Ecuador, Noboa, and 90 days
USD200 million will buy you a yacht, a jet, or a fancy car. But can it buy security?
Last year we watched Ecuador make the definitive transition from largely ignored to global news. Unfortunately, the reason had more to do with failing public security and political systems than beautiful beaches and rivers, or economic success. In December 2023, Ecuador welcomed a new president who has decided to make public security a cornerstone of his administration. He quickly passed a law to reward the private sector for employing young professionals between 18 and 29, and announced Plan Fénix, his administration’s national security strategy.
Then in January, he threw the gauntlet by announcing that his government has entered a state of war against 22 known criminal gangs. Buckle up; it’s going to get bumpy for a while.
The Television studio attack was brazen and desperate. And it signals that similar stunts will follow. They cannot be avoided right now. But Ecuadorian President Daniel Noboa can determine how his team responds. The next 90 days will likely indicate whether he will succeed or fail. Let’s take a look at opportunities for both.
USD 200 Million
Some USD200 million of supplies and “other support” are en route to Ecuador from the US government. It’s not clear to me what this tranche includes, but it’s a solid start and underscores how ties between Noboa’s administration and US law enforcement professionals remain in place after the transition from the Lasso government. The FBI has been in Ecuador for a while now. The DEA too. I expect this small package will provide enough material and cover for Ecuador’s finest to spend a lot of time with hard-nosed professionals who know how to capture and kill bad guys. The US — for better and worse — has been at it a while now in Latin America.
According to the government of Ecuador (GoE), there are another USD700 million on the way from other partners, including Canada — likely the United Kingdom and the EU too.
The Italians are also in the cone. Noboa visited Italy in December 2023 to learn more about their penitentiary system, and how the Italians have designed and developed a “penitentiary intelligence program.” He and team also learned from Italy’s system for securing sea ports and other International entry zones.
Meanwhile, two new prisons are under construction, with a third planned for later this year. It looks like the Israeli company that designed and constructed prisons in El Salvador and Mexico has been contracted in Ecuador. Local reporting suggests that the two new maximum security prisons, already under way, will require 10 months to complete. A third is planned for later in 2024.
In December, Noboa publicly announced that he had received a letter from a criminal group, asking for peace. The existence of an actual letter is less important than the fact that Noboa made a public statement about it. Governments that plan on negotiating with criminal gangs do so quietly.
Noboa has also taken some of the bits and pieces of Lasso’s previous plans and rolled them into his own, dubbed Plan Fénix, and is already at work rooting out the bad apples and stitching the good ones together. There will be more information sharing between law enforcement and the military, and the private sector, through fusion centers. Sure, information will leak. There will be moles. But this is always the case. The question is how fast and hard can these men and women run and gun compared to the other team? Yes, there are problems with infiltration, but Noboa is taking the necessary steps in the right direction.
Noboa is building and executing a public security strategy. As I posted on LinkedIn last year, “This is obviously the hardest option, but it is one we have seen in fits and spurts with success in the region over the years, though less often at the national level -- more often at the city and/or provincial level. Any future president could take this path, but there are few models to follow.”
My bet is that Noboa will look at what President Bukele has done in El Salvador for a model in Latin America. I am more encouraged, however, by his willingness to lean on help from the US, the UK, EU, and Israel.
90 Days
Los Choneros leader Adolfo Macias, aka el Fito, is on the run. So might be Fabricio Colón Pico, a Los Lobos leader. Dozens are free. It’s been a challenge to keep up with all of the prisoners who have some how suddenly set themselves free. These escapes and other prison-related failures suggest that they could have busted out at any time. Why now?
Why also the attack on the television station? I think both are due to pressure. Noboa is ratcheting up the pressure and the bad guys are responding. But they’re not running away. They’re preparing for war.
Ecuador’s criminal system has at least 22 groups, which all have some sort of leadership structure, economic activity, and relationship status with each other and with international criminal groups, including at least Mexican, Colombian, and Albanian. As an entire system, it is small and immature. So is the counterbalance of public security and law enforcement relative to Ecuador’s larger neighbors in Colombia, Brazil, or Mexico.
So it’s going to get messy. There’s no way around it. The additional pressure will test inter- and intra-group relationships within the criminal system; this includes relationships between power brokers and super fixers among Ecuador’s criminal elite and their interlocutors within the Ecuadorian public security system. It includes relationships between Ecuador’s indigenous criminal groups and their international business partners. And, it includes relationships that criminal gangs have with the communities that surround and — at times — protect them.
All of these relationships will be tested. Many will break. Cycles of violence will initiate or accelerate as these relationships are tested. There is a strong possibility that Ecuador will experience an unprecedented wave of violence in 2024.
So the questions I’m asking are: how long will it be messy; how long will Ecuadorians put up with it before they take to the streets; and, how long will the international community hold its breath and wait before deciding to divest and look elsewhere for opportunities.
I’m giving the worst of the messiness 90 days. I’m willing to give Noboa and his team 90 days to execute on Plan Fénix in a way that pins down the baddest of the bad, cuts out the worst of the cancer within the Ecuadorian government, and communicates the important message that Ecuadorians and those who visit should expect to be safe, despite what they’re reading in the news or social media.
For three months, Ecuadorians and their visitors should expect to be stopped, and maybe searched. You should expect to be pulled over at check points that didn’t exist a week ago. Trunks will be opened, and drivers questioned. Homes and places of business will be searched. These activities will become routine for a while, but these minor inconveniences are not what loses the street. It will be the perception of public security.
Fortunately for Noboa, that perception was already low. He can’t go much lower, so a string of victories will go a long way toward supporting that public perception. As long as he captures and/or kills known criminals, or demonstrably moves the needle on improving public security, he will keep the street with him. Wise council would see him notch a couple quick wins before the end of January 2024.
I really hope he does not try to fool his people or put lipstick on a pig to try to trick the public into thinking the situation is improving when it’s not. The people will know, so it will not take much for the streets of Quito and Guayaquil to fill with public disdain for his administration.
Simple, truthful official communiques will go a long way toward keeping everyone informed and calm as their perception of a storm rages around them.
Finally, to investors and other international business interests. Those long on Ecuador will hold. Those looking at Ecuador as an opportunity will wait a bit but likely move capital elsewhere in the short-term. Wait and see is the posture. Those already in country and operating will not divest. They should be careful to understand exposure and proximity to the Ecuadorian criminal system. Make the extra effort to nuance an approach to assessing and mitigating risk for people and assets in 2024.
Mexico in the 2010s looked like a sea of violence with islands of calm, but the opposite has always been true. Right now, Ecuador is going through similar distortions of the truth. Most of the country is peaceful, but there are islands of violence that will surface and submerge seemingly randomly. But it’s neither random nor unpredictable. The difference today is that more effort is required to see where and how these pockets will emerge and whether or not one is exposed. I remain bullish on Ecuador and Noboa. We’ll see what another 90 days bring, apart from more breaking news about how violent the country has become.