WOLFF Leftist Governments and Economic Elites 2016

Leftist Governments and Economic Elites in Bolivia and Ecuador:
From conflict to rapprochement?
Jonas Wolff, Peace Research Institute Frankfurt (PRIF), wolff@hsfk.de
Paper prepared for the 2014 Congress of the Latin American Studies Association (LASA),
May 21-24, 2014, Chicago, IL
– Draft version only, please do not cite without permission –
A revised version of this paper entitled “Business Power and the Politics of Post-
Neoliberalism: Business-Government Relations in Bolivia and Ecuador” will be published
2016 in Latin American Politics & Society.
In comparative studies on the so-called leftist turn in South America, Bolivia and Ecuador are
usually placed close to the radical leftist edge represented by Venezuela. Indeed, the govern-
ments led by Evo Morales and Rafael Correa have implemented processes of far-reaching
political change which included the rewriting of the countries’ constitutions and the turning
away from previous neoliberal recipes towards a much more state-centered development
model. These political changes met with fierce resistance, in particular from the traditional
political and economic elites. In the political arena, this polarization continues until today
(further aggravated by increasing conflicts between the governments and former allies) – but
below the level of official politics, remarkable changes have taken place that have yet to be
studied systematically. These changes concern the relationship of the two governments with
important business sectors. Most notably is the rapprochement between the Bolivian govern-
ment and the economic elites from Santa Cruz, which had been fiercely oppositional during
Morales’s first term in office. The turn from conflict to rapprochement is not that clear-cut in
the Ecuadorian case, but also here recent years have seen some notable changes. The paper
analyzes whether there has been, indeed, such a change from conflict to rapprochement in the
relationship between the two governments and the respective business sectors. It aims at (1)
empirically assessing and comparing the dynamics of conflict and rapprochement in the two
countries, (2) identifying the causes that explain change, and (3) analyzing the implications
for democracy and the overall processes of change.
Jonas Wolff 1
Leftist Governments and Economic Elites
1. Introduction1
In comparative studies on the so-called leftist turn in South America, Bolivia and Ecuador are
usually placed close to the radical leftist edge represented by Venezuela (cf. Cameron and
Hershberg 2010; Dargatz and Zuazo 2012; Weyland et al. 2010). Indeed, the governments led
by Evo Morales and Rafael Correa have implemented processes of far-reaching political
change which included the rewriting of the countries’ constitutions and the turning away from
previous neoliberal recipes towards a much more state-centered development model (cf.
Wolff 2012, 2013).2 These political changes met with fierce resistance, in particular from the
traditional political and economic elites. In the political arena, this polarization continues until
today, and, in recent years, has been further aggravated by increasing conflicts between the
governments and former allies. Yet, below the level of official politics, remarkable changes
have taken place that have yet to be studied systematically. These changes concern the rela-
tionship of the two governments with important business sectors.
While Ecuadorian analyst Simón Pachano (2012: 87) observes a “radical change in economic,
political, social and cultural terms that is expressed in constitutional and legal stipulations as
well as in the public policies promoted by the government”, a recent piece in the Washington
Post noted that “Correa maintains generally strong ties with Ecuador’s business community”
(Miroff 2014) And according to Alberto Acosta, former member of Correa’s political move-
ment, minister and president of the Constituent Assembly, it is surprising “that under a gov-
ernment that defines itself as socialist and revolutionary the private banks and the large eco-
nomic groups have made more profits that during the neoliberal years directly preceding the
taking office of President Correa” (Acosta 2013: 13).3 Concerning Bolivia, Javier Gómez
Aguilar (in Ormachea and Ramirez 2013: 9) observes “an increasingly close relationship be-
tween the MAS government and entrepreneurial sectors that represent the agricultural and
agribusiness interests of the lowlands and, specifically, from the department of Santa Cruz”.
Existing scholarship dealing with Latin America’s “leftist turn” in general and recent political
changes in Bolivia and Ecuador in particular up to now has largely focused on the politico-
institutional dimension of change and the question of democracy, on the evolving relationship
of the governments with the political opposition and/or social movements, on their perfor-
mance in terms of economic development and/or social inclusion, and on the causes that
might explain different types and trajectories of change (cf. Cameron and Hershberg 2010;
Dargatz and Zuazo 2012; Ellner 2012, 2013; Levitsky and Roberts 2011a; Petras and Velt-
meyer 2011; Weyland et al. 2010). This paper sets out to contribute to an analysis of the polit-
ico-economic dimension of change by zooming in on the evolving relations of the “revolu-
tionary” governments in Bolivia and Ecuador with the two countries’ economic elites. In do-
ing so, the paper aims at (1) empirically assessing and comparing the dynamics of conflict and
rapprochement in the two countries, (2) identifying the causes that explain change, and (3)
analyzing the implications for democracy and the overall processes of change. At the present
stage, however, this is only a very first draft which tries to empirically assess what has
changed (or not) in the relationship between the Morales and the Correa government and the
1
The author thanks Gregor Díaz Griffith and Rebecca Paulus for research assistance.
2
According to the Bertelsmann Transformation Index (BTI), the “radical institutional reforms” put in place by
the Correa government concern also the “economic structure of the country” and imply “a challenge to both
liberal democracy and the market economy” (Bertelsmann Stiftung 2014b: 2). Regarding Bolivia, the BTI as-
sesses that Morales’ “project of profound transformation” has meant that “the market economy is conceived of
as one part of a plural economic order that combines private initiative with heavy state involvement in the econ-
omy […] and communitarian and social, cooperative forms of economic organization” (Bertelsmann Stiftung
2014a: 2).
3
Acosta added that also the concentration of business activity is (still) incredibly high, as is the concentration of
landownership (Acosta 2013: 14).
Jonas Wolff 2
countries’ economic elites. In the following, I will start by reviewing comparative studies on
the “leftist turn” (2.) before presenting my preliminary analysis of Bolivia (3.) and Ecuador
(4.).
2. Business in times of revolutions: The state of research

The volume Leftist Governments in Latin America: Successes and Shortcomings (Weyland et
al. 2010) analyzes the Chávez government in Venezuela and the Morales government in Bo-
livia as cases representing what the editors call “the contestatory left”, but the Correa gov-
ernment in Ecuador is clearly seen as also belonging to this “more radical” leftist current that
“challenges neoliberalism, defies strictures of globalization, and attacks the political opposi-
tion (Weyland 2010: 3).4 These contestatory left governments are seen to “feel the political
urge to contest with enemies”, including “business sectors” (Weyland 2010: 3). They “have
put significant and increasing pressure on business, especially foreign investors”: “Most im-
portantly, they have pushed for higher tax and royalty payments and decreed more stringent
controls, especially through forced government participation in enterprise management and
other steps toward nationalization.” (Weyland 2010: 11). At the same time, however, the con-
testatory left is not radical or revolutionary in the traditional, Marxist or communist sense as
governments have forgone “a comprehensive, systematic assault on capitalist property rela-
tions” (Weyland 2010: 3); “even contemporary radicals shy away from confiscatory taxation
or massive expropriation of domestic business” (Weyland 2010: 13).5 Still, the overall politi-
cal result of these policies is described as an “acrimonious relationship of the contestatory left
governments with domestic and foreign business”, which “has triggered capital flight and
dried up investments” (Weyland 2010: 12). The incorporation of “of new mass sectors into
the political system”, combined with deteriorations in “political pluralism” and “liberal safe-
guards” through a strengthening of “the majoritarian aspects of democracy” has further con-
tributed to “political polarization” (Weyland 2010: 14). In the chapter that deals with Bolivia,
George Gray focuses on “policy outcomes and outputs” (Gray 2010: 57). With a view to eco-
nomic policy, the overall assessment is that the Morales government, during its first term in
office, has not done much to really transform the economy, but rather relied on reforms in the
gas sector and, in particular, on increased hydrocarbons revenues (cf. Gray 2010: 57, 65, 71).6
In the comparative chapter on the policies and performance of the contestatory and moderate
left, the editors summarize that the Morales government (just like Chávez in Venezuela) has
made “substantial efforts to reverse some of the market reforms enacted during the 1990s,
especially in the area of privatization” and, thereby, “significantly expanded state intervention
in the economy, including the takeover of more and more productive activities” (Madrid et al.
2010: 153). Still, when compared with Venezuela, macroeconomic policies in Bolivia have
been much more conservative (in terms of public spending), and the Morales government
“has not felt compelled to impose heavy-handed regulations, such as the price controls adopt-
ed in Venezuela” (Madrid et al. 2010: 154). The government “has maintained liberal trade
policies for the most part” and nationalizations have been limited to the hydrocarbon sector
4
In the concluding chapter, the editors explicitly discuss Ecuador as another case where the government has
followed “the approach of the contestatory left” (Madrid et al. 2010: 167). See below.
5
“In sum, the Morales government has not initiated anything resembling a transition to socialism, despite its
vocal rejection of ‘neoliberalism.’” (Madrid et al. 2010: 157).
6
The so-called “nationalization of Bolivian natural gas” did not nationalize the gas extraction and export “in the
conventional or historical sense – via expropriation or changes in property rights” (Gray 2010: 65). Still, it did
significantly increase government participation in gas revenues, included a renegotiation of contracts with multi-
national companies, and increased the role of the state-owned gas company YPFB in the sector (cf. Gray 2010:
65-66; cf. Gamarra 2008: 135-136; Madrid 2011: 248; Madrid et al. 2010: 156-157).
Jonas Wolff 3
and “a few private firms” (Madrid et al. 2010: 157).7 While nationalization almost exclusively
concerned foreign companies, the MAS agenda of land reform did lead to serious conflicts
with domestic economic elites: According to Madrid et al. (2010: 161), new legislation on
land reform and related implementation efforts have been “highly conflictual”, in particular
because of “the clout of agribusiness and its regional concentration in the opposition-
controlled lowlands”.8 The concluding chapter also briefly deals with Ecuador and argues that
the government of Rafael Correa “has adopted a highly contestatory economic and political
strategy” (Madrid et al. 2010: 168).9 With a view to economic policy, the Correa government
“has increased state intervention in the economy substantially” and “boosted government
spending, especially on social programs”, thereby exacerbating inflation (Madrid et al. 2010:
168).10 Correa has also “reoriented the country’s international economic policies”: “It has
taken a tough line on the country’s foreign debt [...], raised tariffs, established quotas on some
imports, and rejected a free trade agreement with the United States” (Madrid et al. 2010: 169).
In contrast to Weyland et al., the comparative analysis presented in The Resurgence of the
Latin American Left (Levitsky and Roberts 2011a) avoids the dichotomous view of two
lefts.11 The editors explicitly argue that, although “Bolivia is routinely classified, along with
Venezuela, as ‘radical’ or ‘populist’”, the MAS government “differs from Chavismo in im-
portant ways, including its relative policy moderation and its deep roots in autonomous social
movements” (Levitsky and Roberts 2011b: 12). While in their four-fold typology Bolivia rep-
resents the “Movement Left”, Ecuador joins Venezuela in the category “Populist Left” (Levit-
sky and Roberts 2011b: 13, Figure I.I). With a view to economic policies, however, the as-
sessment of Bolivia and Ecuador is broadly similar. Both are categorized as “heterodox”: Mo-
rales’ and Correa’s economic policies are characterized by “selective, rather than comprehen-
sive, forms of state intervention that challenge orthodox principles without fully abandoning
the market-led model or making the state the primary engine of development”, breaking “with
neoliberalism”, they “embraced redistributive social policies” that include “increased ex-
penditure, extended coverage of existing social programs, and redistribution through labor
market policies” (Levitsky and Roberts 2011b: 22-23). While generally committed to property
rights, the Bolivian government is seen to have taken “bolder measures to redistribute assets
and wealth, such as land reform” (Levitsky and Roberts 2011b: 23).12
7
Gamarra (2008: 136), for instance, mentions nationalizations of “the smelting company at Vinto” (which af-
fected the Swiss Glencore) and “of the Empresa Nacional de Telecommunicaciones (ENTEL; National Tele-
communications Company)” (which affected an Italian firm).
8
See also Gamarra (2008: 137-138) and Gray (2010: 63).
9
Correa’s strategy, according to Madrid et al. (2010: 168) includes concentrating power, denouncing the opposi-
tion and media, and using social mobilization “to intimidate his opponents”. Constitutional reforms are described
to have further expanded the power of the presidency.
10
More specifically, “the government has moved to assert greater control of the oil industry”, while the new
constitution “prohibits land concentration, eliminates the autonomy of the central bank, gives priority to local
investors over foreign investors, and provides for a larger state role in strategic sectors such as oil, mining, tele-
communications, and water” (Madrid et al. 2010: 168).
11
The most prominent – and most simplistic – analysis of the “two lefts” has been presented by Castañeda
(2006). A volume that most clearly deviates from such a dichotomous view is Latin America’s Left Turns (Cam-
eron and Hershberg 2010).
12
In terms of democracy, Levitsky and Roberts (2011b: 25) do see Ecuador and Bolivia in the same camp with
Venezuela. The “plebiscitarian” orientation that characterizes these three cases is defined by presidents that “ap-
peal directly to popular majorities through plebiscitary mechanisms such as referenda or mass mobilization to
bypass or alter institutional rules, concentrate political authority, and weaken opponents. Although plebiscitarian
leaders may encourage popular participation, they direct or control it from above.” (Levitsky and Roberts 2011b:
25). Still, while Venezuela and Ecuador are seen on “a slide toward competitive authoritarianism.” (Levitsky and
Roberts 2011c: 417), the political changes initiated by the Morales governments in Bolivia do “represent a clear
advance in democratic inclusiveness and citizenship rights” for the country’s “long-oppressed indigenous ma-
jority” (Levitsky and Roberts 2011c: 420).
Jonas Wolff 4
The two country chapters in the volume further spell out this assessment. According to Raúl
Madrid, “the Morales administration’s economic policy has exhibited a surprising degree of
continuity with the past” (Madrid 2011: 247): While the government “has expanded state in-
tervention in the economy”, “increased its control over the natural resource sector”, and “na-
tionalized some foreign-owned companies”, it “has not sought to carry out a transition to so-
cialism or change the existing pattern of development” (Madrid 2011: 248). Vice president
Álvaro García Linera “has argued that the country must proceed through various stages of
industrial capitalism before moving toward socialism” and, correspondingly, “the government
has largely respected private property and has sought to encourage private investment” (Ma-
drid 2011: 248). In the area of international economic policy, the Morales government “has
imposed selected trade restrictions, such as a temporary ban on the export of cooking oil, but
by and large it has maintained open trade policies” (Madrid 2011: 249). The same pattern of
heterodoxy applies to the area of social policy, where the administration “significantly in-
creased social spending”, but “has eschewed radicalism […], focusing instead on deepening
or broadening policies that were enacted by previous governments” (Madrid 2011: 249). Ac-
cording to Madrid (2011: 250), even land reform “largely” keeps the land reform principles
laid down by previous administrations: “Only unproductive large estates are subject to expro-
priation, and the productivity requirements are relatively low.” (Madrid 2011: 250) Further-
more, landowners who are expropriated “are eligible for compensation from the government”,
and “much of the land that has been redistributed to date has belonged to the state” (Madrid
2011: 250).13 Regarding Ecuador, Catherine Conaghan emphasizes two elements of Correa’s
economic policies: the emphasis on building “a vigorous, proactive central government”
(Conaghan 2011: 275) and an increase in “social spending” (Conaghan 2011: 276). “While
the new constitution did not eliminate the market, the Correa administration would relegate it
by expanding the state’s reach as regulator, banker, insurer, stockholder, and entrepreneur.”
(Conaghan 2011: 276) This new attitude towards the private economy, in particular, affected
banks, which “were one of the major targets of government intervention, with the executive
branch appropriating full control over the disposition of assets while leaving the banks re-
sponsible for legal liability” (Conaghan 2011: 276).14 At the same time, however, “Correa has
refrained from mimicking Chávez’s nationalization push” and, instead, has focused “on en-
hancing the substantial market power of firms that are already under state control and forming
new ones” (Conaghan 2011: 277).15 Overall, Conaghan concludes that economic policies so
13
In Madrid’s analysis, this “absence of radicalism in economic and social policy” is due to a serious of factors:
the failure “to come up with a coherent alternative [to the market-oriented model]”; “political learning” from the
failed policies of previous leftist governments (namely the UDP administration in the early 1980s); “certain
[political] constraints” that include the power of the opposition in the Senate, the Constituent Assembly, at the
level of departmental governments as well as in the judiciary and the state bureaucracy; “important economic
constraints” that include Bolivia’s dependence “on foreign countries and institutions for finance as well as export
markets”; and, finally, “the low technical and administrative capacity of the Bolivian government” (Madrid
2011: 256-257). As a result, “the administration continues to face significant financial, bureaucratic, and techno-
logical obstacles to carrying out sweeping economic and social reforms”, while “there are numerous indications
that the administration is well aware of the dangers of unrestrained spending and the importance of foreign trade
and investment to the Bolivian economy” (Madrid 2011: 258).
14
“Under new regulations, banks were subjects to controls on everything from domestic liquidity reserves and
interest rates, to fees on financial services and ATM withdrawals. From the perspective of bankers, the strict
regulatory regime amounted to a ‘de facto nationalization’ of the banking system. The government’s own Cen-
tral Bank, now stripped of its legal autonomy and run by a presidential appointee, administered the new order in
the financial system.” (Conaghan 2011: 276; the quotation is from Weekly Analysis of Ecuadorian Issues, August
24, 2009)
15
“Of the top 50 largest companies in Ecuador, 10 are state-owned firms, accounting for 48% of all business
assets and 44% of all sales.” (Conaghan 2011: 277; drawing on Weekly Analysis of Ecuadorian Issues, August
28, 2009) These numbers, however, include “PetroEcuador, the state company responsible for about 60% of oil
Jonas Wolff 5
far have been heterodox, but this “should not deter us from taking into account important de-
velopments that may shape policy in the long run: namely, how significant changes in law and
the constitution are amplifying the economic powers of the state” (Conaghan 2011: 280).
Arguing from a quite different theoretical and normative position, James Petras and Henry
Veltmeyer (2009, 2011) essentially agree with this assessment. In their comparison of the
three governments that claim to represent a new twenty-first century version of socialism
(“21cs regimes”), Venezuela is considered the only country in which there is something re-
sembling a radical transformation (Petras and Veltmeyer 2011: 201-224). While the Morales
and the Correa governments are credited with some important (anti-imperialist) changes in the
area of foreign policy, their economic and social policies are seen as fairly moderate: Increas-
es in social spending and some (minor) adjustments to the neoliberal model are recognized
but situated in a context of conservative fiscal policies and the absence of any structural
changes to economic structures, class relations and property ownership (see also Petras 2013a,
b). Ecuador represents the “most conservative variant of 21cs” (Petras and Veltmeyer 2011:
222), “combining innovative foreign policy measures with neo-liberal ‘modernization’ devel-
opment strategies” (Petras and Veltmeyer 2011: 208). The latter include “major concessions
to mining and petroleum companies”, “the privatization of telecom concessions and subsidies
to regional business elites” (Petras and Veltmeyer 2011: 222).16 If anything, Correa has shift-
ed the Ecuadorian government’s strategic orientation away from “the coastal financial agro-
commercial capitalist class, centered in Guayaquil”, which is “vigorously attacked” by the
president, towards “the Quito (Andean based) capitalist class”, which is “vigorously support-
ed and subsidized” by this government (Petras and Veltmeyer 2011: 207-208).17
In the case of Bolivia, Petras and Veltmeyer summarize that the Morales government has at
least implemented “significant domestic change in the area of the political-cultural-legal
rights of the indigenous people”, increased the central government’s revenues in the hydro-
carbon sector and “allowed for incremental increases in the minimum wage, salaries and wag-
es”, but has also maintained “fiscal discipline and strict control over social spending” (Petras
and Veltmeyer 2011: 209). Most notably, for the topic discussed in this paper, the authors
conclude that “Morales’ economic strategy is based on a triple alliance between the agro-
mineral multinationals, small- and medium-sized capitalists, and the social movements, most-
ly indigenous.” (Petras and Veltmeyer 2011: 210) In line with his “‘open door’ policy towards
extractive capital”,18 Morales “has strengthened and provided generous subsidies and low
interest loans to the agribusiness sector” (Petras and Veltmeyer 2011: 210) Correspondingly,
the government has “strongly opposed” grassroots pressures for land reform and has tried “to
deflect attention from agrarian reform by settling landless Indians on public lands” (Petras and
exports. Other important state-owned enterprises are found in electricity, telecommunications, insurance, and
army-based operations in steel processing, manufacturing, and agriculture.” (Conaghan 2011: 277)
16
“The most striking departure from any credible claim to socialism is the persistence and expansion of foreign
private capitalist ownership of the strategic mining and energy resources […]. Large-scale, long-term mining
contracts have been signed and renewed giving foreign-owned mineral companies majority control over the
principal foreign exchange and export earning sectors. Worse, Correa has violently repressed and rejected the
longstanding claims of the Amazonian and Andean indigenous communities living and working on the lands
signed off to the mineral multinationals.” (Petras and Veltmeyer 2011: 207)
17
While this also includes some policy changes – as suggested by the notion that Correa’s policies “combine
‘nationalist-populist’ and neo-liberal policies” –, James Petras also argues that the Correa government does in
fact appeal to “the Guayaquil business elite” (Petras 2013b)
18
“The most striking aspect of Bolivia’s economic policy is the increased size and scope of foreign-owned mul-
tinational corporate extractive capital investment. Twenty-nine major foreign multinationals, and close to 100 in
total, are currently exploiting Bolivia’s mineral and energy resources under very lucrative conditions […].” (Pet-
ras and Veltmeyer 2011: 210) “The Morales regime has encouraged and protected large scale foreign investment
in mining and agriculture. It has not nationalized any large mining operation.” (Petras 2013a)
Jonas Wolff 6
Veltmeyer 2011: 212).19 In general, “bankers and business people, both national and foreign,
have benefited from low taxes, a stable currency and business friendly fiscal incentives” (Pet-
ras 2013a).20
While, as seen, most analysts differentiate, in one way or another, between Venezuela, Boliv-
ia and Ecuador and argue that the radical, revolutionary rhetoric used by Correa and Morales
was followed by relatively cautious, at best reformist changes in actual economic policies,
Steve Ellner draws a different picture. According to his comparison of Venezuela, Bolivia and
Ecuador, “Chávez, Morales and Correa in their first successful bids for the presidency deem-
phasized far-reaching socioeconomic transformation and focused on more moderate goals”
(Ellner 2012: 101). Having won the elections, all three presidencies, then, “have been charac-
terized by gradual but steady radicalization unencumbered by the concessions associated with
the consensus politics and liberal democracy of previous years”, interpreting “their electoral
triumphs as popular mandates in favor of socialism” (Ellner 2012: 102; see also Ellner 2013:
5-6). In terms of economic policy, all three presidents “affirmed their anti-neoliberal creden-
tials by largely halting and reversing privatization schemes” (Ellner 2012: 102). What is
more: “Expropriations, threats of expropriations, confrontations, and greater state control of
private (and particularly foreign-owned) companies have gone beyond the actions and dis-
course of most radical populist and nationalist Latin American governments since the 1930s.”
(Ellner 2012: 111) In Bolivia, this, however, is largely confined to the hydrocarbon sector,
while examples from Ecuador are not even mentioned (cf. Ellner 2012: 111).21 In the end,
even as Ellner identifies a “gradual approach to socialism”, his analysis of the “heterodox
character” of the governments is thus not that different from the assessments discussed above
(Ellner 2012: 103).22
What emerges from this discussion of comparative studies is, in essence, a picture of substan-
tive and yet reformist, important and yet gradual changes in economic and social policies pur-
sued by the governments of Morales and Correa. A useful term that conceptually grasps these
ambivalent developments that combine crucial continuities in the economic order and the stra-
tegic orientation of economic policies with no less significant moves that go beyond previous
19
The result: “The super rich 100 families of Santa Cruz continue to own over 80% of the fertile lands and over
80% of the peasants and rural Indians are below the poverty line. Mine ownership, retail and wholesale trade,
banking and credit continues concentrated in an oligarchy which has in recent years diversified its portfolio
across economic sectors, creating a more integrated ruling class with greater links with global capitalist actors.”
(Petras and Veltmeyer 2010)
20
See also the largely similar assessment of the Morales government by Jeffrey Webber (2009, 2011). In line
with Petras and Veltmeyer, Webber essentially argues that the economic policies pursued by the MAS govern-
ment follow a development model of “reconstituted neoliberalism” characterized by some significant adjust-
ments to the previous neoliberal model, but without major structural changes, a certain emphasis on public in-
vestment and social policies, but in an overall framework of fairly conservative fiscal policy (Webber 2011: 177-
229).
21
In Bolivia, the share of the economy (GDP) controlled by the state increased from 15% in 2006 to 38% in
2013 – a significant increase, of course, but still clearly below usual European social-democratic levels. In addi-
tion, the roughly 20 nationalizations mostly affected foreign companies. See LosTiempos.com, November 28,
2013 (“El Estado controla el 38 % de la economía con las nacionalizaciones”).
22
What is important in this regard is that the political changes in Bolivia and Ecuador (and also in Venezuela)
are “unfolding in the context of a bourgeois democratic society in which capitalist relations of production are
still the dominant mode of economy activity” (Ellner 2012: 105). In a related way, Miriam Lang (2010: 17) has
argued that the “progressive governments in Ecuador, Bolivia and Venezuela have succeeded in brushing aside
the old political elites and renovate the party system, the state as a structure, as an institutionality, as a dispositif
of discourses and practices, continues penetrated by this historical range of functions [related to class-based and
colonial exclusion, logics of repression and control, the administration and implementation of dominant inter-
ests]”.
Jonas Wolff 7
policies is “post-neoliberalism” (cf. Grugel and Riggirozzi 2012; Macdonald and Ruckert
2009; Rovira Kaltwasser 2011; Stefanoni 2012a).23
This post-neoliberal agenda, without a doubt, significantly challenged the vested interests of
the economic elites and the private economic sector more generally. Hence, when Morales
and Correa took power in 2006 and 2007, respectively, representatives of the business sectors
were clearly in the oppositional camp. In fact, at the time, it was rather hard to differentiate
between the position of the economic elite and explicitly political opposition groups. These
emerging oppositional alliances, furthermore, had also a regional focus – which emerged from
the overlap between political, economic, and regional cleavages particularly in Bolivia, but
also in Ecuador. In Bolivia, with the 2005 electoral victory of the MAS at the level of the cen-
tral state, the most important segments of the country’s economic elite and the stronghold of
the remaining political opposition have been located in the so-called media luna, the lowlands
in the eastern parts of the country and, in particular, in the department and city of Santa Cruz.
In Ecuador, the overlap is weaker, but again a crucial part of the economic elites and one im-
portant opposition party have been based in the coast and, in particular, in Guayaquil,
Guayas.24 This has led to the emergence of what Kent Eaton (2011) has called “conservative
autonomy movements” opposing the left-governed central governments. To an important ex-
tent, therefore, the conflict between the economic elites and the government in Bolivia and
Ecuador has been “unfolding along territorial lines” (Eaton 2011: 291). Still, although cen-
tered on the question of territorial autonomy, the conflict is largely about economic issues and
interests: Autonomy claims from Santa Cruz and Guayaquil “focus on the defense of the mar-
ket-base models” against the state-centered policies pursued by the central governments, and
private sector entrepreneurs and business associations are among “the most powerful advo-
cates” (Eaton 2011: 291). As Eaton (2011: 295) observes, both autonomy movements are
characterized by “core constituencies” drawn from the countries’ “upper economic strata”
and, correspondingly, by a “critical participation of economic elites in these movements”. 25 In
terms of the evolving relation between central government and regional autonomy movement,
the Bolivian case was characterized by conflict escalation (following the election of Morales)
until a period of outright confrontation (in 2008); in Ecuador, by contrast, the territorial con-
flict constituted an important dimension of the tensions between the Correa government and
the opposition, but as such never came to a head. The crucial, twofold difference is that the
coastal elites (and middle classes) in Ecuador felt never as directly threatened by the central
government as did their lowland counterparts in Bolivia, while the autonomy movement in
Guayaquil/Guayas never gained the capacity of resistance and disruption the opposition
movements in Bolivia’s media luna region and, particular, in Santa Cruz developed (cf. Eaton
23
See also Acosta (2012) and Ramírez Gallegos (2012) for the case of Ecuador. With regard to Bolivia, it is
important to note that there was, obviously, a deliberate strategy to largely continue what was regarded as pru-
dent macroeconomic policies. As Stefanoni (2012b: 231) remarks, the ministries in charge of economic policy
were effectively “protected” from larger changes in personnel and, in particular, from direct influence by social
organizations. In the case of Ecuador, decision-making was, in any case, much more centralized by the president,
himself an economist, and Correa’s administration was characterized by a strong presence of young profession-
als (cf. Stefanoni 2012b: 234).
24
In Ecuador, however, the political opposition has not been as regionally focused as in Bolivia (and support for
President Correa much more evenly distributed across the country); in the same vein, Ecuador’s agrarian export
economy and its hydrocarbon sector are located in two separate regions (in the Coast and the Amazonian low-
lands, respectively), whereas in Bolivia both agribusiness and gas fields are concentrated in the eastern lowlands
(cf. Eaton 2011: 302, 306-307; Eaton 2013b: 21).
25
At the same time, the autonomy movements “have sought to overcome perceptions of elitism by framing each
movement as a broad defense of territorial identity, one in which cruceños and guayaquileños of all class and
ethnic backgrounds can find common cause” (Eaton 2011: 293), and, indeed, autonomy claims “have resonated
substantially beyond elite circles” (Eaton 2011: 292).
Jonas Wolff 8
2011: 297). Both (related) differences are also connected to the fact that the regional cleavage
in the Bolivian case has also an ethnic dimension (cf. Eaton 2011: 300-301).
3. The Bolivian experience: A cycle of contention

What is typical for existing analyses of the Morales government’s relationship with economic
elites (in the lowlands) is that the latter are treated as an inseparable part of “the opposition”
or “the right” in general and “the regional autonomy movements” in particular (cf. Fontana
2013; Gray 2010; Lehoucq 2008). In fact, there are very few assessments specifically con-
cerning representatives and members of the economic sector(s). This, of course, reflects the
empirical fact that, in particular in Santa Cruz, the economic and the political elites are hardly
separate but traditionally very closely intertwined. In this sense, Eduardo Gamarra character-
ized the oppositional groups demanding decentralization as follows: “The most powerful of
these were the myriad groups in Santa Cruz, including the Comité Cívico Pro Santa Cruz (Pro
Santa Cruz Civic Committee), the Cámara de Industria y Comercio (Chamber of Industry and
Commerce), and the Cámara Agropecuaria del Oriente (Eastern Chamber of Agriculture).”
(Gamarra 2008: 126).26
The first years of the Morales government (2006-2008) were characterized by deepening po-
larization and escalating conflict between the governing MAS and allies and the oppositional
autonomy movements led, in particular, by the old politico-economic elites from the eastern
lowlands. In 2009, for instance, the Bolivia report of the Bertelsmann Transformation Index
summarizes: “The government has been confronted by resistance and open rebellion on the
part of regional, social and ethnic elites and movements in a climate of increasing polarization
between (and even within) the two great social and political blocs: the indigenous and leftist
movements, mostly of the Altiplano and the Chapare, supporting the government, and the
mostly white or cholo farming and commercial elites and their followers in the Media Luna
region and other urban centers, in the opposition.” (Bertelsmann Stiftung 2009a: 3) In this
period, both sides were seen as adopting confrontational strategies: The MAS government
continued to pursue a “maximalist strategy”, insisting “on polarizing (instead of integrating)
mechanisms of political mobilization” and establishing “new exclusionary biases”, which
further radicalized “a stubborn and intransigent opposition in the latently secessionist eastern
departments, dominated by conservative latifundio and industrial interests” (Bertelsmann
Stiftung 2009a: 33). Political conflict, at that time, was thus particularly pitting the MAS gov-
ernment against the economic elites from Santa Cruz. The MAS attacked “large-scale farmers
and rich cattlemen in Santa Cruz” as “the oligarchy” (Lehoucq 2008: 118); correspondingly,
26
Petras and Veltmeyer (2009: 22) talk about the “agribusiness oligarchy of Santa Cruz” which is controlling the
departmental government, while also acting through ‘civic organizations’ (such as the Comité Cívico Pro Santa
Cruz). According to Prado (2007: 191), around 2006 and 2007, the Chamber of Industry, Commerce, Services
and Turism from Santa Cruz (Cámara de Industria, Comercio, Servicios y Turismo de Santa Cruz – CAINCO)
was the “headquarters” of the bloc of hegemonic power in Santa Cruz “and the principal generator of policy,
ideology and culture”. The autonomy project, in this sense, was basically “generated by the entrepreneurial elites
in CAINCO, and delivered to the Comité Pro Santa Cruz” (Prado 2007: 195). As to the structure of business
organization in Santa Cruz, “powerful sectoral business associations such as the Chamber of Agriculture, the
Chamber of Hydrocarbons, and the Chamber of Industry and Commerce are all grouped together in a region-
wide associated called the Santa Cruz Federation of Private Entrepreneurs of Bolivia (FEPB-SC)” (Eaton 2011:
302-303). And Eaton adds: “In 2005 the FEPB-SC broke ranks with Bolivia’s national umbrella-wide business
organization (the Confederation of Private Entrepreneurs of Bolivia or CEPB) over the latter’s unwillingness to
adopt a more combative stance vis-à-vis Morales.” (Eaton 2011: 303) [FEPB-SC refers to the Federación de
Empresarios Privados de Santa Cruz (FEPSC), which is in fact the only departmental association that is not affil-
iated to the national Confederación de Empresarios Privados de Bolivia (CEPB).] In addition, business organiza-
tions are part of important civic associations, namely “the Pro-Santa Cruz Committee (Comité Pro-Santa Cruz or
CPSC) and the Guayaquil Civic Board (Junta Cívica de Guayaquil or JCG)” (Eaton 2011: 304).
Jonas Wolff 9
the government’s “inflammatory” rhetoric of land reform “has been largely aimed at the land-
holders of the Santa Cruz department” (Gamarra 2008: 138). As a consequence, it is specifi-
cally these groups that have felt directly threatened by the Morales government’s push “for
significant land reform”, which has been “highly conflictual”, in particular because of “the
clout of agribusiness and its regional concentration in the opposition-controlled lowlands”
(Madrid et al. 2010: 161).
According to George Gray (2010: 63), it is the “politics of land use and rights” that has been
driving “conflict at the local and regional level in Santa Cruz, Tarija, and Chuquisaca” (Gray
2010: 63).27 Writing at the time when the country was “on the brink to civil war” (Peña 2007:
140), Claudia Peña, in her analysis of power and elites in Santa Cruz, identified the issue of
land as the central topic in the national debate between the government and elites in Santa
Cruz because the local development model in this region “centers on property of land and
what is made out of it” (Peña 2007: 141). Correspondingly, the Bertelsmann Transformation
Index reports that “MAS land reform policies were seen as a threat to the interests of the dom-
inant elites behind the autonomy movements” (Bertelsmann Stiftung 2009a: 7). It is not by
chance that, during the escalation of confrontation in September 2009, the regional autonomy
movements specifically attacked the local offices of the National Agrarian Reform Institute
(INRA) (cf. Peñaranda 2009: 154-155).
But what has happened ever since?
3.1 The Morales government and the economic elites in Santa Cruz
In September 2012, the Bolivia Information Forum (BIF) reported that the Morales govern-
ment “has so far seized over 10 million hectares of land from landowners or businesses that
failed to show legal rights to their property or were unable to show that the land was being
productively used”. “Emblematic cases where large landowners have been targeted” include
US citizen Ronald Larssen, “whose ranch was seized and redistributed after the government
deemed that indigenous people were working in a situation of debt-servitude” as well as the
former head of the Comité Pro Santa Cruz, Branko Marinkovic” (BIF 2012).28 In general,
since 2006, 54.2 million hectares have been subject to land title regularization, as opposed to
9.3 million hectares between 1996 and 2005 (Ormachea and Ramirez 2013: 81).29 Since 2011,
27
“Most analysts agree that the current fight over natural resources and land rights is both about rights (land-
owners vs. other social actors) and about uses (extractivist uses vs. environmentally sustainable uses).” (Gray
2010: 63) In general, there is “strong disagreement over natural resource rights, property, and uses, including
land rights and uses” between the central government and the MAS, on the one hand, and the autonomy move-
ments including regional economic elites, on the other, which is reflected in the differences between “the new
constitution and departmental statues” (Gray 2010: 62). According to the new constitution, all natural resources
are “’indivisible and direct property’ of the Bolivian state”, and land rights and uses are limited (restrictions in
land size; caveat of “social and economic function” of land use) (Gray 2010: 62). The autonomy statute of Santa
Cruz, by contrast, defines “forty-three exclusive responsibilities for the departmental level, including natural
resource policy, land policy, and taxation in the region” (Gray 2010: 63).
28
In December 2010, INRA (2010) mentioned three cases of reversion caused by non-compliance with the eco-
nomic and social function or because of illegal land appropriation: one of the properties owned by Branko
Marinkovic (20,000 hectares); a 30,000 hectares property of the family Monasterio (in Santa Cruz); and a 50,000
hectares property in Beni which had been illegally acquired by Mennonites. On the two cases of Monasterios and
Marinkovic, see also Argenpress.info, December 18, 2009 (“Bolivia: El gobierno de Evo Morales recupera
tierras de un banquero y dueño de una televisora”).
29
Most of these lands have been peasant property (11.6 million hectares), TCO/TIOC (16.4) or fiscal land (23.2).
At the same time, advances in regularizing/certifying the land titles of large and medium-sized companies have
been fairly small (between 2006 and 2012, three million hectares have been titled, but 35.0 million hectares are
Jonas Wolff 10
however, “the process of land titling and redistribution has slowed” (BIF 2012). Crucial in
this regard was the revision of the draft constitution by Congress that enabled an agreement
with parts of the opposition and, thereby, the convocation of the constitutional referendum.30
With this Congressional agreement, the governing MAS granted “key concessions” to the
regional opposition, including “protections for current landowners in Santa Cruz who will not
be subjected to strict new limits on the size of landholdings” (Eaton 2011: 297). The new con-
stitution, therefore, “had the effect of legitimising large extensions of land already accumulat-
ed, subject to compliance with rules governing social and economic use” (BIF 2012).31 As a
consequence, “some 5 million hectares of the best agricultural land in Santa Cruz […] are
presently in the hands of large landowners” and, according to estimates, “some 1.5 million
hectares of this land […] is not serving the economic and social function which could be sub-
ject to repossession and redistribution”. Referring to former INRA director Juan Carlos Rojas’
observation that the MAS government appears to have softened its approach to large land-
owning, BIF notes that the government suggested in December 2011 “that the verification of
the economic and social function of land in the east would take place every five (as opposed
to two) years”:
“Some see this as the result of an understanding between the MAS government and agribusiness interests,
given the importance of the latter in providing for the country’s food needs. It may also be the case that
the economic elites of Santa Cruz see collaboration with the government as a more propitious approach
than the sort of conflict that broke out in 2008. By responding to such overtures, the government has iso-
lated groups like the Comité Pro Santa Cruz.” (BIF 2012)32
A CEDLA study further substantiates this assessment. Ormachea and Ramirez (2013), in par-
ticular, highlight two recent examples which demonstrate the rapprochement between the Mo-
rales government and the agricultural and agribusiness elites. First, on the issue of illegal de-
forestation, Law No. 337 (Apoyo a la Producción de Alimentos y Restitución de Bosques),
proclaimed by President Morales in January 2013, effectively “legitimizes the illegal conver-
sion of previously forested land to agricultural usage” (Ormachea and Ramirez 2013: 19).33
The business response to the law was unequivocal: “We are more than pleased [contentísi-
mos]”, emphasized the president of the Cámara Agropecuaria del Oriente (CAO), Julio Roda,
“because these are more than 5 million hectares that will be free from reversions and exager-
still pending/in process of saneamiento). What has been redistributed in favor of indigenous communities and
peasants is mainly public lands (tierras fiscales) (Ormachea and Ramirez 2013: 82-84).
30
On the Congressional agreement and the revision of the draft constitution, see Romero et al. (2009).
31
In addition, landowners “are also able to dodge the 5,000 hectares limit by dividing holdings between family
members and business partners” (BIF 2012).
32
See also Rojas (2012), who, on the one hand, discusses progress during the first years of the Morales govern-
ment but, on the other, also warns of the risk of the process of agricultural transformation being reversed. Rojas,
for instance, notes “the presence of representatives of large private landholders in spheres of policy making”. In
the same vein, Gamarra (2008: 138) has argued that, while “the Ley de Reconducción Comunitaria de la Refor-
ma Agraria y la Revolución Agraria Mecanizada (Law for the Communitarian Redirection of Agrarian Reform
and Mechanized Agrarian Reform) […] has stirred the resistance of large commercial agricultural interests”, the
actual “legal and institutional processes” of this “so-called second agrarian reform” are such that they “may
indeed facilitate a negotiated process of land distribution rather than a violent confrontation between landholders
and campesino invaders” (Gamarra 2008: 138; cf. Madrid 2011: 250).
33
The law enables landowners that illegally deforested land in the years between 1996 and 2011 to pay an “ad-
ministrative sanction” in order to be pardoned (Ormachea and Ramirez 2013: 20); in the case of properties of
more than 50 hectares, 10% of the previously forested area has to be restored (ibid.: 21). According to official
sources, there are 5.5 million hectares of illegally deforested areas of which 38% belong to cattle-rancher, 28%
to agribusiness, 17% to foreign settler, 12% to peasants and 5% to indigenous peoples (Ormachea and Ramirez
2013: 21-22). This implies that, without the new law, 83% of those 5.5 millions of hectares would have to be
subject to reversion (Ormachea and Ramirez 2013: 23). At the same time, the fines established by the law are
relatively low (Ormachea and Ramirez 2013: 24-25). See also Vicepresidencia.gob.bo (Sala de Prensa), August
16, 2013 (“Gobierno y el sector productivo cruceño apuestan por el progreso agrícola”).
Jonas Wolff 11
ated fines”.34 The second example concerns the issue of verification of the economic and so-
cial function of land. In this regard, landowners had demanded to extend the terms in which
this verification was to take place from two years (as established by the current agrarian law)
to five years, with a view to increase the legal security of landowners and facilitate their ac-
cess to loans (Ormachea and Ramirez 2013: 25). In December 2012, the government present-
ed a corresponding law to the legislative assembly and, when the CEDLA study was written,
the legislative process was already far advanced (Ormachea and Ramirez 2013: 24-25).35 Yet,
in the end, the law (Ley de Pausa Social) was in fact rejected by Bolivia’s legislative assem-
bly, precisely because it was seen as benefiting large landowners.36
A further government policy that provoked criticism from Bolivia’s agricultural and agribusi-
ness sectors concerned restrictions on exports. Responding to rising global food prices in
2008, the Morales government introduced “an ad hoc policy of temporary suspensions of ag-
ricultural and agribusiness exports” by way of executive decrees (Ormachea and Ramirez
2013: 31).37 These measures were strongly criticized by business associations (CEPB, CAP,
ANAPO) (Ormachea and Ramirez 2013: 31). While the government argued that the priority
was to supply alimentation to the local population, business representatives saw these
measures as “non-sense” and “going against the productive and commercial apparatus”.38 In
later years, however, these restrictions were loosened,39 and, in April 2012, vice president
García Linera authorized the export of meat, soy, sugar and rice.40
According to Ormachea and Ramirez (2013: 13-14), such governmental concessions can be
seen as direct response to demands voiced by the agricultural business sector (inter alia, by
ANAPO and CAO) at the Encuentro Plurinacional de Cochabamba in December 2011 and
January 2012 (see below).41 According to BolPress.com, it was already in 2010 that the Mo-
rales government has formed a “productive alliance” with agribusiness – an alliance that was
“consolidated” on January 22, 2011 when CAO, CAINCO and the government “started to
design a strategic plan to guarantee food supply to the domestic market and, at the same time,
34
Bolpres.com, January 12, 2013 (“El gobierno legitima desmontes ilegales y suspende la reversión de más de 5
millones de hectáreas”).
35
This law would, on the one hand, declare an exceptional five-year stop of verification, but, on the other, also
generally extend the term from two to five years, or so it seems. See Opinion.com.bo, January 27, 2013
(“Plantean ampliar a 5 años verificación de la función económica social de tierras”); Bolpres.com, Januar 12,
2013 (“El gobierno legitima desmontes ilegales y suspende la reversión de más de 5 millones de hectáreas”).
36
Erbol.com.bo, June 25, 2013 (“Exigen a Desarrollo Rural no beneficiar a terratenientes”).
37
See Table 1 (in Ormachea and Ramirez 2013: 32-34) for an overview of the different measures and decrees.
38
LosTiempos.com, April 21, 2008 (“Aceite: privados descartan diálogo y alistan medidas”.
39
“En octubre de 2010 el Presidente Morales suspendió mediante decreto 0671 la exportación de azúcar y caña
de azúcar, pero levantó el veto en diciembre de 2011 y liberalizó la venta de 650 mil quintales al exterior. En
agosto de 2012 autorizó la exportación de 12.515 toneladas del endulzante y el 22 de septiembre permitió la
venta de 50 mil toneladas adicionales. El 11 de enero de 2013 Morales autorizó por decreto 1461 un cuarto cupo
de exportación de 42 mil toneladas de azúcar.” Bolpres.com, Januar 12, 2013 (“El gobierno legitima desmontes
ilegales y suspende la reversión de más de 5 millones de hectáreas”).
40
Bolpres.com, January 12, 2013 (“El gobierno legitima desmontes ilegales y suspende la reversión de más de 5
millones de hectáreas”). In addition, the vice president “promised the liberalization of exports of grain and sun-
flower derivatives and an increase in the quota of corn exports recognizing that the private sector ‘constitutes
part of the motor of Bolivia’s agricultural economy’”. García Linera, furthermore, emphasized that there was “no
restriction” on the export of soy beans.
41
The study identifies two further “alliances” of the MAS government: with the meat and timber industry (“los
industrials cárnicos y los empresarios madereros”) (Ormachea and Ramirez 2013: 66). The former basically
refers to Fegasacruz (and an agreement between the government, CAO and Fegasacruz about meat exports to
Peru, Venezuela, China and India), the latter to the Cámara Forestal de Bolivia (and an agreement with the gov-
ernment with a view to stopping deforestation) (Ormachea and Ramirez 2013: 66-70).
Jonas Wolff 12
increase agricultural exports”.42 In May 2013, vice president García Linera saw “a good mo-
ment to relaunch the agricultural production in Bolivia” and emphasized, inter alia, that “there
are clear-cut rules, there is no legal uncertainty as regards property, there is no risk of sanc-
tions or reversions”.43 On his part, CAO president Julio Roda Mata, in an interview with El
Deber in June 2013, characterized the relation with the government as “good”, specifically
mentioning the “commitment to increase the exports”, the law on illegal deforestation as well
as further draft laws that would legalize illegal occupation of land and increase the terms for
verifying the economic and social function of land.”44
This leads James Petras to conclude that the previous confrontation between the Morales gov-
ernment and “the Santa Cruz agro-oligarchy” is effectively over, with the latter now support-
ing Morales (Petras 2013a; cf. Petras and Veltmeyer 2011: 209-212). In his assessment, the
Morales government, when faced with “strong and at times violent opposition from the re-
gional elite in Santa Cruz”, “crushed the most violent opposition” but then “negotiated politi-
cal and economic pacts with the leading business and agricultural families”. Agro-business
leaders now receive “subsidies and tax exemptions to encourage exports”, while land reform
was “relegated to marginal public lands”. In the meantime, the promotion of “agro-export
became an integral part of Morales development strategy” and the “electoral coalition” sus-
taining the MAS government was even extended “to incorporate the elites in Santa Cruz”.45
From the perspective of the autonomy movement in Santa Cruz, it appears that the economic
elite of the region basically abandoned the struggle and made a deal with the central govern-
ment in order to protect its economic interests.46
3.2 Event analysis

An analysis of newspaper reports suggests that the rapprochement between the Morales gov-
ernment and the economic elites from Santa Cruz starts with increasing divisions among the
regional elites in Santa Cruz and comes in two phases.47 The first phase (2009-2012) is char-
acterized by increasing signs of splits between representatives of the economic and the politi-
cal elites as well as by first instances of dialogue between the former and the central govern-
ment. The second phase (since 2013) is characterized by increasingly close cooperation, with
an astonishing low level of public conflict between the parties.48
In October 2008, the regional opposition from Santa Cruz was still acting in united ways. Fol-
lowing the Congressional agreement, political and business representatives from Santa Cruz
42
Bolpres.com, Januar 12, 2013 (“El gobierno legitima desmontes ilegales y suspende la reversión de más de 5
millones de hectáreas”). Further policies in line with agribusiness interests include first steps towards authorizing
the use and commercialization of transgenic organisms in Bolivia (ibid.; see also see Ormachea and Ramirez
2013: 27) as well as new programs of financial support to the agricultural sector in 2012 (Bolpres.com, January
12, 2013 [“El gobierno legitima desmontes ilegales y suspende la reversión de más de 5 millones de hectáreas”]).
43
Prensa Palacio de Gobierno, May 7, 2013 (quoted in Ormachea and Ramirez 2013: 23).
44
ElDeber.com.bo, June 23, 2013 (“Julio Roda Mata: ‘Podemos exportar seis mil toneladas de carne’”).
45
In slightly more cautious ways, Webber (2011: 205) concludes that “there remains the possibility of a renewal
of an old social pact between fractions of the eastern bourgeois bloc and imperialist forces in their various guis-
es, and the state bureaucracy occupied by the MAS.”
46
Cf. ElDeber.com.bo, January 6, 2012 (“La élite pactó con el Gobierno y abandonó al cruceñismo”).
47
The following analysis draws, particularly, on research in the online edition of the Bolivian newspaper Los
Tiempos (Cochabamba) conducted by Rebecca Paulus.
48
In a similar way, Gustavo Pedraza, Regional Director of the Fundación Boliviana para la Democracia Multi-
partidaria in Santa Cruz, identifies three phases in the relationship between the Morales government and the
economic elites in Santa Cruz: confrontation (2006-2010), tensions with minimal agreements (2010-2012) and a
“long-term pact” (since 2013). See PáginaSiete.bo, October 6, 2013 (“El vínculo entre el MAS y los empresarios
conviene a ambos”); personal communication in March 2013.
Jonas Wolff 13
jointly called for a “No” in the constitutional referendum.49 But with the new constitution
adopted by a large majority, the situation started changing in 2009. In the run-up to the Inter-
national Fair of Santa Cruz (ExpoCruz), in September 2009, for instance, the president of the
National Chamber of Industry (Cámara Nacional de Industrias), Daniel Sánchez, emphasized
the importance of President Morales speaking at the opening of the fair and asked the presi-
dent of the Comité Cívico Pro Santa Cruz, Luis Núñez, to avoid using this space for political
gains. Previously, Núñez had called the organizer of the Santa Cruz fair a “traitor” for inviting
Morales.50 In the end, President Morales decided to not participate, given the rejection on the
part of the Comité Cívico.51 A few months later, the issue of land redistribution again brought
the different elite sectors from Santa Cruz together in defense of the “departmental productive
apparatus”.52 However, a year later the situation had changed significantly. September 2010,
finally, saw the first visit of Morales to the opening of ExpoCruz. While the political elites
from Santa Cruz – including the governor, the mayor, and the president of the Comité Cívico
– responded by failing to appear at the event, Morales and the president of CAINCO reported-
ly presented the opening ceremony as “a new phase in the relationship between the private
sector and the state, between orient and occident, between the traditional and the emerging
elites”.53 In his speech, President Morales emphasized the need to include the private sector
and explicitly thanked CAO and CAINCO for mediating between the central government and
the departmental and municipal governments of Santa Cruz.54
In January 2011, a meeting of business representatives from Santa Cruz with President Mo-
rales in La Paz confirmed the increasing split between the political and the economic elites.
Comité Cívico president Núñez criticized the meeting, calling CAINCO president Eduardo
Paz and the other business leaders that had met Morales “traitors against the civic struggle of
Santa Cruz”. Paz responded by emphasizing that Bolivia’s entrepreneurs should dedicate
themselves to working and producing instead of meddling in politics. At the meeting, Presi-
dent Morales and the business representatives had emphasized their joint commitment to sup-
port national production and investment in order to generate employment.55
At the ExpoCruz 2011, Vice President García Linera spoke on behalf of the central govern-
ment and his opening statement was very well received by the private sector. García Linera’s
remarks on the need to work together, on the expansion of agricultural production and on in-
vestment in infrastructure were considered “important initiatives” by CAINCO President Julio
Roda. Gabriel Dabdoub, president of the Federación de Empresarios Privados de Santa Cruz,
emphasized the offer of an alliance with the government.56
49
LosTiempos.com, October 24, 2008 (“Sectores cruceños rechazan CPE; Linera llama a estar alertas”). See also
LosTiempos, October, 28, 2008 (“Rearticulan bloque cívico opositor”).
50
LosTiempos.com, September 15, 2009 (“Empresarios piden a cívicos de Santa Cruz no hacer política con la
Expocruz”.
51
HoyBolivia.com, September 16, 2009 (“Evo no asistirá a inauguración de la Expocruz”).
52
In responding to the INRA decision in December 2009 to give 12,500 hectares of land previously owned by
Yamilca Marinkovic, the sister of former Comité Cívico president Branko Marinkovic, to a Guaraní community,
the usual organizations representing the political and economic elites from Santa Cruz called for a Gran Cumbre
Departamental. See LosTiempos.com, December 14, 2009 (“Saneamiento de tierras: Cívicos cruceños piden
“Gran Cumbre Departamental”). Just a few days later, another Santa Cruz landowner (Isvaldo Monasterio) was
affected by the agrarian reform. See LosTiempos.com, December 18, 2009 (“El INRA revierte tierras de otro
empresario cruceño”).
53
LosTiempos.com, September 19, 2010 (“Expocruz, todo un símbolo nacional”).
54
ElDeber.com.bo, September 18, 2010 (“Evo define a Cainco y CAO como mediadores”).
55
LosTiempos.com, February 21, 2011 (“Empresarios deben dedicarse a producir y no a la política, según
CAINCO”).
56
LosTiempos.com, September 17, 2011 (“Privados: Expocruz 2011 arranca con el pie derecho”).
Jonas Wolff 14
Between December 2011 and January 2012 the Morales government invited political repre-
sentatives of the different levels of states and all kinds of social organizations to a two-step
national debate in Cochabamba with a view to deepen “the process of change” (Encuentro
Plurinacional para Profundizar el Cambio). With regard to the private economic sector, the
CEPB participated in both series of meetings. At the opening of the December meeting,
CEPB president Daniel Sánchez reportedly said that this was “an unprecedented meeting” and
emphasized the will “to make an entrepreneurial-indigenous pact [pacto indígena empresari-
al] at all levels”.57 According to then Minister of Government Carlos Romero, CEPB had ac-
credited 28 delegates for the Cochabamba Summit, with further registered delegates repre-
senting CAINCO, CAO and Confeagro.58 An institutional result of this meeting was the deci-
sion to create an Economic Council (Consejo Económico, Productivo, Social y Laboral) in
which representatives of the public sector, the private economy and of labor organizations
would meet to discuss economic and social policies and accompany the implementation of the
National Development Plan.59 At the closure of the meeting, CEPB president Daniel Sánchez
said that “we have been listened to and, to be honest, we have been waiting for this opportuni-
ty for a long time”: “Now we are part of a commitment to Bolivia [compromiso por Bolivia]”,
Sánchez added accompanied by further business leaders.60 Given the unprecedented participa-
tion of business leaders in such a meeting, Los Tiempos columnist Ramón Rocha Monroy
concluded that Bolivia’s entrepreneurs had finally been convinced that the current process of
change was not leading the country towards socialism.61 América Economía concluded that,
with the Cochabamba Summit, Evo Morales managed “to incorporate the private sector,
which until recently had been harsh critics of his government”.62
During 2013, Vice President García Linera assisted in a series of meetings and events in Santa
Cruz, emphasizing the government’s will to support the expansion of agricultural production
in the region.63 In July, for instance, García Linera held a speech at the Expo Caña64 and par-
ticipated in the Encuentro Agroindustrial Productivo: Más Inversión, Más Empleo.65 At this
latter event, García Linera declared that the government adopted the proposal for a “public-
private alliance” made by the agricultural sector from Santa Cruz “as a road map [hoja de
ruta]”66 and, in August, he announced “three agreements” with the agricultural sector from
Santa Cruz: measures to facilitate agricultural exports; the above-mentioned law to legalize
illegal deforestation; and support for the production of electric energy by sugar refineries.67 At
the opening of the ExpoCruz 2013 in September, it was President Morales who held a speech
57
LosTiempos.com, December 12, 2011 (“Comenzó el I Encuentro Plurinacional con llamado a
emprendimientos bolivianos”).
58
APC-Suramerica.net, December 13, 2011 (“Encuentro Plurinacional reúne a 420 delegados de 72
organizaciones”).
59
LosTiempos.com, January 28, 2012 (“Crean consejo económico y social”). According to Los Tiempos, a “con-
sultative council” created by the government and CEPB in February 2011 did not “yield fruit”.
60
AmericaEconomia.com, December 1, 2012 (“Morales suma a empresarios en un amplio acuerdo económico y
social para aliviar tensiones”). The dialogue between the Morales government and the CEPB was continued in
August 2012 during a visit of President Morales, Vice President García Linera and further ministers at the CEPB
– a visit Morales called “almost historic” (CEPB 2012).
61
LosTiempos.com, January 17, 2012 (Ramón Rocha Monroy, “En torno a la cumbre social”).
62
AmericaEconomia.com, December 1, 2012 (“Morales suma a empresarios en un amplio acuerdo económico y
social para aliviar tensiones”).
63
See LosTiempos.com, December 20, 2013 (“‘Agenda productiva’ sella pacto Gobierno-agro cruceño”).
64
Vicepresidencia.gob.bo (Sala de Prensa), July 21, 2013 (“Vicepresidente reta a incrementar la producción de
caña en Santa Cruz”).
65
LosTiempos.com, December 20, 2013 (“‘Agenda productiva’ sella pacto Gobierno-agro cruceño”).
66
LosTiempos.com, December 20, 2013 (“‘Agenda productiva’ sella pacto Gobierno-agro cruceño”).
67
Vicepresidencia.gob.bo (Sala de Prensa), August 16, 2013 (“Gobierno y el sector productivo cruceño apuestan
por el progreso agrícola”).
Jonas Wolff 15
– for the first time officially opening the fair. During the event, both President Morales and
ExpoCruz and CAINCO president Luis Fernando Barbery emphasized the need and willing-
ness to work together.68 More specifically, Morales promised public investment in infrastruc-
ture, “legal security” in issues of land ownership as well as a law on investment that would
give calm to the private sector.69 According to Página Siete, this opening of ExpoCruz 2013
demonstrated that the relationship between the government and the business sector from Santa
Cruz had entered a “new phase”.70 Analysts emphasized the joint interest in cooperation –
economic on the one hand, electoral on the other – that sustained this surprising rapproche-
ment.71 For the private sector, Gabriel Dabdoub (FEPSC) emphasized that the rapprochement
(a “working relationship”) was not in fact new and that economic development of the country
required cooperation “among all [entre todos]”: “We believe that this is a much needed effort
to search for a public-private partnership [articulación pública privada], no matter who is in
government.”72 This alliance was consolidated, in December 2013, at the Foro Empresarial
“Infraestructura para la producción” in Santa Cruz, in which both Morales and García Linera
participated. At the meeting, the government and representatives of the economic sector from
Santa Cruz ratified their joint commitment to the Agenda Patriótica 2025, which basically
foresees a private-public partnership to heavily increase public investment in infrastructure to
promote agricultural production and trade.73
4. The Ecuadorian experience: Targeted confrontation and pragmatic accommodation

During his campaign for the presidency, Rafael Correa promised to reverse two interrelated
problems: “the degeneration of state institutions and the moral bankruptcy of the political
class” and “the disintegration of the nation/homeland (patria) as a result of elite-imposed eco-
nomic policies that sacrificed the public interest in favor of private gain” (Conaghan 2011:
265). In sum, Correa argued that Ecuador was “held hostage by political and economic elites”
(Conaghan 2011: 265) and, correspondingly, “blasted the political and business establishment
as mafiosos (gangsters), pelucones (reactionary bigwigs), and lobos (wolves)” (Conaghan
2011: 266). Understandably, the electoral victory of the political outsider Correa was clearly
perceived as a threat by Ecuador’s politico-economic establishment. Focusing on the econom-
ic elites – and the business sector in general –, the following analysis will assess the extent to,
and ways in, which this political threat materialized after the first election of Correa.
4.1 General relationship: From political marginalization to rapprochement

An overall feature of the “citizen’s revolution” that is generally highlighted by observers is
that it “cut the channels of communication” with the entrepreneurial sector and other corporat-
ist actors and, thereby, significantly reduced their political influence, which traditionally had
been “decisive in the definition of public policies and in the design of laws” (Pachano 2012:
99). As a first step in this attempt to reduce “the usual influence of the grand banks and the
oligarchy from Guayaquil”, Correa, when naming his first cabinet, “generally avoided the
presence of individuals close to the entrepreneurial and financial sectors” (Ramírez Gallegos
68
La-Razón.com, September 20, 2013 (“Evo Morales propone a los empresarios cruceños trabajar por un país
productivo y no consumista”).
69
NotiBoliviaRural.com, September 21, 2013 (“En la inauguración de Expocruz, Presidente Morales promete
inversiones para Santa Cruz”).
70
PáginaSiete.bo, October 6, 2013 (“El vínculo entre el MAS y los empresarios conviene a ambos”).
71
72
73
Vicepresidencia.gob.bo, December 5, 2013 (“Empresarios ratifican su compromiso con la Agenda 2.025 y
Gobierno garantiza inversión para el sector productivo”).
Jonas Wolff 16
2012: 121). During the first months of the government, there was reportedly no meeting of the
business associations with the newly elected president – something quite unusual in Ecua-
dor.74 According to the Bertelsmann Transformation Index (BTI), “the president waited more
than a year before receiving a delegation of businessmen”: “Business organizations have lost
all their previous influence, and have been unable to make Correa take their demands into
account in various attempts to negotiate with him.” (Bertelsmann Stiftung 2009b: 14)75 When
in August 2012 a high-level meeting of business associations with the president featured an
unusually cordial atmosphere, this was reported to be only the fourth meeting of this kind
since 2007.76 In line with these observations, Franklin Ramírez Gallegos (2012: 118) has ar-
gued that the Correa government has effectively increased the “relative autonomy of the state
vis-à-vis multiple interest groups”, including “the factual powers” that used to control much
of the political agenda and of governmental decision-making.
In September 2007, business representatives met for the first National Meeting of Entrepre-
neurs (I Encuentro Nacional de Empresarios) organized by Ecuador’s Business Committee
Comité Empresarial Ecuatoriano (CEE). At this meeting, business leaders presented their
(comprehensive) political agenda for the country.77 The meeting also included an in-depth
discussion with vice president Lenin Moreno, which was to serve as a preparatory dialogue
for a later meeting with Correa.78 In January 2008, 130 business leaders representing 30 na-
tional associations met to voice their rejection of key government decisions, including tax
reform, a minimum wage increase of 30 dollars and the setting of prices for several (basic
food) products.79 Given the dramatic defeat of the opposition parties in the September 2007
elections to the Constituent Assembly, business associations very much became the “face” of
the opposition, as the daily El Comercio commented.80
An example of Correa’s anti-corporatist strategy concerns the Consejo de Comercio Exterior

e Inversiones (Comexi). In the meetings of this state entity, which defines Ecuador’s trade
policies, five business delegates used to have seat and vote: representatives of the export sec-
tor (Federación Ecuatoriana de Exportadores), the industry (Federación Nacional de las
Cámaras de Industrias del Ecuador), commerce (Federación Nacional de Cámaras de
Comercio del Ecuador), and agriculture (Federación Nacional de Cámaras de Agricultura del
Ecuador) as well as a national delegate representing further agricultural, aquacultural and
fishery sectors. President Correa issued a complaint of unconstitutionality against this partici-
pation of interested parties in a regulatory body and, in July 2008, the Constitutional Tribunal
emitted a corresponding decision effectively ending business participation in Comexi.81 In
November 2008, business representatives were again admitted to participate in Comexi meet-
74
ElComercio.com, September 7, 2007 (“Los gremios dieron su versión al Gobierno”).
75
In a later assessment, the BTI country report concludes that business organizations, under Correa, have “lost
the role that they previously had” (Bertelsmann Stiftung 2014b: 16).
76
Still, at this occasion the president of the Cámara de Comercio de Guayaquil, Eduardo Peña, emphasized that
there have been at least one meeting per month with ministers or spokesperson of the government.
ElComercio.com, August 13, 2012 (“Una Nueva Reunión Gobierno-Empresarios, Una Nueva Esperanza Con La
UE”).
77
LaHora.com.ec, August 28, 2007 (“Los empresarios presentan propuestas para la Asamblea”). The proposal
dealt not only with specifically economic issues but also with topics such as “liberty and democracy” or “securi-
ty”.
78
ElComercio.com, September 7, 2007 (“Los gremios dieron su versión al Gobierno”).
79
ElComercio.com, January 8, 2008 (“Una Oposición Con Rostro Empresarial”).
80
ElComercio.com, January 8, 2008 (“Una Oposición Con Rostro Empresarial”).
81
EcuadorInmediato.com, July 2, 2008 (“Comexi deja afuera a cinco funcionarios”); LaHora.com.ec, July 2,
2008 (“TC acoge demanda del presidente Correa”).
Jonas Wolff 17
ings, but this time without voting rights.82 With hindsight, this elimination of institutionalized
business representation in the trade and investment council was seen as one crucial moment
marking the overall political direction during the first years of the Correa government.83 Fur-
thermore, the move was followed by another decision in the same policy area: In September
2009, Correa announced that the government would assume the functions of the private entity
Corporación de Promoción de Exportaciones e Inversiones (CORPEI). In effect, CORPEI –
which was frequently viewed “as ‘lobbyists’ of particular entrepreneurial sectors” – was de-
prived of the responsibility to promote Ecuador’s foreign trade and the corresponding right to
receive an obligatory contribution by importers and exporters (Acosta et al. 2009: 26-27). In
May 2011, president Correa opened the headquarters of Pro Ecuador, the new public institute
now in charge of promoting Ecuadorian export and investment.84
In terms of actual policy decisions, one major disagreement between the government and the
private sector in the area of foreign trade concerned the issue of trade agreements, in particu-
lar with a view to ongoing negotiations with the European Union (EU) (cf. Acosta et al. 2009:
26). In July 2009, Ecuador suspended negotiations with the EU and, when the government
decided to resume talks in February 2010, it made it clear that it would not accept an agree-
ment along the lines of the EU’s bilateral treaties with Colombia and Peru (Leví Coral 2013:
5). In the course of 2011, decisions on the part of the EU threatened Ecuador from also losing
trade preferences in the context of the Generalized System of Trade Preferences (GSP), lead-
ing business representatives to warn of the serious effects on Ecuador’s exports if the country
did not reach a trade agreement with the EU.85
A second area of disagreement specifically concerned importers. Responding to the repercus-

sions of the global financial crisis, in January 2009 the government – through Comexi – intro-
duced protective tariffs on 627 import goods for a period of one year (CEPAL 2010: 128-
129).86 Further restrictions on Ecuador’s import sector included a 40% increase in the tax on
imported “small” automobiles (in December 2010)87; a prohibition to import boilers in order
to reduce the usage of gas in the country (in February 2011);88 and restrictions on imports of
293 products that are either “deemed to be harmful to Ecuadoreans’ health such as bicycles
containing lead” or “that could be produced at home by providing supporting to nascent in-
dustries” (in January 2014).89 In a related move, the Correa government, in 2008 and 2009,
intervened on several occasions to regulate food prices (rice, corn, milk and bread) “and made
82
This time, seven business associations were invited to participate. ElComercio.com, November 10, 2008 (“Los
empresarios vuelven al Comexi, aunque sin voto”).
83
ElComercio.com, May 23, 2013 (“El Peso De Las Normas Marcó La Relación Entre Gobierno Y Sector
Privado Nacional”).
84
Cf. ElComercio.com, June 2, 2011 (“Bienvenida para Pro Ecuador y despedida para Corpei”). Before, a decree
(Decreto no. 776) had created Pro Ecuador with the objective to “promote the diversification and deconcentation
of exports, products and markets”, replacing the private entity Corporación de Promoción de Exportaciones e
Inversiones (Corpei) (Hoy.com.ec, May 19, 2011, “Pro Ecuador remplaza a la Corpei por decreto”).
85
ElComercio.com, December 15, 2011 (“Empresarios piden acuerdo con UE”). Specifically, the EU had decid-
ed to extend GSP preferences only for countries with a per capita GDP lower than Ecuador’s current level. This
decision made
86
Initially, this measure even included imports from within the Andean Community (CAN). This latter measure,
however, was withdrawn (and trade preferences for CAN members reestablished) in June 2009. Cf. Perú21.pe,
June 24, 2009 (“Ecuador restituye las preferencias arancelarias a los productos nacionales”).
87
LaHora.com.ec, December 22, 2010 (“Ecuador sube impuesto a importación de autos para reducir déficit
comercial”).
88
ElComercio.com, February 27, 2011 (“El Gobierno prohibió la importación de calefones en el país”).
89
Reuters.com, January 21, 2014 (“Ecuador Sees 2014 Trade Deficit Falling with New Import Rules”. These
import requirements affect products such as cosmetics or beef for hamburgers and aim at reducing imports by
$800 million. ElUniverso.com, January 14, 2014 (“Importaciones Bajarían Más De $800 Millones”).
Jonas Wolff 18
a deal with the private sector that included certain price cuts for consumers” (Stefanoni
2012b: 245). In addition, the currency export tax (Impuesto a la Salida de Divisas) was in-
creased twice: from 1% to 2% in 2009 (Acosta et al. 2009: 122) and to 5% in 2011 (Acosta
2012: 64). This has directly put a strain on imports, but also on those exporters that depend on
the import of primary materials and capital goods.90 However, it has also be noted that the
government, already in July 2008, had eliminated tariffs on 282 import goods, especially for
capital goods and equipment needed for agricultural and industrial production, with a view to
reducing inflation and support national production.91
When, in December 2009, business representatives met with President Correa, discussions
were reportedly marked by the concerns voiced by different sectors over the lack of trade
agreements with Ecuador’s major export markets as well as over issues such as labor and tax
regulations.92 Notably, it took 32 months until the next high-level meeting of business leaders
with Correa took place. But at that time (in August 2012), the atmosphere was remarkably
different. CEE director Roberto Aspiazu highlighted that now there was the political will to
reach an agreement with the EU, demonstrated by President Correa’s instructions to the For-
eign Ministry and COMEX.93 In the same month, a further meeting of the government, in-
cluding President Correa, with business representatives took place. In terms of results, CEE
president Pablo Dávila highlighted the announced modification of the tax system law (Ley de
Régimen Tributario), which would facilitate a tax credit concerning the currency export tax
for the importation of primary, input and capital goods.94 In the context of another high-level
meeting, in May 2013, business representatives acknowledged that, since 2012, they have
been gaining access to the Correa government. Pablo Dávila, president of the Asociación de
Cámaras de Industrias del Ecuador, emphasized that the “generation of spaces for dialogue
with president Rafael Correa” in 2012 fundamentally changed the relationship between the
private sector and the government.95 At the same time, Felipe Rivadeneira (Fedexpor) high-
lighted the government’s recent emphasis on the promotion of production and foreign trade
(via new trade agreements). Generally, business representatives (e.g., Consejo de Cámaras de
la Producción) acknowledged that improvements in infrastructure are benefiting the private
sector, as does public investment in education. Still, business leaders emphasized that the
eleven tax reforms implemented by the Correa government “have generated uncertainty and a
lack of juridical security” (María Roa Fabara, Consejo de Cámaras de la Producción).96
90
91
Ecuavisa.com, July 17, 2008 (“282 productos de importación fueron gravados con arancel cero por la
COMEXI en su sesión de este jueves”).
92
ElComercio.com, August 13, 2012 (“Una Nueva Reunión Gobierno-Empresarios, Una Nueva Esperanza Con
La UE”).
93
ElComercio.com, August 13, 2012 (“Una Nueva Reunión Gobierno-Empresarios, Una Nueva Esperanza Con
La UE”). In fact, the Correa government had decided to resume negotiations with the EU in March 2012. Cf.
ElComercio.com, March 24, 2014 (“Ecuador y UE abren otra ronda en Manta”). Initially, however, the EU
showed itself not prepared to negotiate a deal that would differ from the agreement already signed with Colom-
bia and Peru. Cf. Prensa.com, March 16, 2012 (“La UE sólo negociaría con Ecuador el mismo TLC que con
Colombia y Perú”).
94
EcuadorInmediato,com, August 29, 2012 (“Empresarios Y Gobierno Califican De Productiva Reunión Entre
Ambos Sectores”).
95
“En 2012 logramos llegar a él [President Correa] directamente. Fue trascendental porque le entregamos
información clave sobre producción, comercio, etc. Ahora vemos que hay interés, decisión por estimular al
sector productivo como política estatal.” Pablo Dávilas, Asociación de Cámaras de Industrias del Ecuador,
quoted in: ElComercio.com, May 23, 2013 (“El Peso De Las Normas Marcó La Relación Entre Gobierno Y
Sector Privado Nacional”).
96
Jonas Wolff 19
As far as the overall state of business in Ecuador is concerned, the tax agency SRI informed in
September 2012 that the largest grupos económicos (conglomerates) present in the country
have both multiplied the volumes of their business and diversified the economic sectors in
which they are present. At the same time, the number of economic groups had increased from
17 (in 2007) to 100. Business leaders recognized that they have been benefiting from econom-
ic growth and correspondingly rising demand as well as from elevated public spending, while
warning that political pressure on companies, in particular through rising taxes, was neverthe-
less a problem and the incentives to invest were still low (because of low trust).97
In April 2013, a visit by President Correa to Germany was very well received by Ecuador’s
business community.98 The visit explicitly had economic aims, with Correa meeting with
German business representatives, advertising the investment location Ecuador, and explaining
that he represented a “modern, conscious left that understands the role of private enterprise in
development”.99 In the follow-up to this trip, the Ecuadorian government also announced fur-
ther steps to facilitate resumed trade negotiations with the EU,100 emphasizing that these ne-
gotiations could start in a few months.101 In response, Pablo Dávila (Federación Nacional de
Cámaras de Industrias del Ecuador), Henry Kronfle (Comité Empresarial Ecuatoriano) and
Felipe Rivadeneira (Federación Ecuatoriana de Exportadores) emphasized the “very positive
message” delivered by the government, specifically referring to the willingness to resume
trade negotiations with the EU as well as the government’s ideas on “making a real change to
the pattern of production [matriz productiva] in the country”. Pablo Dávila also said that Cor-
rea’s visit to Germany “was very important” for the productive sector of the country, while
emphasizing that “we have to accept and support the public policies of Ecuador”, including
the “red lines in the process of negotiations [with the EU]” that President Correa has drawn.102
June 2013 saw a certain setback regarding satisfaction among business representatives. Re-
sponding to US threats in the context of the debate about Ecuador potentially granting asylum
to Edward Snowden, the Correa government unilaterally renounced US trade preferences in
the framework of the Andean Trade Promotion and Drug Eradication Act (ATPDEA). Yet,
business was well aware that the renewal by US Congress of the ATPDEA for Ecuador be-
yond July 2013 had been highly improbable anyway,103 and the Correa government immedi-
ately announced compensatory measures to reduce the impact on Ecuadorian exports to the
US.104 Furthermore, also in June 2013, the Correa government took a decision very much ap-
preciated by the private sector (“a dream becoming reality”, according to the Revista Líderes):
Correa re-established a Ministry of Foreign Trade (Ministerio de Comercio Exterior), which
he himself had abolished (and replaced by a vice ministry within the Foreign Office) when
coming into power in 2007. Also the designation of Francisco Rivadeneira, considered a pro-
fessional official (“un funcionario técnico”), as the new Foreign Trade Minister “produced
97
ElComercio.com, September 13, 2012 (“Grupos Económicos Son Más Prósperos”).
98
Andes.info.ec, August 14, 2013 (“Presidente de industriales: Ecuador dio un mensaje muy propositivo en
Alemania”).
99
ElUniverso.com, April 16, 2013 (“Rafael Correa llama al empresariado alemán a invertir en Ecuador”).
100
ElUniverso, com, April 25, 2013 (“El país prepara nueva posición frente a la UE”).
101
ElUniverso.com, April 26, 2013 (“Negociación con UE se podría retomar en septiembre”).
102
Andes.info.ec, August 14, 2013 (“Presidente de industriales: Ecuador dio un mensaje muy propositivo en
Alemania”).
103
Soon afterwards, Ecuador also lost US trade preferences under the Generalized System of Preferences (GSP),
which US Congress failed to renew (in general). Hoy.com.ec, August 2, 2013 (“Ecuador perdió la ATPDEA y
ahora también pierde el SGP”).
104
ElTelégrafo.com.ec, July 8, 2013 (“ATPDEA: ¿Qué perdemos realmente?”). Cf. ElUniverso.com, October 9,
2013 (“Gobierno Entregó 70 Certificados De Abono”).
Jonas Wolff 20
enthusiasm”.105 The new minister, during a trip to Europe in November 2013, reported back to
Ecuador that the country’s prospects for continuing to benefit from the EU’s enhanced Gener-
alized System of Trade Preferences (GSP+) was highly probably. 106 In the same month, Pres-
ident Correa emphasized the aim to conclude a trade agreement with the EU, if not “at any
price”,107 and, in January and March 2014, first rounds of trade negotiations with the EU took
place.108
These overall changes are reflected in an assessment of Walter Spurrier, a liberal Ecuadorian
economist whose opinion is usually rather close to business. Spurrier, in June 2013, observed
a new attitude on the part of the government to incentivize private investment. He specifically
mentioned the presidential trip to Germany, during which Correa was accompanied by busi-
ness leaders (“whereas his fundamental message during the first years in government had
been to not recognize these associations” and invite, at best, some individual entrepreneurs).
Regarding the new emphasis on promoting foreign trade, Spurrier positively noted the crea-
tion of the Ministry of Foreign Trade (but also warned of the effects of ATPDEA and the
threat of Ecuador losing EU trade preferences in/after 2015). Spurrier’s general assessment of
the relationship between the government and the business sector: “Ese cortejo fue un primer
paso para que el empresario tenga un aliento.”109 In November 2013, El Comercio reported
that the “good relations between the government and the private industrial sector move for-
ward”. The Minister of Industry, Ramiro González, even declared: “The entrepreneurs are the
originators [artífices] of this change. They know that it is that is needed to develop an effi-
cient industrial policy.” Pablo Dávila, president of the Cámara de Industrias y Producción,
responded by emphasizing that the industrial sector had confidence in the Ministry and was
willing to continue collaborating with the authorities.110
At the same time, it has to be noted that the political sympathies of business leaders remained
unchanged. In responding to the results of the subnational elections in February 2014 (which
saw some notable defeats of the governing PAIS in major cities such as Quito and Cuenca),
representatives of business associations expressed “a marked optimism”, envisioning both a
better public-private partnership in the specific cities and a change in orientation towards the
private sector on the part of the central government.111
4.2 Sector- and issue-specific confrontation – with sporadic agreements

When analyzing Correa’s speeches on economic matters throughout his seven years in power,
it becomes clear that his agenda has never been anti-private sector or anti-capitalist. Rather,
his discourse has been characterized by a targeted attack on certain economic sectors, groups
and practices: Correa attacked the financial or banking sector (as opposed to the productive
sector), criticized those economic conglomerates that he depicted as concentrating too much
economic power and manipulating public opinion (usually involving banks that also own pri-
vate media outlets), and argued against “speculative” and “corrupt” practices (again usually
105
RevistaLíderes.ec, June 24, 2013 (“El Ministerio de Comercio crea expectativa”).
106
ElComercio.com, November 12, 2013 (“La extensión del SGP plus para Ecuador en el 2014 es prácticamente
un hecho”).
107
GlobalPost.com, November 11, 2013 (“Ecuador seeks EU trade deal by early 2014”).
108
ElComercio.com, March 24, 2014 (“Ecuador y UE abren otra ronda en Manta”). On the topic, see also Leví
Coral (2013).
109
ElComercio.com, July 14, 2013 (“La Economía Ecuatoriana Ya Está En Una Etapa De Desaceleración”.
110
ElComercio.com, November 26, 2013 (“El Gobierno Y El Sector Industrial Afianzan Su Relación”).
111
ElComercio.com, February 25, 2014 (“Un Marcado Optimismo Del Sector Privado”).
Jonas Wolff 21
seen as characterizing banks).112 Because of the country’s economic structure, this targeted
criticism has also had a regional dimension. In this sense, Petras and Veltmeyer (2011: 207)
noted that Correa, during his first years in government, “has vigorously attacked the coastal
financial agro-commercial capitalist class, centered in Guayaquil” (Petras and Veltmeyer
2011: 207).113 Marc Becker (2013: 47) specifically mentions a series of “moves against the
conservative oligarchy”, including the expropriation of “195 companies belonging to the
Isaías Group” (in order to recover some of the costs that the collapse of this group’s bank,
Filanbanco, had caused in 1998).114 At the same time, “increases in tax collection, including
those on windfall petroleum profits, seem not to have deterred foreign investment, with the
government continuing to sign new contracts with transnational corporations for mining and
oil development”, while Correa’s “agrarian policies favored large-scale economic develop-
ment” (Becker 2013: 48).115
In the beginning and during the first years of the Correa government, there is not much doubt
that the banking sector, economic associations and the private media were among those that
opposed the “citizen’s revolution” (Acosta et al. 2009: 10). Until at least 2011, “the associa-
tions of banks, commerce, exportation and other private sectors did not cease to confront the
Citizen’s Revolution” (Ramírez Gallegos 2012: 126). But recently observers noted that the
government’s relationship with the economic groups in Guayaquil has changed. According to
Napoleón Saltos, within the governing party Alianza País, the group represented by Vice
President Jorge Glas and cabinet members Vinicio and Fernando Alvarado that promotes a
112
See Correa’s official speeches documented at http://www.presidencia.gob.ec/discursos (last access April 1,
2014). This assessment is based on an analysis of selected speeches conducted by Gregor Díaz Griffith.
113
As a result, “Guayaquil’s power circles” have been able to turn their power struggle with the government
(which, in reality, was about the government’s attempt to strengthen the role of state in development planning,
public investment, economic regulation and the redistribution of social welfare) into a conflict about a “local
identity aggrieved by the central bureaucracy” (Acosta et al. 2009: 12). See also Eaton (2011).
114
According to Ramírez Gallegos (2012: 127), the Government, in mid-2008, announced the confiscation, by
the state, “of nearly 200 companies of the Isaías group – one of the country’s most powerful economic groups
from Guayaquil – with the aim to recover a part of the 660 millions of dollars that savers and the state had lost in
favor of such groups during the banking crisis of 1999”. Demonstrating the conflicts within the very govern-
ment, the Ministry of the Economy preferred to step down before sustaining this decision (Ramírez Gallegos
2012: 127). One important consequence of this confiscation was that two of the most important TV channels
passed (temporarily) into state ownership (Ramírez Gallegos 2012: 127-128). Eaton (2013a) also reports a series
of moves by the Correa government that aimed at weakening the sociopolitical organization and representation
of the Guayaquilean (business) elite: “A case in point is the sui generis Comisión de Tránsito del Guayas
(Guayas Transit Committee, CTG), an institution established in 1948 to set transit policy and finance transit
investments through a surcharge that residents agreed to pay on their income taxes (and that exists nowhere else
in Ecuador). In 2007, Correa sought to take control of the committee’s board of directors by successfully filing
an injunction with the politically compliant constitutional tribunal against committee members who also be-
longed to the anti-Correa Chamber of Production and Guayaquil Civic Board. In 2008, Correa secured the elimi-
nation of the CTG altogether.” (Eaton 2013a: 438) Also, “by taking away its lottery, Correa reduced the financial
basis of Guayaquil’s independent Junta de Beneficiencia (Charity Board), an important cultural space that
brought together the city’s socially prominent families” (Eaton 2013a: 438-439). Furthermore, Correa “under-
mined uniquely Guayaquileña organizations that are of more recent vintage, including the city’s Corporación
para Seguridad Ciudadana (Citizen Security Corporation, CSC). Created in 2005 to augment and complement
the work of the national police force within the city, the CSC received 70 per cent of its funds from the national
government until Correa ended the support in 2008, arguing that policing is a uniquely national prerogative.”
(Eaton 2013a: 439)
115
With a view to extractive enterprises, Becker (2013: 54) categorizes the Correa government as adhering to the
“resource-nationalist position” as defined by Anthony Bebbington, “which favors national over foreign or pri-
vate control of natural resources” and is “willing to sacrifice local concerns if doing so will benefit the country as
a whole”. With a view to agrarian reform, there was never a serious attempt by the Correa government to move
forward with any significant redistribution of land. Ramírez Gallegos (2012: 133) mentions some progress “with
the distribution and titling of certain unproductive fiscal lands”, but adds that “the bulk of the agrarian reform
has yet to be concretized”.
Jonas Wolff 22
political project based on the cooperation with Guayaquil’s economic groups and extractivist
sectors has clearly gained strength.116
Still, in two areas the Correa government has been quite consistent: with a view to (a) tax ad-
ministration, evasion and reform as well as (b) in its critical attitude towards the banking sec-
tor.
(a) Ever since Correa won the presidency for the first time, the fight against tax evasion, com-
plemented by some instances of tax reform, has been a crucial issue shaping the relationship
of the Correa government with the private sector. There is general acknowledgement that the
Correa government significantly increased the capacity of the tax administration, implement-
ed some progressive measures of tax reform and, correspondingly, increased the quota of fis-
cal revenues (cf. Carrasco 2012; Ramírez Gallegos 2012: 125; Sánchez 2012: 277-282; SRI
2012a). According to Ramírez Gallegos (2012: 130), the 2007 Ley de Equidad Tributaria was
a crucial measure that led to a 64% increase in tax revenues between 2007 and 2010 and, at
the same time, to an increasingly progressive tax system, characterized by a higher share of
direct taxes. In March 2007, the tax agency Servicio de Rentas Internas (SRI) set up a special
unit dedicated to overseeing 17 of Ecuador’s main economic conglomerates (grupos económi-
cos), including the one owned by former presidential candidate and opposition politician Ál-
varo Noboa (Ecuador’s richest man whose economic group consisted of 114 companies). SRI
director Carlos Marx Carrasco emphasized that tax evasion in the country amounted to 5% of
GDP and that 563 companies that earned 5,027 million US dollars in 2005 paid a mere 49.9
million in income tax.117 In 2012, SRI started to publish a list of individuals, companies and
economic groups with tax debts on its website (SRI 2012b).118 In February 2012, SRI Director
Carrasco reported that the tax burden on major companies (so-called major contributors) had
increased from 1.78% in 2005 to 3.29% in 2010 (and 3.5% including the advance income tax
and the increased currency export tax).119 (In 2013, however, the SRI reported that the tax
burden of 110 economic groups was 2.14% (2011) and 2.01% (2012), respectively.)120 In
2013, SRI also published a list of economic groups with major tax debts.121 In response, Pablo
Dávila, president of the Cámara de Industrias y Producción (CIP), criticized that the list did
not only include confirmed tax debts but also still contested debts against which companies
has issued appeals.122
During the Correa government, tax revenues have continuously increased from $4,686 million
in 2006 to $9,417 million in 2011, while the tax burden rose from a level of between 10.3%
and 11.2% (2001-2006) to 14.5% in 2011 (Acosta 2012: 64). According to Acosta, this signif-
icant increase is basically due to a reduction in tax evasion, tax reform and economic
growth.123 According to SRI data, tax evasion has been reduced from 61% in 2006 to 40% in
2011 (Acosta 2012: 64, note 3).
116
Napoleón Saltos, quoted in: ElPaís.com, March 13, 2014 (“Correa hace cambios en su gabinete por los
resultados electorales en Ecuador”).
117
ABC.com.py, March 26, 2007 (“El Gobierno Ecuatoriano Niega Perseguir a Grupos Económicos”).
118
Cf. ElComercio.com, May 29, 2012 (“150 000 personas del país le deben al SRI”).
119
ElComercio.com, February 13, 2012 (“Identificados 26 Grupos Económicos Más”).
120
EcuadorInmediato.com, July 30, 2013 (“SRI Publica Listado De Grupos Economicos”).
121
ElUniverso.com, February 8, 2013 (“El Servicio De Rentas Internas Presentó Lista De Principales
Deudores”). Cf. Andes.info.ec, April 17, 2013 (“102 Grupos Empresariales Adeudan 1.831 Millones De Dólares
Al Fisco”).
122
ElUniverso.com, February 16, 2013 (“Cámara Pide Al SRI Rectificar Lista De Deudores”).
123
“El crecimiento de los ingresos tributarios debe ser atribuido a varios factores: el esfuerzo realizado por el
Servicio de Rentas Internas para reducir la evasión y elusión tributarias, las reformas tributarias que comenzaron
Jonas Wolff 23
(b) The Correa government has also been fairly consistent in its criticism of the banks and in
its attempt to increase regulation of the banking sector and the financial markets in general
(cf. Weisbrot et al. 2013). As a result, conflicts between the government and representatives
of Ecuador’s banking sector have been a frequent occurrence.
In March 2007, while the new president announced measures to regulate the financial sector,
the representative of the private banks, César Robalino (Asociación de Bancos Privados del
Ecuador – ABPE), complained that the government had not complied with its promise to dis-
cuss its plans in a mixed commission.124 In May 2007, however, Robalino did meet the presi-
dent to discuss the planned reform to the Ley de Instituciones del Sistema Financiero in what
was reported to have been a “cordial” dialogue.125 Still, later in 2007, parliament adopted a
law that limited interest rates and eliminated commissions and some tariffs for financial ser-
vices (Ley de Regulación del Costo Máximo Efectivo del Crédito y Optimización de la In-
versión Pública).126 In 2008, the new constitution was adopted which obliged bankers to sell
their shares in mass media companies.127 In the same year, also the Ley de Seguridad Financi-
era is adopted which creates a Fondo de Liquidez.128
According to a report by Alberto Acosta and colleagues, the “confrontation” between the
government and the banking sector intensified between the end of 2008 and the first half of
2009. The reason was the government’s strategy “to reduce interest rates, promote the produc-
tive apparatus through credit, and repatriate public and private savings from the exterior”
(Acosta et al. 2009: 120). In December 2008, the association of private banks (ABPE) pub-
lished a statement, in the national press, openly criticizing the government.129 As a conse-
quence, the government retracted gradually from the policy of regulating interest rates
(Acosta et al. 2009: 121).130 In the course of 2009, the president’s threats to force the private
banks to repatriate domestic savings placed in the exterior did not materialize (Acosta et al.
2009: 122).
At the same time, however, the period between late 2008 and early 2009 was characterized by
joint attempts by the government and private banks “in order to avoid that the country would
suffer from the consequences of the global crisis”.131 Anti-crisis measures taken by the gov-
a incrementar la presión tributaria y por cierto la misma disponibilidad de recursos monetarios que alientan el
consumo y en alguna medida también el crecimiento económico.” (Acosta 2012: 64, note 3)
124
ElComercio.com, March 25, 2007 (“La Banca Privada Afronta Seis Desafíos”).
125
ElComercio.com, May 11, 2007 (“El Gobierno y la Banca Negocian las Tasas de Interés”).
126
AméricaEconomía.com, November 4, 2012 (“Ecuador: la compleja relación entre Correa y la banca”).
127
128
129
In an open letter “to our depositors and to the country”, ABPE expressed its “profound preoccupation about
the future of the financial system and of the national economy”. According to the statement, recent policies and
draft laws (the letter mentions the Ley de Seguridad Financiera and the reform of the tax law as well as the regu-
lations announced by the Superintendencia de Bancos, the Central Bank and the Servicio de Rentas Internas)
were threatening “economic stability and public confidence” in the financial system. At the same time, the asso-
ciation showed itself open to “constructive dialogs” with the president (ABPE, “A nuestros depositantes y al
país”, El Comercio, December 2008, documented in: Acosta et al. 2009: 120).
130
The report specifically mentions the Central Bank regulations 153-2007 (from December 28, 2007) and 184-
2009 (from May 6, 2009) which demonstrate an increase in the financial institutions’ liberty to raise certain
interest rates. In early 2009, the government also decided to channel mortgage loans offered by the Instituto
ecuatoriano de Seguridad Social (IESS) through private banks, thereby subsidizing the latter. Furthermore, in
February 2009, the Central Bank “yielded to pressure by the private banks and lowered the minimum reserve
rate from 4% to 2%”, without posing any conditions (Acosta et al. 2009: 121).
131
Jonas Wolff 24
ernment included the reduction of the minimum reserve requirement (encaje bancario) and
the injection of public resources into the financial sector.132 Since early 2009, responding to
the repercussions of the global financial crisis, the government and the banking sector
(ABPE) “intensified their meetings”.133 On February 20, 2009, President Correa and the
ABPE reached an agreement that included, inter alia, the possibility to raise some interest
rates, tariffs and commissions.134 According to El Comercio, on February 20, 2009, for the
first time since the election of Correa, representatives of the private banks entered the presi-
dential palace; results of the meeting included the government’s promise to establish a scheme
of mortgage loans of the Ecuadorian Social Security Institute (IESS) channeled through the
private banks.135 Reportedly, there was even a whole agenda of meetings (“mesas de trabajo”)
between the government and the banking sector that included the resumption of four commis-
sions (with representatives of privat banks and the Central Bank) that had been established
months ago but were suspended.136
In May 2009, Ecuador’s second biggest bank, Banco de Guayaquil, officially left the associa-
tion of private banks ABPE. The reasons given for this decision included a conflict with the
country’s number one bank, Banco Pichincha, and concerns about the ABPE’s lack of a clear
strategy of negotiation and communication with the government. Together with Banco Pacífi-
co and others, Banco de Guayaquil reported contemplated establishing an alternative associa-
tion – supposedly with better relations with the government.137 The government directly re-
sponded to these tensions within the banking sector, and President Correa invited Guillermo
Lasso, president of Banco de Guayaquil, to two meetings.138 At the same time, there also con-
tinued to be meetings between the government and the ABPE, even if “without results”.139
In June 2009, El Comercio140 reported deepening rifts between the government and the pri-
vate banks and listed a series of government policies that have affected the banking sector
such as the establishment of the Banco del Afiliado,141 the reactivation of public banks, the
reduction in interest rates, the elimination of commissions, and the tax on currency export.
Under Correa, furthermore, the state gained the right to fix the prices of financial services and
obliged the banks to repatriate some of their assets held in the exterior. In May 2009, “the
government established a Domestic Liquitidy Coefficient, which required that 45 percent of
all banks’ liquid assets had to be held domestically”; in August 2012, this coefficient was “in-
creased to 60 percent” (Weisbrot et al. 2013: 3). In December 2009, the national parliament
adopted the Ley Reformatoria a la Law de Régimen Tributario Interno y a la Ley Reformato-
ria para la Equidad Tributaria del Ecuador which raised the tax on currency export from 1%
to 2% (for transfers of more than 1,000 dollars). Another reform (by decree) established new
132
133
ElComercio.com, June 4, 2009 (“Los Acuerdos Entre La Banca Y El Régimen Están a Medias”).
134
Further agreements concerned the maintenance of public resources in the financial system and a reduction of
the income tax on reinvested gains. Cf. ElComercio.com, June 4, 2009 (“Los Acuerdos Entre La Banca Y El
Régimen Están a Medias”).
135
ElComercio.com, February 21, 2009 (“El Presidente y la banca privada revisan las medidas anticrisis”).
136
ElComercio.com, February 27, 2009 (“La próxima semana seguirá el diálogo”).
137
In June 2009, ABPE represented 16 of Ecuador’s 25 banks. The nine remaining, non-affiliated banks are:
“Banco de Guayaquil, Pacífico, Cofiec, Comercial Manabí, Territorial, Delbank, Sudamericano, Capital y Fin-
ca”. ElComercio.com, June 21, 2009 (“La fractura banca-Gobierno se ahonda”).
138
ElComercio.com, June 21, 2009 (“La fractura banca-Gobierno se ahonda”).
139
140
141
The Banco del Afiliado, associated with the Ecuadorian Social Security Institute (IESS), manages investment
funds for IESS and its affiliates.
Jonas Wolff 25
regulations promoting savings and loans cooperatives (Acosta et al. 2009: 122).142 In 2010,
the government ordered the private banks “to repatriate parts of the Freely Disposable Interna-
tional Reserves”.143 In the same year, new Central Bank regulations required private financial
institutions to buy government bonds as a part of their liquidity reserves. 144 In 2011, through a
referendum, a new regulation was passed that bars private financial institutions from owning
or holding shares in companies outside the financial sector.145 In 2012, the Central Bank
raised the coefficient of domestic liquidity (Coeficiente de Liquidez Doméstica) from 45% to
60%, thereby obliging banks to further repatriate assets held in the exterior.146
In October 2012, in the context of the campaign for the February 2013 elections, the govern-
ment sent a draft law to parliament (Ley Urgente de Redistribución del Gasto Social) which
included raising taxes on banks in order to increase the Bono de Desarrollo Humano.147 On
behalf of the private banks, ABPE (2012) criticized the plan. Other representatives of private
banks equally criticized the proposal, including Fidel Egas (Banco Pichincha).148 The Cham-
ber of Industry and Production (Cámara de Industrias y Producción – CIP) warned that the
proposal constituted “a threat to the stability of the system” (CIP 2012). Following the adop-
tion of the law on November 20, 2012, the ABPE threatened to issue a complaint of unconsti-
tutionality to the Constitutional Court.149
The Bertelsmann Transformation Index 2014 summarizes:

“The Correa government defined as one of its priorities the tighter regulation of the financial system,
leading to the adoption of the 2008 Law for the Creation of a Financial Safety Net, which, among other
areas, established a bailout fund to be financed by the banks themselves, reformed the deposit insurance
system, and regulated interest rates and the charging of commissions. Further new regulations have con-
tributed to an ongoing reorganization of the banking sector. In order to provide for a decartelization of
the economy, the anti-monopoly law prohibited combining multiple banks or different types of financial
institutions and restricted corporate ownership across banking and other financial interests. Banks are
also required to maintain at least 45% of their liquid reserves in Ecuador, in addition to maintaining as
liquid reserves at least 1% of their deposits in securities issued by the non-financial public sector. Last-
ly, in the context of the election campaign, a special tax was approved that uses the profits of banks to
finance an increase in the subsidy called the Human Development Bonus.” (Bertelsmann Stiftung
2014b: 21; see also Ramírez Gallegos 2012: 124-125; Weisbrot et al. 2013)
In April 2012, an article published in América Economía summarized the turbulent history of
relations between the Correa government and Ecuador’s private banks (which is generally
characterized as “tense”, with ups and downs): The overall picture is one of tensions or out-
right confrontation, giving way to conciliation and friendly exchange only in “moments of
international crisis”. The overall impression on the part of the private banks, as represented by
César Robalino (ABPE) is an “increasing hostility” towards the financial sector. Blasco Pe-
ñaherrera Solah (Federación de Cámaras de Comercio) also sees a discriminatory treatment
because the government does not control other business areas equally, while Correa “has per-
142
During 2009, the Ley de Economía Popular y Solidaria, which would also deal with this issue, was not yet
presented to the national parliament (Acosta et al. 2009: 122).
143
144
145
146
147
AméricaEconomía.com, November 4, 2012 (“Ecuador: la compleja relación entre Correa y la banca”). Under
Correa’s plan, “taxes would go up on bank holdings abroad and an excise tax on financial services would in-
crease, with the proceeds used to increase lump-sum payments for single mothers, the elderly poor and other
needy Ecuadoreans” (Solano 2012). See also Becker (2013: 48).
148
Cf. Hoy.com.ec, October 23, 2012 (“¿Expropiar Utilidades a La Banca O a Los Depositantes?”).
149
Infobae.com, November 22, 2012 (“Ecuador: Los bancos privados contraatacan”).
Jonas Wolff 26
secuted” the banks.150 At the same time, however, profits of the private banks have steadily
risen since the global financial crisis in 2009, according to data from ABPE.151 With a view to
such data, the Ecuadorian economist Pablo Dávalos calls the government’s relationship with
the banking sector “very cordial, very amicable”.152 Alberto Acosta (2012: 67) also emphasiz-
es the rising profits being made by private banks in Ecuador during the Correa government.
Yet, the Wall Street Journal paints a different picture: “According to data from Private Bank-
ing Association of Ecuador, or ABPE, the nation’s banks had return on equity of 10.15% in
2013, compared with 12.79% in 2012, 18.91% in 2011 and 14.32% in 2010. In 2006, when
President Correa was elected to office, banks had return on equity of 24.21%, according to
ABPE.” (Alvaro 2014) On balance, Ecuador’s banks continue to make significant profits,
with an upward trend in absolute terms, but with a downward trend in relative (profit rate)
terms.
In sum, Alberto Acosta sees important changes in terms of “postneoliberal” policies, which,
however, do not imply a radical change in terms of “a postcapitalist transition” (Acosta 2012:
63). Acosta acknowledges a series of improvements and advances, but also highlights that
there was hardly any structural change or redistribution and that, correspondingly banks and
economic groups have done very well during the Correa government. In particular, those eco-
nomic groups active in the sectors of importation, linked to public infrastructure investment or
social expenditures have benefited from government policies (Acosta 2012: 67). Notably,
there has also been no progress in terms of agrarian reform (Acosta 2012: 68). Also, dollariza-
tion “has created an anchor that has prevented implementation of many policies that would
affect the macroeconomic balance” (Bertelsmann Stiftung 2014b: 22) According to James
Petras (2013b), Ecuador’s “oligarchy”, “while publically condemning Correa”, is “privately
busy negotiating public-private procurement agreements especially in communications, infra-
structure and banking”. As a result, “[b]usiness elites especially in Guayaquil and the middle
and upper echelon of the public sector especially in the petrol sector, have become important
contributors and backers of Correa’s electoral machine” (Petras 2013b). In the end, however,
this critical analysis of the Citizen’s Revolution is not so far away from Rafael Correa’s own
assessment. In early 2012, Correa stated: “We have not been able to drastically change the
model of accumulation. Basically, we are doing things better with the same model of accumu-
lation, instead of changing it, because it is not our wish to harm the rich, but it is our intention
to have a society that is more just and equitable.”153
150
151
According to ABPE data, profits (utilidades) of 26 institutes fell from $253.9 in 2007 to $217.6 in 2009 to,
then, increase to $260.9 (2010) and $393.0 (2011). AméricaEconomía.com, November 4, 2012 (“Ecuador: la
compleja relación entre Correa y la banca”). See also Solano (2012).
152
153
ElTelégrafo.com.ec, January 15, 2012 (“El desafío de Rafael Correa”).
Jonas Wolff 27
5. Comparative analysis
The analysis shows that the Correa government, and President Correa in particular, confront-
ed economic elites in a targeted manner focusing on specific sectors (private media, banks),
specific individuals/economic groups (e.g., Grupo Isaías) and specific issues (e.g., tax eva-
sion). While there have been changes over time – driven by both economic and political cy-
cles – this pattern is quite consistent over the years of Correa’s presidency. In the case of Bo-
livia, by contrast, there is much more of a change over time: from open conflict to some kind
of accommodation.
But what explains the specific patterns in Bolivia and Ecuador, including the differences and
commonalities of the two cases? Following Eaton’s explanation of the successful resistance to
recentralization in Bolivia (as opposed to Ecuador and Venezuela) (Eaton 2013b), the remark-
able rapprochement between the Morales government and the economic elite from Santa Cruz
could be read as resulting from a kind of backing down of the government, which effectively
had to concede to demands from Santa Cruz, enabling the rapprochement. The “major conces-
sions – procedural and substantive –“ that the autonomy movements were able to secure did
arguably not only “restrict the scope of recentralization” (Easton 2013b: 2), but also included
limits to the economic reforms pursued by the central governments and, thereby, significantly
reduced the threat perception on the part of the economic elite in Santa Cruz.154 This is line
with assessments by Petras and Veltmeyer and Webber (see above) – but it is only part of the
story: In a paradoxical way, the rapprochement is also a consequence of the weakness of the
opposition to Morales and of the dependence of the Morales government on the continued
success of the business elite in Santa Cruz. On the one hand, it was only after the autonomist
strategy of confrontation had openly failed that the business sectors in Santa Cruz increasingly
distanced themselves from the radical wing of the political opposition and started to engage in
dialog with the Morales government.155 On the other hand, the development model pursued by
the Morales government – which is basically developmentalist, with a macroeconomic anchor
in extractive industries and agricultural production – meant that economic policies were based
on thriving agribusiness in Santa Cruz. At the same time, the government’s focus on modern-
izing the country implied public investment in infrastructure that has been in line with busi-
ness interests (as has been the fairly conservative macroeconomic policies). As a result, I
would argue that the change from open confrontation to rapprochement in the Bolivian case
resulted from an interaction between the politically dominant but economically dependent
Morales government and the politically weak but economically strong business elites. In
structural terms, this rapprochement was enabled by the overlapping interests of the Morales
154
In this sense, Eaton (2013b: 16) mentions as one the three “major concessions that walked the country back
from the brink of civil war” the “response to eastern concerns about new constitutional limits on the size of land-
holdings (5,000 hectares)”, which consisted in an agreement “to make these limits nonretroactive, a dramatic
concession that prevents expropriation by the national government of virtually all existing lowland agribusiness-
es”.
155
According to Gustavo Pedraza, a crucial role was played by Demetrio Pérez, president of the Asociación
Nacional de Productores de Oleaginosas, who already in the years 2008 and 2009 decided to enter in a dialog
with the Morales government. While this move was criticized by civic leaders and local authorities in Santa
Cruz, the results of this dialog increasingly convinced other business leaders that this was in fact a viable strate-
gy. See PáginaSiete.bo, October 6, 2013 (“El vínculo entre el MAS y los empresarios conviene a ambos”). A
second crucial factor, highlighted by both Pedraza and journalist Maggy Talavera, is the de-legitimation and
isolation of the radical wing of the political elite from Santa Cruz in 2008 and 2009 (with the occupation of pub-
lic institutions in the September 2008 protests and the case of alleged terrorism [the so-called “Rózsa case”] in
April 2009). See PáginaSiete.bo, October 6, 2013 (“El vínculo entre el MAS y los empresarios conviene a
ambos”).
Jonas Wolff 28
government and the Santa Cruz business sectors – and continues to be constrained by the limi-
tations of these overlaps.
For the Ecuadorian case, Eaton’s assessment would suggest a different explanation: Here, one
could argue that it was the success of the Correa government in largely implementing its
agenda (recentralization in the case of Eaton, but also more generally in terms of political and
economic changes) that forced the economic elite to basically accept the situation as long as
no plausible alternative seemed available. Again, this is only part of the story. The observed
pattern is, in fact, a bit more complex. On the one hand, the Correa government never meant
to systematically challenge the vital interests of the economic elite and the main business
groups as such – but, on the other, it has continued to challenge specific economic groups and
sectors. As a result, while conflict in the business-government relationship in Bolivia had a
crucial regional dimension, conflicts in the Ecuadorian case evolved largely along sectoral
lines. This mirrors not only the strategy of the Correa government, which rather attacked spe-
cific sectors (such as “the banks”), but also the organizational structure of economic interest
representation in the country. In contrast to Bolivia, where business in Santa Cruz was orga-
nized in one overarching regional federation (FEPSC), “in Guayas each sector is integrated
vertically into nationally organized associations such as the Chambers of Commerce, Produc-
tion, and Construction” (Eaton 2011: 303). Furthermore, “capital owners in Guayas are a class
divided”: On the one hand, there are “traditional elite families” which used to constitute “a
closed and intimate social group characterized by membership in the Guayaquil Naval Club
and sponsorship of the Guayaquil Charity Board”; on the other, there is “a much more frag-
mented set of new economic elites who have no common organizational forum, including the
Universo newspaper conglomerate, the Sarniskys’s Mi Comisariato supermarket chain,
Guayaquil’s one remaining bank (Banco de Guayaquil), the feuding heirs of Lucho Noboa’s
banana empire (siblings Alvaro and Isabelita), and the Lebanese-Ecuadorian Isaias brothers,
who are currently facing extradition charges for alleged embezzlement during the 1999 bank-
ing crisis.” (Eaton 2011: 303). As a consequence, for instance, the fortunes of Álvaro Noboa
(Grupo Noboa) and his sister Isabel Noboa (Grupo Nobis) under the Correa government have
been quite different: While Álvaro Noboa was constantly charged with not paying taxes, saw
parts of his property confiscated by the state, and eventually fled to Miami, Isabel Noboa was
decorated, in 2013, by the National Assembly with a prize for entrepreneurial merits and was
selected by the journal Vistazo as “the business leader with the best reputation in Ecuador”.156
In sum, this fragmentation of economic elites in Ecuador enabled Correa’s strategy of gener-
ally reducing the political influence of business associations while selectively cooperating
with certain business leaders and economic sectors and challenging others.
A common features that unites the two cases of self-declared revolutions in Bolivia and Ecua-
dor is that they both represent, first and foremost, political revolutions: They were basically
about replacing old political elites by new political actors (individuals and groups), about sig-
nificantly reducing the privileged access of socioeconomic elites to the political system and
about restructuring the overall politico-institutional setup of the state.157 With a view to the
economy and, specifically, the economic elite, representatives of the business sectors thereby
saw their direct influence in the spheres of government significantly reduced. But, in econom-
ic terms, there has been much less of a revolution in either case – which clearly sets both ex-
periences apart from “traditional” revolutions. Hence the notion of “post-neoliberalism”,
which tries to grasp this combination of changes in economic and social policies without a
156
Hoy.com.ec, December 26, 2013 (“Los hermanos Noboa tienen suertes distintas con Correa”).
157
On these changes in the political elites and the access to the political system, see Mayorga (2012: 27), PNUD
(2010) and Wolff (2013) with a view to Bolivia, and Ramírez Gallegos (2012) and Wolff (2010) for the case of
Ecuador.
Jonas Wolff 29
clear-cut break with the past model of development (or, for that matter, with the pre-existing
regime of accumulation). In fact, individual examples aside, 158 by and large, changes in eco-
nomic policies and transformations of the structure of the economy did not include direct at-
tacks on existing domestic companies, property owners and/or economic groups.159 This, in a
general sense, also reflects the “national-popular matrix” that has constituted the overall frame
of government discourses and policies in Bolivia and Ecuador (Stefanoni 2012b: 209).
[to be continued]
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Leftist Governments and Economic Elites in Bolivia and Ecuador:

From conflict to rapprochement?

Jonas Wolff, Peace Research Institute Frankfurt (PRIF), wolff@hsfk.de

– Draft version only, please do not cite without permission –

2. Business in times of revolutions: The state of research

3. The Bolivian experience: A cycle of contention

But what has happened ever since?

3.2 Event analysis

4. The Ecuadorian experience: Targeted confrontation and pragmatic accommodation

4.1 General relationship: From political marginalization to rapprochement

An example of Correa’s anti-corporatist strategy concerns the Consejo de Comercio Exterior

A second area of disagreement specifically concerned importers. Responding to the repercus-

4.2 Sector- and issue-specific confrontation – with sporadic agreements

The Bertelsmann Transformation Index 2014 summarizes:

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