The cost of Ecuador’s surrender on fuel subsidies

IT IS BECOMING a familiar story. In the aftermath of the South American commodity boom, a centrist president has to repair economic damage caused by a leftist populist and, either because of technical or political mistakes, botches the job. The IMF is blamed for measures that would be even more painful without its money. It has happened in Argentina. And now it is happening to Lenín Moreno in Ecuador. After a fortnight of protests, rioting and looting, on October 13th he withdrew a decree eliminating fuel subsidies. His government will find it hard to recover.

Mr Moreno was elected in 2017 as the successor of Rafael Correa, an autocratic populist. Ending a period of instability which had seen five presidents come and go in ten years, Mr Correa ruled successfully for a decade, thanks to the commodity boom. Higher oil revenues, plus expensive and opaque Chinese loans, allowed him to build roads, hospitals and schools while also squandering billions. He doubled the size of the state. But after the oil price plunged in 2014 the economy fell into recession. Mr Correa stepped aside, but backed Mr Moreno, his former vice-president, who has used a wheelchair since he was shot in an attempted robbery in 1998.

Mr Moreno broke with the policies of his predecessor. He had little choice. In 2000 Ecuador adopted the dollar after its...

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