SITUATIONAL ANALYSIS: Ecuador at the turn of the Century

MINIMUM WAGE IN TERMS OF BUYING POWER -- ECUADOR. 1990-1999An underlying theme in most presentations at the Cuenca Forum was the growing hardship and ill health that the poor in Ecuador are suffering because of the economic crisis and globalization. Many of the nation's ills were traced in part to Ecuador's suffocating foreign debt and to structural adjustment programs (SAPs) imposed jointly by the International Financial Organizations (World Bank and IMF) and Ecuador�s elitist right-wing government.

Suffocating debt. To service Ecuador�s huge foreign debt, the interest payments alone are over half of the government's annual budget. This puts the nation in the situation of a poor landless share-cropper who must forfeit half of his harvest to the wealthy land owner each year. Although the poor man works from dawn to dusk, he never has enough produce left to adequately feed his family. And every year he goes deeper into debt. Such is the situation not only of the poor majority in Ecuador, but of the nation itself. ECUADOR’S FOREIGN DEBT AS % OF ITS NATIONAL BUDGET, 1995-2000

Widening income gap. At first glance, Ecuador appears to have a thriving economy. Elegant new housing and malls give cities a look of national prosperity. But as in many Third World countries, wealth is concentrated in the hands of a small minority: mostly big businessmen and financial speculators who thrive through links to multinational industries. Meanwhile the poor get poorer.

Structural Adjustment. Adding to the plight of the destitute, Structural Adjustment Policies have mandated that many public services be cut back or privatized. Likewise, user-fees have been introduced for health services and public education--services that used to be free.

Privatization. Plans to privatize the Social Security system (IESS) are also now underway. This will deprive even more people of health care. Currently the IESS covers just 22% of the population, providing health insurance only for the minority who are formally employed and pay a monthly quota. However the program tends to lack adequate medicines and services because the government "borrows" from IESS reserves (insurance payments paid by citizens) to help service the foreign debt and pad the pockets of corrupt officials. (When the UN recently "awarded" Ecuador the status of the most corrupt government in Latin America, the country's President responded that it couldn't be so because Ecuador had not entered into any such competition!)


Poverty and Inequity in Ecuador today:

- 63% of the total population, and 80% of the indigenous people, live in poverty. 42% live in extreme poverty, lacking sufficient earnings to meet their most basic needs.

- The richest 20% have 61% of the income, and the poorest 20% have only 1.5% of the income, and the gap between rich and poor is steadily widening. Skinny kid

- Over 50% of children are malnourished � up from 45% 2 years ago. In rural areas 67% of children are malnourished.

- A third of the population lacks potable water and sanitary facilities.

- Half the population lacks adequate access to basic health services; a third lack adequate housing.


Inflation in Ecuador has gone through the roof (48% in 1998, and 100% predicted for 2000). Prices of food, housing, and goods have soared, while wages have stagnated, even for skilled professionals. The poor have become more destitute and the middle class is disappearing:

- Buying power of the minimum wage (US$40 per month) has dropped 75% in 5 years.

- Today the starting wage of a doctor working for the government is only $56 a month.

- Half the population is un- or under-employed.

Dollarization of local currency. In an attempt to control runaway inflation and the threatened bankruptcy of the corrupt banking system, this year (2000) the Ecuadorean government converted the national currency from "sucres" to US dollars. Nevertheless, rampant inflation continues. People must pay increasingly large amounts for basic necessities. This has led to country-wide protests and revolt.

Increase in crime. As in Mexico and other countries that have also experienced falling wages, unemployment, and cut-backs in public services, Ecuador is now experiencing a pandemic of crime and violence. Street children, homeless people, prostitutes, and beggars have proliferated, as has domestic violence. Wealthier homes often have armed guards with sub-machine guns stationed outside their prison-like walls. Fear of car-theft limits the mode of travel in certain areas.

Indigenous uprising in Ecuador, January 2000: Achievements and failures

In response to soaring prices, frozen wages, privatization, user-fees for health and education, and "dollarization," in January 2000 the indigenous peoples (Indians) of Ecuador launched a nation-wide revolt demanding a new, more pro-people government. Business and transportation ground to a halt as thousands of people from every tribal group filled the streets and blocked highways with logs, boulders, and themselves. Then, the Ecuadorean Army joined the insurrection, led by junior officers. Within 3 days the nation's president was ousted and the potential existed for a new more popular government. Picture from the cover of Alternatives to Neoliberalism and the People’s Movement. by Francisco Hidalgo Flor “Levantamiento popular” means People’s Uprising.

Alas, however, the uprising took place without adequate plans for a workable popular alternative. In the confusion after the overthrow, top generals in the army betrayed the indigenous front and restored to power the same corrupt politicians who favor the globalized market at the expense of the poor.

One reason that the insurrection brought little change (and if anything a more deeply entrenched far-right power structure) was that indigenous organizations made little effort to seek solidarity with organized labor or the nation�s powerful student and teacher organizations.

Another reason the January uprising brought little change was that the US government was quick to threaten Ecuador with trade sanctions (refusal to buy crude oil), and to halt international loans (including those from the World Bank) if the neoliberal oligarchy were dismantled.

In the last analysis, little was gained through the indigenous revolt, except for the lessons learned:

1. A well-organized peaceful mass uprising can topple an inequitable government (more effectively than corrupted national elections)

2) A practical plan for a more equitable and democratic alternative government must be well formulated before the uprising commences, and,

3) Given the power of today's globalized economy, any national struggle based on human needs faces enormous odds. Therefore, people's movements and organizations around the world must come together in the struggle for fairer, healthier, more democratic decision-making. This is the goal of the forthcoming People's Health Assembly in Bangladesh this December.

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