WASHINGTON - November 21 - The Center for Economic and Policy Research (CEPR) today released an issue brief, “Ecuador’s Presidential Election: Background on Economic Issues.” To read the paper, see http://www.cepr.net/documents/ecuador_elections_economic_issues.pdf
“The ‘fear factor’ has been a key strategy of the right in Latin American elections this year,” said Mark Weisbrot, co-Director of the CEPR and the lead author of the report. “But there is no reason to think that the outcome of this election would adversely affect Ecuador’s economy, regardless of who wins.”
The report notes that the severe economic crisis of the late 1990's is not likely to be repeated, since the conditions that caused it are no longer present. Among other changes, the country has adopted the dollar as its national currency, which eliminates the currency risk and instability that played a central role in the 1998-2000 economic collapse.
The race pits billionaire banana magnate Alvaro Noboa, the richest man in the country, against left economist Rafael Correa, who has criticized the sluggish economic growth under the “Washington Consensus” reforms of the past two decades and pledges to make poverty alleviation his first priority.
Noboa has closely aligned himself with US foreign and commercial policy in the region and supports a “free trade” agreement (FTA) with the United States. Correa, by contrast, has criticized the IMF and World Bank, rejects the proposed FTA, and has said he will not renew the contract for a US military base at Manta when it expires in 2009.
But the report concludes that commercial relations with the United States would not be adversely affected if Correa wins, noting, for example, that the White House and Congressional leaders both support the renewal of trade preferences for Ecuador along with the other Andean countries.
“Washington has not altered commercial relations or even reduced aid to the left governments that have won in recent years,” said Weisbrot. He noted that even in Nicaragua, where US officials openly warned of economic sanctions if Daniel Ortega were to win the election, nothing has happened since Ortega won on November 5.
The report looks at Ecuador’s economic recovery, dollarization, current economic situation, and other issues relevant to the election and future economic policy.