On February 11, Ecuadoran President Lucio Gutierrez will visit with President George W. Bush in Washington.  While the newly installed Ecuadoran leader will likely ask his counterpart to support continued multilateral loans and development aid to his nation, President Bush should use the opportunity to cement U.S.-Ecuadoran security ties, to encourage deeper democratic and market reforms to enhance Ecuadoran stability, and say no to excessive dependence on international assistance. 

Fractious nation
President Gutierrez leads a country with a history of power struggles between contentious interest groups and on-again/off-again democracy.  Ecuador has had 17 constitutions since independence and a divided oligarchy controls most of the commodity-based economy.  In the last seven years, Ecuador has had six presidents-two of whom, Abdala Bucarám and Jamil Mahuad, lasted a year or less before their ouster.  In January 2000, it was army colonel Lucio Gutierrez who led indigenous protesters in marches that forced out Mahuad, considered ineffective in fighting corruption and who proposed dollarizing an economy plagued by runaway inflation.  His vice-president and successor, Gustavo Noboa, dollarized it anyway. 

Now in Carondelet Palace himself, Gutierrez will face an assembly representing the highland elites, coastal landowners, and Ecuador's indigenous population.  Just 17 percent of the 100-seat unicameral body is loyal to his Patriotic Society Party coalition.   Although democratic and market-based reforms are ongoing, elites have resisted opening the economy to competitive enterprise.  Instead, social spending, subsidies, and price controls were meant to help Ecuador's 50 percent poor compensate for restricted access.  Over-reliance on commodity exports such as petroleum and bananas has limited growth to pay back loans that support such programs. 

Troubled neighborhood
Potential civil war in Venezuela, drug trafficking, and terrorist groups operating in Colombia and in the confluence of the Argentine, Brazilian, and Paraguayan borders threaten trade and impact neighbors with refugees.  Narcoterrorists such as the Revolutionary Armed Forces of Colombia (FARC) still operate in 70 percent of Colombia's territory and have infested Ecuador's northern Sucumbíos department.  Peru also faces a resurgence of drug trafficking and terrorism.  Two weeks after Gutierrez was inaugurated, a group called the Peoples Revolutionary Militia took responsibility for a bomb that exploded at an American Airlines office in Quito. 

Good intentions
A political novice, Gutierrez was elected with 54 percent of the vote in a runoff election on November 24, 2002.  Although he once led a coup and counts radical Indians as his base of support, Gutierrez said he wants to be president of all Ecuadorans, and promises to fight poverty and corruption while preserving dollarization and allowing continued use of Ecuador's Manta air base for the U.S.-backed Andean counternarcotics effort.   

On the domestic front, he supports decentralizing the Ecuadoran state, devolving authority over local affairs to local jurisdictions.  He would like legislative bodies to more effectively represent their constituents.  And he has proposed creating a fourth branch of government to audit public spending and the banking sector.  Regarding foreign affairs he shuns taking part in any "triangle" or "axis" involving Cuba's Fidel Castro or Venezuela's leftist president Hugo Chávez.  Yet, he said he would help Colombia solve its narcoterrorism threat by opening Ecuador's borders and pursuing peace with its Marxist guerrillas.  "Guerrillas are human beings too," he said in Washington last November. 

Some of these ideas are clearly impractical.  In October, Ecuadoran voters approved a measure to eliminate 23 at-large congressional seats, reducing the national assembly to 100 members.  Gutierrez would like to chop that number to 60.  Without changes to make assembly members stand for actual districts, another reduction would decrease representation, not enhance it.   A fourth branch of government to audit accounts unnecessarily duplicates functions normally carried out by the legislative and judicial branches.  And easing border controls with Colombia would invite more border incursions by violent guerrillas in Ecuador's poorly patrolled northern provinces.  Ecuador's 35,000 police and small, 600-member counternarcotics unit would be quickly overwhelmed. 

Tough love
The United States needs stable allies in troubled South America.  Despite inexperience and concerns over his past, Lucio Gutierrez appears to understand that Ecuador's future depends on accountable governance and open markets.  That should be enough of a start for President Bush to forge friendly working realtions with him.  But for collaboration to be fruitful, President Bush should: 

• Encourage Ecuador's support for U.S.-aided regional counternarcotics and counterterrorism efforts by its securing borders and helping Colombia pressure its narcoterrorists into laying down arms.  Appeasing such groups will only prolong the violence and invalidate the $22 million President Bush has requested in FY 2003 security assistance for Ecuador in his Andean Regional Initiative. 
• Advocate strengtheningrepresentative government.  Washington should tailor existing U.S. assistance to leverage changes allowing legislators to stand for districts within their departments and municipalities.  Such aid should also support tax reforms allowing localities to collect revenue to fund programs administered under their own authority.
• Urge less dependency on multilateral credit such as recently announced $200 million standby loan being negotiated with the International Monetary Fund, in favor of measures that promote diversified exports, small and medium-sized business creation, ongoing judicial reforms, and stronger protection of private property. 
• Enlist Ecuador's backing for the Free Trade Area of the Americas (FTAA).  Through the FTAA, Ecuador would gain greater access to developed markets and foreign investment, helping to further stabilize its economy.   

Conclusion
Ecuador may only have 12 million citizens and do $3.4 billion worth of trade with the United States, but it is an important supplier of petroleum (100,000 barrels per day) and has worked hard to keep itself relatively free of the kind of coca production, trafficking, and money laundering that has plagued its northern neighbor.  Despite a past that suggests military rigidity, President Gutierrez appears open to ideas, has selected several experienced cabinet members, and generally favors a democratic, pro-market agenda.  President Bush should encourage his counterpart to help defeat the twin scourges of drug trafficking and terrorism in the Andean region, and offer support for strengthening Ecuador's democracy and market economy-a work still in progress.

Stephen Johnson is Senior Policy Analyst for Latin America in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation. 

The author wishes to thank intern Raymundo Morales for his contribution to this Web Memo.