In an unexpected victory for the right, the conservative former banker Guillermo Lasso has won the Ecuadorian presidential election after defeating the leftist economist, Andrés Arauz, in the second round of the country’s presidential election.
Surprisingly, Arauz won the first round which had many business leaders fearful of the potential economic impact of the leftist candidate who had renounced the International Monetary Fund (“IMF”) and had spoken about a de-dollarisation of the country.
So what changed?
Diego Andrés Almeida, Administrative partner at Almeida, Guzmán & Asociados in Quito was following closely, “There was a huge shift in Lasso’s campaign. He hired Jaime Durán Barba, who was an advisor to Macri and network management advisers from Xavier Hervas (another candidate). These group of advisers shifted the image of Lasso from a traditional banker to someone more modern, putting aside his conservative beliefs to focus on the new generation. It also helped that Jaime Vargas [an indigenous leader that rose to prominence during the protests of 2019] decided to support Lasso.”
“These group of advisers shifted the image of Lasso from a traditional banker to someone more modern, putting aside his conservative beliefs to focus on the new generation.”
Diego Andrés Almeida, Ecuador
Lasso’s margin of victory was greater than anyone had expected and in many ways this should bring peace to the country. Not least because Arauz formally conceded and granted Lasso the victory so there is absolute legitimacy and there should be no protests.
The same partner at Almeida, Guzmán & Asociados reported that his clients are excited about the election results, “Lasso should mean a market friendly government. Lasso led for 20 years what is now the fourth largest bank in Ecuador, so he has always been on good terms with the private sector. Lasso’s intent is to make Ecuador a financial market, following Panama’s example, so there should be good opportunities for the private sector. Lasso is also open to the Western world, so we hope that foreign investment should increase.”
An Ecuadorian economist agrees that Ecuador could open up under Lasso, “What Lasso wants for Ecuador is to transform the country into a financial hub, there will be an opening and the agreements with the IMF will be fulfilled which should attract private capital.”
“What Lasso wants for Ecuador is to transform the country into a financial hub, […] the agreements with the IMF will be fulfilled which should attract private capital.”
In fact, Lasso has said that he will respect Ecuador’s commitments to the IMF with the exception of their request to raise the country’s VAT rate. Lasso also plans to raise the country’s minimum wage to USD 500 per month and wants to attract more foreign direct investment, particularly in the hydrocarbons sector. His electoral promises include the creation of two million work places and the concession of low-interest loan concessions to the agricultural sector.
Lasso is not going to have it easy though. He will still face a fragmented Assembly as the composition of the 137-member National Assembly was decided in the general elections in February and no party achieved an outright majority.
José Urizar Espinosa, Commercial and Corporate partner at Almeida Guzmán & Asociados observed that there is currently a lot of movement around the Assembly, “Lasso does not have control of the Assembly but there are intense negotiations underway. Arauz controls 30% of the votes but bear in mind that Assembly members do change sides and many had aligned themselves with Arauz because they thought he was the most likely winner. It was interesting to see that none of the newly elected Assembly members that belong to Arauz’s party attended the closure of his campaign. I wouldn’t be surprised to see half of Arauz’s camp change benches/party.”
“Lasso does not have control of the Assembly but there are intense negotiations underway. I wouldn’t be surprised to see half of Arauz’s camp change benches/party.”
José Urizar Espinosa, Ecuador
Lasso’s win will be well received by the country’s mining industry but some uncertainty remains, as an industry executive explained, “Lasso has not focused his plans on extractive activities and it is important to mention that Lasso is open to environmental protection issues. For example, he has pledged to support the popular consultation to protect the Yasuní National Park and the Ecuadorian Amazonia. He has accepted that there is an issue around consultations for mining activity. This could complicate matters for the industry.”
Outside Ecuador there are also potential implications of Lasso’s win on regional security as a geopolitical analyst in Quito commented, “The left are in power in Argentina, in Bolivia the left did very badly in the sub-nationals, in Peru things are still uncertain and the right has won in Ecuador. It’s going to be interesting to see what happens in Colombia next year as this could dictate what you’re going to see in terms of regional security.”