Alaco

17.02.2017 | Is Ecuador set to defy Latin America’s shift to the right?

A left-wing candidate is leading the polls in the country’s upcoming presidential election, but a corruption scandal implicating his party may make it a close-run contest.

Ecuadorians could buck the rightward trend in Latin American politics when they vote in this weekend’s presidential election, with a left-wing candidate, Lenin Moreno, heading the polls  despite his party, the ruling Alianza Pais, being linked to a major corruption scandal.

This Sunday’s ballot sees popular leftist President Rafael Correa stepping down after more than a decade in power. Polling suggests that Moreno, a former Vice-President, may secure a narrow victory – probably after a run-off.  Ecuador would then counter the prevailing political trend in Latin America, which has seen voters reject populist leaders and administrations in Brazil, Argentina and Peru.

Correa is credited with using the proceeds of the country’s vast oil wealth to oversee significant economic development and improvements in living standards, avoiding many of the mistakes made by the country’s close ally Venezuela, which squandered much of its energy riches and is now paying the price.

But the oil price collapse has depressed Ecuador’s economy overshadowing the government’s achievements. Voters’ concerns over the leadership’s competence have been heightened in the past few months by allegations that have swirled around former Alianza Pais officials implicated in a scandal that has engulfed the state oil company, Petroecuador.

A countrywide investigation into Petroecuador began following the Panama Papers leaks in April 2016 which revealed a number of high-profile Ecuadorians were connected to a network of offshore companies.  Since then, allegations – ranging from bribery to embezzlement – have been levelled at scores of people linked to the oil company.

Defendants in a trial centred on the redevelopment of Petroecuador’s Esmeraldas Refinery, which went over budget by $1 billion, faced charges of receiving bribes from contractors and hiding their illicit earnings in offshore companies based in Panama and the Bahamas.

The trial concluded this week with 10 of the defendants found guilty of bribery, sentenced to five years in prison and ordered to pay a total of $25 million in compensation. Their lawyers have said they will appeal the convictions.

Ecuadorian media reports had focused on two of the convicted defendants, ex-managing directors of Petroecuador Alex Bravo and Carlos Pareja, also a former oil minister. They were alleged to have been the organisers of the bribery-for-contracts scam.  Bravo had been remanded in custody awaiting the outcome of the trial, while Pareja had for a time fled the country after investigations into the case were launched.

In recent weeks, Correa and Pareja have been engaged in a very public social media battle, with the latter publishing a video of himself claiming that the current Vice-President and Moreno’s running mate Jorge Glas is at the centre of the corruption network. Correa denied Pareja’s claims and responded on Twitter that Pareja was simply trying to destroy Alianza Pais’ campaign and should see a psychiatrist. 

The scandal appears to have shaken public confidence in the governing party at a time when revenues are diminishing due to the steep decline in oil prices, with billions of dollars’ worth of Chinese loans being sought to service mounting debts.

While Correa has been a popular leader, his administration appears to have struggled to tackle the massive fiscal deficit that has emerged in recent years. Despite the fall in oil revenues, the government has remained committed to its popular social programmes as part of a so-called Citizens’ Revolution Correa introduced when he came to power in 2007.   

Many Ecuadorians’ desire for change following Correa’s ten years at the helm together with the fallout from the corruption scandal suggest that Moreno may not be able to garner enough votes to secure a first-round victory in Sunday’s election, in which voters will also elect a new assembly. 

Moreno’s main rival, Guillermo Lasso, a former banker, is promising to reduce taxes, boost employment and introduce greater transparency in Ecuador’s dealings with China.

While opinion polls are considered to be politically biased, they all appear to point to Moreno as the leading candidate.  According to surveys conducted in January by the widely cited Quito-based pollster Cedatos, Moreno and Lasso are expected to win 32% and 21% of the vote respectively. If neither candidate secures more than 40% of ballots and a ten point difference over their closest rival, a second round of voting will take place on 2nd April. 

Although Moreno’s electoral prospects might have been harmed by the allegations against Glas and Petroecuador, his vow to continue Correa’s social programmes resonates strongly with voters. Moreno is clearly riding the wave of Correa’s popularity, but if he triumphs he is likely to come under pressure to introduce greater transparency and economic reforms to deal with the country’s massive debt burden.