The Murmuring Volcano - Ecuador's Economic Crisis

Military and indigenous people came together to provoke the crisis
Military and indigenous people came together to provoke the crisis that led to the fall of the Jamil Mahuad government in 2000

Article from Black Flag #219 (2000) about the uprising in Ecuador against neoliberalism and "dollarisation".

Submitted by Fozzie on January 22, 2021

The neo-liberal model that has been so enthusiastically adopted in many parts of Latin America is designed to make the poor pay — with higher prices, lower wages and increased social costs. The underlying causes of the economic crisis in the country lie in the country's corrupt and fragmented political classes. The government of Jamil Mahuad was inaugurated in August 1998. His predecessor, Alarcon, was arrested for corruption. He in turn had replaced Abdala Bucaram, called 'El Loco', who fled the country after people surrounded the Presidential Palace. The political classes, such as the financial and export elites of Guayaquil, Ecuador's largest city, are so neo-liberal in outlook they have been criticised by the IMF! Among other things, they got income tax abolished and have rigged bailouts for a series of banking scandals, all of which they have profited from.

Ecuador is heavily reliant on oil and banana exports and the national currency, the sucre, has long been prone to hyper-inflation. Mahuad's solution has been to try to pass the costs onto the poor. In 1999, an attempt was made to increase gasoline prices, which prompted widespread strikes and blockades by taxi and bus drivers, until the price hike was removed.

In October, the crisis deepened and the country suffered two volcanic eruptions, Pichincha near the capital, Quito, and Tungaragua, which caused the resort town of Bailos to be evacuated.

In January this year, Mahuad answered the deepening crisis by freezing bank accounts, announcing the privatisation of the oil fields and decreed that the US dollar would be the nation's currency. This ‘dollarisation' did not just mean the end of the sucre, but increased spoils for the rich who could speculate in dollars. This measure was immediately met with calls for an uprising by the main Indian organisation, CONAIE (Confederation of Indigenous Nationalities of Ecuador) on 15 January.

CONAIE launched an 'Indian and Popular Parliament', going for a conscious strategy of dual power, with talk of forming a Council for National Salvation. The oil workers and students struck.

A long-term resistance struggle was planned. As CONAIE'S vice-president, Ulcuango, noted, if they resisted 500 years of oppression, they can very well resist several months more. Their goal is a new economic and political order, far from neo-liberalism and based on the Parliament of the Peoples of Ecuador. By 20 January, between 20 and 30 thousand Indians were in Quito. The Indians managed to assemble outside the National Congress but were dispersed by the police and army, using tear gas.

CONAIE appealed to the army, many of whom are Indians themselves, to support them. An offer to negotiate with Mahuad was rejected, as they didn't recognise his legitimacy. The Parliament of the Peoples of Ecuador demands included the suspension of the state of emergency, the abandonment of ‘dollarisation', the resignation of Mahuad, actions against corruption, a freeze on public transport fares and the restoration of a Council for National Salvation. Though not demands an anarchist would make, they were designed to appeal to the majority of the Indians and the urban poor. The Ecuadorian Constitution allows for the people assuming such powers when the authorities are incompetent and act against the national interest.

There were riots in other cities and troops took over an oil refinery in Esmereldas that had been occupied by striking workers. In the province of Chimborazo, 50,000 Indians blocked the Pan-American Highway. In a desperate attempt to back-pedal, Mahuad announced a pay rise for private company employees from $47 to $60 a month. But as the basic cost of living for a family in Ecuador is $200 a month, this was an insult.

On Friday 21 January, the Indians took over the Congress backed by junior and middle-ranking officers. They established a provisional government, the Council for National Salvation, headed by Colonel Lucio Gutierrez, with the President of CONAIE, Antonio Vargas, and Carlos Solerzano, formerly of the Court of Justice.

The official military leader, General Carlos Mendoza, arrested Gutierrez, and forced Mahuad to resign. Vice-President Noboa was initiated as President, pledging the same policies. The faces changed, but the economic misery remained.

The indigenas tried to continue the uprising in Quito, but lacking the support of the army, they decided to leave the city. They were evicted from the Peoples Parliament by the army, which officially dissolved it. According to Ecuadorians United in Montreal, Canada, General Jaime del Castillo led 400 soldiers to massacre the Indians at El Arbolito in Quito, but fortunately the soldiers refused to obey. The indigenas said that they would watch the new government and the struggle would continue. The new government started to purge the military and arrest prominent leftists, Indian leaders and people from the Co-ordination of Social Movements.

While not as libertarian in character as some other indigenous movements in Latin America, CONAIE has several tendencies, explained here by an activist at an alternative news agency in Quito.

“Not all the indigenous people are for a change of government, the big capitalists among them, for example, who are large exporters of handcrafts. They are happy with the idea of dollarization and with the idea of neo-liberalism. And so, within the organized indigenous movement there are various factions. [O]ne that holds the indigenous position... excludes anyone who is not indigenous. They are purists and call for the return of Tahuantinsuyo [the Inca Empire]... The Democratic Faction for a New Ecuador is the most structured politically and has the great majority. The various uprisings and taking over the main churches has been their work. Theirs is the design for the Parliament [and] the proposed reforms.

“The bad thing about this faction is that when they allied themselves with the democratic party line, they lost 40% of what they had gained before. They formed the Pachakutik movement and let themselves become taken in by the siren song of 'democracy', though it seems, luckily, that they are beginning to resist. Nowadays they are saying that they have shown that with the current democracy the people have no alternatives, so a takeover of power is the only solution.

“The utilitarian position includes those who are selling the indigenous movement as a mendicant movement, those who ask you for money at every turn, even for the air they breathe... This faction is into the world of NGOs (Non-Governmental Organizations).

“They talk of a New Plurinational and Democratic State in order to make room for all the anti-neo-liberal factions that don't want to be classified as orthodox or leftist. The idea is to attract the small and medium-sized producers, who have been seriously hurt and who have recently played a significant part in the development of the national economy. There is nothing to discuss with big business.

“We're not thinking about an autarchy, nor in the total destruction of what is in the country in order to start all over again, an idea that is not acceptable. It is believed that the middle and lower class sectors of society can foster a new Ecuador.

“Politics by alliance should be this way.

“Remember that the movement of the indigenous and rural people is not one of armed conflict but it is political and this is the world of ideas. For this reason, proposals are accompanied by protests."

Though their immediate aim of a more popular government was thwarted, the uprising is not over and the indigenas are discussing new strategies. The local and regional plenaries remain, and already one in Quito has demanded the release of the detainees and repeated the demands of the Peoples' Parliament.

For updates see the following websites: or —which has the most up-to-date, reliable information in Spanish.