The Ecuador of Guillermo Lasso

During Lasso’s two years in office, Ecuador has registered the highest annual inflation of the decade, the highest rate of homicide in seven years, mass migration, and unprecedented drug-related activities

May 24, 2023 by Tanya Wadhwa
Ecuador’s incumbent president Guillermo Lasso failed the people of his country during his short two-year term in office. Photo: Guillermo Lasso/Twitter

On Wednesday morning, May 17, Ecuadorian President Guillermo Lasso decreed the dissolution of the country’s parliament using a never-before-tested constitutional clause known as “cross-death,” which triggered early presidential and legislative elections, and caused the premature end of his presidential term and plunged the country into an unprecedented political crisis.

The dissolution of parliament took place a day after the body began an impeachment hearing against Lasso. He is accused of corruption and embezzlement of public funds. He argued that there was a “serious political crisis and internal commotion” in the country, and that the dissolution of the opposition majority parliament was a “constitutional solution” and a “democratic action.”

The “political crisis and internal commotion” however, was not because the Congress dared to investigate the president’s acts of wrongdoing, but rather because of Lasso’s questionable governance. According to a survey conducted in February 2023, 85% of Ecuadorians disapproved of Lasso as president.

While Lasso has now successfully avoided the possibility of being investigated and removed from office, it is necessary to recall the track record of the two-year banker turned president and what his administration has meant for the country.

Economic crisis

In December 2022, Ecuador registered its highest annual inflation of the decade: a record 3.74%, according to a report by the National Institute of Statistics and Censuses of Ecuador (INEC). The items whose cost increased the most in 2022 included food products and non-alcoholic beverages, transportation, various goods and services, restaurants and hotels, furniture and household items, education, healthcare, and rent, water, electricity and gas services.

The INEC also reported that the cost of the basic family basket, consisting of 75 essential products, reached USD 763.44 in December 2022, and that of the vital family basket, made up of 73 products, but less in quantity and quality than the basic basket, reached USD 538.96.

Additionally, according to a recent study conducted by the INEC, 53.5% of the workers were employed in the informal sector in the first quarter of 2023. The figure represented an increase of 2.4% as compared to the same period in 2022. The situation was much worse in the rural areas, where 76.9% of the workforce is in the informal sector.

The survey also indicates that, in the first three months of the year, the average monthly income of this sector was USD 379.60. Likewise, in rural areas, the monthly income was around USD 219.70. Jobs in the informal sector are generally unstable, with low wages, and without social security or rights, according to the International Labor Organization (ILO).

Security crisis

Since January 2022, Ecuador has been witnessing a concerning spike in criminal violence, especially in the Pacific coastal regions. Assassins have been targeting judicial officials and killing police officers as well as citizens at record rates.

The Lasso government blames drug trafficking gangs for it, arguing that due to Ecuador’s location, between Colombia and Peru, the world’s leading cocaine producers, the country has become a key transit point for drug shipments to the United States and Europe.

In March, the president declared a 60-day state of emergency in the coastal provinces of Esmeraldas, Guayas, Los Ríos and Santa Elena, and deployment of the military to the streets. However, the murders have continued to take place, something that severely affects the credibility of the government.

In 2022, Ecuador recorded the highest rate of homicide in seven years: 25 murders per 100,000 inhabitants. In 2021, the rate was 13.7 cases per 100,000 inhabitants, which means in one year an increase of 82.5% was recorded.

Migration crisis

The deteriorating socio-economic conditions have forced thousands of Ecuadorians to leave their country and take on a perilous journey to the US in search of a better life. For years, Ecuadorian migrants have argued poverty and unemployment as reasons for migration. Now they are also citing the growing insecurity in the country as one of the causes.

There has been an alarming increase in Ecuadorian migrants crossing the Darién gap jungle that separates Colombia from Panama, an extremely dangerous trek. In January, the Panama Migration Office revealed that Ecuadorian was the second nationality that most crosses the Darién pass. During 2022, around 30,000 Ecuadorians crossed the jungle.

June 2022 national strike

In June 2022, hundreds of thousands of Ecuadorians mobilized across the country as a part of an indefinite national strike against the anti-people economic policies of the Lasso government and the increasing insecurity in the country. The strike was called for by various Indigenous, Afro-descendant, and peasant organizations, with a set of ten demands that address the urgent needs of the majority of Ecuador’s population in the face of rising inflation and cost of living crisis.

The demands included the reduction and freezing of fuel prices; provision of employment opportunities and labor guarantees; putting an end to privatization of public companies; introduction of price control policies for essential products; allocation of greater budget for public education and health sectors; protection to people from banking and finance sectors; provision of fair prices for agricultural products; an end to drug trafficking, kidnappings and violence; bans on mining and oil exploitation activities in Indigenous territories and near water resources; and respect of the collective rights of Indigenous peoples and nationalities.

After over two weeks of nationwide social protests and roadblocks, the government agreed to make concessions on some of its policies. It signed an agreement with organizations to end the strike and advance the negotiation process to address the social demands raised by them.

In October, the organizations and the Lasso government concluded the negotiations after three months of talks without agreements on all points.

Six were killed and over three hundred were injured during the protests before reaching an agreement. Following the strike, the National Assembly held the first impeachment vote to remove Lasso from power for unleashing brutal repression against social protests. Lasso survived the vote by a margin of just two votes.

Prison crisis

Ecuador’s prison system has also been going through a severe crisis since the end of 2020. Prisons across the country have been plagued by shootings, riots and violent confrontations. According to official data, since January 2021, 442 prisoners have been killed in the state’s custody in different massacres in prisons.

The Lasso government has blamed drug trafficking gangs fighting for control of prisons as well as territory and drug trafficking routes outside prisons for the crisis. Nevertheless, human rights organizations have highlighted that overcrowding, negligence of the authorities, and absence of crime prevention policies in the country are the fundamental reasons.

Drug-trafficking and the Lasso government

The Lasso government is trying to play the victim, but investigations have revealed that it may be intimately linked  to the reason behind the worsening of the illegal drug trade and related violence in the country.

In January, digital media outlet La Posta published a series of documents and audio recordings that linked various government officials and Lasso’s brother-in-law, Danilo Carrera, with alleged acts of corruption and drug trafficking.

La Posta’s investigative report, called El Gran Padrino or The Great Godfather, revealed an alleged criminal structure for the appointment of positions and public contracts in exchange for money in state companies, linking Danilo Carrera’s friend and businessman Rubén Chérres —murdered in April—, and with various government officials, such as Hernán Luque, fugitive former president of the Coordinating Company of Public Companies (EMCO). According to the report, Chérres, Luque, and Carrera managed appointments to high positions within public companies and ministries, and decided which private companies work with the State in exchange for bribes.

The report also revealed Chérres’ alleged links with the members of the Albanian mafia, and that the mafia had chosen Ecuador as a strategic point for drug trafficking operations. It alleged that since Chérres and Carrera possessed influence over key institutions, such as the Customs service and the Ministry of Energy, they helped the members of the mafia disguise themselves under the facades of big businessmen and launder assets and promote arms and human trafficking in the country.

La Posta’s report details information from an investigative report prepared by the Anti-Narcotics Police of Ecuador between May and July 2021.

The impeachment trial

The publication of the report by the media outlet led the Prosecutor’s Office to initiate investigation against several public officials within public companies for the crimes bribery and corruption. The epicenter of the investigation in the EMCO were the public oil transportation company Ecuadorian Oil Fleet (FLOPEC) and the electricity company Electrical Corporation of Ecuador (CELEC).

In March, the opposition majority congress asked to start impeachment proceedings against the head of state. The Constitutional Court approved the request by opposition legislators to impeach Lasso politically for the crime of embezzlement of public funds, related to a contract signed between the FLOPEC and the private Amazonas Tanker Pool company.

The motion, presented by congresswoman Viviana Veloz of the left-wing opposition Union for Hope alliance (UNES) bench, detailed that there was evidence of “the diversion or distraction of the funds generated annually by these pools of companies with which LOPEC had a contractual relationship in the transportation of crude oil.” It also argued that Lasso “defined the continuation of oil transportation contracts in favor of third parties, conscious that they represented a loss for the state.”

For his part, Lasso rejected the existence of a structure or network of corruption in his government and public energy companies. He denied the accusations, arguing that the contract was signed under the previous administration of former President Lenín Moreno in 2018, and that under his administration profitable changes were made to the contract based on advice from the Comptroller General’s Office.

Pandora papers

In October 2021, Lasso was also implicated in corruption and financial crimes, after offshore companies owned by him were mentioned in the Pandora Papers. The Pandora Papers uncovered a complex web of tax havens, shell corporations, and offshore accounts that hide the true ownership of billions of dollars of assets.

A law passed in 2017 prohibits elected officials from holding assets and capital in tax havens. Following the allegations in the Pandora Papers, Lasso made several public statements declaring that he had not violated the law. He also released his financial documents in support of his claim. He said that while he had previously invested in foreign companies and held money in foreign accounts, he had sold them off after he dedicated himself to politics.

At the time, the National Assembly voted to only question him instead of removing him from office.