcial narrative (and showed its inconsistencies). Like President Chávez in Venezuela, Correa in his discourse connected the process he was leading with other episodes from Ecuador’s history, especially those seen as strengthening the state and national construction. For Chávez, the model to be imitated was that of Simón Bolívar (Price 2009); he went so far as to commission a new, less aris- tocratic portrait of El Libertador, perhaps to suggest that slight physical changes would make him appear more a man of the people, and less the wealthy creole landowner that he truly was. It should be noted that Bolívar also considered himself to be liberator of Ecuador and 366 F. SÁNCHEZ AND S. PACHANO

Bolivia, and this later served to strengthen symbolic bonds and to build anti-colonial and anti-imperial narratives among all three governments. In Ecuador, the connection with history was made above all through references to the Liberal Revolution of 1905, led by Eloy Alfaro. The Citizens’ Revolution reinterpreted its Liberal predecessor, highlighting confrontation with the conservative elites of the sierra region to underline continuity with correismo, but eliding the 1905 revolution’s greatest achievement: the separation of church and state. Supposed familial ties between Alfaro and Correa were also hinted at, given that the two shared a maternal surname; but they differed strongly in the anti-clericalism of the former and the clerical conservatism of the latter. Another success in the construction of stories (partly shared with Bolivia) was the idea of ‘good living’. This narrative allowed the government to be seen as a political project with an environmental commitment that incorporated into the development model an indigenous worldview of harmony with nature. This approach permitted the government to raise revenues in progressive international fora, and even to be held up as a paradigm of post-development, or an analytical category deemed worthy of United Nations agencies. In reality, however, Correa’s development project was based on resource extraction (Lewis 2016)—very far from the theory contained in sumac kaway. In other words, this was just another empty signifer (Laclau 1996) prone to multiple resignifcations and contradictions (see Chapter 11).

9 Public Policies The government of the Citizens’ Revolution promoted an ambitious program of public policies across all felds, as is evident in the notion of ‘good living’; but now that some years have passed and the results have been assessed, the evaluation turns out to be rather negative. This volume analyzes in depth the case of pre-university education at all levels, as well as proposed changes to the university system meant to generate an economic model based on technological development, of which Yachay Tech University was the fagship (see Chapters 12 and 13). The chapters leading up to those dealing with educational reform reveal more failures than successes in the Correa government’s public policy. Without denying that certain positive aspects were indeed advanced, here we propose a hypothesis that might help explain the reason behind the many failures. In the frst place, as indicated in Chapters 2, 5, and 11 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 367 of this book, the government became too frmly attached to technocratic reasoning, adopting it uncritically. But this rationale was often blind, leading to mistakes in public policy design or else errors of omission, as criticisms and observations by the political opposition were excluded (although many have since been accepted as correct). Public policies under Correa were legitimized by consultation processes that supposedly sought to decentralize power and to promote participation, but these high aspirations came into immediate confict with the centralizing power structure and the unilateral decision-making that characterized Correa’s technocratic populist government (see Chapter 5). One factor worth exploring as an explanation for the poor effectiveness of public policies is the immediacy with which Correa acted—it should be recalled that he issued public instructions to members of his government via Twitter. The hasty execution or premature launch of a given program became an objective in itself, driven by a sense of urgency that often came across as anger against members of Correa’s own government, often expressed as public reprimands during the Enlaces Ciudadanos (see Chapter 3). The rapidity demanded by the government sometimes meant that necessary safeguards typical of well-designed public policy were not taken into account, frustrating the appropriate amendment of errors. A large part of the government’s perceived reliability was based on a permanent communications campaign that boasted the continuous delivery of public works—the execution of new infrastructures and other programs— characterizing the state as a nonstop machine geared to the production of public policies. The more it produced, the faster it had to go. As a consequence of all this, regulations and norms to safeguard transparency in public procurement became an obstacle to be eliminated through declarations of emergency—a political and administrative resource that allowed the president to make direct contracting choices while circumnavigating control mechanisms. Although theoretically meant to accelerate processes, such actions also increased the risks of corruption and waste of public resources (see Chapter 4).

10 international Policy Ecuador in this period developed a largely contradictory international policy. On the one hand, the rhetoric of the Citizens’ Revolution promised absolute sovereignty and autonomous decision-making, free from 368 F. SÁNCHEZ AND S. PACHANO the meddling of traditional superpowers. On the other hand, this celebrated sovereignty was often compromised, making the country more dependent on new, emerging powers. From unrelenting disputes with its main export receivers (the United States and EU) to new high levels of indebtedness with China, the decade left Ecuador in a much worse international position, despite efforts by Correa to increase and improve the country’s international presence—whether by participation in international relations fora or through closer relations with other ‘left’ leaders (as in China, Russia, Iran, or Belarus) who ostensibly shared his views on the authoritarian exercise of power and confrontation with “the West”. Justifed in the development of a new multilateralism, this mechanism for strengthening international relations (which could be highly effective at times) had an intrinsic weakness: when national leaders and political tendencies change, the countries with which they were aligned can lose international position. One clear example was the virtual disappearance of the UNASUR organization after its presiding promoters had been turned out of power. As García Montero et al. (2019) demonstrate, ‘anti-imperialism’ (or ‘anti-Americanism’) is a central component of leftist thinking in Latin America; therefore, the ‘left turn’ implied a loss of geopolitical infuence vis-à-vis the United States and related organizations (like the OAS in the political sphere, or the IDB, IMF, and WB in the economic sphere). Meanwhile, the embrace of China—as an emerging commercial and fnancial partner that makes no demands for economic liberalization or the improvement of democratic, social, or environmental standards—was a pragmatic choice (Wintgens 2019). And a third major result of the regional turn to the left and the reaction by countries not part of that ideological bloc was the creation of at least three new integration schemes: UNASUR, ALBA, and the Pacifc Alliance. The frst two organizations are closer to the left governments, while the third is composed of countries more prone to liberalizing trade than to building strong political ties. To conclude this summary of the contributions to be found in this volume, complemented by possible future lines of study or alternative explanations, we need only point out that the model promoted by the Citizens’ Revolution was weak in terms of sustainability, given the diffculty in consolidating its political and economic characteristics, which included a gradual isolation from society. The revolution’s excessive dependence on the person of Rafael Correa worked against the creation 15 CONCLUSIONS: ASSESSING THE LEFT TURN IN LATIN AMERICA … 369 of ‘path dependence’ that might be expected to endure through a political party or through subsequent leaders. In the end, what remains of that process is an obese state rendered inoperative by a scarcity of resources and a divided society.

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