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Updated September 8, 2021
Ecuador: An Overview
Ecuador is a small, ethnically and geographically diverse
CREO party won 12 of 137 seats in the unicameral National
country of 17.5 million inhabitants, located in South
Assembly.
America between Colombia and Peru (See Figure 1).
President Guillermo Lasso of the conservative Creating
Figure 1. Ecuador at a Glance
Opportunities (CREO) party took office for a four-year
term in May 2021. He has pledged to build on the
accomplishments of former President Lenín Moreno (2017-
2021), who implemented liberal political and economic
reforms and pursued closer ties with the United States. Like
his predecessor, Lasso could face resistance from some
sectors of the population and in the divided legislature.
Political and Economic Background
During a decade in power (2007-2017), leftist populist
President Rafael Correa brought some stability to Ecuador’s
previously tumultuous political scene. He governed in an
increasingly authoritarian manner, however, constraining
Area: 109,483 square miles, slightly smaller than Nevada
freedom of assembly and association, stifling freedom of
Leadership: President: Guillermo Lasso; Vice President: Alfredo
the press and expression, and restricting independence of
Borrero; Minister of Foreign Relations: Mauricio Montalvo;
the judiciary. Correa also presided over a public
Finance Minister: Simón Cueva Armigos
investment-driven economic expansion, with growth
Ethnic Makeup: 72% Mestizo (mixed Amerindian and White);
averaging 5% annually between 2010 and 2014. Although
7.4% Montuvio (coastal farmers of mixed race and indigenous
stronger growth and increased social expenditures helped
heritage); 7.2% Afro-Ecuadorian; 7% Amerindian; and 6.1% White
reduce poverty, Correa’
(2010 census, National Statistics and Census)
s policies left Ecuador with
Key Trading Partners: United States (27.5%), China (20.6%),
significant debts to China and reinforced Ecuador’s
and the European Union (14.5%) (Trade Data Monitor, 2020)
dependence on petroleum and other commodity exports.
Poverty Rate: 25% (2019, World Bank)
In 2017, Lenín Moreno of the Alianza Pais (AP) party was
Economy: GDP = $96.7 billion (current U.S. $, 2020, IMF est.)
elected president. Although he served as one of Correa’s
Inaugurated in May 2021, President Lasso has pledged to
vice presidents, he quickly distanced himself from the
implement a series of business-friendly reforms. He
former president in style and substance. Among other
campaigned on tax reforms intended to promote growth,
measures, Moreno sought funding from financial
reduce import duties, and eliminate a 2% income tax on
institutions such as the International Monetary Fund (IMF)
small and medium businesses. He also promised to double
and made efforts to curb corruption, open and liberalize
oil production and mining concessions. Lasso may struggle
trade, and strengthen democratic institutions.
to move his agenda through the divided National Assembly,
These shifts alienated some members of Moreno’s party
however, given the relatively weak position of his CREO
and generated backlash from some sectors of Ecuadoran
party. The new legislature, seated in May 2021, is
society. In October 2019, for example, Moreno eliminated a
dominated by the leftist opposition coalition, UNES, linked
fuel subsidy, triggering mass demonstrations and protracted
to former President Correa.
protests. Human rights advocates accused security forces of
President Lasso inherited a difficult economic situation. A
using excessive force to quell the disruptive protests, which
crash in global oil prices and the COVID-19 pandemic
reportedly resulted in 11 civilian deaths. The fallout of the
drove Ecuador into a deep recession in 2020. The economy
Coronavirus Disease 2019 (COVID-19) pandemic further
eroded Moreno’s popularity, and he left office after a single
contracted by nearly 8% and the poverty rate climbed to an
estimated 30.8%, according to the Economic Commission
term with an approval rating under 9%.
for Latin America and the Caribbean. Several economists
2021 Election and Current Challenges
project a relatively weak recovery for Ecuador in 2021 but
forecast growth exceeding 4% in 2022 and the recovery of
In April 2021, Guillermo Lasso, a conservative former
2019 output levels by 2023.
banker and three-time presidential candidate, defeated
Andrés Arauz, a loyalist of former President Correa, in a
Ecuador has managed to plug its large fiscal deficit—
second-round presidential runoff. Many observers found
projected to reach $4.8 billion (4.6% of GDP) in 2021—
Lasso’s victory a shock, given his first round showing,
with credits and deferrals. In September 2020, for example,
barely above the third-ranked candidate from the center-left
the IMF granted Ecuador a 27-month extended arrangement
Indigenous Pachakutik party (see below text box). Lasso’s
for a $6.5 billion loan to address the crisis caused by the
https://crsreports.congress.gov
Ecuador: An Overview
pandemic in exchange for progressive tax reforms to be
U.S. bilateral aid to Ecuador increased from less than $2
imposed by the end of September 2021. The Lasso
million in FY2018 to an estimated $23.8 million in
government has pledged to cut the deficit in half in 2022,
FY2021. The Biden Administration’s FY2022 budget
but some political analysts warn that austerity measures
request for bilateral aid to Ecuador is $28.8 million. This
could fuel public discontent.
would include $13 million for development programs,
$10.5 million for counternarcotics efforts, and $5.3 million
Ecuador also continues to contend with the public health
for military equipment and training. The United States also
challenges posed by the COVID-19 pandemic. With over
has provided more than $25 million in FY2021 to help
32,000 COVID-19 deaths reported in Ecuador as of
Ecuador address the humanitarian needs of some 500,000
September 2021, the pandemic’s destabilizing grip endures.
Venezuelan refugees and migrants. For COVID-19
During Lasso’s presidential campaign, he promised to
response, the U.S. government provided $19.5 million in
vaccinate the Ecuadorian population expeditiously. He has
FY2021 to Ecuador. In July 2021, Ecuador received its
won plaudits for his success in raising the full vaccination
largest vaccine donation to date: 2 million Pfizer-BioNTech
rate from 7% to 53% by September 2021. As of early
vaccine doses sent by the U.S. government.
September 2021, after 100 days in office, Lasso’s approval
rating exceeded 70%, according to several polls.
Former Presidents Trump and Moreno signed a first-phase
trade agreement in December 2020. The Protocol on Trade
Pachakutik (PK) Party and Its Evolution
Rules and Transparency includes provisions intended to
benefit Ecuador’s small- and medium-sized businesses,
Ecuador is one of the world’s most biodiverse nations, with
bolster trade and investment flows, and increase
protected areas encompassing 25% of the country, including
transparency. Ecuador’s largest trade partner is the United
marine and Amazonian ecosystems. The politically significant
States. Its top U.S. export is petroleum, followed by
Indigenous population initially supported former President
seafood, including shellfish, and fruits and nuts, such as
Rafael Correa, who rewrote the constitution to account for a
bananas. Ecuador’s top U.S. imports are refined petroleum
multiethnic society, but that support dwindled as Amazon and
and machinery. The Lasso government hopes to further
highland Indigenous lands came under pressure from
bilateral trade by concluding a “mini” trade agreement with
government-backed resource development and oil
the United States and is eager to include other products in
exploitation. Correa’s government suppressed Indigenous
the U.S. Generalized System of Preferences.
protests against such projects on traditional lands, and the
government condemned some Indigenous activists as
The U.S. International Development Finance Corporation
terrorists. In acknowledgement of rising Indigenous political
(DFC) announced it would help finance private investment,
power, President Guillermo Lasso and his conservative
making available $2.8 billion for sustainable development
Creating Opportunities (CREO) party backed the leader of
projects. In January 2021, the DFC reported it would
the PK party for president of the National Assembly. This
refinance up to $3.5 billion of Ecuador’s debt to China in
party has the second-largest number of seats (27 of 137) in
exchange for Ecuador’s agreement to exclude China from
the 2021-2025 National Assembly and draws support from
its telecom networks. According to the DFC’s chief
Indigenous and pro-sustainable development groups.
executive officer, the “predatory” debt repayment also
would assist Ecuador in improving the value of its strategic
U.S.-Ecuadorian Relations
assets.
Although the United States traditionally had close relations
Issues for Congress
with Ecuador, former President Correa’s populist style and
Congress may seek to influence the Biden Administration’s
policies, which he called “anti-imperialist,” increased
policy toward Ecuador through such tools as the
frictions. Correa shut down U.S. counterdrug operations at
appropriations process, oversight hearings, and legislation.
Manta Air Force Base in 2009, expelled the U.S.
In March 2021, the Senate approved S.Res. 22, endorsing
ambassador in 2011, and granted WikiLeaks founder Julian
Assange asylum in Ecuador’s London embassy
the advancement of bilateral economic, security, and
in 2012. He
development relations. Some Members of Congress have
also imposed restrictions on the work of the U.S. Agency
expressed support for negotiating a free-trade agreement
for International Development (USAID), which resulted in
with Ecuador. Other issues of interest include the Lasso
the agency closing its offices in 2014 after 60 years of
government’s performance in policing and security, its
operating in Ecuador.
counternarcotics and environmental policy, and its handling
Warm bilateral relations resumed under former President
of the plight of Venezuelans residing in Ecuador.
Moreno. Counternarcotics cooperation restarted in 2018,
For additional earlier background information, see CRS
with a focus on combatting illegal armed groups along
Ecuador’s northern border with Colombia
Report R44294, Ecuador: In Brief.
. Likewise, the
USAID mission in Ecuador reopened in late 2020 to help
June S. Beittel, Analyst in Latin American Affairs
the country rebuild democratic institutions, protect the
environment, and create economic opportunities. Moreno
Rachel L. Martin, Research Assistant
allowed British authorities to rearrest Assange in 2019,
IF11218
after seven years inside of Ecuador’s embassy to the United
Kingdom. President Moreno stripped Assange of the
Ecuadorian citizenship that Correa had granted him.
https://crsreports.congress.gov
Ecuador: An Overview
Disclaimer
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