Ecuador shuts its door

President Noboa’s bold security measures and economic strife.

President Daniel Noboa’s initial month in office has been marked by a proactive stance against criminal organisations, mirroring strategies seen in El Salvador. Declaring war on 22 criminal groups, Noboa adopted a military approach, drawing both support and criticism. Renato Rivera, from the Organised Crime Observatory of Ecuador, advocates for addressing illicit economies and drug trafficking over a violence-centric approach. 

The recent escape of two dangerous gang leaders questions the administration’s capability to handle this national threat, adding complexity to an already challenging situation. The broader Latin American context sees collaborative efforts against organised crime, as evidenced by the Andean Community’s Resolute Action Plan launched in January. Noboa’s “administration’s swift adoption of a no-tolerance strategy towards these illegal groups is reshaping Ecuador’s approach to security,” commented a partner in a legal firm based in Quito.  

Beyond the security challenges, Ecuador faces urgent issues on multiple fronts. “Noboa’s security strategy, while seemingly effective, has taken a toll on Ecuador’s economic panorama, posing challenges that demand attention and resolution,” confirmed the law firm partner. Ranked among the world’s 54 most debt-vulnerable nations, Ecuador turns to China for debt restructuring, though concerns about increased corruption linger. The decision to halt oil production at the Yasuní National Park, to safeguard the unique biosphere, does impact revenue streams.  

“Noboa’s security strategy, while seemingly effective, has taken a toll on Ecuadors economic panorama.”

Partner and lawyer at a legal firm, Ecuador

Over two months into office, President Noboa has shown a swift response to narco-gang violence, adopting a no-tolerance strategy. While crime rates have decreased considerably, the economic landscape has faced challenges. “Following a state of emergency decree, which included the classification of these narco-gang groups as terrorists, [Minister of Interior] Palencia affirms homicide rates have dropped to almost a third of what they were before Noboa took office,” affirmed the lawyer. 

Noboa’s collaboration with the United States, signifying joint efforts in “equipment, intelligence and financing for Ecuador’s law enforcement and military.” However, the security-centric strategy has economic repercussions, necessitating attention to resolve challenges.  

President Noboa’s 60-day state of emergency declaration aimed at curbing crime, impacts various industries, “particularly tourism and hospitality, which are projected to be the most affected.” The legal professional expanded, “The assumption remains that if crime levels continue to decrease due to the state of emergency, businesses and people would probably approve the extension.” Worldwide media coverage and local apprehension contribute to the challenges faced by sectors relying on stability. 

Additionally, “increased scrutiny of goods passing through Ecuadorian ports could also add unrest to importers and exporters, who will likely see increased delay times in customs,” explained the lawyer. The security strategy has influenced Ecuador’s growing budgetary deficit and overall economy. Proposed tax-increasing legislation aims to address these challenges, introducing “a temporary 3% increase in sales tax, a one-time tax on profits forms financial institutions ranging from 5% to 15%, as well as a monthly 3.33% tax on all salaries above USD 1,000 per month for up to 8 months.” 

While combating the crime crisis is a priority, questions arise about potential distractions from other critical issues. Noboa’s focus on stabilising Ecuador’s security situation has garnered international cooperation, notably from the United States, distancing the country from Venezuela and El Salvador. The legal partner reported, “The choice in allies is probably a longer-term effort to promote economic and investment ties with traditional western democracies, if and when the security issues are resolved.” The partner continued, “Noboa has not been very vocal on how he will address long standing traditional challenges.” 

“the choice in allies is probably a longer-term effort to promote economic and investment ties with traditional western democracies.”

Partner and lawyer at a legal firm, Ecuador

The President’s stance on longstanding challenges such as government fuel subsidies, social security and economic inequality remains unclear. “However, a stabilised and safe area within a volatile South America may be an attractive and reassuring alternative for foreign investors.”  

President Daniel Noboa’s early actions in Ecuador have centred around a robust response to narco-gang violence. While effective in reducing crime rates, the security-centric approach has introduced economic challenges. Navigating a delicate balance between security, economy and international relations is crucial for the stability and future growth of the nation. In the face of lingering uncertainties, Ecuador finds itself at a pivotal moment, demanding strategic and comprehensive measures to confront the myriad of challenges ahead.

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