Bolivia and Ecuador: Crisis or Coincidence?

Summary

Unnamed opposition groups in Bolivia and Ecuador appear to be stirring up instability in an effort to force regime changes through early resignations or assassination. The simultaneous crises could be coincidental, but it also is possible that a deliberate effort may be under way to destabilize both countries at the same time.

Analysis

The recently elected presidents of Ecuador and Bolivia are under attack by extremist opposition groups that appear to be trying to foster social and political instability in order to force an early change of government. Ecuador's national police chief said April 10 that a plot hatched in Colombia to assassinate President Lucio Gutierrez had been foiled, and the U.S. government warned Bolivia last month that extremist groups were planning to launch a coup attempt in April against President Gonzalo Sanchez de Lozada.

These simultaneous political crises could be a coincidence, since Bolivia and Ecuador are cauldrons of poverty, high unemployment and social discontent. However, it also is possible that recent political developments in Bolivia and Ecuador make this situation more than coincidental.

A forced change of government in Bolivia and Ecuador, whether by coup or assassination of an elected president, could significantly aggravate instability along the entire Andean Ridge region and leave Chile, Brazil and Argentina vulnerable to potential social and political spillover. Regime change in either country also would throw a huge wrench in the Bush administration's counter-drug and counterterrorism initiatives in the Andean Ridge region, especially if the current presidents in Bolivia or Ecuador were ousted or killed.

The Bush administration is seeking to expand Plan Colombia to Ecuador now that Gutierrez has aligned his government, at least verbally, with the United States in terms of dealing with Colombia. A U.S. diplomatic source in La Paz also told Stratfor recently that Washington views Bolivia, Chile and Colombia as an "axis of good" in an increasingly unstable South American region.

But if Gutierrez and Sanchez de Lozada were removed from power, their successors possibly would not be as supportive of U.S. policy objectives.

Groups in the Andean region that would benefit from instability in Bolivia and Ecuador include the Revolutionary Armed Forces of Colombia (FARC), Colombian drug traffickers and organized crime gangs, in countries like Paraguay and Brazil, that smuggle narcotics and weapons internationally.

Stratfor is not inferring that any of these groups could be involved in fostering instability in Bolivia and Ecuador, but they certainly would lead the list of potential beneficiaries who would profit amid the political turmoil that would follow a forced regime change.

It also is possible that the simultaneous crises in Bolivia and Ecuador stem from a set of circumstances and conditions that are very similar in both countries. For instance, both have high unemployment rates, large fiscal deficits and sluggish economies -- and both presidents lack a coherent plan for stimulating economic growth.

Sanchez de Lozada does not have a congressionally approved budget for 2003, since opposition parties have been more focused for the past four months on trying to force his resignation. And it doesn't look like he will gain congressional approval or military support to build a proposed natural gas pipeline to northern Chile, which would allow liquefied natural gas to be exported to the United States and Mexico.

Gutierrez's economic plan is to get as close as he can to the International Monetary Fund, foreign oil companies and the Bush administration. Since taking office in January, Gutierrez has signed a standby aid agreement with the IMF to help narrow the government's fiscal deficit.

Moreover, he now asserts that adopting the U.S. dollar as Ecuador's national currency in 2001 was a great idea, although at that time he led a military coup that toppled the president who decided to adopt the dollar. But Gutierrez has yet to explain how he would halt the rapid slide in the competitiveness of Ecuador's exports as a result of using the dollar instead of the now-defunct sucre.

In addition to a dearth of stimulus plans, both presidents also confront divided, fractious legislatures and increasingly frequent public demonstrations and strikes by government workers and unions that demand salary increases or are expressing discontent with economic policies.

The instability appears more acute right now in Bolivia than Ecuador, but appearances can be deceptive. Both presidents clearly are under mounting strain, which is beginning to affect their words and actions in public.

For instance, Sanchez de Lozada on April 10 addressed a rally for the ruling Nationalist Revolutionary Movement (MNR), calling on the party faithful to "take up arms" to defend his government, which constitutionally would end in August 2007. Vice President Carlos Mesa and other senior government officials immediately clarified that the president was speaking figuratively and in metaphors, but some opposition leaders now are calling openly for the president to undergo a psychiatric examination.

In Ecuador, Gutierrez is embroiled in a very public fight with his wife, who last week declared that he made some poor choices in governmental appointments and hinted that corruption is a much bigger problem now than it was before Gutierrez took power.

Instability likely will continue to increase in both countries in coming days and months, and potential regime changes cannot be dismissed. Both leaders have vowed to complete their terms as scheduled in 2007 -- but Bolivia has a history of nearly 200 coups since independence in 1825, and Ecuador has had five presidents -- counting Gutierrez -- in the last six years.

And it doesn't look like he will gain congressional approval or military support to build a proposed natural gas pipeline to northern Chile

Poverty always has powerful defenders.

Gutierrez's economic plan is to get as close as he can to the International Monetary Fund, foreign oil companies and the Bush administration.

Essentially, he is going to implement the economic plan of Jamil Mahuad, the president he overthrew.

Moreover, he now asserts that adopting the U.S. dollar as Ecuador's national currency in 2001 was a great idea,

Stopping "dollarization" was the immediate motive for the coup. Every leftist group in the country agreed that dollarization would somehow help the rich while hurting the poor, although the opposite was the case. The wealthy had been dollarized for years; upper class real estate, upper class salaries, and most contracts, had been written in dollars for years. It was only the poor who dealt in sucres, which locked them into a declining currency to the benefit of their employers, who were themselves paid in dollars. Jamil Mahuad's revolutionary idea was to eliminate that scam once and for all.

In the aftermath of the coup, the replacement president, Mahuad's vice president, forged ahead with dollarization. No one wants to go back. Not even the coup leaders.

Gutierrez is discovering what every other president discovers, which is that reality is not easily wished away. A bankrupt country cannot engage in wishful deficit spending if there is no one left in the world who wants to lend it more money. A bankrupt country must find ways to attract investment, and employment, and cannot let the usual suspects dictate the terms, not even the various political action groups that have brought him to power.

The difference between Gutierrez and Mahuad is that Mahuad understood from the beginning what it would take to save the country, and plunged ahead enthusiastically to implement his program over the intense opposition of every leftist pressure group in the country. Gutierrez, who was put in power by those same pressure groups, is being dragged by reality into doing the same things, with the result being that his supporters believe they have been betrayed.

(snip)Both al-Qaida and Hezbollah are active in the common border area of Colombia, Peru and Ecuador, according to an earlier statement of Deputy Secretary of State Richard Armitage in hearings before the Foreign Appropriations Subcommittee of the House Appropriations Committee, cited in a report from Radio Free Europe/Radio Liberty. (/snip)

- Source: Terrorists Active in US 'Backyard' - Latin America Hotbed for both Al Qaida, Hezbollah

(My mistake: use this link since the one in the previous post won't work)

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