In January 2000, Mahuad announced plans to replace the sucre, the national currency, with the US dollar. Mahuad wanted to stabilize the economy and end chronic inflation, but native peoples grew angry at the plan because they believed they would lose their savings. The sucre had been pegged at about 8,000 per dollar only a year earlier, but now stood at 25,000 per dollar. On 21 January, thousands of native peoples marched to Quito to protest “dollarization” of the economy and called for Mahuad’s ouster. With the aid of the military, they occupied the empty Congress building and Supreme Court. Mahuad fled the government palace. Gen. Carlos Mendoza took power and declared that a three-man junta would lead the country. The junta was composed of Antonio Vargas, leader of the Confederation of Indigenous Nationalities of Ecuador, Carlos Solorzano, a former Supreme Court justice, and Col. Lucio Gutierrez. The junta only lasted a few hours. Under intense international pressure, including US threats to end economic aid, Mendoza dissolved the junta. Congress named the 62-year-old vice president, Gustavo Noboa Bejarano, as president of the country despite protests by Mahuad. Noboa, a respected former rector and law-school dean at the Catholic University, said he would not abandon plans to “dollarize” the economy. By giving up its currency, Ecuador turned its monetary policy to the US Federal Reserve. Noboa’s government attempted to assure Ecuadorians that the new currency will stabilize the nation. With a “Get to Know the Dollar” campaign, the government converted all sucres in circulation, about $450 million, before the end of 2000.
In the October 2002 presidential elections, newcomer Lucio Gutiérrez ended first with slightly over 20% of the vote in a field of 11 presidential candidates. He went on to win the runoff election with 58.7%, easily defeating Alvaro Noboa, the candidate favored by the outgoing president. Gutiérrez had entered politics after he led a coup attempt in 2000 to oust president Mahuad. Gutiérrez assembled a loose coalition of smaller parties and indigenous groups and campaigned against established parties. Although he used a populist rhetoric to win the election, after his inauguration he has sought to reassure foreign investors and international lending institutions. He has maintained the economic policies of his predecessors and has softened his criticism of the dollarization initiative. After years of economic stagnation, the economy began to show signs of strong recovery in 2001 and 2002. Yet, more than 70% of the population lived in poverty in 2002.
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