Ecuador News Round-Up No. 10: Noboa Declares War

January 16, 2024

Fito’s Escape

On January 7, a combined police and military force entered the Regional de Guayaquil prison to transfer the inmate Adolfo Macías (alias “Fito”), leader of Los Choneros gang, and other inmates to the maximum security jail known as La Roca. Upon reaching his cell, security forces realized Fito was nowhere to be found.

President Noboa has announced that news of an imminent transfer was leaked to Fito. His communications secretary blamed Fito’s escape on Ecuador’s failed penitentiary system. The Prosecutor General’s Office subsequently opened an investigation into Fito’s disappearance and charged two of the jail’s staff for aiding his prison break.

Fito had already been transferred to La Roca in August of last year, a move that sparked protests from inmates. His stay was short-lived as by September, a judge had ordered his return to the Regional de Guayaquil prison.

A manhunt is now underway. Following news of Fito’s disappearance, riots erupted in six prisons around the country on January 8, with inmates taking dozens of staff and security personnel hostage.

The Night of Terror and January 9

On January 8, President Noboa responded to the riots by declaring a 60-day, nationwide state of emergency and an unprecedented 11 p.m. to 5 a.m. curfew.

Many media outlets described the hours following Noboa’s decree as a coordinated “night of terror.” Across the country, gangs took at least seven police officers hostage and set off numerous car bombs and other explosives. At the Riobamba jail, 39 inmates managed to escape amid explosions and gunshots. Among those still at large is Fabricio Colón Pico, a leader of Los Lobos gang who had been apprehended three days prior for allegedly planning the assassination of Prosecutor General Diana Salazar.

On the afternoon of January 9, masked gunmen took over the studios of the TC Television channel during a live broadcast. Security forces were able to intervene swiftly and rescue the workers and journalists without any casualties, but the images deeply shocked Ecuadorians, made international headlines, and went viral on social networks. The day’s violence resulted in 13 deaths, including of two police officers.

The Government’s Response and Declaration of War

President Noboa, inaugurated in November, has inherited a dire security situation. Since 2017, Ecuador’s homicide rate has skyrocketed from 5.8 per 100,000 inhabitants to a historic 46.5 in 2023, making it the most dangerous country in the region. The first 24 hours of 2024 witnessed 50 registered violent deaths, and a week later, the nation descended into an unprecedented wave of violence.

The government was therefore swift to respond to the events of January 9. Eager to differentiate himself from his predecessor, Guillermo Lasso, who ended his presidency with record low approval ratings after overseeing the historic crumbling of Ecuador’s security situation, Noboa was keen to convey that he is firmly in charge and is resolute in addressing the challenge.

As the TV studio hostage crisis was underway, President Noboa issued Executive Decree 111, declaring Ecuador to be in a state of “internal armed conflict” and ordering the armed forces to “neutralize” organized criminal groups in accordance with international humanitarian law, essentially authorizing the use of deadly force. The decree classified 22 gangs as “terrorist organizations.”

Shortly thereafter, the National Assembly’s legislative administrative council (CAL), composed of representatives from the major legislative blocs, issued a resolution expressing support for the government and outlining the different parties’ commitment to granting pardons or amnesties “in cases deemed necessary to ensure the work” of the armed forces and police. The next day, the National Assembly unanimously approved a resolution supporting Decree 111.

Noboa’s decree has ignited legal debates over the meaning and implications, particularly in terms of international humanitarian law, of granting belligerent status to organized criminal groups. Human rights organizations, including Human Rights Watch (HRW), are concerned that the decree “could lead to abuses” by the armed forces. HRW’s Americas Director Juanita Goebertus said, “Trying to fight crime as if it were a party to an armed conflict has never been the right response,” as in other countries it has led to “grave violations of human rights.”

At the time of writing, over 1,100 people have been arrested and another 19 have died as a result of the violence, including five alleged gang members shot by police. On January 13, the government announced that it had successfully freed 178 penitentiary staff and security personnel who had been held hostage. Additionally, security forces recaptured 28 escaped inmates, though another 43 escaped on January 14 from a prison in the city of Esmeraldas.

Noboa, a mere few weeks into his presidency, still enjoys widespread support, and the rallying of various political forces around him provides some added legitimacy and capacity to act resolutely. There are, however, doubts concerning his security agenda, the so-called Plan Fénix, about which little is known. Noboa has revealed that his plan contemplates the construction of two “Bukele-style” maximum security prisons with the help of an Israeli company that built similar facilities in El Salvador and Mexico. The government has also announced it wishes to acquire prison barges to isolate the most dangerous criminals at sea.

The government also intends to pursue a deal worth $200 million with the United States in which Ecuador will exchange Russian and Ukrainian military equipment for modern weaponry. Given Russia’s belief that the military equipment exchanged by Ecuador will reach Ukraine, Russia’s ambassador to Ecuador stated that Ecuador’s participation in this deal would be an “unfriendly step” that would violate its neutral stance.

Security Cooperation with the United States and Recurring Concerns with Sovereignty

The United States is a key actor in the situation unfolding in Ecuador. And the bilateral relations between the two countries is now entirely dominated by the dynamic of the war on drugs, which generally involves ramped up involvement of the US security apparatus in countries facing challenges like Ecuador.

Security cooperation with the United States has steadily increased since the Lenín Moreno administration (2017–2021) and further intensified under the government of Guillermo Lasso (2021–2023), despite corruption allegations against the former president and accusations that his administration had ties to criminal organizations.

As a result, it is in coordination with the US Embassy that the Prosecutor General’s Office has offered rewards for information leading to the capture of Fito and Colón Pico. The US State Department announced that it was sending high-ranking officials to Ecuador, including General Laura Richardson, commander of the US Southern Command, to “accelerate” and deepen security cooperation. Richardson has visited Ecuador on several occasions in the last few years. The FBI has also been investigating the August 2023 assassination of presidential candidate Fernando Villavicencio, although no news has been announced in the past few months.

In addition, the Ecuadorian Constitutional Court is set to determine if a deal signed between the US and Ecuador in October 2023 requires congressional approval. The deal’s leaked text establishes that US military personnel, contractors, and officials will be “temporarily” present in Ecuador to conduct activities including training, exercises, and undefined “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 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 possibility of US troops being sent to Ecuador has already stirred much controversy and debate on whether this would violate Article 5 of the Ecuadorian Constitution, which prohibits the establishment of foreign military installations or bases on Ecuadorian soil. Such active security assistance by the US to Ecuador, a country pursuing a militarized response to criminal organizations, is also worrying given the bloody track record of US security cooperation with other Latin American countries in similar situations, such as Colombia and Mexico.

Noboa’s Referendum

On January 2, after remaining silent on the substance of his presidential campaign’s proposal for a referendum, President Noboa finally submitted a set of 11 questions for the Constitutional Court’s approval. These mostly deal with the armed forces and security, though some also touch on migration and gambling. Noboa’s proposal asks Ecuadorians whether they support the armed forces taking actions against transnational organized crime, whether sentences for serious crimes like homicide or drug trafficking should be increased, and whether the operation of casinos and other gambling activities should be permitted, among other questions. Noboa’s tentative date for the referendum is set for sometime between late February and early March, depending on when the questions are processed and approved.

The reaction to the referendum has so far been largely unfavorable. The 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 and his Acción Democrática Nacional party, along with the opposition Construye party, have criticized the questions. They argue that the referendum should address issues beyond security, that the proposed reforms lack substantive depth to justify a referendum, and that many of the suggested measures have, can, or will be addressed by National Assembly legislation.

However, the main point of contention centers on gambling. Various parties contend that gambling serves as a widely acknowledged mechanism for money laundering and have expressed concern that this poses a significant risk to Ecuador, given its record-breaking levels of insecurity, organized crime presence, and its dollarized economy (also conducive to money laundering). Ecuadorians voted to ban casinos and gambling in a 2011 referendum proposed by former president Correa for similar reasons.

In response, Noboa has added nine additional questions to the referendum focused on amending the constitution to permit the extradition of Ecuadorians (a proposal previously rejected in a 2023 referendum); expanding the state’s authority to seize criminals’ assets; creating “territories of national interest” in which mining concessions can be revoked to tackle illegal mining; allowing the president to propose fast-tracked emergency legislation that addresses issues beyond the economy (the current provisions only allow emergency legislation for economic purposes); and recognizing international arbitration for investment disputes to “promote foreign investment.”

The international arbitration question in particular is likely to face pushback from the left. 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 it is through regional arbitral bodies. Following the adoption of the 2008 constitution, the Correa administration terminated Ecuador’s bilateral investment treaties (BITs) and left ICSID, the World Banks’ investor-state dispute settlement (ISDS) arbitration institution. In 2021, however, Ecuador’s Constitutional Court decided that President Lasso’s move to rejoin ICSID did not need congressional approval, and the country’s reentry was subsequently ratified. Article 422 has nevertheless prevented Ecuador from signing bilateral investment treaties (BITs) or other treaties with ISDS arbitration clauses. For instance, the Constitutional Court only allowed Congress to consider for approval a recent trade agreement with Costa Rica once the clauses about arbitration, including at ICSID, were removed.

In an article on Ecuador’s reentry into ICSID under Lasso, CEPR researchers Guillaume Long and Andrés Arauz discussed a report on Ecuador’s BITs commissioned by the Ecuadorian government in 2013. The report

identified the usual snags of ISDS mechanisms, not least the problematic issue of arbitration: lawyers with close ties to industry being contracted on a case-by-case basis to moonlight as arbitrators for these mechanisms, and Global South countries mostly losing (at best tying) arbitration cases against transnational corporations, even when the governments had been acting in the best interests of their country or defending the rights of their people. … Furthermore, the report demonstrated that the BITs created a shield of impunity for transnational corporations’ environmental damage and tax evasion.

Recent Legislation

In the short time that it has been back (since its dissolution in May), Ecuador’s National Assembly has been very active, having passed at least seven laws. While most of these were carried over from the previous session, two were submitted by president Noboa.

President Noboa first proposed a tax reform, approved with minor changes on December 19. The law does not stipulate any increase in taxes, and its main aim is to generate youth employment. The reform includes amnesty from fees and interest on unpaid taxes, tax deductions for companies that create employment for young people, efforts to promote public-private partnerships, and a temporary fiscal residence program for foreign investors, among other provisions.

In order to address some of the criticism against the law, the National Assembly established that the president’s family — perhaps the wealthiest in Ecuador — will be exempt from the tax amnesty. However, there is no indication that Grupo Noboa, the company belonging to Noboa’s family, won’t be able to benefit from the measure. Grupo Noboa is the number one debtor to Ecuador’s Internal Revenue Service (SRI). Ecuadorian unions protested the law, saying it only benefits those in power and that its clauses on duty-free zones will make work more precarious. Since the tax reform does not call for increased taxes and relies heavily on tax breaks and benefits, it will not be sufficient to resolve Ecuador’s debt challenges and insufficient government revenue.

Noboa’s recent declaration of “internal armed conflict” and related military operations could also prove expensive — over $1 billion, according to Noboa’s finance minister. Noboa has therefore proposed a new initiative called the law to “Confront the Internal Armed Conflict and the Social and Economic Crisis.” The bill’s main provision calls for a value-added tax (VAT) increase from 12 to 15 percent, even though Noboa had previously said he would not increase taxes. The RC and PSC have come out against the bill, with the RC saying it would place a burden on the lower and middle classes. It is still making its way through the National Assembly.

Noboa’s finance minister also announced that Ecuador will pursue austerity, cutting spending by 2 percent of GDP to earn IMF support for a new financing program in the form of a stand-by agreement. This is despite that austerity and other conditions tied to IMF financing, after former president Moreno came to an agreement with the Fund, led to a decline in growth, an increase in poverty, and the dismantling of key institutions, which contributed to the violence and insecurity that the country is currently facing.

On January 11, the National Assembly passed Noboa’s second proposed bill: the law on energy. The purpose of this law is to deal with Ecuador’s energy crisis and rolling black outs that had been so unpopular in the last few weeks of Lasso’s presidency. This law forgives interest and fees on unpaid electricity bills and enables public utility companies to call for public bids when delegating their duties to private companies. As noted by Reuters, it also “gives tax incentives for companies which generate their own power” and “creates an energy efficiency fund meant to finance improvements to the sector that reduce consumption.”

Metástasis Case

On December 14, 2023, Ecuadorians awoke to the news of mass arrests involving current and former officials, judges, prosecutors, police officers, and lawyers. Overnight, theProsecutor General’s Office conducted 75 raids and arrested 31 people. Diana Salazar, the prosecutor general, ordered the operation as part of the new “Metástasis Case” that she claims is directed against corruption and a “criminal structure” within the state. Broadly, those arrested are accused of accepting bribes from Leandro Norero, a prominent drug trafficker who was murdered in 2022, in return for influencing judicial decisions in his favor, along with other benefits. Salazar’s case is largely based on alleged text messages found on 15 of Norero’s phones.

Two weeks after the initial raids, another eight people were charged for their alleged involvement in the case. In total, at least 21 people have been placed under pretrial detention. Among them, two reside abroad, and an Ecuadorian judge has asked Interpol to issue red notices for them.

While corruption is undoubtedly rampant within Ecuador’s judiciary, at least one arrest ordered by Salazar — that of Wilman Terán — has been criticized for bearing the hallmarks of a politically motivated prosecutorial decision. At the time of his arrest, Terán was president of the Council of the Judiciary (CJ), an independent body tasked with oversight and administrative duties relating to the judiciary, including the courts and the Prosecutor General’s Office. The CJ is involved in extending judicial terms and appointing new judges to the highest court, the National Court of Justice (CNJ). In recent weeks, Terán and the CJ had been conducting a selection process for seven new judges to fill vacant seats on the Court.

There has been much speculation as to whether the Metástasis case was an attempt on behalf of Salazar, the powerful die-hard anticorreísta prosecutor general, to prevent the appointment of judges not loyal to her. In particular, her fears may have been that a new CJ would reexamine violations of due process in past trials, which have been considered to be politically motivated.

Ecuador’s judiciary has begun the process of selecting a permanent replacement for Terán, which, as laid out in Article 179 of the Ecuadorian constitution, involves the Council of Citizen Participation selecting from a shortlist of candidates drawn up by the CNJ president, who currently happens to be the ardent anticorreísta Iván Saquicela.

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