On 2022/6/13, large-scale protests against the Ecuadorian government began. Sparked by public frustration over rising prices for essentials such as food and gasoline, the movement lasted for about two weeks, paralyzing transportation and domestic economic activity and leaving several people dead. In the end, the protests ended after the government accepted the demands of the Confederation of Indigenous Nationalities of Ecuador (CONAIE). Multiple factors were behind the largest protest movement in recent years. This article delves into those factors.

The National Assembly debating the protests that broke out in June 2022 (Photo: Asamblea Nacional del Ecuador / Flickr [CC-BY-SA 2.0])

History of Ecuador

Ecuador is a country located right on the equator in Latin America, with a population of about 17.8 million. Humans are thought to have settled here about 10,000 years ago, and multiple Indigenous groups and political organizations were formed between about 5,000 and 2,000 years ago. Among them, the Kingdom of Quito—said to have been composed of several Indigenous groups—grew the strongest. In the 13th century, the Inca Empire, founded in what is now Peru, invaded in 1460 and conquered the Kingdom of Quito. However, armed conflict within the Inca Empire weakened it.

In 1533, Spain invaded and imposed colonial rule, and, as in other parts of South America, the area around present-day Ecuador became a Spanish province until 1563. During that period, pathogens brought by settlers and forced labor reduced the Indigenous population from the 16th to the 17th centuries. As independence movements surged across Latin America in the early 19th century, several cities including Quito, now the capital, came together in 1830 to achieve full independence as the Republic of Ecuador, largely maintaining colonial-era borders. However, this did not lead to stable governance, and political instability continued through the latter half of the 20th century. After independence, Indigenous peoples and the poor held low, serf-like status, and a small elite—such as descendants of settlers—held power, leaving Indigenous communities politically and economically marginalized. They also faced discrimination, such as being forbidden to speak their own languages.

From the 1930s, the U.S. company United Fruit Company entered Ecuador, purchasing large tracts of land in Tenguel and establishing banana plantations. In order to prevent worker resistance, the company offered substantial benefits while also exhibiting an authoritarian approach that controlled workers’ lives to a notable degree. Banana exports boomed in Ecuador from the late 1940s, and by the 1950s the country had become the world’s largest exporter. However, outbreaks of diseases such as Panama disease slashed banana production, and United Fruit withdrew in the mid-1960s. Despite a drop in export volumes of around 30%, Ecuador continued to export bananas thereafter.  

Up to the 1970s, banana exports were the pillar of Ecuador’s economy, but after oil was discovered in the Oriente in 1967, crude exports expanded rapidly in the following years. While this brought economic growth, much of the wealth generated by bananas and oil flowed abroad to foreign companies. Issues such as social inequality, environmental destruction, and Indigenous rights came to the fore, and political conflict between liberals and conservatives continued through the 1980s and 1990s. The global drop in oil prices in 1986 dealt an economic blow to Ecuador. Subsequent intervention by the International Monetary Fund (IMF) led to widening inequality, and by the late 1990s the country was close to hyperinflation. The poverty rate in 1999 stood at 52.1%.

In response, President Jamil Mahuad Witt at the time advocated dollarizing the currency, but public dissatisfaction mounted, and the military—taking into account the unrest—staged a coup. As a result, then–Vice President Gustavo José Joaquín Noboa Bejarano became president. He also considered dollarization essential to address inflation since 1999, and in 2000 the dollarization policy was approved by the legislature, making the U.S. dollar Ecuador’s legal currency.

In 2007, Rafael Vicente Correa Delgado (hereafter, Correa) was elected president with strong support from the poor. The Correa administration expanded public spending and raised incomes, while also exhibiting an authoritarian streak such as tightening media regulations. In 2008, it amended the constitution, working to improve the social standing of Indigenous peoples by recognizing Indigenous languages in the constitution. The U.S. Air Force had used an Ecuadorian air base in Manta since 1999, but Correa demanded their departure. The U.S. Air Force withdrew in 2009, and the base was returned to Ecuador. Furthermore, by sheltering WikiLeaks founder Julian Assange—who released classified U.S. information—at the Ecuadorian embassy in London, the administration came into diplomatic conflict with the United States.

Former President Correa delivering a speech (Photo: Cancilleria del Ecuador / Flickr [CC-BY-SA 2.0])

Correa was re-elected in 2013 and served until 2017, the longest tenure in Ecuador’s history. When Lenín Boltaire Moreno Garcés (hereafter, Moreno) was elected president in 2017, he pivoted to neoliberal policies (※1) and handed over Assange to the British government, easing tensions with the United States. In 2021, Guillermo Alberto Santiago Lasso Mendoza (hereafter, Lasso) was elected and, as of 2022, is serving as president.

Poverty and economic policy

Leonidas Iza, the leader of CONAIE, which led the protests in 2022 6, said that Ecuadorians are facing poverty and are furious at the country’s inequality and injustice. As this suggests, domestic economic problems were deeply tied to the protests. The signs were apparent from 2015. A sharp drop that year in oil prices—which account for 36% of Ecuador’s total exports—slowed economic growth. In response, the Moreno administration in 2019 secured an IMF loan of USD 4.2 billion, but the conditions included steep austerity measures such as raising fuel prices, privatizing health care and education, and mass layoffs in the public sector—policies that ultimately worsened poverty. When the fiscally strained government announced the removal of subsidies for essentials like fuel and social assistance, the public mounted large-scale protests. The nationwide unrest became so intense that it temporarily forced the president to flee the capital; after eight days of demonstrations, the government reversed the subsidy removal.

Economic recovery did not follow, and the trend was accelerated by the onset of COVID-19 in 2020. The global pandemic paralyzed 70% of Ecuadorian companies, and the domestic unemployment rate reached 68%, plunging the country into a severe economic paralysis. The number of people living in poverty increased by about 3.2 million between 2019 and 2020, and the level of social inequality fell back to where it had been a decade earlier. Although recognition of Indigenous rights has finally advanced in recent years, poverty remains pronounced. Since 2007, the poverty rate among Indigenous peoples has never fallen below 45%, and in 2020 it reached about 60%. In late 2020, the government sought another IMF support program, and USD 4 billion in financing was implemented within the year.

CONAIE and the government in talks in 2021 (Photo: Ministerio de Gobierno Ecuador / Flickr [Public domain.mark-1.0])

Meanwhile, domestic inflation rose, and by 2022 6 it had reached its highest level since 2015. Although Ecuador exports crude oil, it imports most refined products such as gasoline from abroad, so the global surge in oil prices drove a sharp rise in domestic gasoline and diesel prices. Compared to 2020, prices were about 2 times higher, imposing a heavy economic burden that made daily life untenable for many.

The banana industry—Ecuador’s leading export after oil—was also hit. Due to sanctions imposed by Western countries on Russia over the invasion of Ukraine, exports to Russia became impossible, likely costing about USD 700 million in annual sales. Even amid this, the Lasso administration sought to continue neoliberal policies aligned with IMF loan agreements, such as a 12% increase in fuel prices—moves that likely contributed to the latest large-scale protests.

Indigenous peoples and environmental issues

The latest protests were led by CONAIE, the largest Indigenous rights organization in Ecuador. As noted above, the surge in the cost of living undeniably helped spark the unrest, but their demands of the government also involve Ecuador’s environmental issues.

As of 2020, about 1.1 million people identified as Indigenous in Ecuador, accounting for 6% of the total population. There are 14 Indigenous groups recognized, and about 25% of Indigenous people live in the Amazon rainforest. The government has adopted protective policies such as creating protected areas to prevent the destruction of Indigenous living environments and nature. However, it has permitted oil development within supposedly protected areas, leading to repeated pollution by the state and corporations. The largest environmental contamination case in Ecuador involved an Ecuadorian oil company that merged with Texaco (now Chevron) (※1), which over roughly 30 years from 1964 to 1990 dumped more than 64 million liters of toxic wastewater in Ecuador’s rainforest. Reportedly done to save disposal costs, this practice has inflicted public health harms on local Indigenous communities, including cancer, miscarriages, and birth defects.

Investigating Chevron’s environmental contamination (Photo: Cancilleria del Ecuador / Flickr [CC-BY-SA 2.0])

In response, the company—having withdrawn from Ecuador in 1992—claimed its operations complied with standards and dismissed the Indigenous communities’ complaints. In 1993, 30,000 Indigenous people filed a lawsuit against Chevron through human rights lawyer Steven Donziger. The ruling came about 18 years later, in 2011, when Ecuador’s Supreme Court recognized Chevron’s legal responsibility and ordered USD 18 billion in damages. Chevron refused to pay, and compensation has still not been made. Donziger, the plaintiffs’ lawyer, was then sued by Chevron in the United States and, after a trial marked by many irregularities, was placed under court-ordered house arrest for about 1,000 days. He completed his sentence of home confinement in 2022 4.

In 2006, Ecuador terminated its contract with Occidental Petroleum, a U.S. oil company that had been operating in the country since the 1980s, and seized Occidental’s assets. Occidental, one of Ecuador’s largest investors, withdrew, and state-owned Petroecuador further increased its presence in the domestic oil industry. However, Petroecuador sometimes contracts foreign oil companies to carry out operations. As a result, most of the profits from oil remain with foreign companies and the central government, and little reaches the Indigenous communities who suffer the environmental damage this industry brings.  

In 2018, the Ecuadorian government held a national referendum on whether to reduce oil drilling in Yasuní National Park in the Amazon, and 67.5% of voters approved the reduction. In response, the government decided to cut the extraction area within the park from 1,030 hectares to 300 hectares. Yasuní is one of the most biodiverse parts of the Amazon and home to Indigenous peoples. At the same time, it is a region that contains 18.3% of Ecuador’s oil reserves, and drilling has long been conducted there. The year after the referendum, the government redrew the boundaries of the extraction area but did not restrict extraction.

Furthermore, the Lasso administration, launched in 2021, promoted a project to expand drilling areas with a pledge to double oil production. The decree advancing the project also included deregulation of oil extraction, which CONAIE flatly rejected. The administration did not rescind the decree, deepening mistrust among Indigenous groups toward the government.

CONAIE demonstrations in 2002 (Photo: Donovan & Scott / Wikimedia Commons [CC BY-SA 4.0])

Political corruption

Another factor underlies the issues described above. In 2019, a survey of 403 Ecuadorian journalists and opinion leaders found that the largest share cited corruption as the country’s most important problem. Internationally, Ecuador scores poorly on corruption; in Transparency International’s Corruption Perceptions Index, Ecuador ranks 105th out of 180 countries. Some protest participants called for an end to corruption.

Correa, president from 2007, was charged with accepting USD 8 million in bribes in exchange for infrastructure contracts between 2012 and 2016. In 2020, he was convicted in an Ecuadorian court on corruption charges and sentenced to 8 years in prison, although he denies involvement. Moreno, Correa’s successor, also faced allegations that bribes were paid to his relatives by a multinational that built a dam in Ecuador, though the truth remains unclear.

It is also worth noting relations between the Moreno administration and the United States. The U.S. sought Assange’s extradition from Ecuador and applied economic pressure such as trade measures. It is alleged that the IMF—of which the U.S. is the largest shareholder—made the cancellation of Assange’s asylum a condition for loans. Conditions were also said to include dropping lawsuits against Chevron, the oil company mentioned above. The Moreno administration reportedly accepted these conditions, had already revoked Assange’s asylum, and was signaling moves to withdraw the case against Chevron.

Five months after taking office, Lasso was named in the International Consortium of Investigative Journalists’ “Pandora Papers,” which revealed millions of dollars in assets hidden abroad. He was investigated for alleged tax evasion, and lawmakers sought his impeachment, but opponents of the motion outnumbered supporters, and Lasso remains in office.

Lasso (right) delivering a speech (Photo: Samurai Juan / Flickr [CC-BY-SA 2.0])

Has the government responded?

In response to the protests, CONAIE presented the government with 10 demands, including price controls for agricultural products, an end to deregulation of oil extraction, increased fuel subsidies, lower fuel prices, job creation, and higher budgets for health and education. On 6/30, the government reached an agreement with CONAIE to cut gasoline and diesel prices by 15 cents and to restrict oil exploration and extraction in protected areas. It also announced that it would present concrete solutions within 90 days.

In 2022 9, CONAIE and the government agreed to a temporary moratorium on new oil and mining concessions. The moratorium is to remain in place until a law is enacted guaranteeing the right of Indigenous peoples to be consulted prior to extraction activities. The economic situation of the public is still poor. As of 2022 9, Ecuador’s central bank expects that, due to stagnant employment and the impact of the protests, the economic situation of one in three Ecuadorians will worsen over the next 3 months [source]. Moreover, due to conflicts between the executive branch led by Lasso and a legislature dominated by the faction of former President Correa, there is no sign that structural political reforms will advance, leaving doubts about whether corruption can be eradicated.

As of 2022, Ecuador carries external debt of about USD 40 billion, making economic issues severe. To break out of this situation, the current administration is prioritizing sectors such as oil (with a goal to double production) and mining, but this simultaneously requires addressing Indigenous and environmental concerns. Oil development can drive growth, but without equitable distribution of the gains, the problems will persist. Increasing partnerships between Petroecuador and foreign companies could further worsen economic hardships for Indigenous and poor communities by accelerating profit outflows. If development proceeds, environmental destruction in regions inhabited by Indigenous peoples must be prevented. Furthermore, amid the urgent need for decarbonization to curb climate change, Ecuador will face questions about whether to continue advancing oil development.  

Taking into account issues of poverty and environmental destruction, how can Ecuador develop its economy? We must continue to closely watch the country’s trajectory.

※1 Neoliberalism is the idea of deregulating, minimizing government intervention in markets, and leaving the economy to the outcomes of free market competition.

※2 After withdrawing from Ecuador in 1992, the Ecuadorian oil company Texaco, which had dumped oil waste for 30 years, merged with Chevron in 2001. As a result, Chevron inherited Texaco’s lawsuits.

Writer: Maika Ito

Graphics: Yudai Sekiguchi

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