Where does the IMF road lead. From economic recipes to a popular explosion in Ecuador
Why Ecuadorians ousted the government from the capital
Mass demonstrations by Ecuadorians began after Moreno signed a decree abolishing from October 3 the subsidies for diesel fuel and gasoline that had been in force in the country since 1970. After the president’s decree, gas station prices rushed more than twice (about 123%), which caused a real shock in the country.
I must say, the people in this region live cool, sometimes tough to ruthlessness. For example, on the already mentioned Tuesday, in the southern Mexican town of Las Margaritas, local residents displeased with the mayor tied him with a rope to a pickup truck and dragged the poor fellow through the streets until the police managed to recapture their unlucky boss from the crowd.
Apparently, Moreno felt similar prospects (protest marches moved to Quito) and preferred to leave the capital with his government for the benefit. After all, the Ecuadorian police could not cope with the protesters, although they arrested almost 600 people. At the same time, about 500 people were injured in clashes between security forces and protesters on both sides. It was reported even about one dead.
Experts note that the protests in the country have acquired a spontaneous, uncontrollable character. True, the Confederation of Native American Peoples is now trying to formulate general requirements for the government and lead the popular movement, but so far the participants in the speeches have spilled out their anger quite spontaneously, although not without some purpose.
So it was with oil production facilities. They (three fields in the Amazon region where the Petroamazonas EP company operates) were taken under control by protesters to "protect the resources of the Ecuadorian state." As a result, oil production fell, and then completely stopped. Together with her, due to a drop in pressure in the main, the Trans-Ecuadorian Pipeline System (SOTE) stopped working.
In an interview with the local newspaper El Comercio, Lenin Moreno accused his predecessor Rafael Correa and the president of neighboring Venezuela, Nicolas Maduro, of rioting in the country. According to Moreno, acting together
Rafael Correa publicly denied the allegation. In an interview with RT, he noted that the reason for the protests lies in the "inept management of the economy." “We left the economy of Ecuador in a state of growth,” said the ex-president. - This continued until the 2017-2018 years. And this year we are in decline. Unemployment increased, this increased instability. 500 of thousands of Ecuadorians faced poverty again. ”
He dismissed Moreno and Nicolas Maduro. “Protests in Ecuador are the responsibility of the International Monetary Fund, and not the government of Venezuela,” the Venezuelan leader quoted RIA as saying.News».
Similarly, experts speak out. They note that Moreno "pursues austerity policies in line with the recommendations of the International Monetary Fund."
It all started so well ...
History The friendship of the current Ecuadorian president with international financial institutions manifested itself in the public sphere at the beginning of this year. In February, Lenin Moreno, in an appeal to the nation, said that an agreement had been reached with the International Monetary Fund (IMF) on the possibility of obtaining a loan of 10,2 billion dollars.
This amount will include an IMF loan of 4,2 billion dollars, the remaining six (one billion jointly) will be provided by the World Bank, the Inter-American Development Bank, the Latin American Development Bank, the European Investment Bank, the Latin American Reserve Fund and the French Development Agency.
Lenin Moreno boasted to the country: the credit line was opened on very favorable terms (for a term of 30 years at a rate of less than 5%), and now happiness will come for Ecuadorians. “The allocated funds will primarily create new jobs, including remote ones, for women with small children,” the president promised.
The experts explained the favor of international financiers to the head of Ecuador by the fact that Moreno, unlike his predecessor, began pro-American politics and was kindly for it. Others linked Quito's lending to the pending British loan to WikiLeaks founder Julian Assange, who had been hiding in the Ecuadorian embassy in London since 2012.
So, however, it happened. On 11 in March, Ecuador finally signed a loan agreement with the IMF and soon received the first tranche of 652 million dollars. At the same time, the pressure of the Ecuadorian authorities on Julian Assange increased. The journalist was restricted access to the Internet, they began to accuse him of violating the regime of the embassy and other sins.
A month later (April 10) Moreno deprived Assange of Ecuadorian citizenship. On the same day, the ambassador of Quito in London called the local police, invited her officers to come to the diplomatic mission and pick up the disgraced journalist, which they executed literally the next day. Thus ended the seven-year saga of the struggle of the founder of the site WikiLeaks with British justice.
After his arrest, Moreno explained his decision to the public by saying that Assange “intervened in the internal affairs of several countries and violated a number of international conventions.” This comment was ignored in the Western media. They talked more about the political nature of Ecuador’s deal with the IMF and its obvious benefits.
Monetary Fund is true to itself
However, the reality was not as blissful as it appeared in the media. The deal really had a political connotation. This became clear when Moreno announced the withdrawal of Ecuador from 1 on January 2020 from the Organization of Petroleum Exporting Countries (OPEC). This step was made in the interests of the United States, where Ecuadorian oil actually goes.
But this was not the end of the matter. The IMF demanded that the government of Ecuador tighten its economic policy and introduce a number of restrictions on budget spending. The main one was the requirement to abolish subsidies for motor fuel. Every year, a substantial amount was spent on this from the country's budget - $ 1,2 billion. In Quito, the IMF accepted and promised to resolve the issue in the fourth quarter of the year.
Now in the light of the protests of the population it is clear how far this agreement of the Ecuadorian authorities was, to put it mildly, short-sighted. Let's count. If Moreno, without any credit and unnecessary obligations, had simply removed subsidies for diesel fuel and gasoline from the budget, he would have released 3,6 billion dollars in three years (namely, for such a period, which the IMF ultimately lent money). This amount is comparable to the onerous loan of the monetary fund. Only now, in addition to everything, Ecuador is entangled with short-term debt, for which the poor population of the country will pay.
Having embarked on a rapprochement with the United States, Lenin Moreno rushed back into the arms of global financiers and seems to suffocate in those arms. After all, the IMF does not practice revising the agreements. So, you have to perform them anyway. To popular protests, the monetary fund is deaf and dumb ...
- Gennady Granovsky
- Euronews (YouTube, video frames)
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