A trapped president
President Lasso is trapped in a power battle with the Assembly, which is the omen of a lose-lose situation unless both sides seek ways to lower the political heat. Ever since the CAL rejected the mega-bill project, conflict between the parties has escalated, with mutual accusations. Finally, Lasso agreed to re-send the bill divided into its tax and labor reforms to comply with the constitution. At least the tax reform will be submitted as urgent, with a 30-day term for legislators to approve it.
Unfortunately, just as some voices at the Assembly started to sound more conciliatory, the scandal of the Pandora Papers emerged, and Lasso is mentioned among other public and private leaders who apparently have property or have conducted transactions in the so-called “tax havens”.
Ecuadorian law forbids presidential candidates from having property in any such places. The electoral court examined Lasso’s case last year before he was approved as a candidate for this year’s elections. Thus, it is expected that nothing irregular will be found.
The problem resides in the fact that Lasso transferred some of those properties to his family without paying a bequest tax. Technically, this tax would be due when the transactions become effective, which they have not. But an opposition going after Lasso’s failure gives enough cloth to cut. An ad-hoc commission was formed in the Assembly to investigate this case and called Lasso to testify. In an unprecedented action, they also called Lasso’s family. Worse came to worst when Lasso refused to respond to the Assembly’s call and invited legislators to visit him at the Presidential House.
To make things more difficult, since last week farmers and some unions have been marching and blocking roads, mainly on the coast. CONAIE, led by Leonidas Iza, is announcing a protest for October 26, which is raising fears of a repeat of October 2019.
On the bright side, the agreement with the IMF brought the first $800m, which will help to reduce arrears and increase, as promised, the welfare bonus, which might help to lower the social unrest. But decisions about derivatives prices and the focalization of subsidies are far from being resolved and are at the core of the above-mentioned protests. We suspect they are being fueled by people who have their own political interests, and Lasso is claiming there is a conspiracy led by Jaime Nebot, Leonidas Iza, and Rafael Correa.
Even though positions among analysts are polarizing in favor of an extreme solution, such as “cross death”, in which the the president closes the assembly and in six months new presidential and legislation elections are called, and others who think Lasso should make a pact with UNES and the Social Christians, we still believe a middle-of-the-road solution seeking agreements one at a time is feasible. However, for this last road, the government urgently needs a stronger political team and a much better communication strategy.
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