Daunting Task After Ecuador’s Peaceful Change

The visit here by U.S. Secretary of State George P. Shultz--despite his displeasure with an anti-American mural in the nation’s Congress--underscores the significance of Ecuador’s peaceful change last Wednesday from one elected administration to another.

With the conservative President Leon Febres Cordero yielding to leftist Social Democrat Rodrigo Borja, Ecuador has accomplished its third consecutive transfer of power to a democratically elected president since the military abandoned the reins in 1979.

This small country of 10 million was the first in Latin America to restore democracy after the region’s long period of military dominance during the ‘60s and ‘70s. It is also notable for a country that elected Jose Velasco Ibarra president five times between 1930 and 1968 but never allowed him to complete a single term.

Borja will inherit a country wracked with near-insurmountable economic problems and governmental structures weakened through abuse of the democratic process by the personalistic and often-authoritarian Febres Cordero. Since many of Latin America’s other infant democracies have also been weakened by severe economic problems and threats of renewed military intervention, how Borja handles his multiple problems may be a bellwether.

Borja faces two major challenges that will bear heavily on whether he and democracy survives: First, he must put some life into an economy battered by depressed prices for Ecuador’s main export, oil; the devastation of a major earthquake in March, 1987; inflation running at more than 50%; a currency devaluation of nearly 200% over the past year, and the burden of a $10-billion foreign debt.

Second, he must restore some legitimacy to government institutions suffering the effects of paralyzing hostility between the president and the Congress, a rebellion in March, 1986, by elements of the armed forces, the kidnaping in January, 1987, of Febres Cordero by elements of the air force, and the former president’s often utter disrespect and flagrant non-compliance with verdicts of the Supreme Court and Constitutional Guarantees Court.

Borja has his work cut out: He and his Democratic Left Party do not have full control of the government, which is on the brink of bankruptcy. With only 31 of 71 seats, the Democratic Left does not control the Congress. The remaining seats are scattered among 10 other political parties. An arrangement with former President Osvaldo Hurtado’s Popular Democrat Party, which is ideologically and programmatically closest to Borja’s group, produced a three-vote majority.

A majority coalition ought to give the chief executive an easier time with the traditionally independent Congress than his predecessor had, but relations between the two are seriously eroded. During the Febres Cordero regime, a virtual state of war existed. Congress spent most of its time either in impeachment proceedings against members of the government or refusing to pass legislation presented by the president, forcing him to rely increasingly on decree powers.

Perhaps as recompense, when Congress passed its own bills, the president would frequently either veto or refuse to publish the law in the official register. The erosion of legitimacy suffered under Febres Cordero will surely cause the Congress to try to reassert itself. Combined with the historical volatility of political coalitions and general ineffectiveness of political party discipline, Borja’s three-vote majority looks precarious.

Borja will come under considerable pressure to implement policies that tend to be highly inflationary but also tend to benefit his party’s primary electoral support among the middle and working classes: wage hikes, price controls, maintenance of public-services subsidies and limits on payment of foreign debt. Such policies will provoke opposition from the private sector and quite possibly from the Democratic Left’s more conservative coalition partner.

Borja inherits a budget deficit nearing 11% of the gross national product. To renegotiate the debt and obtain needed resources, harsh measures aimed at stabilizing the economy will have to be implemented. The removal of subsidies on fuel and other basic goods and services will please international creditors but cause bitter opposition from Borja’s primary constituents as well as his enemies.

The new chief executive will face pressure from the private sector, which has adopted a wait-and-see but suspicious attitude toward Borja, as his Social Democratic views cause fears of more state intervention, nationalization of the banking system and major concessions to labor (the last leftist president, Jaime Roldos, immediately doubled wages on assuming office in 1979). Although Borja went out of his way during the campaign to calm these fears and has assured businessmen that he intends no massive changes, it will take little to provoke serious opposition. International donors and creditors are similarly suspicious, mainly because they fear a moratorium will be declared on debt payments. (Borja reportedly told Shultz last week--indicating the country’s strong need for U.S. support--that he would not nationalize any businesses.)

While Borja has been vocal in seeking a dialogue or “concentration” of interests toward definition of policy for his incoming government, there has been little concrete action. With the scale of sacrifice that will have to be made to achieve economic stability, the independence of Congress and the fragility of the ruling coalition, failure will be much easier to achieve than success.

But despite these cautions, there is an aura of optimism in Quito, perhaps born more out of desperation than reason, but nonetheless a feeling that the new government has both the capacity and the will to invigorate the economy and restore legitimacy to its highly eroded democratic structures. The rest of Latin America will be grateful if Borja succeeds.