Ecuador: Violent reaction against income redistribution

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Never before in the history of Ecuador has the propertied elite had to concede so much to the demands of the poor. Public sector spending increased from 21% of GDP in 2006 to 44% in 2013. This is part of the Citizens’ Revolution led by President Correa and the Alianza PAIS. Spending on people has infuriated the wealthy and they want to remove the government and seize back their loot. They control most of the media and attack the government’s programme in every way, including violent demonstrations.

Taxing the rich

On 1 June 2015, Correa announced two new tax bills. One, the Wealth Redistribution Law – a progressive inheritance tax affecting the richest 2% of Ecuadorians – starts with a 2.5% tax on homes costing between $35,400 and $100,000. The highest marginal rate would be 47.5% for the family but up to 77.5% for other beneficiaries. The second bill is a real estate capital gains tax of 75%. They undermine the power of 100 elite families who have dominated Ecuador for centuries. Wealthy landowners and property developers are furious, headed by the Mayors of Quito and Guayaquil, Mauricio Rodas and millionaire banker Jaime Nebot respectively, plus the Prefect of Azuay, Paul Carrasco.

Stronger tax collection is a blow against international companies too, extending corporate tax and capital gains tax collection to non-residents’ (tax haven) earnings from Ecuadorian companies and prevents other evasions. Whereas in 2014 Ecuador’s net tax collections totalled $13.3 billion, the government expects about $15.6 billion this year, important because lower oil prices are expected to slow economic growth.

The Rodas-Nebot grouping supports all opponents of the government to create the impression that Correa’s government is dictatorial and violent. This tactic was used in the September 2014 Quito demonstration against proposed changes to the Labour Law and a change allowing politicians to stand for an unlimited number of terms. They don’t want Correa to run for president again in 2017. On 19 March demonstrations ended with violent attacks on the police in Quito, Guayaquil and Cuenca.

The split in the working class

The Law for Labour Justice and Recognition of Work from Home was passed in April. It included the recognition of the labour of homemakers and sex workers, now incorporated – along with transport workers – into the social security system for the first time, benefiting upward of 1.5 million people. This is a decisive change for women in Ecuador. All employment contracts signed from 1 January 2016 will be indefinite not fixed-term. Construction workers must register with the Ministry of Labour Relations to defend them against employer abuse. Vulnerable and discriminated groups, such as pregnant women, Afro-Ecuadoreans and LGBT workers are now protected. This law fuels hatred of the government by the rich.

In anti-government demonstrations the United Front of Workers (FUT – composed of three union groupings) marched to defend its own sectional interests, opposing the new law. As a result of FUT’s sectarian and opportunist behaviour, 60 workers’ organisations in the country formed the United Workers Trade Union Federation (CUT) to back the reforms. CUT is an open organisation, recognising of all types of workers, including those in the informal sector and will work to promote the right to unionisation. There are some 4.2 million workers in Ecuador, but only 12% are unionised, yet, because of the government’s actions, Ecuador is now second only to Panama in Latin America in the purchasing power of its minimum wage.

The ‘soft coup’ strategy

Once the tax proposals were made, the right launched more demonstrations on 8 June. On 15 June, to prevent the violence, Correa temporarily withdrew the tax bills from parliament, calling for peaceful discussions. Still, on 25 June a large demonstration was organised by Mayor Nebot in Guayaquil, with Guayaquil’s flag and colours prominent, attacking the new tax laws and government ‘interference’ in Guayaquil’s affairs. On 1 July the government denounced plans by the country’s right-wing to overthrow the government during protests scheduled for the next day. Minister of Interior Jose Serrano said that a strategy involving former Colonel Pazmiño was to cause chaos. Pazmiño, former Chief of Military Intelligence, is ‘very close to the CIA’. He was sacked by Correa in 2008, after colluding in Colombia’s bombing of Ecuador.

The Pope

The Pope’s July visit to Ecuador, Bolivia and Paraguay upset the right wing. Hypocrisy forced the suspension of protests during the Pope’s visit from 6 to 8 July. It maddened them; preaching against inequality is not what imperialism needs, and Correa is doing what the Pope only speaks of! Between 2006 and 2014, Correa reduced poverty from 37.6% to 22.5%, whilst extreme poverty was reduced from 16.9% to 7.7%. Only a few hundred right-wing demonstrators returned to the streets on 9 July to rally in front of the Alianza PAIS headquarters in Quito.

The National United Collective of Workers, Indigenous and Social Organisations (Cedocut), met on 13 July to set the date for a national strike on 13 August. On 18 July the Confederation of Indigenous Nations in Ecuador (Conaie), declared their own general protest for 10 August, rejecting the government’s call for discussions. They fear that oil production will bring money in the short term but leave logged forests, polluted water and nature devastated, whilst large scale mining will deprive them of local small scale work. The government insists that all new oil activity will use the highest technical, social and environmental standards in exploring and developing prospects, to provide benefits for all social groups in Ecuador. Conaie has made it clear that it does ‘not seek to destabilise the government nor cause chaos’.

The opposition in Ecuador is desperate and with their imperialist allies can be expected to continue to try and destroy Correa and his Alianza Pais. It is essential that we understand the split in the trades unions, and the crisis that industrialisation presents to the remnants of natural economy, if we are to understand the lies and confusion sown by the enemies of socialism.

Alvaro Michaels

FRFI 246 August/September2015