Ecuador News Round-Up No. 9: Noboa’s First Weeks in Office

December 08, 2023

In Ecuador: Exit Lasso, Enter Noboa

President Guillermo Lasso’s last five weeks in office, after Daniel Noboa’s election victory on October 15, felt agonizingly long, with polls showing the overwhelming majority of Ecuadorians desperate to turn the page on one of the most unpopular governments in Ecuador’s history.

In the first days of November, Lasso visited the United States, where he attended an investment forum organized by the Inter-American Development Bank (IDB) and the US government, as well as the first Americas Partnership for Economic Prosperity Leaders’ Summit, convened by President Joe Biden.

On the international front, Lasso signed a cooperation agreement with Europol, the EU’s law enforcement cooperation agency; decorated US Ambassador Michael Fitzpatrick, a crucial ally throughout Lasso’s turbulent 30 months in office; and received Samantha Power, the head of USAID, who launched PILARES, a three-year, $17.7 million “citizen’s security” initiative for Ecuador.

Lasso also signed a decree that grants international security protection to former presidents, vice presidents, and their spouses. The decree specifies a minimum protection period of two years for presidents and one year for vice presidents. This backtracks on a decree he signed in 2021 that stated security for presidents would last only one year, not cover spouses, and would be limited to protection in Ecuador.

The Return of Power Cuts

Ecuador’s energy crisis was, by far, the most pressing issue Lasso faced in his last days in office. The country, which generates 80 percent of its electricity through hydroelectric plants, has been hit by a severe drought caused by the onset of the El Niño phenomenon. In response, on October 26, the government announced that it would begin rationing energy and instituting rolling blackouts for several hours a day, until at least mid-December. Lasso also traveled to Peru and Colombia, and the two countries agreed to export electricity to Ecuador, though this did not prevent the blackouts.

Aside from the drought, the government has blamed the crisis on increased demand due to what it referred to as the country’s “economic reactivation,” the “state’s monopoly over the distribution of electricity,” and the inadequate state of electricity infrastructure. The administration did not acknowledge its failure to heed the National Electricity Operator’s warning from January about lower-than-usual water levels, insufficient investment in maximizing the output capacity of an existing thermoelectric plant, neglecting updates to the government’s 2018 energy demand projections and energy investment roadmap, and attracting insufficient private investment to offset the shortfall in public investment in the energy sector.

The last wave of power cuts in Ecuador go back to 2009, before the Correa administration engaged in large-scale public investment in the electricity sector, greatly increasing per capita electricity generation during his 10 years in office. The recurrence of a problem that seemingly belonged to the past was met by a new wave of discontent. And Lasso’s popularity further declined in the last days of his presidency. According to the firm Perfiles de Opinion, Lasso left office with an approval rating of 12.29 percent, down from 74 percent at the start of his term. Out of 13 Latin American countries surveyed, CID Gallup’s figures show that, with a 13 percent approval rating, Lasso and Peru’s Dina Boluarte were tied as the region’s most unpopular leaders.

Ecuador’s August 20 snap election and October 15 runoff resulted from Lasso’s dissolution of the National Assembly, Ecuador’s Congress, to avoid his impeachment. Lasso triggered a constitutional process known as the “mutual death” clause, which enables the president to shut down Congress one time only in the president’s four-year mandate and if certain conditions are met, but forces him/her to hold general — including presidential — elections. Lasso’s popularity was so low that he ultimately opted not to run in these elections. Similarly, his party decided not to run any candidates in the legislative elections.

Noboa’s First Days in Office

Daniel Noboa was finally inaugurated on November 23 in front of Ecuador’s legislature, the National Assembly. In his speech, the new president emphasized youth and pragmatism, and claimed his priorities would be security and employment. He reiterated that he refuses to fit into traditional political categories, adding that he is not “anti-anything,” only “pro-Ecuador.” Noboa then headed to Carondelet, the presidential palace, to attend a ceremonial lunch and meet with Colombian president Gustavo Petro and Brazilian vice president Geraldo Alckmin.

Verónica Abad, Noboa’s vice president, did not attend the lunch and instead visited a market in northern Quito. This fueled speculation of a rift between the two, as Noboa and Abad had not been seen together in public since June — likely a product of the controversial political statements she made during the campaign that have positioned her on the far right of the political spectrum, a rift reconfirmed by Abad’s absence from the official Noboa cabinet photo.

Within a few hours, Noboa had restructured the vice presidency and appointed Abad to the newly created position of “peace ambassador” in Israel. Abad was later made the official ambassador to Israel. Ecuador’s membership in the UN Security Council was invoked as a justification for this decision. Abad subsequently convened a press conference where she stated that “the president wants me far away from Ecuador,” adding that she was the victim of an internal attempt to sidestep her within Noboa’s presidential campaign. She followed this up with an interview on CNN where she said that Noboa had betrayed the Ecuadorian people by entering into a legislative agreement (discussed below) with the Revolución Ciudadana (RC), the party of former president Rafael Correa. Noboa’s collaborators did not comment on the rift.

Less than two days into his term, the president revoked a set of guidelines that eliminated penalties for the possession of small quantities of drugs for personal use, a policy introduced by the Rafael Correa government, following UN guidelines, to differentiate users from traffickers. However, as AP notes, it is “unclear how Noboa’s decision will be implemented,” given that Lasso’s own decision to eliminate these same guidelines — which have been denounced by conservatives as one of the factors behind Ecuador’s drug crisis — was never implemented in practice. Furthermore, the Constitutional Court’s 7-17-CN/19 ruling mandates that there should be a clear differentiation between drug users and traffickers when determining punishments. The court ruled that “If the detainee is in possession of more than the maximum admissible amount for personal consumption, it is up to the operators of justice to establish that the person in possession of [drugs] … has the intention of trafficking rather than consuming.” It is therefore unclear how the Noboa government will comply with the Constitutional Court’s ruling without regulating the possession of different amounts of drugs.

On November 28, Noboa also presented a tax reform bill to the National Assembly, thereby fulfilling one of his campaign promises. The reform does not contemplate a tax increase. Instead, it offers tax deductions for companies that create employment for young people, tax exemptions for investments in renewable energy, VAT rebates for the construction and real estate sectors, a temporary fiscal residence program for foreign investors, efforts to promote public-private partnerships, a tax amnesty that forgives interest and fines on unpaid taxes, and a new regime for duty-free zones that includes more benefits, among other provisions. Some analysts view the reform as a short-term measure that won’t address the government’s “fragile situation of state finances,” such as issues around insufficient government revenue.

The tax amnesty in particular has caused controversy, including objections by Rafael Correa over concerns of a conflict of interest. Grupo Noboa, the company belonging to the president’s family, is the number one debtor to Ecuador’s Internal Revenue Service (SRI). According to a study from the Central University of Ecuador, Noboa’s tax reform will exempt the company from paying close to 65 percent of the $143 million it owes.

The reform was introduced as a measure of economic urgency, meaning that the legislature only has a month to debate, modify, accept, or reject it. Noboa is expected to declare a state of emergency shortly in order to introduce a broader package of simultaneous legislative proposals.

The New Cabinet

Daniel Noboa’s cabinet stands out for its youth and gender parity. The cabinet is made up of 13 men and 13 women, with an average age of 42; the youngest ministers are 25 and 26. Noboa has included members of his campaign, business people, academics, civil servants, an engineer, a judge, and a medical doctor, as well as individuals from other professions.

Noboa’s choice of young ministers has raised concerns regarding inexperience both in the media and abroad. One outlet even reported that international organizations exerted pressure on Noboa to refrain from appointing Sariha Moya, a 35-year-old planning official, as minister of economy for her lack of experience in the field, after she was introduced as the incoming minister at meetings with multilateral banks and investors. Noboa ultimately selected a different candidate — Juan Carlos Vega Malo, a 51-year-old economist, consultant, and businessman, for the role.

Foreign Policy

Days after winning the election, Noboa left Ecuador for a trip to Spain, Italy, and the United States. In Spain, he met with migrants, investors, King Felipe VI, local leaders, and the head of La Liga, Spain’s professional soccer league. In Italy, Noboa met with the Italo-Latin American International Organization to discuss the fight against organized crime.

In the United States, the then president-elect primarily held meetings with investment banks and international financial institutions, such as the International Monetary Fund, Inter-American Development Bank, and the World Bank. In meetings with these institutions, Noboa asked for a nine-month bridge loan, arguing that it would be used to fund infrastructure and social programs. He emphasized that securing credit from these institutions was crucial for his reelection bid and the implementation of his economic agenda, and that Ecuador was at risk of defaulting by 2026 if the economy did not pick up, something that loans and private investment could help avoid, he noted.

After his inauguration, Noboa also met with the Development Bank of Latin America and the Caribbean (CAF). The minister of economy and finance stated that the government was looking for financing, in particular for infrastructure projects. The foreign minister’s priorities also appear to include advancing ongoing negotiations for a free trade agreement with Mexico as well as finalizing Ecuador’s admission into the Pacific Alliance, a regional trade bloc. Other priorities for the government reportedly involve negotiating a trade agreement with Canada and having the US Congress approve the IDEA act, which, if passed, would reduce US tariffs on Ecuadorian exports, among other things.

In Noboa’s meeting with Colombian president Gustavo Petro at his inauguration, the two discussed Ecuador’s energy crisis, the climate crisis, violence and narcotrafficking, and coordinating bilateral responses to the upcoming drought, which will also impact Colombia. In Noboa’s meeting with Brazilian vice president Geraldo Alckmin, the discussion centered around the issue of Latin American integration and UNASUR, as well as broadening economic engagement, environmental cooperation, and an Ecuador-Mercosur agreement.

After a meeting with USAID, Noboa said that the agency is aligned with his administration’s priorities and that there is a possibility that it could provide $50 million for irrigation infrastructure, support to small and medium agricultural producers, and security. Samantha Power noted that the office in Ecuador is being upgraded to a full mission to intensify cooperation with the country. On his trip to Washington, Noboa also met with members of Congress, but there is little reporting on the subject of any discussions.

December marks the first time in 31 years that Ecuador will occupy the rotating presidency of the UN Security Council, which Ecuador will hold for one month. Noboa’s recently nominated permanent representative to the United Nations in New York stated, in very general terms, that Ecuador’s priorities would involve youth, peace, and security, and that Ecuador would call for a signature debate on the topic of organized transnational crime, which the country has been ravaged by in recent years. There was no mention of the most salient conflicts that the Security Council has been debating in the last few months (Israel’s offensive in Gaza, the Russia-Ukraine war, or an international force being sent to Haiti), and the ambassador’s first press conference was criticized by some observers for demonstrating a patent lack of experience in multilateral affairs.

In the immediate aftermath of Hamas’s attack on Israel, Noboa released a short statement prior to his inauguration condemning Hamas and stating his commitment to supporting Israel’s security and “right to self-defense.”

Noboa’s decision to send his vice president to Israel was applauded by Israel, the US, Russia — a country that Noboa and fellow legislators visited in 2022 as part of a delegation allegedly funded by him — and other countries. The international legitimacy of her “peace mission,” however, does not appear promising. The decision to dispatch Abad is clearly rooted in domestic politics. It is likely aimed at keeping her far from the corridors of power and from making her usual controversial statements against women’s rights, among other issues, in the name of the government.

Abad moreover has no diplomatic experience, no expertise in the region, and it is questionable whether her extremist positions and far-right ideological grounding make her an ideal peace negotiator by any stretch of the imagination.

Legislative Agreement

Daniel Noboa has secured an agreement in the 137-seat legislature that could allow for some governability if the deal holds. Noboa had been silent on this matter until his inauguration. Construye, a right-wing anticorreísta party, had essentially given Noboa an ultimatum: either secure Construye’s support for a legislative agreement that excludes the RC, or engage in negotiations with the RC and forfeit Construye’s backing for such an agreement. Noboa chose the latter option, and had his ADN party form a loose alliance with the RC and the traditional Social Christian Party (PSC).

With 51 seats in the National Assembly, the RC is the strongest force in the legislature. Until November 14, Construye, with 28 representatives, was the second most important party. But, since then, the party has split over infighting. A faction within Construye came from a separate movement called Gente Buena (GB). Both supported the presidential campaign of Fernando Villavicencio, a candidate who was assassinated on August 9. Following the assassination, disputes over leadership led to the break up, and Construye proper now has 19 seats, while GB has seven. The practical consequences of this rupture remain to be seen, but they are unlikely to be severe, given that both parties are strongly opposed to correísmo and share similar ideological principles.

While Construye was splintering, Noboa’s ADN got more powerful. With only 14 seats in the legislature after the August elections, the party formed a bloc with smaller parties and independents hours before the National Assembly went into session. ADN and its allies now hold 25 seats. The PSC, on the other hand, has seen minimal movement, holding steady with 18 seats, four of which also come from an alliance with smaller parties.

The ADN-PSC-RC deal mainly involves the distribution of leadership positions within the National Assembly’s administration and committees. Henry Kronfle of the PSC became the body’s president. The RC and ADN secured the first and second vice presidencies, respectively. Each of the three parties captured one of the four seats reserved for representatives of legislative blocs within the National Assembly’s administrative body. The fourth went to Construye.

As for the 15 legislative committees, the RC came out first, with the presidencies of six. These include justice, oversight, autonomous governments, transparency, constitutional guarantees, and protection of children. Justice and oversight were on the top of the RC’s list, given the lawfare that correísmo has endured in recent years and the party’s insistence that the judiciary should be depoliticized and impartial. The RC has already formally requested the impeachment of Prosecutor General Diana Salazar, who has played a key role in persecuting members of correísmo on political grounds and intervening in the 2021 and 2023 elections to favor non-correísta candidates. Nevertheless, this is unlikely to pass, since ADN, Construye, and the PSC have opposed the move.

ADN chairs the legislative committees for international relations, security, economic development, economic and tax regime, and health and sports. The PSC chairs biodiversity, education, agriculture and fisheries, and employment and social security. Although the PSC, ADN, and RC head all of the committees, none of them possess an outright majority in any one. Construye was left with no leadership role and declared it would form a “proactive and democratic” opposition, especially against the RC.

Members of the RC and PSC have said that the agreement will allow for governance, meaning that they will support Noboa’s bills once they review them. Of course, this is on the condition that no red lines are crossed, which, in the case of the RC, means not pursuing privatization.

On November 28, the National Assembly passed this legislature’s first bill, with an overwhelming 134 votes in favor, defending equal pay for men and women and tasking the Ministry of Labor with oversight, compliance, complaints, and redressal.

Lasso’s Uncertain Future

On November 30, the National Assembly passed a resolution declaring former president Guillermo Lasso “politically responsible” for embezzlement. The legislative vote is essentially a political decision vindicating the National Assembly’s impeachment process against Lasso, which was cut short by the president’s dissolving of parliament in May. The new National Assembly has essentially stood in solidarity with the old assembly and made it clear that it believes the president should have been impeached and is corrupt. The vote, however, is not juridically binding, and it will be up to the Prosecutor’s Office to decide whether or not to pursue the matter and eventually press charges.

The National Assembly has also formed a committee to investigate the assassination of presidential candidate Fernando Villavicencio. Several months have elapsed since Villavicencio’s murder, but no information has been made public regarding who might be behind it. On October 6 and 7, the seven hitmen held by the government for the killing were all assassinated, strangled in two separate jails, fueling speculation that sectors of the Ecuadorian state, security forces, and indeed government may be complicit in the chain of murders.

Meanwhile, Danilo Carrera, Lasso’s brother-in-law and close business associate, who has been described as the key link between the Lasso government and what is often described in Ecuador as the “Albanian Mafia,” has been confined to house arrest. He faces charges of organized crime for his role in the organization of fake public contracts and a cash-for-appointments scheme in public entities.

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