ECUADOR: Gutierrez removal will not end instability

Analysis

A series of poor political decisions in recent days made President Lucio Gutierrez politically vulnerable:

• After months of unrest over his unconstitutional replacement of the Supreme Court last December (see ECUADOR: Judicial changes polarise politics - February 25, 2005), Gutierrez last week dismissed the Court entirely.
• His overreaction to peaceful protests galvanised opposition to his government. In particular, declaring a state of emergency in the province of Pichincha -- which includes the city of Quito -- following a general strike resulted in thousands of citizens taking to the streets in defiance of the suspension of their rights of assembly, free speech and movement.
• When Gutierrez repealed the state of emergency shortly afterwards, it made him appear weak and encouraged protestors to intensify efforts to overthrow him.

Congress yesterday dismissed Gutierrez on the grounds of 'dereliction of duty', replacing him with Vice-President Alfredo Palacio. Palacio has ordered the arrest of Gutierrez, who has reportedly sought asylum from Brazil. Venezuela has also offered him exile. In addition, a detention order has been issued for recently returned former President Abdala Bucaram (see ECUADOR: Bucaram return will weaken Gutierrez - April 4, 2005), who is likely to be arrested in the coming days unless he manages to flee.

Stability under Palacio? Protestors' anger was aimed at Gutierrez, Bucaram and Supreme Court President Guillermo Castro. However, Palacio's name scarcely figured at all, let alone as a replacement leader:

• Palacio has maintained a low profile. A doctor and academic, his activities in the administration have been largely confined to the field of health.
• In recent months he became increasingly critical of his own government, referring to Gutierrez as a 'dictator'. This week he called for an end to the state of emergency and 'repression' of protestors. However, the media and populace largely ignored Palacio, who never became a figure of popular support.

Despite this, recent history offers some hope for stability. This is the third time in nine years that a president has been replaced before the end of his term. On two of the previous occasions, the replacements -- Fabio Alarcon in 1997 and Gustavo Noboa in 2000 -- served an entire term, followed by democratic elections. Nonetheless, several factors indicate that Palacio may struggle to maintain stability:

• Noboa enjoyed more popular support and a higher profile than Palacio and Congress specifically chose Alarcon in lieu of the vice-president.
• The Gutierrez administration was chronically unstable because of the former president's lack of a popular support base and inability to maintain coalitions in Congress (see ECUADOR: Gutierrez faces multiple challenges to power - April 28, 2004). Lack of popular support for Palacio is even more marked.
• The armed forces have so far been ambivalent about Palacio's succession.

Palacio's intention will probably be short-term survival:

• Lacking a particular support base, he will have to form new alliances, which he will probably do through a cabinet that includes representatives from major parties. He has also raised the possibility of forming a constituent assembly to resolve the current crisis.
• If he can last until December, he will probably serve out the remainder of the term, as there will be little incentive to depose a sitting president with elections due within twelve months.

Following the pattern all recent presidents have experienced, Palacio is likely briefly to enjoy broad-based support, followed by a slow decline in popularity and decreasing ability to achieve political goals. If Palacio is to achieve anything, it is crucial that he defines his aims quickly and makes concrete changes. In particular, the sooner the Supreme Court is named, the less likely it is to be as politicised as its two recent predecessors.

Bureaucracy. In the short term, Gutierrez's fall will mean a radical reshuffle of key positions in the bureaucracy:

• When Gutierrez came to power he helped a large number of friends, family and former military colleagues into lucrative jobs. As a consequence, reform efforts suffered, as many appointees lacked the experience and qualifications their roles demanded.
• No political groups support Palacio, so this may be an opportunity to depoliticise many of the most important positions such as those that control the state electricity, oil and telephone companies. On the other hand, if Palacio struggles to achieve the support of political parties he may be tempted to use these posts as bargaining chips.

External relations. Gutierrez's dismissal is a major setback for free trade talks with the United States (see COLOMBIA/PERU/ECUADOR: FTA talks progress gradually - February 15, 2005):

• Hours after Gutierrez was removed, the delegation currently in Lima for the ninth round of negotiations suspended all activities.
• Unless Palacio moves quickly to re-establish their negotiating authority, the momentum of this round is likely to be lost.

There are also implications for the current strong relationships with multilateral financial organisations such as the IMF and World Bank (see ECUADOR: Structural reform faces obstacles - April 12, 2005):

• Given his background in public health, Palacio will probably want to increase spending on social programmes, particularly health and education. If he does, this will cause conflict with Gutierrez's economic team, which maintained tight fiscal discipline throughout the previous administration and is committed to limiting social spending (see ECUADOR: Fiscal outlook remains solid - December 31, 2004).
• Palacio has been sceptical about the role of financial institutions and has repeatedly criticised the IMF and World Bank. In particular, he has criticised government willingness to divert money from social spending to paying the external debt. This is a common complaint from Ecuadorian politicians as it resonates with the populace, but is usually confined to election campaigns or the opposition. The fact that Palacio has been so critical from within the government, without obvious ambition subsequently to be a presidential candidate, seems to indicate that his view is genuinely held.

Despite this, most politicians who achieve office have discovered that the support of multilateral financial institutions is vital to their political survival. Like many before him, Palacio's rhetoric may not reflect his actions.