State of emergency in Ecuador

Turmoil in the South American country continues, as the President, police and army all wrestle for c

The relative calm of Rafael Correa's three-year presidency was shattered yesterday when protests by police officers paralysed the country and took a nasty turn when the president was injured and taken to hospital.

In response to austerity measures implemented by President Correa on Wednesday evening, hundreds of police officers lined the streets of Quito and other major Ecuadorean cities on Thursday morning and blocked airports and roads across the country. The new measures include a law passed by Congress which will reportedly affect the granting of medals, bonuses and promotions as part of a vain attempt by the government to cut expenditure. Around 300 members of the armed forces, who are also affected by the law, joined the protest and stormed Quito's main airport, preventing flights from entering or leaving the airport for up to nine hours.

Things turned from bad to worse when Correa visited a military barracks. As he stood addressing the armed forces around him, the President shouted "If you want to kill the president, here he is. Kill him, if you want to. Kill him if you are brave enough." Moments later he got what he was asking for when he was physically attacked by protestors and sprayed with tear gas. After being taken to hospital, the President was reportedly trapped inside for several hours while a gun battle waged between protestors led to several people being killed and dozens injured.

He was smuggled back to the safety of Carondelet palace by members of the army. Having previously declared a state of emergency, since his rescue, Correa has described the protest as an attempt to overthrow him.

Certainly Ecuador is no stranger to political coups: three of its presidents have been ousted over the last 13 years. Correa was in fact the first president to win two terms when he was re-elected for his second term last year. However, his popularity has declined dramatically over the last year following certain controversial decisions. His decision that the country would default on $3.2 billion of "illegitimate" international debt made its sovereign debt one of the riskiest in the continent and provoked widespread fiscal problems. In February 2009, his decision to expel two US diplomats was rejected by Washington. In July this year he implemented a new oil law which enables the government to nationalise oil fields if a private operator fails to comply with local laws. Given that oil is one of the country's main selling points, many fear that such a move may deter foreign investors.

Although Correa faces little challenge from the opposition, he has earned a surprising contender to his presidency in the form of his brother Fabricio and the tensions between the brothers have done much to discredit Rafael's presidency in recent months. In 2009 the pair was embroiled in a corruption scandal when Ecuadorean newspaper Diario Expreso revealed that Fabricio's engineering business had experienced suspiciously unprecedented growth since his brother took office.

Since one of Rafael's main goals throughout his presidency has been to fight corruption, these allegations, although unfounded in the end, were enough to taint Rafael's political career irrecoverably. In a vain attempt to reduce the impact of the scandal on his reputation, Rafael subsequently signed a decree preventing public entities from entering into advertising contracts with media outlets.

Although the brothers initially supported one another throughout the allegations, relations quickly soured and Fabricio has since expressed his wish to stand for the 2013 elections. In contrast to the relatively peaceful Miliband struggle for Labour leadership across the Atlantic, this brotherly contest looks set to be less than amicable.

This, combined with the fact that Rafael has received much criticism for his handling of events over the past few days, puts the future of his presidency in doubt. Many people, including leading Ecuadorean journalist Rubén Darío Buitrón, refute Rafael's claims that he has been the victim of a military coup and warn that he may use the situation to galvanise support. It is difficult to say how this week's events can be resolved, but it is certain that worse is yet to come.

Photo: Getty Images
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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.