The EconomistOctober 12th 2019 The Americas 392 and brownface, embarrassing the world’s
most “woke” head of government.
Mr Scheer has capitalised on this, tell-
ing voters the prime minister is “not as ad-
vertised”. His other big message is that a
Conservative government will help Cana-
dians “get ahead”, mainly by cutting taxes
and fees. A “universal tax cut” will lower
the rate on the lowest income bracket from
15% to 13.75%. Mr Harper’s boutique tax
credits, for children’s sport and taking pub-
lic transport, which were axed by the Liber-
als, will be reinstated. National museums
will be free. Some of the money to pay for
all this will come from a 25% reduction in
foreign aid. The Conservatives promise to
help homebuyers by easing mortgage
stress tests for banks, which were brought
in to cool an overheating housing market.
Their promise to scrap the carbon tax
combines this “affordability” agenda with
enthusiasm for oil. Under the Liberals,
provinces that do not have their own car-
bon-pricing schemes must accept the fed-
eral one. This sets a price floor of C$20 a
tonne, which will rise by C$10 a year until
- All the money raised is returned to
the province. Four provinces—Manitoba,
New Brunswick, Ontario and Saskatche-
wan—are subject to the federal scheme,
and Alberta will be from January. Mr
Scheer’s plan to replace it is a hotch-potch
of regulations and incentives. Few special-
ists think it will result in Canada meeting
its Paris promise.
How green you are
On this issue, most Canadians share Mr
Trudeau’s alarm rather than Mr Scheer’s
complacency. But the Greens and the left-
leaning New Democrats are also appealing
to climate worriers. And the goodwill Mr
Trudeau may have earned from environ-
mentalists was reduced by his decision to
buy a pipeline that carries petroleum pro-
ducts from Alberta to Canada’s west coast
and to back its expansion.
Mr Trudeau’s plan, like Mr Scheer’s, falls
short of what is needed to achieve the Paris
goal, let alone eliminate net emissions.
Planting 2bn trees, Mr Trudeau’s new pain-
free idea, will not accomplish that. Still, he
has laid a foundation on which he can
build, if re-elected, in part by continuing to
raise the carbon-price floor beyond 2022.
Polls say each of the two main parties
has the backing of a third of the electorate.
Most of the rest is split between the New
Democrats and the Greens. Mr Trudeau
may have the edge because many of Mr
Scheer’s votes are bunched in the oil-pro-
ducing western provinces. Perhaps a tenth
of voters will make up their minds at the
last minute, says Darrell Bricker of Ipsos, a
pollster. In a close fight, they may be deci-
sive. Their choice may depend not on how
they feel about Canada but how they feel
about the planet. 7P
resident lenín morenois facing his
biggest crisis since he was elected two
and a half years ago to clean up the mess
left by his populist predecessor, Rafael Cor-
rea. The country is in turmoil. The presi-
dent’s decision to rid the country of cher-
ished but wasteful fuel subsidies has
provoked nationwide riots and looting.
Shops, agricultural estates and govern-
ment offices in Quito, the capital, have
been ransacked. A curfew has been im-
posed in areas close to government build-
ings and airports. Mr Moreno felt obliged to
move his government to the port city of
Guayaquil—and to declare a state of emer-
gency. The situation is scarily volatile.
Meanwhile, prices at the pump have
surged. Furious taxi drivers and bus drivers
went on strike, blocking hundreds of cross-
roads. When their ring-leaders were arrest-
ed, even angrier protests erupted, egged on
by trade unions, left-wing activists and
students. Cuenca, the country’s third city,
is being supplied by airlifts. Petro-
amazonas, a state oil company, has been
forced to stop production at three oilfields,
reducing national output from 550,000 to
385,000 barrels a day.
Broadly speaking, the strife was
prompted by Mr Moreno’s decision to com-
ply with the terms of the imf in order to
win an injection of $4.2bn, 4% of gdp. This
is needed to put Ecuador’s economy back
on a solid footing after a decade of mis-management under Mr Correa, a radical so-
cialist who admired Hugo Chávez, the for-
mer president of Venezuela. Since coming
to power, Mr Moreno has been moving cau-
tiously ahead. But this month he took the
risk of slashing the fuel subsidies (except
for liquefied gas) that have cost the treasury
$60bn in the past four decades.
A recent study by the Inter-American
Development Bank says that the subsidies
benefited mainly the better-off. Moreover,
much of the fuel was smuggled to Ecua-
dor’s neighbours, Colombia and Peru,
where official prices have been far higher.
Mr Moreno knew his decision—by presi-
dential decree—would provoke outrage.
No previous government had dared to do it.
His administration had been slow to fi-
nalise its package of tax and labour re-
forms. So the imf has commended Mr Mo-
reno for his audacity in taking the
subsidy-cutting decision by decree. Some
economists compare him favourably with
Argentina’s president, Mauricio Macri,
who has proved just as unpopular while
enacting similar reforms more timidly. Mr
Moreno has also decided to take Ecuador
out of opec, the oil-producers’ club, in the
hope of increasing exports, when and if the
rioters calm down or have been squashed.
To soften the hardship that many Ecua-
doreans will suffer from the inevitable
jump in transport fares and other prices,
Mr Moreno has promised to increase wel-
fare payments to poor families from $50 to
$65 a month and to raise the threshold for
eligibility to benefit nearly 5m of Ecuador’s
17m people. He also intends to reduce du-
ties on mobile phones and computers. The
middle class has so far been happy with his
reforms.
His chief political antagonist is his pre-
decessor, Mr Correa, who is calling for early
elections and says the president is reaping
what he sowed. But Mr Correa has his own
troubles, since he may soon face charges of
corruption and illegal campaign financing
during his time in office. He is in self-im-
posed exile in Belgium. He is also blamed
by Mr Moreno for stirring up the violence
during the protests—allegedly in cahoots
with his friend Nicolás Maduro, Chávez’s
despotic successor.
Mr Moreno is determined not to suffer
the fate of two previous presidents, who
were overthrown thanks to riots, in 2000
and 2005. His team has quietly begun to ne-
gotiate with an influential organisation of
indigenous people, known as conaie.
Some university, church and un figures are
mediating.
Much hangs on how the unrest plays
out. Mr Moreno’s hope is that he will
weather the storm and enable Ecuador to
follow the example of reform set by Chile or
Uruguay, rather than fall back into another
decade of instability like the one that pre-
ceded the rise of Mr Correa. 7QUITO
A daring move to abolish fuel subsidies
has provoked nationwide disarrayEcuador’s state of emergencyWill Lenín weather
the storm?
The fury Moreno has fuelled