What’s happened:

On Wednesday, President Guillermo Lasso of Ecuador announced the dissolution of the country’s National Assembly and called for general elections, two years ahead of the end of the current term. The decision came while Lasso was in the middle of an impeachment trial led by the opposition, after media reports broke out in March accusing him of turning a blind eye to corruption schemes involving his inner circle to embezzle money through public companies. The reports also accused these individuals of having ties to the Albanian mafia. Ecuador’s constitutional court later approved a charge of embezzlement against the president.

Mr Lasso has consistently denied the accusations, and in early May a congressional committee advised against impeaching the president, finding no credible evidence to do so. However, the National Assembly, which is dominated by the left-wing opposition, voted to go ahead with the proceedings last week.

Mr Lasso had already announced in the days prior that, should impeachment look likely, he would call for a muerte cruzada - “mutual death” in Spanish -, a presidential power included in the constitution in 2008 to dissolve Congress, move up general elections, and govern alone and by decree for six months until the new government and legislature are installed. Had the president been impeached, Vice President Alfredo Borrero would have taken over the presidency and governed until 2025. Now, elections will be held in three months, and the officials elected will only be in office until they finish the existing term.

What next:

While the mechanism of “mutual death” provided a temporary solution to the impasse between Mr Lasso and the National Assembly, we expect increasing levels of unrest in the coming weeks. Mr Lasso is a conservative, right-wing politician, and the parties in control of Congress are led by Leonidas Iza, the hard-left leader of the Confederation of Indigenous Nationalities of Ecuador (CONIDE), the country’s largest indigenous movement, and by controversial former president Rafael Correa. Both Mr Iza and Mr Correa have warned that if the President dissolved the National Assembly, they would call for mass protests, which are now highly likely to occur. Mr Lasso’s approval ratings are currently around 17% and he has already faced severe nationwide protests in 2021 and 2022. The CONAIE is expected to call for widespread strikes in the coming days, and they have the ability to implement roadblocks, and shut down airports and ports. We note that the armed forces have expressed their support for Mr Lasso, increasing the potential for a potential escalation or violent repression.

It is unclear whether the President will be able to govern effectively by decree. Ecuador is facing a worsening security situation, fuelled by criminal gangs from the Western Balkans that use Ecuadorian ports to smuggle cocaine to Europe. Local gangs are also using ports to traffic cocaine from Colombia and Peru, leading to a significant increase in violence. The president has struggled to bring this issue under control; it is unlikely he will do so in the next few months. We expect a series of populist measures to bolster his popularity to take precedence; Mr Lasso has, for example, already announced tax cuts for the population.

There is speculation that the elections could result in the return of former president Correa, who fled the country over corruption accusations in 2017 and has a sentence in abstentia of 8 years in prison. Early elections could benefit correistas, who can run for reelection. A potential Correa government would mean significant policy reversal, particularly setbacks in fiscal consolidation and an increase in protectionist policies.