Elections in Ecuador: litmus test for par …

Ecuadorians must vote in the second round this Sunday, April 11 to elect their president. The candidates are Guillermo Lasso (Photo), an elite 65-year-old banker; Yes Andres Arauz, a 36-year-old progressive Central Bank official. There is no doubt that the result will have a profound impact on the future of the nation; The candidates have very different views on how to pull Ecuador out of the pandemic and the current economic recession. But while the competition has received little international attention, it has global implications.

In the United States, it is easy for many to go unnoticed what is happening in Ecuador, a small Andean nation of less than 18 million people, located between Peru and Colombia. However, From 2016, the country took the lead in a global campaign against the use of offshore tax havens. The next election will be critical in determining whether this leadership will continue.

In 2016, the leak of Panama Papers He revealed how the rich and powerful of the world have used offshore tax havens to launder money, evade taxes and hide their wealth. The leak exposed politicians and business leaders around the world, including many heads of state. The Icelandic prime minister was forced to resign after the discovery of his hidden capitals. Virtually every country was splashed, including Ecuador, after it was revealed that Lasso owned a bank in Panama.

Tax evasion is a global concern. Last year in America, 55 of the largest companies did not pay federal tax. It is estimated that the use of tax havens costs governments between 500 and 600 billion dollars each year. Low-income countries lose more in offshore tax havens than they receive foreign aid from developed countries. It is money that could be spent on education, health care, infrastructure and other urgent needs.

Four years ago, in other elections in which Lasso participated, Ecuadorian voters approved Referendum which prohibited politicians from having capital in offshore tax havens. It was the first such vote in the world. In 2018, the government responded to voters’ wishes by formalizing the rules against tax havens into law. Not only were public officials prohibited from owning property or capital in these jurisdictions; but also the ban includes electoral candidates.

Today, at the gates of the second electoral round in Ecuador, this question is assuming great importance. The elections pit Lasso, a banker who for years has used tax havens and other low-tax jurisdictions, with Andrés Arauz, an economist who helped design the revolutionary reforms against tax havens in Ecuador when he was director of the Central Bank.

The mainstream Ecuadorian media have paid little attention to this issue. It is as if the five-year tax filing scandal of former President Donald Trump has gone unnoticed in the mainstream American media. And in this case, the proper Lasso admitted he owns a bank in Panama, although he claims it is not a violation of the law. In 2014, even before the Panama Papers, Ecuador passed legislation prohibiting banks or their shareholders from having subsidiaries in tax havens, like Panama. This law is of the utmost importance for the economy and the people of Ecuador.

Capital flight facilitated by offshoring [deslocalización] It is a global problem, but it is particularly relevant in the recent history of Ecuador. Banks and bankers – like Lasso – played an important role in the economic crisis of the 1990s which saw poverty rates skyrocket in Ecuador. In the 2000s, under former President Rafael Correa, the government introduced new taxes on capital leaving the country, raising significant revenues to help rebuild the economy, drastically reduce poverty rates and prevent economic crises. that could result from it. especially since Ecuador has had the dollar as its national currency since 2000.

Ecuador was one of the first countries to be affected and one of the most affected by the coronavirus pandemic. A new wave has forced the country to declare a state of emergency in several provinces. After years of fiscal austerity, the current government of Lenín Moreno has a single-digit approval rating. Whoever wins next week’s election will assume leadership of a state less able to respond to a public health crisis than the state of 2017, when Moreno was elected and before the severe cuts in public services he implemented.

To ensure the Ecuadorian government has the resources to provide a strong response to the pandemic and to get people across the country back to work, the country’s elite will have to pay its fair share of taxes.

US lawmakers have also recently cracked down on business secrecy in states like Florida and Delaware. New legislation passed late last year will require shell companies registered in the United States to disclose the identity of their “beneficial owners” to public authorities. Previously, public limited companies were registered in these jurisdictions precisely because the “beneficial owner” was allowed to remain hidden. These changes will make it much more difficult for the global elite to hide their money in the United States. There again appears a link with the next Ecuadorian elections.– Lasso and his son’s business partners are linked to more than two dozen Florida-registered shell companies who collectively own more than $ 30 million in real estate.

No candidate should be allowed to break the law by running for president. Applicants should be required to disclose any personal or family connection to any foreign shell company. This particular form of corruption is not only a vital threat to the Ecuadorian economy; It is a serious flaw in the international financial system that is hurting most of the world’s economies, including the United States.

* Peter V. and C. Vann Woodward Professor of History at Yale University ,. Author of The End of the Myth, a 2020 Pulitzer Prize-winning work for the non-fiction category.