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ECUADOR: PRESIDENT GUSTAVO NOBOA FACES STRIKES & BANK CRISIS.

Growing social unrest and an impasse in talks with indigenous groups awaited Ecuadoran President Gustavo Noboa in mid-July when he returned from a trip to Spain, where he went looking for money and an agreement on the status of Ecuadoran immigrants in Spain. In addition, Noboa found it necessary to close the nation's largest bank, state-controlled Filanbanco, because of a lack of liquidity.

On July 6, lawmakers voted to raise their salaries by US$600 to US$2,100 a month, although Congress president Jose Cordero conditioned the raise on implementation of controls to ensure lawmakers' attendance at both plenary and committee sessions.

The raise angered citizens, especially health workers who have been on strike for more than three weeks demanding higher wages and a larger budget for the public health system. The government has insisted that there is no money in the budget to raise salaries.

Doctors and public employees strike

The strike by 26,000 doctors, nurses, and other health professionals began July 3. Doctors with the public health system earn between US$56 and US$300 per month. In the past three years, dollarization and ongoing high inflation (91% in 2000) have hurt many workers, including health professionals, and brought demands for substantial wage increases.

"Some of us have more than 17 years in this work and the salary we receive is barely US$46 a month," said Rosa Santamaria, president of the Federacion de Enfermeras.

The strike has forced state hospitals to suspend consultations and nonemergency surgery. Strikers want to deal directly with Noboa, since they are convinced that the solution to the labor conflict depends on the political will of the president.

On July 16, Noboa called a Cabinet meeting to discuss the growing unrest, after 45,000 employees in the Education, Health, and Labor and Social Welfare Ministries voted for a work stoppage to demand higher wages. The public-sector employees called for an indefinite strike starting July 17.

"We are asking for salaries to be raised so they cover 75% of the basic basket of goods," said Hector Teran, president of the Confederacion Nacional de Servidores Publicos (CONSEP). Teran said that with an additional US$40 million-- about 10% of what it cost the government to capitalize two state-controlled banks earlier this year--state workers could earn a decent salary. State workers earn between US$30 and US$120 a month.

CONSEP secretary general Bolivar Vacaycela said strikers would show up for work, but stay at their work places "with their arms crossed." In Ecuador, strikes are prohibited in places that provide public services so workers are resorting to this "strike while on duty" to press their demands.

Vice President Pedro Pinto said that the government's response to CONSEP is the same as it was to the striking public health workers. "If we do not have [resources] for the doctors, much less will we have them for public servants," he said.

The government said that meeting the demands for higher salaries for public employees would mean not carrying out the fiscal discipline necessary to meet fiscal-deficit goal, set by the International Monetary Fund (IMF), of 1.3% of GDP for this year. The government considers fiscal discipline key for making dollarization work.

On July 25, the Federacion de Medicos de Ecuador said it would hold a "great national march" that would be concentrated in Quito the following day.

CONAIE breaks off dialogue

Meanwhile, on July 9, Marcelo Santos, minister secretary- general of the presidency, announced the imminent promulgation of several decrees aimed at satisfying the demands of indigenous organizations, which included a review of public transportation fares, the sale of household gas in communities, Plan Colombia policies, land titles for campesinos, capitalization of the Banco Nacional de Fomento (BNF), and support for emigres who went to Spain.

A dialogue between the government and the indigenous groups began in April, the result of an agreement signed by Noboa in February to end a massive protest by the Indians that had paralyzed the country (see NotiSur, 2001-02-09).

Santos said the government was willing to continue the dialogue with the Indians regarding an additional 25 demands that had not yet been resolved. But, on July 17, the government postponed indefinitely the date for signing the decrees, and Santos said it was because the Indians objected to the text of some of the decrees.

On July 19, the indigenous groups, led by the powerful Confederacion de Nacionalidades Indigenas (CONAIE), suspended the talks with the government, saying they would put the future of the talks in the hands of an international mission, which was acting as mediator of the dialogue.

Marco Murillo, president of the Federacion de Indigenas Evangelicos (FEINE), accused the executive of being unwilling to listen to the campesino demands.

The government insisted it wanted to continue the dialogue, and it offered to resolve eight of the more than 30 demands that the Indians presented in April. The Indians did not accept the solutions offered by the government and deplored the government's delays in finding solutions to the problems.

On July 23, CONAIE and the Coordinadora de Movimientos Sociales (CMS) said they would resume their protests against the government's economic policies, which had been halted when the agreement was reached to hold the dialogue.

CMS director Doris Solis said the protest would begin with a march originating in Zamora Chinchipe in the southern Amazon region of the country. It would include sit-ins in government offices and those of international organizations, and would conclude with a march in Quito on August 10, independence day.

The protests now include calls for the government to agree to salary increases for the striking state workers, a rejection of the government's plan to privatize electricity- generating companies--scheduled for September, payment of the government's debt to the social security program, and a veto of the recently passed social security reforms.

Government closes nation's largest bank

CONAIE and the CMS also want Congress to lift the banking-secrecy protection to reveal who is responsible for and who is benefitting from the July 17 closing of state- controlled Filanbanco, the nation's largest bank, because of a lack of liquidity. They said lifting the secrecy protection would make public the names of the large debtors whose unpaid loans are considered the cause of the failure of several banks, including Filanbanco. It would also shed light on what happened to the US$1.4 billion in bailout funds given to state banks Banco del Pacifico and Filanbanco in the past two and a half years.

The government announced July 22 that it had reached an agreement to transfer some assets and liabilities from Filanbanco to private banks. The private banks will return US$266 million to Filanbanco's depositors, but as more time passes without details of the deal being made public, depositors are becoming increasingly nervous.

The government said the private banks will take over Filanbanco's short-term deposits. Clients with deposits greater than US$300 and those with debts will know which private bank will be handling their accounts in two weeks, the statement said. But private bankers said clients would not be able to withdraw their deposits before August 13.

Filanbanco was taken over by the government in 1998 amid a financial crisis that, between 1998 and 2000, saw it and 14 other banks fail.

Minister of Government Juan Manrique asked Attorney General Mariana Yepez to carry out a preliminary investigation to see whether charges against bank officials are warranted.

On July 23, Noboa said that during the first ten months of his presidency, he was kept in the dark about the magnitude of Filanbanco's difficulties.

CONAIE and the CMS called Noboa's action a "confiscation" of depositors' money, and said the result would be that "US$228 million owed by bankers, business people, and the politicians aligned with them" would never be repaid.

The state must absorb much of the losses of Filanbanco, since the private banks have reportedly only agreed to assume 35% of the outstanding operations.

CONAIE and the CMS contrasted the amount of money the government has poured into failing banks with its resistance to demands for salary increases by state workers.

Poverty increases

The Instituto Nacional de Estadisticas y Censos (INEC) reported that the basic basket of goods for a family of four costs about US$289 a month, while an Ecuadoran family's average monthly income is US$201.

Poverty and inequality have increased in Ecuador in recent years, said World Bank representative McDonald Benjamin on June 23. "During the last five years, and especially the past two, poverty has affected 8.6 million Ecuadorans, of whom 4.2 million are at critical levels of poverty," he said. The gap between rich and poor has widened, with the richest 10% of the population of 12 million now receiving 43% of the nation's income, while the poorest 10% only receives 0.6%.

Unemployment now stands at 10.9% of the economically active population (EAP), with another 47.9% underemployed, according to the economic weekly Lideres. And, even apparent good news often is not. A recent slight decline in unemployment does not indicate an increase in jobs, but rather reflects the large number of people who have left the country. [Sources: Associated Press, 07/11/01; El Nuevo Herald (Miami), La Opinion (Los Angeles), 07/16/01; Reuters, 07/17/01, 07/19/01, 07/22/01; Notimex, 06/23/01, 06/28/01, 07/17/01, 07/20/01, 07/23/01; Spanish news service EFE, 07/06/01, 07/09/01, 07/18/01, 07/19/01, 07/25/01]
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Publication:NotiSur - South American Political and Economic Affairs
Article Type:Statistical Data Included
Geographic Code:3ECUD
Date:Jul 27, 2001
Words:1596
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