In a shock move on 3 August, Ecuadorian President Lenín Moreno removed Vice-President Jorge Glas from office after the latter suggested that the government had been manipulating economic figures. In a two-page presidential decree, Moreno absolved his deputy of his responsibilities, accusing him of “not having understood” the “loyalty and commitment… implied in serving the homeland in a unified way”. The decree came a day after Glas, who has been the subject of a number of corruption allegations, issued a statement denying his involvement in illicit activities and attacking Moreno’s administration for “perversely manipulating the economic figures”.

Glas spat further complicates Moreno’s difficult agenda

Since his narrow victory in April’s presidential election, Moreno has faced both economic and political challenges. While Ecuador’s oil-reliant economy has been transformed over the past 10 years – a period often referred to by former president Rafael Correa as the “victorious decade” (década ganada) – it has flagged since oil prices began to fall in 2014. Furthermore, with a high public sector deficit, estimated to be around 5-6% of GDP, and few monetary policy tools at his disposal given the country’s use of the US dollar, Moreno has been forced to take painful measures to address the “critical” state of the economy. Moreno’s clash with vice-president Glas, also from the ruling Alianza País party, is likely to distract government attention from the much-needed economic stabilisation effort.

Such context is vital for understanding the current turmoil affecting the government. Despite serving as Correa’s vice-president between 2007 and 2013, Moreno has attempted to distance himself from the causes of the present economic difficulties, instead criticising the state of the economy he inherited from Correa. Responding to Moreno’s criticisms of Correa’s economic management, Glas, who also served as vice-president during Correa’s final term (2013-17), accused the current administration of manipulating economic data to attribute the present difficulties to the previous government. For Moreno, such defiance from his vice-president was deemed unacceptable and Glas was promptly suspended. Nevertheless, in seeking to disassociate himself from the causes of the current economic difficulties and his beleaguered vice-president, Moreno has taken a considerable political gamble early in his presidency.

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Dwindling oil prices have had a significant effect on the government’s budget. Photo Credit: Wikipedia Commons

Moreno distances himself from Correa

Despite receiving strong support from former president Correa during the election campaign, Moreno has increasingly sought to distance himself from his predecessor since assuming the presidency in May. By labelling himself “the people’s president”, restoring cordial relations with the media, and doing away with Correa’s weekly television show, Citizen Connection (Enlace Ciudadano), Moreno has broken with Correa’s confrontational modus operandi. Furthermore, Moreno has changed course in two key policy areas: anti-corruption strategy and economic policy. In response, Correa, who continues to be a significant figure in the national discourse despite relocating to his wife’s native Belgium, has begun to voice plentiful criticism of his successor.

In characteristic fashion, Correa has taken to Twitter to robustly defend his government’s record and criticise Moreno’s new approach. Having departed Ecuador on 10 July, Correa has launched a forty-four tweet defence of his administration’s economic policy, issued support for the suspended Glas, and told young people to “never trust” somebody like Moreno. While Correa, who was unable to run for re-election due to constitutional a term limit, poses little threat to Moreno’s fortunes in the short term, his growing opposition to the current president may have important implications for governability. Although a controversial figure, not least for his hostility towards the press – leading Freedom House to declare the country as “not free” – Correa remains a popular figure in Ecuador. Leaving office with a 62% approval rating, he continues to hold sway over important segments of the ruling Alianza País party and has not ruled out running for the presidency in 2021.

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Lenin Moreno began his presidential term in May this year. Photo credit: Wikipedia Commons

Economic recovery key to Moreno’s fortunes

Despite the instability arising from Glas’ suspension, Moreno’s key priority will remain economic stabilisation. While Ecuador’s economy expanded 2.6% in the first quarter of 2017, growth “seems to be levelling off” in Q2; a likely result of attempts to deal with the deficit. Such signs of a slowdown have also been seen in extremely low inflation figures, with July’s price falls of 0.14% further indicating a decline in economic activity.

Fortunately for Moreno, Ecuador’s economic panorama is likely to benefit from the difficulties facing US president Donald Trump. The paralysis of the current White House and the Federal Reserve’s reluctance to hike interest rates have contributed to a significant weakening in the value of the dollar, boosting the competitiveness of Ecuador’s exports. As many determinants of Ecuador’s economic performance are external (oil price, global conditions, dollar value), the fate of the economy is often difficult to predict. If, however, external conditions continue to turn in Moreno’s favour, political disputes – such as the row with Glas – will be overshadowed by economic recovery.


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