Ecuador News Round-Up No. 12: Concerns over Government Security Response Rise. Can It Work, and at What Cost?

March 22, 2024

Noboa’s Security Approach Continues to Raise Human Rights Concerns

Following President Noboa’s January 9 declaration of a state of emergency and his decree announcing an “internal armed conflict” against 22 gangs, security forces have detained over 13,000 people. While this has led to a decrease in violent deaths, there has been an almost five-fold increase in extortion and kidnappings when compared to the January–March 2023 period. Additionally, this approach has exacerbated the problem of prison overcrowding and has raised serious human rights concerns.

Several Ecuadorian human rights organizations submitted amicus curiae briefs to the Constitutional Court for its review of the legality of Noboa’s state of emergency and security-related decrees. The briefs argue that Noboa did not adequately justify his declaration of an internal armed conflict and that the 22 gangs listed in the decree do not meet the international humanitarian law definition of nonstate parties to armed conflict. They also denounced arbitrary detentions, torture and inhumane treatment in prisons, racial profiling, and even extrajudicial killings. National and international media outlets report that the death of Carlos Javier Vega, a civilian allegedly killed by the military on February 3 while on his way to sell a puppy, may be the first extrajudicial killing since the start of the internal armed conflict.

Human rights organizations have also condemned the “discourse of Bukelization,” as Noboa has labeled those highlighting human rights violations as “antipatriotic,” while Henry Kronfle, the president of the legislature, said people should care “a little less” about the human rights of “bad guys” and more about the rights of “good people.”

There is no doubt that Noboa’s rhetoric and security measures bear a strong resemblance to President Nayib Bukele’s approach to insecurity in El Salvador. Writing for the Washington Office on Latin America, Adam Isacson and John Walsh urged against El Salvador’s model being replicated in Ecuador, where the Salvadoran “iron-fisted security approach” would require far more arrests and a much larger prison population. They note that Ecuador also faces the greater difficulty of confronting wealthier and more fragmented gangs, and the drug trade plays a more significant role than in El Salvador, among other factors. Former Ecuadorian military and human rights officials also note that Noboa should do more to couple his militarized response with social policies that address poverty and other drivers that push people into organized crime.

Despite these concerns, the Constitutional Court approved Noboa’s state of emergency and security-related decrees, though some judges issued a concurring opinion stating that Noboa did not sufficiently justify the existence of an internal armed conflict. The Court further ordered the ombudsman to monitor the government’s security measures and verify any potential human rights violations. Noboa subsequently extended the state of emergency for another 30 days on March 7.

On March 16, El País reported that SNAI, the country’s prison authority, is collecting genetic samples from inmates to create a database of genetic profiles that can be used to implicate them in past or future crimes. This information is reportedly withheld from the inmates, who are not informed of their right to refuse. Instead, they are told that the procedure is routine and that the information will be used to identify their bodies in case of death. SNAI confirmed that it is taking the genetic samples, but claims it is doing so with informed consent. It later temporarily suspended the practice amid criticism.

Updates on the Assassination of Presidential Candidate Fernando Villavicencio

After three unsuccessful attempts, a preparatory hearing was held on February 27 for the six individuals accused of involvement in the August 9 assassination of presidential candidate Fernando Villavicencio. A prosecutor presented evidence and requested that the judge proceed with a trial.

The prosecutor alleged that the evidence, including testimony from a “protected witness” allegedly privy to the planning of the killing, but who did not participate, demonstrates that the Lobos gang was behind the planning and logistics of the crime. However, the mastermind(s) who contracted the killing have yet to be identified.

Carlos Edwin Angulo Lara, alias “Invisible,” an imprisoned mid-level leader of the Lobos gang, was the alleged head of the operation and an intermediary between the assassins and those who contracted them. Using a phone with a US number, he allegedly issued the order to kill Villavicencio from a Cotopaxi prison and helped to plot the attack via video call. Laura Dayanara Castillo Velin, another Los Lobos member and the spouse of the protected witness, took care of the logistics — acquiring and distributing weapons, ammunition, vehicles, and branded clothing from Villavicencio’s campaign for the gunmen’s use. The rest of the suspects drove vehicles or were present at the scene of the crime. Prosecutors also suspect that those who attacked Villavicencio — seven Colombian individuals who were all murdered in prison in October — were hired gunmen.

The protected witness alleged that a prior attempt to assassinate Villavicencio in the city of Santo Domingo, led by another imprisoned mid-level Los Lobos leader known by the alias “Chino,” had been called off. After this effort was abandoned, Angulo Lara joined the conspiracy. As for the motivations of Angulo Lara and the others, the witness said the killing would have allowed them to rise up the Lobos ranks.

The protected witness’s testimony, though partially classified due to its use in another investigation, did not mention former president Rafael Correa. In October, days before the second round of the presidential elections, Villavicencio’s widow and his replacement candidate, Christian Zurita, claimed to have received advanced access to the testimony and said the witness blamed the “Correa government” for the killing. This negatively affected Luisa González, the candidate representing Correa’s movement, in the elections.

At the end of preparatory hearings, a judge ruled that five of the suspects would proceed to trial, while the sixth was released due to lack of evidence linking them to the crime.

The Purga Case

On March 4, Prosecutor General Diana Salazar launched “Caso Purga” (the “Purge Case”) — an offshoot of the ongoing Metástasis corruption case.

As in the Metástasis case, the Purga Case targets alleged corruption within the government, and several current judges, lawyers, the former president of the Court of Justice of Guayas, a former assemblyman from the Social Christian Party (PSC), and Guayas Province officials were detained on charges related to organized crime. A total of 12 people were arrested, with a judge ordering preventative detention for nine and alternative measures for the rest.

Pablo Muentes, the ex-assemblyman, is accused of using his political influence over Guayas judges to win a $4 million lawsuit against a bank, using falsified documents. Muentes and Fabiola Gallardo, the former president of the Court of Justice of Guayas, are accused of paying Mayra Salazar, a defendant in the Metástasis case, to run fake social media accounts to defend them from criticism and to help get Gallardo elected. Muentes is also accused of quashing administrative proceedings against Gallardo, while she, in turn, allegedly took orders from him regarding rulings and case assignments. Moreover, prosecutors claim that Gallardo contacted Adolfo Macías, leader of the Choneros gang, and offered to grant him favorable rulings in return for cash.

The left-of-center Revolución Ciudadana (RC) party, the largest in the National Assembly, has repeatedly denounced Salazar for her politicization of high-profile investigations. These include the Metástasis case and those against former president Rafael Correa and former vice president Jorge Glas, who is currently staying at the Mexican embassy awaiting a decision on his asylum application. In the coming months, the National Assembly is set to hold an impeachment vote against Salazar brought by the RC over what they allege is her inaction and biased conduct in several cases, including those involving former president Lasso and his associates. Members of the RC are also calling for the oversight committee to investigate the Purga and Metástasis cases.

The PSC has issued a statement distancing itself from Muentes, and members of the National Assembly have, on three occasions, tried and failed to pass a resolution supporting Salazar. A debate on a fourth resolution expressing support for her, which also would have asked her office for information on several cases and the starting date for an investigation into former president Lasso, was canceled on March 19.

El País’s March 16 article on the collection of genetic samples in prisons also mentions that police suspect that Leandro Norero, a prominent drug trafficker believed to have been murdered in 2022, may still be alive. The Prosecutor General’s Office claims that chat messages found on Norero’s phones triggered investigations that led to the Metástasis case. Norero had faked his death in 2020 to evade Peruvian authorities, and police believe that the prison ambush that supposedly led to his death could have been another ruse, as they are not certain about his body’s identity due to its dismemberment and partial cremation.

Arrest of the Vice President’s Son

Francisco Barreiro Abad, the son of Vice President Verónica Abad, was arrested on March 21 following raids in Cuenca and Quito. Prosecutors said the arrest is part of the new “Nene case” (in Spanish, “nene” is a colloquial way of saying “kid”), which looks into alleged influence peddling in the vice presidency. Barreiro Abad, who has worked for the provincial government of Azuay, was arrested “for his alleged participation in the incident being investigated.” The case is still in its initial stages; more information has not been disclosed. In a statement about the arrest, the Ministry of the Interior said, “this government … is firmly committed to the prevention and eradication of crime, and supports the prosecution of all acts of corruption.”

During the presidential campaign, Noboa had begun distancing himself from his running mate over her controversial political comments. Once in office, the president, who decides the vice president’s role, sent Abad away to Israel with the title of ambassador and ordered her not to speak to media outlets.

Budget Proposal and the Search for IMF Financing

On February 20, Noboa sent his 2024 budget proposal to the National Assembly. Due to the snap elections in August and October 2023, the budget, which asks the legislature to approve $35.5 billion and aims to reduce the fiscal deficit, is being delivered later than usual. While the budget would increase spending on security in general, it has been criticized for cuts to universities, the judicial branch, electoral authorities, the Ministry of Women and Human Rights, the Ministry of Agriculture, and the Secretary for Risk Management (at a time when the country is facing devastating rainfall), among other areas. It has also been criticized for not considering the revenue to be generated by Noboa’s controversial Value-Added Tax increase, which will be set at 15 percent starting April 1.

To help fund the budget, the government plans to borrow $11.1 billion, with $4.8 billion coming from multilateral financial institutions such as the International Monetary Fund (IMF) and World Bank. Noboa reportedly said on March 1 that he hopes to reach an agreement with the Fund for around $3 billion in credit within two months. The IMF’s communications director confirmed Ecuador’s request to enter into formal negotiations, and another Fund official said that Ecuador is likely to receive an Extended Fund Facility loan — a type of medium-term credit that includes structural reform conditions. Ecuadorian media outlets interpret Noboa’s pursuit of IMF financing as a way to pay off existing IMF debts with a new round of IMF debt, as Ecuador will have to pay the Fund $541 million in 2024 and $1.1 billion in 2025.

Ecuador has sought IMF financing since 2017, and austerity and other conditions attached to loans, coupled with the COVID pandemic, have contributed to declining growth, increasing poverty and inequality, and the worsening security situation. These factors have, in turn, led to historic rates of out-migration. Moreover, surcharges — fees on loans to highly indebted middle-income borrowers, on top of regular interest payments and fees — divert scarce resources from human needs and other priorities and create pressure for Ecuador to take on more debt.

Nonetheless, the US government has applauded Ecuador’s engagement with the IMF. In a recent trip to Quito, US Treasury Assistant Secretary Brent Neiman “welcomed efforts by the authorities to restore fiscal stability and encouraged them to continue to engage productively with international financial institutions to potentially secure new financing.”

On March 21, with 73 votes in favor, the National Assembly voted to “observe” the proposed budget, meaning that a list of observations and comments about it will be sent to the president. The observations, a part of the formal review process, highlight cuts in funding for education, universities, health care, and the national police; note that local governments should receive more funds; and question why the budget does not account for the VAT increase, among other comments. Noboa has the choice of addressing the observations or sticking to his original proposal. If he decides on the latter, the budget will pass as law unless the National Assembly votes, with at least 92 members in favor, to stick to its observations. In that case, Noboa would have to address them.

Ecuador’s Referendum

Ecuadorians will head to the polls again on April 21 to vote on a set of 11 referendum questions about security, extradition, employment contracts, and international arbitration. Ten of these were proposed by President Noboa, while one comes from former president Lasso. Questions 4 and 5 — which ask Ecuadorians if the state should recognize international arbitration for investment disputes, and whether it should allow for fixed-term and hourly employment contracts, respectively — have emerged as the most contentious proposals.

Between February 28 and March 4, a total of 21 political parties and civil society organizations (CSOs) registered with the National Electoral Council (CNE) to campaign for or against the referendum, and to receive campaign funds from the CNE for that purpose. Of these organizations, eight registered to campaign in favor of all questions, while most of the rest registered to campaign either against all questions or only against questions 4 and 5.

Ultimately, the CNE approved campaigning by just 10 organizations. Those in favor of a “yes” vote on all 11 questions include Movimiento CREO, former president Lasso’s party; People, Equality, and Democracy (PID), a party that is part of Noboa’s National Democratic Action (ADN) alliance; Partido Avanza, a center-left party; and the AMARU Indigenous confederation. The Indigenous party Pachakutik — the political-institutional arm of CONAIE, Ecuador’s largest and most influential Indigenous group — will be the sole organization to campaign for a “no” vote on all points. All other organizations will campaign against questions 4 and 5, except for the Ecuadorian Socialist Party, which will only oppose question 5. These include UNE, Ecuador’s largest teachers union; UGTE, one of the country’s most important labor unions; the left-wing Popular Unity Party; and the center-left AMIGO party.

FUT, another important labor union; CONAIE; and the RC oppose the referendum as well, but have not registered with the CNE. The conservative, anti-RC Construye party is in favor of the referendum, as are key chambers of commerce and business associations, who back question 4 in particular.

In his push to have the referendum approved, one of Noboa’s vice ministers said the president will mainly draw support from his positive image. Noboa’s approval rating currently stands at 81 percent.

The Issue of Investor-State Dispute Settlement

Question 4, which deals with investor-state dispute settlement (ISDS), is especially contentious. Article 422 of the Ecuadorian constitution, adopted by popular referendum in 2008, stipulates that it is unconstitutional for Ecuador to submit to international arbitration unless via regional arbitral bodies. Following the 2008 constitution’s adoption, the Correa administration left ICSID, the World Bank’s ISDS institution, and terminated Ecuador’s bilateral investment treaties (BITs) that contained harmful ISDS and investment protection provisions. Ecuador rejoined ICSID under the Lasso administration, despite the National Assembly condemning the move and filing a motion of unconstitutionality against it. Even so, Article 422 has continued to prevent Ecuador from signing BITs and treaties with ISDS arbitration clauses.

ISDS provisions grant foreign companies and individual investors the right to sue countries for alleged violations of international investment agreements or trade agreements. This often results in ISDS cases being brought against governments acting in the best interest of their people, including by strengthening or implementing laws and regulations around climate change, the environment, tax evasion, discrimination, or intellectual property, among many other possible perceived threats to current or future investor profits. For this reason, a UN Special Rapporteur called ISDS “catastrophic” for human rights and environmental action in a recent report.

ISDS proceedings are also costly, with legal fees averaging about $13 million per case. A 2021 report found that, excluding particularly large claims against Russia, investors claimed an average of $817 million in compensation from countries, and the average amount awarded was $169 million. For cases involving fossil fuels, the average claim is $1.4 billion, while the average reward is $600 million. Moreover, the International Institute for Sustainable Development notes: “states never win; they only do not lose. Only investors win awards of damages; states may at best, receive an award of costs.” Countries cannot initiate ISDS cases; only investors can.

According to a recent analysis of Ecuador’s ISDS cases by the Transnational Institute (TNI), the country is currently facing 29 such cases. Six were initiated after Ecuador pulled out of its BITs, as sunset clauses allowed suits to be brought for another 10 to 15 years. Of the 29 cases, 21 have been resolved, with arbitrators siding with the state in 7 cases and with investors in 14. Ecuador was ordered to pay $2.9 billion in the resolved cases, not including interest or legal fees. The country still has eight pending cases, and the claims sought — $9.9 billion, the equivalent of the 2024 budget for health care and primary and secondary education combined — are only known for three of them. Three-fourths of the cases against Ecuador were initiated by North American investors, with half of the cases relating to mining or hydrocarbon interests.

Past budgets, and President Noboa’s current proposed budget, estimate that Ecuador may have to pay up to $2.4 billion in ISDS claims still to be determined — around 6.7 percent of the 2024 proposed budget. In a case against Honduras, investors are seeking $10.8 billion, around two-thirds of that country’s annual budget.

ISDS cases have also been criticized for their secrecy, lack of transparency, and a revolving door that allows lawyers with close industry ties to act as arbitrators and experts for both investors and states at the same time. Additionally, studies show that investment treaties with ISDS clauses fail to attract foreign investment. This was demonstrated in a 2013 audit of Ecuador’s BITs commissioned by the government, which found that instead of attracting foreign investment, they created a shield of impunity for transnational corporations’ environmental damage and tax evasion.

It is not only countries in the Global South, such as Ecuador, India, South Africa, and Indonesia, that have moved away from ISDS. Some countries in the Global North, including Germany, France, Luxembourg, and the UK have also, by exiting the Energy Charter Treaty. Even North American countries, including the US, have decided to severely limit the scope of ISDS in the renegotiated NAFTA/USMCA agreement.

Daniel Noboa in Canada and a Possible Free Trade Agreement

The issue of ISDS has become especially salient in Ecuador following a series of announcements made during President Noboa’s recent visit to the US and Canada. His trip coincided with a CELAC regional leaders’ summit, which Noboa consequently missed — demonstrating his disinterest in regional integration.

During Noboa’s visit to Canada, it was announced that Ecuador and Canada would begin negotiating a “free trade” agreement (FTA) in April this year. Canadian parliamentary meetings on a possible FTA with Ecuador in February revealed that both governments want to include ISDS provisions, despite previous statements by Canadian officials criticizing the mechanism. Canadian civil society organizations (CSOs), such as the Canadian Centre for Policy Alternatives (CCPA), MiningWatch Canada, and Amnesty International Canada have warned against the potential FTA and ISDS. In Ecuador, CONAIE and other Indigenous groups issued a joint statement condemning the proposed agreement.

In addition to the FTA, Noboa announced the signing of $4.8 billion worth of investment agreements with six Canada-based mining companies. These deals lay the groundwork for future investment protection agreements with the companies. CONAIE and other Indigenous groups have opposed this move, and 70 CSOs protested outside the Canadian embassy in Quito on March 4 against the promotion of Ecuador as a mining destination. Canadian mining and natural resource companies are responsible for 70 percent of that country’s ISDS cases outside of North America, and they are especially active in Latin America, according to a 2022 CCPA report.

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