Ecuador makes switch to U$ Dollar

The movement against dollarization continues strong in Ecuador 
after President Noboa approved the Law of Economic Transformation, 
which will make the U$ dollar the official currency of Ecuador.

People have already begun trading in their 25,000 sucres on the 
dollar, which have devalued by about 400% in the last year. During 
this period Ecuador's financial crisis resulted in defaulting on 
many loans, which has scared away foreign investment.

Imperialism is the stage of capitalism where wealth is extracted 
from the oppressed nations through the penetration of capital into 
their economies. One important means is loaning finance capital to 
governments which often must use the money to buy from the 
imperialist country. The governments that receive the loans are 
expected to attempt to pay back the imperialist banks, and 
subsequently provide the banks with endless streams of income.

However, there is an inherent contradiction that if you constantly 
remove wealth from the oppressed nations: eventually they cannot 
pay back their loans. This is what scares bankers. Over the past 
few months, the talk of dollarization has coincided with visits 
and discussions between Ecuador's government and representatives 
from the International Monetary Fund (IMF). President Noboa was 
careful to cut some banking requirements from the law that were 
opposed by the IMF, the World Bank, and other large investors. (1)

Dollarization would force a stable currency on Ecuador and hence 
attract more foreign investment. The people of Ecuador recognize 
that dollarization is not in their interest and have shown 
continued discontent with the plan. As the law went to congress 
and the president in March, unions and indigenous organizations 
staged protests and strikes throughout the country. 

The Confederation of Indigenous Nationalities of Ecuador (CONAIE), 
the major indigenous force in Ecuador, began a dialogue with the 
current government after it had reestablished power in January. 
CONAIE hoped to prevent the dollarization, which they believe will 
only further impoverish the peasant population they represent. 
However, on March 16, CONAIE acknowledged that their discussions 
were not going anywhere and broke them off to join the protests 
being planned by the Coordinating Committee of Social 
Movements.(2) History shows that the ruling class does not make 
deals against their interest unless the opposition has the 
military power to coerce them. This is how Maoists know that armed 
resistance against the oppressors is necessary and that once 
military power is established the people must never relinquish 
that power while negotiating.

Besides dollarization, "the new legislation allows Ecuador's 
government to sell to private investors up to 51% of its shares in 
the telecommunications and electrical energy sectors, and gives 
the president the power to grant by decree a concession to build a 
new oil pipeline."(1) The privatization is another way to bring in 
foreign investment, which will result in further exploitation of 
the people of Ecuador. Oil pipelines running through indigenous 
lands and destroying these areas in the Amazon basin was a major 
struggle between the people and government backed corporations 
that led to the consolidation of CONAIE. These other items 
included in the Law of Economic Transformation have also been 
major rallying points for the people of Ecuador to oppose. 

Antonio Vargas, president of CONAIE, released a statement 
describing numerous death threats from possible right wing 
paramilitaries against leaders of the indigenous movement. In this 
statement, he calls on the movement to maintain peaceful protests 
in the midst of the threat of violence.(2) However, leaders of the 
movement have acknowledged the possibility of armed uprising in 
recent months.

While calling for peaceful demonstrations may be the most 
effective tactic for the indigenous people of Ecuador at this 
time, events of the last few months only help illustrate the 
necessity for a long term strategy of armed revolution. The 
peaceful takeover of Ecuador by indigenous leaders and the 
military in January was quickly returned to the hands of the 
bourgeoisie, who have continued with business as usual and enacted 
the dollarization policy which was a driving factor in the ousting 
of the previous president.(3)

The majority of Ecuador is clearly on the side of CONAIE and the 
unions that have led the recent struggles. It is up to the people 
of Ecuador to build a strong center to this movement. By 
establishing Maoist leadership and military power, the people can 
best take full advantage of this and other crises to follow.

Notes:

1. Weekly News Update on the Americas, issue #527, March 5, 2000  
Nicaragua Solidarity Network of Greater New York  339 Lafayette 
St., New York, NY 10012 (212) 674-9499 wnu@igc.org
2. CONAIE webpage <http://conaie.nativeweb.org/>
3. MIM Notes 204, February 15, 2000.