Ecuador: Victory in disputed referendum paves the way for President Moreno to consolidate power
A contentious national referendum held on 4 February awarded President Lenín Moreno a resounding victory over comrade-turned-foe, former president Rafael Correa, paving the way for Moreno to consolidate power. Providing a huge boost to the president’s political capital, the ballot, which put seven proposals to a vote, gave Moreno a long-sought mandate that he lacked, following a razor-thin victory in last year’s election. He will now be able to push through decisive constitutional and economic changes that run counter to his predecessor’s vision, which are bound to amplify divisions within the ruling PAIS Alliance (Alianza Pais) party. While analysts have welcomed Moreno’s win and hope it will lead to a program of economic adjustment, uncertainty prevails over the extent to which he will tighten fiscal policy to bring the country’s debt dynamics onto a more sustainable path, given the muted economic recovery so far.
Ecuador’s heavy reliance on external borrowing has given rise to a steeply rising debt burden, accrued through short-term bonds and oil-for-loans. Despite the need for reforms, Moreno may be reluctant to impose sharp austerity measures and is likely to take a more gradual approach to fiscal consolidation, given that the economy remains in a fragile position since being derailed by low oil prices in 2015–2016. Commenting on the referendum result and how it will shape Moreno’s economic agenda, Santiago Caviedes, Economic Analyst at Humboldt Management, stated:
“The result of the referendum strengthens business confidence as it reduces the chances of the return of Correa with a more radical agenda. President Moreno will attempt to form a centrist government, and will carry out business-friendly, albeit incomplete, reforms. He will have room for gradual fiscal consolidation as long as oil prices remains above 50 dollars per barrel. The new investment law will be a golden opportunity to boost business sentiment”.
Taking center-stage in the run-up to the vote, the most heated among the seven proposals was the call to reinstate a limit on election terms to only one second term for all elected officials. With 64.2% voting in favor of the motion, the constitutional amendment allowing for indefinite re-election, which was approved by the National Assembly in 2015 under Correa’s rule, can now be repealed. This would bar Correa, who already served three terms—from 2007 to 2017—from contending for the presidency in the future. All seven of Moreno’s proposals on the ballot garnered close to or more than two-thirds of the total votes in support.
A majority voted in support of restructuring the CPCCS—the Council for Citizen Participation and Social Control—which offers Moreno another means to further curb Correa’s influence by terminating the terms of current council members and changing the way the members are selected, along with reducing the duration of their terms. In the meantime, a transitory committee will be appointed directly by Moreno to replace them. This will give him more leverage over the workings of the Council, which oversees the process of appointing the attorney general, representatives to the electoral council and the comptroller general, among other important positions within the state. Moreno has urged Congress to bring the legal and constitutional changes into force immediately. However, the move to end existing members’ terms has come under fire from the Inter-American Commission on Human Rights, which ruled against the measure after members lodged complaints.