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May 20, 2019
Ecuador: An Overview
Political and Economic Situation
elections for mayor in the country’s largest cities of
Guayaquil and Quito (Figure 1).
Ecuador is a small, ethnically diverse country of 16.5
million inhabitants located in South America between
Figure 1. Ecuador at a Glance
Colombia and Peru. In April 2017, Lenín Moreno was
elected president from the leftist Alianza Pais (AP) party,
succeeding President Rafael Correa (2007-2017), a populist
leader of the same party. Correa, Ecuador’s longest-serving
president, was re-elected three times, bringing some
stability to Ecuador’s tumultuous politics. Many thought
Correa’s “Citizens’ Revolution” would continue under
President Moreno, who served as Correa’s vice president
for six years. President Moreno, however, quickly distanced
himself from Correa in style and substance. In recent
months, Moreno has adopted market-friendly policies,
shown interest in closer relations with the United States,
and rejected Venezuela’s government under President
Area: 109,483 square miles, smaller than the state of Nevada
Nícolas Maduro, which Correa had promoted as an ally.
Leadership: President: Lenín Moreno; Vice President: Otto
Moreno narrowly won a runoff election with slightly more
Sonnenholzner; Minister of Foreign Relations: José Valencia
than 2% of the vote. Correa’s two former vice presidents
Ethnic Makeup: 72% Mestizo (mixed Amerindian and
were on the winning ticket: Moreno at the top and Jorge
White); 7.4% Montuvio (coastal farmers of mixed race and
Glas as Moreno’s vice president. Once in office, Vice
indigenous heritage); 7.2% Afro-Ecuadorian; 7% Amerindian;
President Glas remained close to Correa, while President
and 6.1% White (2010 census, National Statistics and Census)
Moreno moved quickly to adopt a more moderate tone. In
October 2017, President Moreno suspended Glas due to
Poverty Rate: 23.2% (2018, World Bank)
allegations that he had taken bribes from the Brazilian
Economy: GDP: $107.3 bil ion (current US $, 2018 IMF est.)
construction firm Odebrecht when he oversaw Ecuador’s
petroleum company. Odebrecht has been the focus of
Historically, Ecuador has relied on commodity exports,
corruption prosecutions throughout Latin America. In
such as bananas, shrimp, and coffee. Discovery of oil in the
December 2017, Glas was convicted and sentenced to six
Amazon in 1967 transformed the Ecuadorian economy, but
years in prison for taking $13.5 million in bribes from
the country remains largely dependent on commodity
Odebrecht executives. He was impeached in January 2018
exports despite efforts to diversify away from oil. In 2000,
and removed from office.
Ecuador adopted the U.S. dollar as its national currency
following a major recession in 1999. Dollarization helped
President Moreno has taken additional steps to limit
curb inflation and fostered some macroeconomic stability.
Correa’s lingering influence in politics, which many
However, according to numerous assessments, strong
analysts characterized as anti-democratic. In February 2018,
growth under Correa was driven by a public investment
Moreno organized a referendum that would prohibit
boom fueled by high oil prices and lending from China,
indefinite reelection (including Correa’s return to office)
including loans for oil.
and address corruption. While all measures on the ballot
passed, the results deepened fissures between AP members
The Correa government took on extensive debt from China
loyal to Correa and those aligned with Moreno. During the
for its construction projects that is partially payable with oil
campaign against the referendum, Correa convinced 28 of
shipments to China. One of the largest projects, the Coca
the 74 AP legislators to join a new, Correa-based party.
Coda Sinclair hydroelectric project, cost some $2.9 billion
President Moreno currently has support from 58 legislators
but reportedly had significant design flaws. Ecuador’s total
(out of 137 in the National Assembly), which include his
trade with China increased from $234 million in 2002 to
wing of the AP in coalition with some smaller parties. To
$5.2 billion in 2018. China was Ecuador’s second-largest
achieve passage of priority legislation, Moreno must seek to
trade partner in 2017, accounting for 16% of imports and
shore up coalitions, because his supporters lack a majority.
almost 7% of exports. The United States, however,
remained Ecuador’s largest trading partner, accounting for
In Ecuador’s municipal elections in March 2019, many
27% of total trade. Public opinion regarding China soured
analysts noted a fracturing of the political landscape, as
in 2017, when the Ecuadorian navy captured a Chinese
none of President Moreno’s political allies won a
fishing ship in the country’s territorial waters near the
significant victory. This was particularly striking in
Galapagos with 300 tons of illegally caught sharks.
https://crsreports.congress.gov
Ecuador: An Overview
After a 2.4% expansion of GDP in 2017, Ecuador’s
expulsion of the U.S. ambassador in 2011 following public
economy slowed to an estimated 1.4% annual growth in
disclosure of confidential diplomatic cables by WikiLeaks.
2018, according to the Economist Intelligence Unit, and is
The strains in the U.S.-Ecuador relationship continued
forecast to grow by less than 0.5% in 2019. Analysts expect
when Correa granted WikiLeaks founder Julian Assange
that planned cuts to government spending, put in place to
asylum in Ecuador’s London embassy in 2012.
win an International Monetary Fund (IMF)-backed loan
package of $10.3 billion over three years, will depress
Diplomatic ties have since been restored, and in mid-2018,
public investment. The fiscal tightening related to IMF
Vice President Mike Pence visited Ecuador and held talks
conditions, combined with low oil prices, may amplify
with President Moreno to broaden the bilateral dialogue and
voter discontent that has been increasing. Moreno has
strengthen U.S.-Ecuadoran relations in a number of areas.
pledged to trim public expenditures by cutting central
Vice President Pence recognized efforts by Ecuador to
government bureaucracies, eliminating offices, and selling
encourage private investment. President Moreno noted with
government buildings. He has proposed tax incentives to
gratitude the inclusion of Ecuador in the renewal of the U.S.
encourage a more business-friendly environment, although
Generalized System of Preferences (GSP) and called for the
with efforts to protect the poor. In 2018, Moreno announced
inclusion of additional products in the GSP going forward.
a major initiative to liberalize the economy and plans to
The leaders also announced a commitment to reactivate a
privatize seven of Ecuador’s 22 state-owned companies in
bilateral Trade and Investment Council. They also
2019. He has endorsed public-private partnerships for
discussed strategies and U.S. assistance to manage the
government projects in such areas as infrastructure and
influx of more than 150,000 Venezuelans who had fled
energy.
their country and continue to shelter in Ecuador.
Modifying the Controversial Communications Law
In mid-April 2019, British authorities arrested Julian
Assange after nearly seven years of asylum in the embassy
In 2019, President Moreno made good on his promise to
at the invitation of Ecuador’s government, which had
modify the country’s controversial 2013 communications
stripped Assange of his protected status. Many analysts
law. The law had defined communications as a public
interpret Assange’s re-arrest as a positive development in
service, giving government broad authorities to regulate its
U.S.-Ecuador relations. Subsequent reports indicate that the
content, dissemination, and scheduling. It also gave the
Moreno government plans to turn over Assange’s computer
president authority to investigate and sanction journalists
and phone records to the United States.
through an agency known as the Communications
Superintendent (Supercom). From 2014 to 2017, Supercom
Ecuador received nearly $1.8 million in bilateral foreign aid
levied some 675 fines targeting media critical of the
both in FY2017 and FY2018, while the Trump
government.
Administration requested $1.5 million for Ecuador in
Moreno proposed a series of changes to modify the law
FY2019. For FY2020, the Trump Administration has
substantially. The amendments, which gained passage in
requested an increase to $6.2 million, with $1 million in
late 2018 with 75 votes in the National Assembly, rein in
development assistance to build civil society capacity, $5
the powers granted to the national government in the
million for counternarcotics, and $200,000 for International
original law.
Military Education and Training. The United States is also
supporting some 110 Peace Corps volunteers in Ecuador.
The updated version, submitted to the National Registrar in
The U.S. State Department maintains in its 2019
February 2019, eliminates Supercom, giving the entity 180
International Narcotics Control Strategy Report that
days to review its processes and reverse pending sanctions
Ecuador’s security forces and judiciary lack sufficient
against media targets; reinstates banned radio and television
funding to effectively combat the transnational criminal
frequencies; and stipulates that foreign individuals or
challenges the country faces, including drug trafficking.
entities cannot own more than 49% of any national media
company. Furthermore, the amended law now defines
President Moreno has asserted that his efforts to “freshen
access to information as a human right. While many
up” democracy in Ecuador will address neglected foreign
observers celebrate the changes made to the law, others
relations. Ecuador’s capacity to cope with thousands of
argue that the reforms should have gone further. For
Venezuelan migrants displaced in Ecuador remains
example, the reformed law creates a new regulatory body—
challenging as instability persists in Venezuela. U.S.
the Council for Regulation, Development, and Promotion of
relations with Ecuador may seek to revitalize key elements
Information and Communication—that some consider a
of the former relationship, including close counternarcotics
milder version of the Supercom. Additionally, critics
cooperation, amid Moreno’s planned efforts to reassert the
maintain that the reform did not repeal an article that
rule of law, support basic press freedoms, restore judicial
restricts media outlets from publishing information about
independence, and curb public corruption.
judicial cases.
U.S.-Ecuadorian Relations
For more background, see CRS Report R44294, Ecuador:
In Brief, by June S. Beittel.
While the United States traditionally had close relations
with Ecuador, under former President Correa the
June S. Beittel, Analyst in Latin American Affairs
relationship became tense in large part due to his populist
Edward Y. Gracia, Research Assistant
governing style and his combative “anti-imperialist” stance.
Friction between the two countries culminated in Ecuador’s
IF11218
https://crsreports.congress.gov
Ecuador: An Overview
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