Banking on friends

Observations on Ecuador

Last month, shattering even the elevated expectations of early polls predicting victory, some 82 per cent of the Ecuadorean electorate voted "Si" in a referendum to reform the decrepit constitution that misgoverns their country. It is a clear vote of support for President Rafael Correa, who had said before the referendum: "If the people withdraw their confidence, the leader must retire with dignity."

The vote also signals support for Correa's heretical policies and promise of change. "Ecuador is no one's colony," said the leader, who has also just expelled the World Bank's representative in retaliation for the bank's suspension in 2005 of a $100m loan to Ecuador.

The keystone of Ecuador's decolonisation is the multilateral BancoSur proposal, which aims to restructure Latin America's financial architecture and create a sovereign lending agency oriented towards regional development. Adding heft to this proposal, many South American countries - and, recently, Ecuador itself - have paid off IMF or World Bank debts ahead of schedule, thus distancing themselves from the condition-laden loans that had saddled their region with two decades of retarded growth. As Ecuador's finance minister, Ricardo Patiño, has observed: "We have no interest in soliciting credit from the IMF. BancoSur is a long-standing aspiration of the people of South America." Financial integration is an important step towards broader aspirations for regional integration.

Internally, the trajectory of Correa's programme clearly veers left, and the old Ecuadorean oligarchy might well block this path. Constitutional change will not by itself ensure radical change without reform of the institutions where the sclerotic residue of power still resides. But the old elite will not readily countenance the dismantling of their power structures. The people may have voted "Si" for change but root-and-branch reform may prove elusive.

"The dying political old guard has not yet been defeated," observes the minister of the interior, Gustavo Larrea. The question is whether Correa and his party, Alianza País, can use the popular desire for change to pry open the battened portals of power.

As Pepe Laso, director of communications at the Andean University, told the weekly Vistazo: "The rhetoric of 'the homeland returns' is connected with deeper dimensions that go beyond the market." Correa has first promised to reclaim national sovereignty. In a country slammed by "pro-market" policies of structural adjustment, that will be a big first step.