Concern mounts over Ecuador’s response to earthquake devastation

Ecuador's President Rafael Correa arrives at the Manta air base after a 7.8-magnitude earthquake struck the South American nation. (Credit: Carlos Rodríguez/Andes/Flickr)

Even before a 7.8-magnitude earthquake struck off the Pacific coast of Ecuador on Saturday, leaving a path of destruction estimated to cost between $15 billion and $30 billion to rebuild, the South American country was neck deep in economic woes. Now, concern is rising over the country’s ability to pay for the reconstruction and displacement of thousands of Ecuadorians.

The Andean nation has been in its worst recession since the financial system collapsed in the late 1990s. According to the International Monetary Fund (IMF), this is largely due to low oil prices, lack of international competitiveness due to a strong U.S. dollar (which the country uses as its currency), and difficulty in securing loans on the world financial markets.

The damage caused by the earthquake will make matters worse. The IMF predicts that that the country’s gross domestic product (GDP) will contract 4.5 percent this year, and the unemployment rate will be 5.75 percent a point higher than last year’s average.

What this means for the thousands affected by the quake is that their government, under the leadership of leftist President Rafael Correa, will need to seek out foreign aid … billions of it.

“Let’s not kid ourselves, it will be a long struggle … Reconstruction for years, billions (of dollars) in investment,” Correa said while supervising rescue work in the disaster zone, according to a Reuters report.

The quake is Ecuador’s worst natural disaster in more than half a century. The damage has left at least 507 people dead, injured more than 3,000, and left thousands more homeless and in urgent need of emergency shelter assistance.

A state of national emergency is now in full force in the Manabí province, where more than 200 people died. States of emergency were also declared in Santa Elena, Guayas, Santo Domingo de los Tsáchilas, Los Rios and Esmeraldas, where 6,000 residents of the coastal town Muisne are some of the most affected.

“Muisne is already one of the poorest areas within Esmeraldas Province, with 98 percent of the population living below the poverty line and 80 percent living in rural areas,” said Maria Villalobos, country director for Save the Children Ecuador and Peru, in a press release. “Now, close to 90 percent of infrastructure here has been critically damaged by the quake and aftershocks, leaving at least half of the population displaced and a high percentage of children considered to be at risk.”

Ecuador’s government has already mobilized around 13,500 security personnel to provide disaster relief, Reuters reports; nearly 400 rescue workers also flew in from various Latin American neighbors, along with 83 specialists from Switzerland and Spain, to provide emergency aid and help extract survivors from beneath the rubble.

To finance the costs of the emergency, Ecuador’s government said, $600 million in credit from multilateral lenders like the World Bank and the Inter-American Development Bank was immediately activated. The Finance Ministry also has $300 million in emergency funds available, Vice President Jorge Glas said Sunday, and will also use contingent financing to help pay for reconstruction.

But as estimates for the financial cost of the earthquake are in the tens of billions, Eurasia Group analysts speculate that the government will seek help from the International Monetary Fund. The IMF said Sunday it stands ready to help Ecuador as needed.

Correa, a self-described socialist who previously cut ties with the IMF for ideological reasons, will probably try to avoid the fund until his term ends in May 2017, the Eurasia group said but the next government may have no choice.

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Lisa Nikolau

Lisa Nikolau is a Madrid-based reporter for Humanosphere, covering gender equality, indigenous rights and poverty in Latin America and worldwide. Find her on Twitter at @lisanikolau, email lisa.nikolau@humanosphere.org or see her latest work at www.lisanikolau.com