Radical reforms in Ecuador: an example for Canada?
I am witnessing, for the first time in my life, a government that has won democratic power with a promise to implement badly needed political and economic reforms actually proceeding to do so.
Rafael Correa
>by Roger Hollander
January 18, 2008
I heard it back then from my Liberal and even some of my Tory friends: “Ed Broadbent is by far the best candidate. Too bad he’s NDP. Otherwise I’d vote for him.” I am now hearing the same thing about Jack Layton.
Well, let me tell you something. Jack Layton, with his keen intelligence, his transparent honesty, his charismatic and winsome personality, his formidable drive and seemingly endless energy, his love for his country, and – above all – his commitment to social and economic justice; if Jack Layton were Ecuadorian, he’d be the country’s leader today.
Let me explain.
Ecuador, a small country with a population of about 13 million, is a country rich in natural resources: minerals and oil, bananas, fresh flowers, coffee, cocoa, rice, fish and shell fish – the list goes on and on. And yet, nearly three fourths of its people live in poverty and lack basic sanitation, health and educational resources.
It has been ruled by military dictatorships and, since the late 1970s, by democratically elected presidents who rarely are able to complete a term in office. Its Congress is made up of a plethora of political parties, most of which are beholden to entrenched economic interests. It has been commonly asserted and seldom contested that the country is simply ungovernable.
Enter Rafael Correa, a European and U.S. trained Professor of Economics who in 2005 became Finance Minister in a transition government. He had the audacity to stand up to the World Bank by demanding that excess revenues from petroleum be directed towards financing health and education programs rather than toward servicing the external debt. The now discredited ex World Bank President, Paul Wolfowitz, pressured the government to fire Correa, and the Minister became a hero in Ecuador overnight.
A dark-horse candidate with an organization created on the fly, Correa overwhelmed the traditional political parties and won the 2006 presidential election in a landslide. He was 43 years old, the same age as John F. Kennedy when he ascended to the presidency of the United States. Correa has no representation in the Congress, however, which continues to be dominated by three main obstructionist political parties.
Correa’s major campaign promise was to hold a popular referendum that would ask Ecuadorians if they wished to create a Constituent Assembly with plenary powers to restructure Ecuador’s political and economic system. That Referendum was held in April 2007 and the “Yes” vote was an astounding 81.7 percent. Elections for the 130-member Constituent Assembly were held in September of the same year, and Correa’s supporters (Acuerdo País) won 80 seats and another ten to fifteen seats went to progressive parties that are more or less in support of the president’s radical reform agenda. The three major traditional parties (Social Christian, PRIAN and PSP) are a small minority, winning a total of 32 seats between them, and enjoy the additional support of only a handful of delegates from other right leaning parties. How the mighty have fallen!
The Constituent Assembly began meeting in late November, and its first act was to suspend the Congress, a highly popular move.
Just before year’s end it passed its first major piece of legislation, a tax reform bill that addresses blatant omissions and closes enormous loopholes and went into effect on January 1, 2008. Its major elements include (all amounts in US dollars):
- • A progressive inheritance tax, excluding estates of $50 000 or less, and with a ceiling of 35 percent on estates of $600 000 or more; • A progressive income tax, excluding annual incomes of $7850 or less (the average annual salary in Ecuador is approximately $2500), with a ceiling of 35 percent;
• A progressive tax on unused acreage (enormous estates owned, and in many cases confiscated, by the country’s traditional elites are sitting fallow);
• An increase in “sin taxes” on cigarettes, liquor, perfume, videogames, sport rifles and ammunition, and incandescent light bulbs.
• An increase in the minimum wage from $170 to $200 monthly, and increase of 17.6 percent.
The vote for these measures at the Constituent Assembly was 90 in favour, 23 against, 6 abstentions, and 11 absent. The 90 “Yes” votes represent 69.2 percent of the Constituent Assembly’s total membership and 79.6 percent of those members present and voting.
It is estimated that the new taxes will generate revenue in excess of $400 million, virtually all of it coming from the pockets of the upper and upper middle classes.
These revenues will go directly into public education, urban infrastructure, public utilities such as water purification and sanitation, economic development, and public transportation.
Needless to say, the country’s economic elite, who since time immemorial have been getting away with murder with respect to taxation, are in a state of apoplexy. Correa has been unrelenting in his criticism of the mainstream media, who have attempted to derail his reform agenda with distortions and outright lies. He is being referred to as a dictator and compared to Adolph Hitler. This in the face of unprecedented popular support as reflected in a series of landslide election victories.
I am witnessing, for the first time in my life, a government that has won democratic power with a promise to implement badly needed political and economic reforms actually proceeding to do so. I see in Ecuador, for the first time since I began my annual extended visits thirteen years ago, a glimmer of hope for genuine change. Where this will lead – once the powerful economic forces behind the opposition to these reforms come together with a unified strategy – no one can predict.
I see Correa as a Kennedy/Trudeau-esque figure, but one who, in the context of Latin American political and economic realities, has no choice but to propose more radical reforms than one would expect in the U.S. or Canada. He has made a pronouncement, for example, that “authorizes” workers to take over businesses and industries that refuse to comply with the new tax structure and minimum wage.
Canadians should take a good look at what is happening in Ecuador. In the past 25 years we have seen our social safety net eroded, the loss of decent paying jobs, an increase in underemployment, social programs cut, employee benefits reduced, urban infrastructure deteriorating, and a shameful and exponential rise in homelessness.
I just hope that Canada doesn’t have to fall to the level of poverty and disintegration that has characterized Ecuador before we find a way to elect a genuine leader – I think you might know who I mean – with the vision and courage to address with conviction and vigour the inequalities and injustices that are anathema to the vast majority of Canadians.
Roger Hollander is a former Toronto Metro Councillor (1987-1995) who has lived much of the past 12 years in Ecuador.
