Ecuador freezes fuel prices, after struggle with social movements

RIO DE JANEIRO, BRAZIL – The president of Ecuador, Guillermo Lasso, announced this Friday (22) the freezing of fuel prices and promised that he would enforce “without exceptions” the official prices of the basic food basket in the country, after an intense struggle with social movements over his tax and labor reforms.

“As of today, the monthly increases in fuel prices are suspended, the price of Extra gasoline is fixed at 2.55 dollars, and the price of Diesel for public, community, school, tourism, heavy load, mixed transport and for the general public, at 1.90 dollars,” he announced.

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Social movements had called for a march on Tuesday 26 to demand these measures, after months in which fuels had risen by more than 40% in Ecuador under a price band system, set by his predecessor Lenín Moreno, which had de facto mitigated the loss of state revenues from the historical subsidies in force in the country.

Lasso argued his decision on the need to “provide stability to the pockets of Ecuadorians”.

“We have listened to you, the citizens, and also to the social and political sectors to generate agreements that will lead us to a stable environment in which to grow and generate employment,” he said in a public speech.

A SENSITIVE ISSUE IN ECUADOR

Fuel prices are one of the most sensitive issues in Ecuadorian society, and an attempt in 2019 by Moreno to eliminate subsidies led to a wave of riots in which at least six people were killed and more than 1,500 injured.

Moreno backed down to calm the country but, a few months later, with the price of crude oil at rock bottom due to Covid-19, he set up a floating price system that in some ways had a similar effect.

Because the price in Ecuador was subject to the international market, the rise in crude oil prices in 2021 has increased the cost of all fuels to consumers.

Regarding the demands to control the increase in prices of essential products made by the indigenous movement, Lasso assured that he has ordered “the authorities of the National Government to protect the family economy”. “I have instructed governors and mayors to enforce, without exceptions of any kind, the official prices of rice, milk, fruits, and all the products of the basic food basket,” he added.

FEAR OF A CRISIS LIKE THE ONE IN 2019

The announcement comes after several weeks of tug of war with the leadership of the indigenous movement CONAIE, whose president, Leonidas Iza, had called for massive protests next week.

The president assured today that “this government does not feel it owns the truth.” On the “contrary, we know that the creation of opportunities is not only our task, but everyone’s,” he added.

Despite his recent rants in which he warned his supporters that he would not allow riots like the ones that shook Quito two years ago, the president has adopted today a less adversary and more conciliatory tone, in an apparent attempt to release pressure.

The state of social unrest has been increasing in the last weeks. There has been an unprecedented prison crisis and citizen insecurity, which has led the president to declare a state of emergency to alleviate both scenarios.

In addition, since last month Lasso has seen his fiscal and labor reform plan blocked in the Legislature, and his popularity has declined after it became known through the leaked Pandora Papers that until 2017 he had assets in tax havens, which is being investigated in the National Assembly and the Prosecutor’s Office.