Ecuador News Round-Up No. 11: Noboa Looks to Fund his “War on Drugs” as Tensions with Russia Rise

February 16, 2024

Ecuador’s Security Situation After the Declaration of Internal Armed Conflict

On January 9, following a night of intense criminal violence, President Noboa declared Ecuador to be in a state of “internal armed conflict” and authorized the armed forces to use deadly force against a list of 22 gangs labeled as “terrorist organizations.”

In spite of the January violence, high-profile jailbreaks, and hostage taking, Noboa has not borne the political cost of Ecuador’s decaying security. Inaugurated in November 2023, his government currently enjoys a 76 percent approval rating.

The Noboa administration has boasted that the security measures taken by his government in January have already cut violent deaths by up to 40 percent in some regions. Security forces have carried out countless operations and have arrested over 8,000 people, though the number of those subsequently released is unknown. Primicias reports that the arrests have exacerbated prison overcrowding. Prison capacity had already been exceeded by 13 percent prior to the arrests.

Noboa has said that the armed forces are collaborating with Ecuador’s prison authority (the SNAI) to keep prisons under control, but human rights groups report that some prisons are under full military control, with no civilian staff present. They also note that inmates have been subject to torture and other forms of inhumane treatment. In fact, a judge ruled on February 9 that the armed forces and the SNAI violated the rights of seven inmates and engaged in actions that “could be considered torture” by denying them medication.

To deal with the problem of prison overcrowding, Noboa ordered authorities to begin the process of repatriating foreign inmates to their countries of origin. There are over 3,000 non-Ecuadorian inmates, with 90 percent coming from Colombia, Peru, and Venezuela. Foreign Minister Gabriela Sommerfeld said that Peru and Colombia have accepted requests to receive repatriated citizens, adding that further details must be agreed before this can happen. Sommerfeld also met with her Colombian counterpart on February 14 to review procedures aimed at facilitating repatriations.

Violence has not stopped despite the declaration of internal armed conflict, however. By February 5, 26 days after the declaration,13 attacks on public and private infrastructure had been recorded, along with another 13 attacks on police buildings. On January 17, suspected hitmen killed a city of Guayaquil prosecutor who was on his way to court. On January 29, shots were fired at the Prosecutor General’s office building in Manta, but without casualties. On February 7, a local politician was assassinated in Naranjal.

Furthermore, security forces have yet to recapture Fabricio Colón Pico, a leader of the Lobos gang who fled prison on January 9, and Adolfo Macías, alias “Fito,” leader of the Choneros gang, who escaped from prison sometime around January 7. Adolfo Macías’ wife and other family members were recently deported from Argentina.

When asked about Ecuador, UN Secretary-General Antonio Guterres’ spokesperson said that Guterres “welcomes the progress made in the reduction of homicides that have been reported in January by the authorities in Ecuador and he recalls that efforts to halt the wave of violence in Ecuador must comply with international law and should meet Ecuador’s long-standing commitment to the rule of law.”

In an interview with The New York Times, Fernando Bastias of the Permanent Committee for the Defense of Human Rights of Guayaquil said, “We’re not seeing anything new or innovative. … What we’re seeing is an increase in cases of grave human rights violations.” The article goes on to state: “videos have circulated online showing the authorities also using rougher tactics: men and boys rounded up on the streets are hit on the head or forced to kiss one another. In one widely-shared video, a teenager is made to scrub a tattoo until his chest is bloody.”

Noboa’s Value-Added Tax Reform

Ecuador has been facing important fiscal challenges, resulting from rising indebtedness and insufficient government revenue. The government has claimed that the increase in security operations and the armed forces’ deployment, along with other security-related costs, are adding pressure on the government’s expenses. The finance minister claims an additional $1 billion is urgently needed.

In response, Noboa put forward a bill calling for an increase in the value-added tax (VAT) from 12 to 15 percent, breaking a campaign promise to not increase taxes. In fact, he had confronted his rival, Luisa González, in a televised presidential debate, suggesting she would raise the VAT to 14 percent if elected. A VAT increase is supported by the International Monetary Fund (IMF) and is likely to assist the government’s attempts to receive more financing from the Fund.

Major political parties in the National Assembly, including the Revolución Ciudadana (RC) and the Partido Social Cristiano (PSC), who are currently in a loose legislative alliance with Noboa, came out against the bill, with the RC saying a VAT increase would place much of the burden on the lower and middle classes. Instead, the parties presented alternative proposals to fund the government, which were subsequently incorporated into the final bill. These consist of an increase in the tax on capital exiting the country, from 3.5 percent to 5 percent; and taxes on profits generated by banks in 2023 and by corporations in 2022. The VAT increase was also modified by members of the National Assembly’s Committee on Economic Development, with the final bill stipulating an increase to 15 percent for two years, followed by a permanent rate setting of 13 percent.

With a final vote of 83 in favor, the National Assembly approved most of the bill but struck down the provision raising the VAT. President Noboa then partially vetoed the approved bill to reintroduce increasing the VAT to 13 percent, with the option of raising it to 15 percent if necessary. The bill then returned to the National Assembly, which needed 92 of 137 votes to override Noboa’s veto and pass the bill without a VAT increase. Members of the RC and PSC were unable to secure the votes, so the version of the bill partially vetoed by Noboa, stipulating a VAT increase among the other proposals, will now become law. However, several members of the National Assembly contend that Noboa’s partial veto is illegal as it violates Article 132 of the Ecuadorian Constitution, which states that taxes can only be set or modified through legislation. Noboa’s partial veto, several legislators claim, is an executive measure that bypasses the National Assembly.

Other Economic Measures

In addition to his efforts to raise the VAT, Noboa has sought other ways to shore up the state budget. One option may be to postpone permanent closure of the 43-ITT oil block, the majority of which is located within the Yasuní National Park in the Amazon. In August, Ecuadorians voted, in a referendum, to prohibit oil extraction in block 43-ITT (see Ecuador News Round-Up No.5), kicking off a one-year countdown for the state-run oil company to cease operations there. Noboa, who favored stopping 43-ITT oil production, said in an interview that he will ask the Constitutional Court if and how the closure can be postponed, ideally for five years. Environmental and Indigenous groups strongly oppose this option.

Another option that Noboa is considering involves raising fuel costs, or, as he puts it, eliminating certain fuel subsidies (the existence of these subsidies is in fact debated, since current fuel prices are still above production cost but below international market prices, which means there is an opportunity cost for the state). The fuel price adjustment is widely unpopular, especially among Indigenous groups and labor unions, who have protested and organized national strikes against similar moves in the past.

Noboa initially made vague declarations about the plan, saying it would not affect “the people” or small-scale farmers. He later said that his plan was aimed at raising fuel prices for large corporations and certain industries. Prices for widely consumed, low-octane gasoline (known as Ecopaís and Extra) would also gradually be raised to international market levels, but diesel and domestic gas will not be touched, to avoid negatively impacting the people and the country’s “productivity or competitiveness,” Noboa said. Noboa has not specified the duration of the gradual price increase; he has only emphasized that, to avoid “transferring the cost to consumers,” the increase will be linked to “improvement of efficiency” in the energy sector, including in areas such as the electric grid and domestic refinement.

Leonidas Iza, leader of the CONAIE, Ecuador’s largest Indigenous group, applauded Noboa’s statements on price increases that won’t affect average citizens and small-scale farmers. Iza added that raising fuel prices should follow the road map reached by Indigenous groups and the government as a solution to a 2022 national strike. This targets fuel prices for large-scale fishing and mining companies. Iza also said that the money earned from raising prices for large-scale companies could be transferred to the poorest Ecuadorians.

Even though Noboa’s efforts to raise the VAT have strained his uneasy legislative pact with the RC and the PSC, the National Assembly recently voted to unanimously pass Noboa’s fourth urgent economic law, which also has revenue-generating provisions. This modified law, which still needs Noboa’s final approval, would reform the law on state seizure of criminally obtained assets with the aim of speeding up the process; expanding uses of seized items; ramping up the anti-money-laundering unit; and granting SERCOP, the agency for public procurement, the ability to suspend the contracting process if it detects illicit links or collusion.

More problematically, the Noboa administration announced it would delay paying public sector workers’ January wages, except for those working in education, security, and health care.

The government now also seeks to refinance its IMF debt servicing and obtain a new loan from the Fund.

As part of Noboa’s goal of cutting government expenses by $1 billion, he has begun dissolving or merging government agencies. The last six years have been punctuated by much institutional instability. Former president Lenín Moreno, for instance, reduced the prison system’s budget by 30 percent; closed the Coordinating Ministry of Security and the Ministry of Justice and Human Rights; merged the Ministry of the Interior into the Ministry of Government; and shut down SENAIN, the country’s main intelligence agency. Lasso then undid some of his predecessor’s institutional changes to the security apparatus; now Noboa is undoing some of Lasso’s reforms.

Preliminary Preparations for the 2025 Presidential Elections

On February 9, Ecuador’s National Electoral Council (CNE) officially declared the start of the so-called electoral period when the CNE requests funds from the Ministry of Finance, defines a budget, draws up an election calendar, and engages in other preliminary administrative tasks related to organizing an election.

The CNE has also released its calendar for the 2025 presidential elections. From September 13 to October 2, parties will register their presidential and vice presidential candidates. The campaigning period is set to kick off on January 5, 2025, and election day is scheduled for February 9. A possible second round is set for April 13, with the elected ticket for the 2025–2029 presidential term to be sworn in on May 24.

Constitutional Court Rules on Referendum Questions

Ecuadorians, however, are poised to go back to the ballot box before the February 2025 presidential election, as Noboa plows forward with his planned referendum.

On January 2, Noboa submitted a set of 11 referendum questions to the Constitutional Court for approval. These mostly dealt with the armed forces and security, though some also touched on immigration and gambling. The PSC and RC argued that his questions lacked depth and that his drive to legalize gambling was counterproductive. Noboa responded to the backlash by introducing nine additional questions and dropping his proposal to legalize casinos and some other gambling activities.

The Constitutional Court reviewed the 19 questions presented by the government, and ultimately blocked nine that it said did not change current regulations, were imprecise, or that addressed multiple topics in a single question. It initially approved six questions, followed by another four after these underwent a second review.

The 10 questions the Constitutional Court approved ask whether:

  1. The armed forces should be permitted to conduct security checks on roads that lead to prisons;
  2. Sentences for serious crimes like homicide or drug trafficking should be increased;
  3. Those sentenced for serious crimes should serve the entirety of their sentence in prison;
  4. Possession of weapons or ammunition exclusively designated for security forces should be criminalized;
  5. Seized weapons, munitions, and explosives that were used in connection with a crime can be used by security forces;
  6. The law on the state’s seizure of criminally obtained assets should be simplified;
  7. Ecuadorian citizens can be extradited abroad (a similar proposal was previously rejected in a 2023 referendum launched by former president Lasso);
  8. International arbitration for investment disputes should be recognized (see Ecuador News Round-Up No. 10 for analysis on this question);
  9. The labor code should be amended to allow for fixed-term and hourly employment contracts;
  10. Tribunals specializing in constitutional matters should be established.

NACLA reports:

Ramiro Ávila, a law professor at the Simón Bolívar Andean University in Quito and former Constitutional Court member, notes some queries were confusing; the government could achieve many of the proposals through laws or executive acts. What worries him is the integration of seemingly unrelated topics, especially while in crisis. … Noboa has justified the inclusion of unrelated queries, saying they are needed to reactivate the economy, create jobs, and guarantee foreign investment.

In addition to Noboa’s questions, the Constitutional Court approved a referendum question submitted by former president Lasso while he was still in office. It asks whether the armed forces can support police in the fight against organized crime. The Court also ordered the CNE to present the former president’s proposal to the public.

In order to officially begin the process of organizing the referendum, President Noboa had to issue a decree stating which of his 10 questions he would ultimately include. He decided to present all of them in the referendum. The CNE has 15 days from the day of the decree to officially convene the referendum and another 60 days to hold the vote. The total number of questions that citizens will vote on will be 11. President Noboa has not commented on the approval of Lasso’s question.

In an interview with Primicias, CNE member José Cabrera said the CNE needs the full 60 days it is granted to effectively organize the referendum. Days later, the CNE announced that the referendum will take place on April 21. Cabrera noted that, as with other votes, both Noboa’s and Lasso’s referendums should take place on the same day.

Cabrera said that the electoral authority still owes $10 million to suppliers, members of polling stations, officials, and news outlets for services rendered in previous elections. The Organization of American States Electoral Observation Mission’s report on the 2023 presidential elections noted that in the last seven years, Ecuadorians have voted in nationwide elections at least nine times. Apart from straining state resources, the report mentions that it is “evident that there is widespread fatigue among the electorate, electoral officials, and [members of polling station teams] due to the holding of so many electoral processes, including popular consultations, in a short period of time.”

Constitutional Court Approves, and Noboa Ratifies, Security-Related Agreements with the US

Since Noboa’s declaration of an internal armed conflict, Ecuador’s Constitutional Court has ruled that two security-related agreements with the United States do not need congressional approval, giving Noboa the green light to ratify them.

The first, signed in September 2023 by then president Lasso, stipulates that US and Ecuadorian authorities will carry out joint maritime operations against “illicit transnational activities,” like the trafficking of drugs, arms, and migrants. US aircraft will also be allowed to fly over, and land in, Ecuador for the duration of an operation.

In October, the Lasso administration and the US Ambassador in Quito quietly signed the second agreement — a Status of Forces Agreement (SOFA) that outlines the terms by which members of the US military can operate in Ecuador.

According to its text in Spanish, the SOFA applies to US military personnel, contractors, and officials “temporarily” present in Ecuador to conduct certain activities, including humanitarian work, training, exercises, and other “cooperative activities to address shared security challenges.” US military personnel and officials will be given diplomatic privileges, and US vehicles, aircraft, ships, and personnel will be able to enter and travel freely within Ecuadorian territory. Disciplinary actions against US personnel will be taken in accordance with US criminal law, and any claims for damages or losses by third parties against the US will be handled by the US government following its own laws. The US military will also be allowed to operate its own telecommunications systems and will have the right to use all frequencies within Ecuador’s radio spectrum.

Both agreements have sparked debate and concern over potential violations of Ecuadorian sovereignty. Although the SOFA authorizes a temporary US presence in Ecuador, it does not determine a specific time frame. Article 5 of Ecuador’s constitution bans foreign military bases and installations on Ecuadorian territory, but the September agreement stipulates that Ecuador may lend the United States infrastructure and installations for exercises and storage. The SOFA’s clauses about “diplomatic privileges” for US personnel raise questions of potential impunity, and the provision mentioning “cooperative activities to address shared security challenges” does not specify what this entails.

In their dissenting opinion, three Constitutional Court judges argue that the SOFA cedes Ecuadorian sovereignty “without the clear establishment of coordination mechanisms with Ecuadorian authorities.” They also take issue with the US’s potential ability to apply its laws in Ecuador, and say the agreement is “broad and does not delimit with certainty the activities that will be carried out.”

Asked on January 10 how the US government plans to support Ecuador in its efforts to combat gang violence, National Security Council spokesperson John Kirby said: “We haven’t had a specific conversation about exactly what that would mean. But I would walk you away from any consideration of U.S. military troops or anything like that. There’s no plans for that, and we ought to just kill that right now.”

President Noboa ratified both agreements on February 15, entering them into force.

Diplomatic Tensions with Russia

In late December, Noboa announced that Ecuador intends to pursue a deal worth $200 million with the United States in which Quito will exchange what he referred to as “scrap metal” for modern weaponry. It was quickly reported that this “scrap metal” was Russian and Ukrainian military equipment. Given Russia’s belief that the equipment exchanged by Ecuador will reach Ukraine, Russia’s ambassador to Ecuador said that Ecuador’s participation in this deal would be an “unfriendly step” that would violate its neutral stance and international agreements that prohibit Ecuador from transferring Russian weapons to third countries without Moscow’s approval.

Noboa has steadfastly maintained that the items Ecuador is set to exchange are merely scrap. “They (Russia) allege that it is war material, that it is war equipment. We have proved that it is scrap and, according to international agreements, war material cannot be transported in this case, but scrap of this type can be transported,” Noboa said. The foreign minister added that Ecuador plans to exchange nonoperational equipment.

Ecuadorian media, meanwhile, have reported that, according to military sources, Ecuador will give up six Russian Mi helicopters, 12 long-range missile launching systems, 34 short-range air defense systems, and portable BM-21 rocket launching vehicles to the United States. It has also been reported that these helicopters have remained unused for three years due to lack of maintenance and spare parts. The Lasso administration had earmarked $24 million for their repair; however, this process was halted when the US approached Ecuador with an earlier version of the exchange deal.

On February 3, Russia retaliated when its federal agency for veterinary and phytosanitary controls prohibited imports from five Ecuadorian banana companies, saying it had discovered disease in previous Ecuadorian banana shipments. Russia also banned imports of Ecuadorian carnations for similar reasons. Ecuador exports more bananas to Russia than it does to any other country; they make up 82 percent of the value of Ecuadorian exports to the country.

In an embarrassing refutation of Noboa’s claims regarding the nature of the deal with the US, Kevin Sullivan, a high-ranking State Department official, confirmed during an interview on an official visit to Ecuador that the deal’s purpose is to “transfer equipment to the Ukrainian government, which is fighting against the Russian invasion. … We are very happy that [Ecuador] is supporting the Ukrainian government in its effort to defend its territory.”

Sullivan’s statements directly contradict Noboa’s claim that Ecuador’s Russian equipment is scrap, and confirm that the hardware can be made operational. Sullivan also appeared to confirm that, to his knowledge, the deal is going forward.

The Ecuadorian government denies that Russia’s ban on imports from certain Ecuadorian banana companies is related to the exchange deal with the US. On February 16, days before an Ecuadorian delegation was set to traveled to Moscow, the Russian government lifted the ban, and the five banana companies will be able to resume exports to Russia on February 19. Hours later, the Russian ambassador to Ecuador announced that, after a meeting with President Noboa, Quito will call off its decision to transfer Russian military equipment to the US, though the Ecuadorian government has not made a formal statement on the issue. The ambassador added that Ecuador will issue a formal statement the week of February 19.

Free Trade Agreement with China

On February 7, with 76 votes in favor, Ecuador’s National Assembly approved a “free trade” agreement (FTA) with China. Noboa then ratified the agreement on February 15. Thousands of products from each country will no longer be subject to tariffs or will have a gradual reduction in tariffs. According to ECLAC, Ecuador mainly exports primary and natural resources to China, including shrimp, oil, and copper concentrate, while China exports manufactured goods to Ecuador like tractors, buses, vaccines, phones, and chemicals.

FTA proponents claim it will help Ecuador’s economy grow, increase exports, create employment in the long term, and benefit small and medium-sized businesses. They also boast that Ecuador’s “sensitive industries” are protected, as 800 products, such as shoes, textiles, plastic, and aluminum, are excluded from the agreement. A National Assembly member noted that Russia’s ban on Ecuadorian bananas played a role in the vote to approve the agreement.

On the other hand, civil society groups opposed to the FTA contend that it poses environmental risks, saying that the FTA will intensify Ecuador’s extractive activities and that Ecuador lacks the necessary regulatory framework to respond to the consequences of this and other aspects of the agreement. Others worry that the agreement will allow China to export waste and trash to Ecuador, with 86 environmental organizations, activists, and academics signing a statement warning of the risks.

Furthermore, the scientist and entrepreneur Inty Grønneberg and Executive Director of the Chamber of the Ecuadorian Automotive Industry David Molina point out that, according to a report from the Ministry of Production that was presented to the National Assembly, Ecuador will lose $566 million in tariff revenue alone.

Capeipi, the Pichincha chamber of small and medium-sized enterprises, also claims that Ecuadorian industry will not be able to compete with — and will be badly hurt by — the likely massive increase in imports from China.

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