On September 28, the Ecuadoran public voted overwhelmingly in favor of adopting a new constitution that had been swiftly drafted by the Constitutional Assembly and finalized by the government of President Rafael Correa. Little analysis has been applied to this 150-page document. What will this mean for the rule of law in Ecuador?

What is understood about the provisions of the new constitution is worrisome; the lack of understanding in Ecuador about how the constitution will be interpreted is of even greater concern. A number of the constitution’s provisions could present challenges to the rule of law and the future of private investment in Ecuador, including:

- Expanded executive control over the judicial and legislative branches of government, as well as the central bank.
- Respect for property rights is now based on ambiguous notions of social and environmental responsibility. The provisions leave huge discretionary decision-making to the government to define what this means.
- The government will be able to intervene in the pricing of market goods.
- International arbitrage is now prohibited in contracts for foreign investment.

While it is unclear how the government will implement the new constitution, the anti-business tenor of the document and its cloudy definition of property rights and contract law will likely inhibit future foreign investment in the country, and turn back progress made to date.

Dora de Ampuero of the Ecuadorian Institute of Political Economy (IEEP) explains that “the new constitution is structured in such a way that much of its content is confusing, which gives the executive the opportunity to interpret the new text however they best see fit.” She further explains that “It is still too early to know where the country is heading, but if the guiding principles of the constitution are followed, then Ecuador will become a closed economy that will be limited by government intervention.” IEEP has been engaged in an active campaign to promote better understanding of the market economy and the principles of democracy through a weekly radio and television program and public forums, with a particular focus on issues that are important to young leaders. This work is especially important now that the new constitution has been approved.

With so much confusion, why was the new constitution approved? “People voted for change because they were tired of an old system of political parties and a Congress that did not work,” says Ampuero. Yet, endorsement at the ballot box does not necessarily mean that people approve of the President’s vision of a socialist country. Soon, people will ask for concrete results. If the high expectations that slid the constitution into place are not met, Ecuador could face a violent crisis.

In the coming months, as key reforms related to the constitution are debated in government, it will be even more important to inform the public of these crucial issues, says Ampuero. In this sense, the new constitution could possibly present new opportunities for civil society, according to Mónica Hernández of Alianza Equidad, an NGO that has been working with local business and community leaders to fight corruption in Ecuador. Hernández sees positive language in the constitution that establishes citizen participation in almost all aspects of administration, noting that “Article 11 and 100 guarantee that citizens can exercise their rights effectively and this opens the door to more citizen involvement.”

So, are the changes for better, for worse? What happens over the next few months will show the true direction of Ecuador’s new constitution. It is now up to the country’s business community and broader civil society to help bring some clarification to all the confusion.

* John A. Zemko, Regional Director for Latin America and the Caribbean and Martin A. Friedl, Program Officer for Latin America and the Caribbean of the Center for International Private Enterprise (CIPE)

Labels: Ecuador