But Armijo was not just any student. And this was not a run-of-the-mill political event. Her speech inaugurated the new “City of Knowledge” at Yachay, described by Correa as “the most important project in the country’s history.”
A billion public petrodollars have gone into the venture. Built around Yachay Tech University, where Armijo was enrolled in the first group of 174 scholars, the comprehensive plan envisions a futuristic post-industrial city–a shining Silicon Valley for South America.
“A new motherland is being born,” Correa preached at Yachay, vowing to “jump into the future” and build a “society of knowledge” that will overcome poverty.
Nothing could be more symbolic of the populist spending spree that has underpinned Correa’s agenda since he became president in 2007. With sky-high oil prices that peaked above $140 per barrel in 2008, he sensed an opportunity to transform Ecuador into a progressive powerhouse fueled by education and innovation.
An ambitious “Citizens’ Revolution” was launched to pull Ecuador into the 21st century at warp speed. The program has more than doubled the state education budget, created jobs, built hospitals, expanded housing credit and established four “mega universities” including Yachay.
But not everything has gone as planned. Ecuador is inching closer to the brink of a failed petrostate. And looming above the turmoil is another potential disaster: The country’s iconic volcano, Cotopaxi, is smoldering for the first time in 139 years.
In 2000, Ecuador adopted the US dollar as its currency after a brutal economic crisis. Combined with its deep need for oil, this has created a toxic spiral of dependence: The future of Correa’s Andean petrocracy is irrevocably bound to whims of the global market.
It boils down to supply and demand. Rising oil production has swollen the marketplace, leading to a 14-year low price of less than $28 per barrel earlier this month. And it may sink even further. The US nearly doubled production in recent years, while Iran is set to start pumping again after crippling economic sanctions were lifted.
Fellow petrostates like Nigeria, Russia, Brazil, and Ecuador’s Andean neighbor, Venezuela (another country to champion heavy social spending) have been engulfed by economic distress. Frequent tales of woe from Caracas speak of basic items like milk in short supply. The crisis there also caused a political earthquake: President Nicolás Maduro’s ruling socialist party was trounced at congressional elections in December.
Could Ecuador be next?From the Yachay pipe dream to Lago Agrio, a backwater drilling town buried in the Amazon jungle, to dreary slums in the gritty metropolis of Guayaquil and the most notorious ghetto in Ecuador, this story follows a petrodollar trail of truth, taking in people and places touched by Correa’s revolutionary vision.
Prizing Ecuador’s economy away from oil is a key objective of the grand Yachay design. Executives insist their budget will not be touched, despite cuts to other areas. “The risk is high,” admits Hector Rodríguez, CEO of Yachay EP, “but the only way of escaping oil dependence is to break that cycle by giving money to entrepreneurs and scientists.”
Less than two years after Correa’s inaugural address, deals have been inked with the likes of Microsoft, Cisco, IBM, and Siemens, lured by a special economic zone offering juicy tax incentives. China’s EXIM bank has laid down a $260 million credit line. Oil companies including Halliburton will conduct hydrocarbon research and create cutting-edge curricula to train the next generation of chemical engineers.The inaugural university class has been joined by a fresh batch. About 800 students currently attend Yachay Tech, which has hired teaching staff from institutions across the globe. A community college is also up and running, with a mix of traditional and technological programs like carpentry and biotech.
“We are dreaming high,” says Ricardo Silva, rector of the 17 de Julio Institute, watching laborers wire the roof of a 4G telecommunications lab. “This is a township, but it’s not run by a mayor. It’s a corporate-managed city. That’s a very novel way of doing things,” he states.
“The roots have taken ground,” Silva continues. “It’s amazing. Three years ago, this was all grassland. There was nothing here.”
Across a dirt road from Silva’s technical institute, the doors of a solitary ochre bungalow have been padlocked from outside. A couple of dogs nap on its front porch, but the interior is bare; limp cables hang pitifully from the ceiling. On a faraway hill, a massive Yachay sign looms over a lush valley dotted with building sites. What looked from a distance like fertile fields actually contain parched bean plants or malnourished maize.“I lived in my house for 35 years. We had tomatoes, carrots, avocadoes, peppers, cattle. I left everything. My project is dead,” laments Yolanda Morillo, sitting in a cluttered ground-floor apartment in Urcuquí, minutes from the Yachay complex. The 73-year-old farmer has short silver hair, a furrowed brow, and hallowed hands that betray the nature of her trade.
In October 2011, the authorities sent Yolanda an eviction notice: Three months to pack up and leave her 10-hectare (0.04mil²) property, located on prime real estate at the center of Correa’s emblematic enterprise.
“I tried to find lawyers, but nobody would accept the job,” she recalls. “They said it was impossible to resist the government, but I had to fight to get a fair price for my land.”
That search was eventually successful, and Yolanda’s case has been crawling through Ecuador’s legal system since January 2012. She says a chance meeting with Correa himself spurred hope for a compromise: “The president was scared by my anxiety and started talking and talking. He said he would help if I calmed down. They offered to give me land somewhere else in exchange.”
But it was not to be. In April this year, a judge ordered Yolanda to accept an offer she claimed meets just half the property’s value, which she used to buy a smaller plot further away–the only affordable option.
The City of Knowledge appropriated 18.5 square miles in total, displacing dozens more families and eliminating hundreds of jobs. In Urcuquí, many workers complain that promised government programs to fill the employment void have not materialized.
“I’ve sent my resume to Yachay many times, but they tell me all positions are taken,” says Edison Peña, 45, who lives with his wife and three children in the Mercedes area. “It feels like the whole thing is fraud and lies.”
“We used to have permanent work, all year round,” adds community leader Manuel Quimbiamba. He estimates that roughly half the 500 farm laborers in his neighborhood are struggling to get by. “Now, the only jobs you can find are by contract,” he continues. “It needs to be more stable.”
René Ramírez, Ecuador’s minister for higher education, science, technology and innovation, and a major force behind Yachay, could not be reached for comment.Yachay Tech has also brushed with controversy. In July, its rector was fired after he allegedly complained about making the same salary as directors in California, who rarely set foot on campus.
“Someone who earns $16,300 per month from the government should have the decency to live in Ecuador,” Fernando Albericio, a world-renowned chemist, told a local news portal. “I was honest with them, and they sacked me.”
“Yachay is a good project, but so badly planned,” sighs Yolanda. “They are not involving the community. It’s too much land and too much money.”
Yolanda describes going through an “emotional crisis like a spinning roulette wheel.” Her grey eyes glisten. “These years I have lost all my strength. I feel sick, mentally and psychologically. I have nothing.”
“Economics is like a game of Chinese spinning plates,” he grinned, going over next year’s forecast of a 2.5 percent budget deficit. “But don’t worry! It’s perfectly manageable based on oil at $35 per barrel.”Mega-projects like Yachay became a personal obsession for the president, who has lavished petrodollars on more universities and a pacific refinery that has been plagued with problems.
“Oil today is like bananas, coco and coffee in past times,” explains Alberto Acosta, an economist who briefly served as energy minister in 2007. “It is fundamental to Ecuador.”
But Correa’s government was “unable to spy the gradual weakening of the international market, and has not overcome oil dependence–or even suggested an alternative,” Acosta writes in a recent paper. “In fact, they’ve been consolidating this dependency by expanding frontiers and looking for the last available reserves.”
Acosta says Correa has failed to diversify national industries, citing data that suggests oil represented 52 percent of total exports in 2007 and just one percent less in 2014. Pumping charges levied by foreign extractors mean that, with such a low global price, it’s almost impossible for the government to profit from sales. At the same time, agreements with countries like China have pledged away future production before the barrels are even filled.
Meanwhile, Correa has created a redistributory leftist state fueled by rampant, resource-hungry capitalism, uttering proclamations such as, “I don’t like oil or mining, but I like them more than poverty and misery,” to publicly reconcile his image with this striking separation between ideology and economy.
A crucial element of his marketing strategy is the Secretariat of Buen Vivir (“good living”), which is named after an eponymous national plan first published in 2009. On paper, it serves as a de facto ministry of thought, designed to imbue the government with high ideals that upend traditional notions of development.
“Economics is one thing, internal happiness is another,” says Freddy Ehlers, the Minister of Good Living. An ebullient ex-journalist who cast aside impartiality to back Correa’s first presidential campaign, Ehlers talks in abstract terms about his mission to “redefine what progress means,” with an emphasis on wellbeing instead of wealth.
“I’m not quite sure what he does,” Santiago Rojas, a baby-faced lawyer from the minister’s legal team, admitted of his boss, “but he has a lot of meetings–and he meditates.”
Buen Vivir is everywhere in Ecuador. It embellishes a national network of infant care centers. Correa’s speeches are peppered with the good living mantra, despite the fact it essentially signifies an open culture war against his own economic doctrine.“This government is pure propaganda and hypocrisy,” says Alberto Acosta, who ran for president in 2013. “It’s like a driver who indicates he’s going left but turns right. Correa is one of the biggest capitalists in Ecuador.”
In late November, the president averted a constitutional showdown by vowing not to stand in 2017 elections. It was perhaps a shrewd move to avoid shouldering responsibility for Ecuador’s impending economic malaise. But he opened the door to a presidential return in 2021: The proposed amendment that removes term limits was approved by Congress in December.
“In underdeveloped countries like ours, the continuity of successful projects like our revolution is fundamental,” Correa tweeted to nearly 2.5 million followers.
Even without a bank balance swollen by the oil bonanza, the 52-year-old remains a formidable force with public approval at more than 40 percent. Correa’s radical spending has lifted many Ecuadorians out of poverty, but he presides over an increasingly divided nation. Anger is rising in communities that were not invited to the petrodollar party.
Ecuador’s first oil concession was awarded in 1878, catalyzing a wave of production along the Santa Elena peninsula throughout the 20th century. When Texaco discovered rich Amazon deposits in the late 1960s, it marked the beginning of a new era: The Andean nation was poised to enter the world stage, revitalize its economic fortunes and leave behind an agricultural past for a proud petro-centric future.Around Lago Agrio, verdant jungle is pockmarked with oil wells delving deep below the trees. Flares dance in the sky above huge tanks and pipelines running along the roadside. Engineers in heavy overalls work 40-hour shifts in tropical heat, six or seven days per week, snatching quick naps whenever they can.
“It’s like being married to the company,” admits one technician at Schlumberger, ruefully swigging a chilled beer while curfewed in a hotel until his next grueling day begins.
Nearby, the town square is abuzz with Friday evening life. Teens hang out in a plastic park, watching frantic games of volleyball or munching fried chicken from Lago Agrio’s shiny new KFC. Kitschy radio pop booms out from a central viewing tower, adorned by a glass wall with cascading currents of water illuminated in shimmering colors.
From its terrace, the view is dominated by a space-age municipal sports center to the north. It opened in 2014 to serve a new generation: Between 2001 and 2010, the provincial population grew more than 60 percent (to 176,000), as workers migrated to seek new opportunities after the 1990s downturn. Many dreamt of service jobs at petro firms that never stop pumping.
To the south, rows of trees all but obscure a long stretch of slum homes, with rusty corrugated roofs and breeze-block walls containing curtainless windows.
“We built these houses because we didn’t have anywhere to live,” says Angel Chamba Cuenca, who shares a shack with his wife and daughter at the eastern end of the settlement. Under an eerie neon glint, he pours water from a blue bucket over his soapy head, rinsing away layers of sticky jungle sweat.“We were selling things in the streets, but the mayor wanted us to be more legal so we could receive government support,” explains Cuenca, a migrant from the southern region of Loja. He is one of some 200 small traders who have lived and worked on Avenida Petrolera (“Oil Avenue”) for the last eight years.
Their homes are squeezed behind shops on a commercial strip that was recently cut in half by evictions, clearing the entrance for a new park with nature trails and tourist facilities.
“We formed an organization and they promised to build a market for us, but we’re still waiting,” adds Cuenca. He says the group has been left in limbo by two subsequent mayors, including Yofre Poma, a Correa ally who rose to the post of provincial governor in 2014.
“Police came to bother us all the time, so we asked them to fix the road instead. We want to trade freely, but the government is denying us,” Cuenca says, chewing boiled yuca cooked on a stove that lies next to his sleeping daughter’s bed. “Correa says he is building unity and equality for everybody. It’s not like that. We are all against Correa.”
“Life used to be great here,” he continues. “There was lots of coco and coffee production. They paid you in advance and we all had jobs. But now it’s just oil, and you need qualifications to work with those companies. It’s not for everyone.”
Others in Lago Agrio associate the oil boom with extraordinary wealth.
“When it was at $120, we were all laughing,” recalls Antonio, who runs a mobile stand that sells coconut juice for 50 cents per cup. He claims to have made $17,000 in a matter of months as personal chef for a picky supervisor at Petrobras, Brazil’s state oil company, and says those savings bought a house for his children.
In the glitzy sports complex just meters from his home, Angel is back at work. His second job is attending the public toilets, collecting 15 cents from every user and offering them sugary snacks neatly arranged in a glass case.
“You have to sacrifice yourself, or you don’t eat,” he laments. “Correa says he is ending poverty, but he’s doing it by killing the poor.”
The grubby center is a forest of gold exchange stores, throwback 1970s architecture and fried empanada stalls; a park filled with friendly iguanas is the main attraction. On the banks of the river Guayas, the Malecón 2000 boardwalk features rows of bronze statues and viewing towers occupied by necking teens, ignoring the faint odor of trash juice rising from grimy waters below.
A glamorous big wheel is to be opened next year. “It’ll be just like Miami!” exclaims a security guard, idly flirting with an ice cream sales girl at her deserted stand. The construction site looks barely operational.
Further along, South America’s first IMAX cinema is overlooked by a striking hill painted in pastel colors. The founding stones of Guayaquil were laid at Cerro Santa Ana in 1536, but today it boasts a chintzy promenade of bars and restaurants, nicknamed “Disneyland” by locals, topped with a toy-town ornamental lighthouse that wouldn’t look out of place in a Donald Duck production.A neighboring hill commands the summit view, but its own brightly colored buildings have lost their vibrancy.
“Don’t go over there,” warns a wary policeman, standing at the foot of Cerro del Carmen. “They will steal everything. We only go up when something happens.”
“If I take you that way, the police will think I’m going to rob you,” chuckles a bricklayer who has cousins in the barrio. “And you definitely can’t go alone.”
Correa’s petrodollars have not reached Cerro del Carmen. Dogs bark from the balconies of half-built homes as kids kick a ball around one narrow alley, beneath webs of tangled cables leaching power from hot-wired streetlamps. Instead of a lighthouse, the hilltop anchors a giant copper monument of Jesus, surrounded by lanky satellite towers jutting into the cloudy sky. Trash smothers parts of the hillside, dueling for superiority with weeds and creeper vines.
“It’s the old city and the new city, you see the full contrast,” says 32-year-old María, taking in Guayaquil’s cookie-cutter skyline from her tiny terrace in the slum. She looks after her three children by day and works the bar of a downtown disco by night, serving drinks to wasted revelers with cash to burn. “The apartments in those buildings go for $200,000,” she adds. “The house opposite mine costs $20,000.”
“We see a lot of crime and drugs here,” continues her friend Nicki, a Colombian who spent many years in the area and returns often. “Lots of people complained, but the authorities didn’t care until an important person got robbed a few months ago. If it’s somebody like the son of Correa, they will take you down like a bitch!”
The women say police stormed their neighborhood and arrested serial offenders following that incident, although they do not know who the significant victim was. The atmosphere remains volatile.
Later, an officer shared a surveillance video of two hapless tourists being mugged by armed men in broad daylight at Cerro Santa Ana, where guards patrol the Disneyfied visitor zone almost constantly. One thief was apprehended at Cerro del Carmen.
“They should fix everything, like the other hill,” says Nicki, “but not just the parts that everyone sees, because that creates a myth.”
The mayor has been known to send painting teams to touch up façades before public holidays, although many stairwells are in precarious condition. Statistics indicate that almost 100 percent of Carmen residents are served by waste disposal, but loose bags in the street would appear to suggest otherwise.“You can see we’ve been totally forgotten here,” states Gaby, a transgender woman who lives down the block from María. Her breath reeks of moonshine as she tries to propose a nude photoshoot.
“Sometimes, it feels like we’re living in exile.”
The north section of the jagged island resembles a warped human heart, with two bridges as arteries, pumping cars and motorbikes and people in a constant cycle of traffic. A large port denotes a sharp, invisible border separating the grey urban sprawl from a leaf-shaped green reserve with an ecological sports park at its core.
Isla Trinitaria is the most notorious neighborhood in Ecuador. “We say you need four eyes around here: two at the front, two at the back,” says Esperanza de Trunquillo, 73, who has lived in the area for more than 20 years.
Tales abound of bloody turf wars, drive-by shootings and ringleaders with sinister nicknames. Residents speculate that police are sympathetic to particular gangs. In June, a teenager died in a real-life game of Russian Roulette.
“Drugs create conflict,” muses Evelyn García, gently rocking a hammock that holds one of her two children, snoozing peacefully. Their house is hewn from cold cement, with peeling walls decorated by tatty Disney posters and toys untidily stashed in a corner. García works as a mango packer, eking out $75 in rent for the bungalow she also shares with a teenage brother, whom she hopes to keep away from trouble.The 23-year-old was raised in an orphanage, abandoned by a homeless mother addicted to “H,” a “cheap and strong” heroin derivative that sells for $1-2 per gram. García says her mother recently disappeared with the youngest of her four siblings, and was found begging at Guayaquil’s bus terminal by a passing cousin.
“Kids aren’t allowed to work. When they have so much free time, they turn to crime. They want an easy life,” says García. She criticizes a 2013 government decree that established tolerant thresholds of possession for drug users, designed to avoid excessively criminalizing minor consumers.
“I would tell Correa to change the law back,” she says. “It’s not working. All drugs should be prohibited. Dealers are selling ‘H’ in schools. The kids are lost, desperate, collecting trash or stealing just to get their fix.”
At the local police station, officers prepare for the visit of a senior supervisor, dusting down reinforced windows and sweeping the concrete floor as a radio crackles in the background. The Facebook homepage is open on an idle computer screen. “Boss, I want to go to bed. I’m tired!” moans one lieutenant, almost dozing at his desk.
He sits up when a flustered girl walks in, saying her phone was stolen by a supposed “friend” who pointed a gun at her baby daughter as they took a morning stroll. A car is dispatched to the perpetrator’s address. Within minutes, calls for backup arrive on the scratchy radio. “Sometimes, the families come out throwing stones,” says another officer, dashing off to assist.
Later, a patrol van trundles through lanes of humble homes, stopping at a corner where a bemused boy in a blue tracksuit is clutching a crack pipe. The shakedown happens in a wordless instant.
“Nothing,” reports the sergeant. “He’s already smoked it all.”Isla Trinitaria was born when Guayaquil ran out of space. And when the island could give no more, people built shacks on stilts atop a mangrove swamp in the Salado estuary, once known for crystalline waters that inspired poetic odes.
In 2010, with oil at around $80 per barrel, the government pledged $73 million to rescue the Estero Salado from years of neglect. It had become a floating dump, poisoned by the rancid waste of a booming, unplanned metropolis and slums with no sanitary infrastructure.
The shabby banks will be transformed into a 25-mile promenade, divided into 11 sections with playgrounds, green spaces, and exercise machines. President Correa visited in July to inaugurate two of the new parkways, casting scorn on questions about the plan’s economic rationale.
“Conservatives are asking where the money is, saying we have squandered the oil boom,” he proclaimed. “They should leave their mansions and private islands and come to Trinitaria, to see the Ecuadorian people’s money is finally managed with clean hands, lucid minds and fervent hearts, for the motherland and for the majority.”
Four months earlier, hundreds of police officers had descended on the community of Mélida Toral, riding speedboats, horses or helicopters, and leading a fleet of bulldozers in their wake. The streets simmered with rage as residents scrambled to save possessions from demolition; their homes stood in the way of Correa’s boardwalk. Forty-seven families were displaced.
On November 13, it happened again. Nineteen more houses were razed to the ground.
“I feel impotent. I’m sick and unemployed, without anywhere to go for my wife and two daughters,” said Walter Moreira, who was evicted both days. He claims government officials had authorized him to build on the land where splinters of his wooden home are the only remaining traces of life.
Moreira remains in limbo despite a fund of $110 million earmarked by the Ministry of Urban Development and Housing to relocate 8,175 families who live on the estuary.
“Correa says, ‘The poor are with me and I will take this country forward,’ but if we’re not poor, who is?” said Moreira, 52. Tears streamed from his eyes. “This man has defrauded and humiliated us. He hasn’t given us what we yearned. We are destroyed. Finished. Nobody is looking out for us.”Guayaquil architect Eduardo McIntosh enjoys the idea of creating a “tropical Venice” by restoring the estuary, but he believes the government has created a “false dilemma” over the need to “choose between preservation of the mangrove swamp or human habitation of this ecosystem.”
In a thoughtful essay for an alternative political journal, McIntosh argues that locals should be integrated as “Estuary Guardians” because they are the most appropriate people to serve tourists and maintain facilities. “Having communities live symbolically with the mangroves is the best way of conserving them,” he writes.
The notion of a pastime paradise on the fringes of a ghetto is fraught with complexity. Essential services like running water, electricity, and childcare appear to be improving across Isla Trinitaria. But these basic provisions fall way behind Ecuador’s grand design for pimping the periphery of its neediest neighborhood.
The day before, thousands of protesters had paralyzed the capital with a general strike, the first mass demonstration of President Rafael Correa’s eight years in power. Indigenous groups, trade unions, environmentalists, and political rivals gathered in hotchpotch opposition to constitutional proposals they believed would extend Correa’s presidency indefinitely.
Tremors of unrest also accompanied Cotopaxi’s last major eruption in June 1877. In the town of Latacunga, pungent clouds of sulphuric ash descended on scores of people marching against an authoritarian church closure; the air was thick with political turmoil after Quito’s archbishop had been poisoned a few months earlier. As a five-mile column of smoke mushroomed above the volcano, men and women cried out that it was the “Punishment of God!”Cotopaxi is active again. If it blows, more than 300,000 people could be affected, and 25,000 businesses would suffer. The country’s economy would grind to a halt with transport closures and disrupted cellphone networks. Special teams would be sent to evacuate people living in danger zones and provide emergency medical support.
Ecuador has set aside an $850 million disaster response fund that also covers the El Niño phenomenon currently brewing in Pacific waters, and forecasted to be one of the strongest on record. In 1997, the last time El Niño struck, 50,000 people were displaced and 286 died in floods, while authorities took heavy criticism for failing to act on accurate predictions.
This year, the government is ending school terms early in potential flood areas and advising farmers to insure their crops. Hundreds of millions of dollars have been spent on six water management “mega-projects” that will protect over 540 square miles of land and 330,000 people.
But just $200 million of Correa’s emergency disaster budget comes from state coffers; the rest is credit from the Interamerican Development Bank and other lenders. Critics see this as another sign that petrodollars have been squandered.
“The government has always said it’s best to invest and not save anything for tough moments. And when those moments arrive, they must take on debt,” said Pablo Lucio Paredes, a professor of economics at the Universidad San Francisco de Quito. “When state spending reaches 44 percent of GDP, it’s evident that a major part is not well invested, like the Pacific Refinery, airports with two flights per day, or more buildings for the bureaucracy.”
Residents of Isla Trinitaria, Cerro del Carmen, Lago Agrio and Urcuquí would not disagree. Nonetheless, government data claims that Correa’s “Citizen’s Revolution” has reduced poverty from 37 percent in 2007, when he entered office, to 22 percent in 2014, a drastic shift in just five years.
The Buen Vivir media campaign will not hesitate to proclaim life has improved for millions of Ecuadorians. But at what cost?
As economic malaise forces Correa to put the brakes on his modernization program, the world must consider the consequences of such rapid development. His fundamental failure to save for a rainy day and diversify Ecuador’s petro-centric model could be diagnosed as classic political short-termism on a frightening scale.
Correa sank oil money into social projects to become one of the world’s most popular leaders. Conveniently, he will step out of the firing line next year. Recent constitutional reforms bar current officials from standing in 2017 elections, but they may return later. Correa might very well trumpet this inclusivity, while quietly leaving a proxy to face rising public anger as budget cuts start to bite, before coming back in 2021 to rescue a democracy in distress as citizens clamor for their champion.
It appears to be a shrewd master plan, but Correa is not off the hook. Cotopaxi’s eruption cycle continues to ebb and flow, despite waning panic after alert levels were lowered. El Niño remains a lurking specter of chaos.
The divine punishment of 1877 is lost in history. But Ecuador’s perfect storm may be yet to strike.