Ecuador’s president vows indigenous groups will not block mining projects

Ecuador’s president has rejected environmental opposition to a big expansion of mining projects, saying he cannot allow indigenous groups motivated by “political interests” to ruin the Andean nation’s economy.

Days after President Guillermo Lasso touted $30bn of projects, including 14 mining ventures, to foreign investors at an Ecuador Open for Business event, the constitutional court sent a very different message. It invalidated the environmental permit given for drilling in the Los Cedros cloud forest saying there had not been prior consultation with local communities.

The decision provoked howls of protest from the mining lobby. It threatens a big copper project being developed by Ecuador’s state mining company Enami with Canada’s Cornerstone and the uncertainty from it could affect other mining projects, hitting Lasso’s plans to revive the economy.

Lasso told the Financial Times in an interview that Ecuador’s deposits of copper and other valuable metals needed to be mined to support the global energy transition away from fossil fuels and added: “To deny ourselves this possibility is to deny the future development of the country and this government will not let that happen.”

He said he planned to try to win over public opinion by “explaining what kind of mining this is, responsible, sustainable mining and defending the greater interest of the majority of Ecuadoreans above the political interests of indigenous leaders who want to make a campaign on the basis of sacrificing the Ecuadorean economy”.

Ecuador’s economy was hit hard by the pandemic and has yet to recover fully. Citi estimates growth of 3 per cent in 2021 and 1.5 per cent in 2022. Lasso believes the figures will be higher but still adds: “These are not numbers which make me very cheerful or very happy because we need more vigorous economic growth.”

After scoring early successes with one of the developing world’s fastest vaccination campaigns, Lasso now faces an uphill struggle. His CREO party holds less than a tenth of the seats in the National Assembly and he has failed to form a stable governing coalition.

The president’s tax reform only passed by default, after a time limit for Congress to accept or reject it expired. A progressive measure which increases levies on companies and the wealthiest Ecuadoreans, it will raise close to 1 per cent of GDP in additional revenue, according to JPMorgan.

Lasso now wants to pass a labour reform to make the country’s rigid employment laws more flexible and an investment promotion measure facilitating public-private partnerships. The labour measure faces stiff opposition from the leftist UNES bloc of former president Rafael Correa and from the indigenous party Pachakutik.

“In January we are going to present [the labour reform] to civil society and to Ecuadorean public opinion in order to have the broadest possible debate between employer groups, unions, academics, politicians and collect all the possible concerns to modify the project and then send it, I would say in March, to the National Assembly for approval,” Lasso said.

That task has been complicated by a very public dispute between the president and Jaime Nebot, the leader of the centre-right PSC party. After campaigning jointly the PSC broke with Lasso at the start of his government and Nebot has criticised the president harshly since for failing to keep political agreements.

To deny ourselves this possibility is to deny the future development of the country and this government will not let that happen

That leaves Lasso dependent on Pachakutik for support but the indigenous party is divided and has been a fickle force in congress. Its former presidential candidate Yaku Pérez formally accused Lasso of tax fraud after details of his offshore investments were published in the Pandora Papers, triggering an investigation by the Prosecutor-General.

Lasso, a self-made millionaire, hit back strongly after the Pandora revelations. He said he had exited his offshore investments in 2017 and survived an effort launched by political opponents in congress to impeach him. The comptroller’s office also dropped a probe for lack of evidence.

“This is an absolutely closed chapter,” Lasso told the FT of the impeachment attempt. “It was born closed and it died closed because there was no motive for such an investigation.” He described Perez’s accusation as “ridiculous”. 

But the problems Lasso faces in governing “won’t change for the rest of his term”, said Andrés Mejía, an Ecuador expert at King’s College London. “My sense is that it will get worse . . . It’s a worrying sign that he has broken the possibilities of a meaningful coalition so quickly.” 

Lasso also faces a serious challenge from worsening criminal violence, much of it linked to the drug trade. The US ambassador revealed this month that Washington had cancelled the visas of a number of Ecuadorean “narcogenerals” and expressed concern about the degree to which law enforcement had been penetrated by traffickers.

Two prison massacres in the space of two months in facilities controlled by drug gangs cost the lives of more than 180 inmates. Lasso said security was now his top priority.

“I will finish this interview and [then] spend the two hours which I dedicate each day to strengthening the SNAI, which is the institution which runs the prison system,” he said. “My big concern is security.”

Michael Shifter, president of the Interamerican Dialogue, a Washington think-tank, said he was struck after a recent visit to Ecuador by how serious drug crime had become.

“Ecuador was always proud of the fact that it was not like Peru or Colombia,” he said. “But it has certainly joined the club now, unfortunately. That is a big headache for Lasso.”