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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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Cartels Take Over As Ecuador's New Power Brokers

  • Ecuador has been swept into a drug-related violence crisis, exacerbated by its strategic location between the world's largest cocaine producers, Colombia and Peru.
  • The recent assassination of presidential candidate Fernando Villavicencio and other politicians has intensified the country's already fraught political climate, leading to a state of emergency declaration by President Guillermo Lasso.
  • The upcoming presidential run-off in October 2023 between Luisa González and Daniel Noboa comes at a critical time for Ecuador, a country struggling to address its economic, political, and security issues amid skyrocketing cocaine trafficking.
Ecuador

Ecuador, once an island of peace in the strife-torn Northern Andean region of South America, is caught in the midst of drug-fueled violence, which is exacerbating a long-running political crisis. In an unprecedented event, presidential candidate Fernando Villavicencio was shot down by a Colombian gunman when leaving an August 2023 campaign rally. That occurred after government officials and local politicians were attacked and even murdered over the last year by gangs battling to control Ecuador’s booming cocaine trade. A confluence of events, including being sandwiched between the world’s largest cocaine producers, Colombia and Peru, along with a deep political and economic crisis, saw Ecuador emerge as a crucial international transshipment point for the narcotic. There are indications of further instability and violence for the once peaceful Andean nation. 

Ecuador’s presidential election went ahead on Sunday, August 27, 2023, under tight security after rightwing President Guillermo Lasso declared a state of emergency in the wake of Villavicencio’s assassination. Rightwing pro-business Lasso, during his term, has struggled to enact any meaningful and urgently needed economic reforms, with the leftist-dominated National Assembly blocking any attempts to reduce spending and debt at every turn. The legislative body was dissolved by Lasso in May 2023 so as to avoid impeachment on accusations of embezzlement, triggering a general election. Leading leftist candidate and one-time lawmaker Luisa González, a protégé of former President Rafael Correa who was sentenced to eight years imprisonment for corruption in 2020, has emerged as the front runner. After a close vote, there will be an October 2023 run-off between González and center-right businessman Daniel Noboa to decide who will rule Ecuador until May 2025, which is the remaining part of Lasso’s four-year term. 

González is campaigning on a traditional leftist platform, mirroring that of her mentor Correa, with a focus on increased spending for social programs and public infrastructure to reduce poverty. That, in conjunction with a crackdown on corruption, forms the primary elements of her plans to resurrect Ecuador’s economy and tackle rising violence by reducing poverty. Noboa, on the other hand, plans to provide financial incentives, such as tax breaks, to attract greater business investment to restart a stalled economy and solve spiraling crime by deploying Ecuador’s military alongside the police, a strategy used in neighboring Colombia. The outcome of this election will be important for a country grappling with a weak economy and struggling to contain escalating violence driven by cocaine trafficking. Nevertheless, the victorious candidate will only have a short time to implement policies, a mere one and a half years, making it almost impossible to effect meaningful change that can effectively tackle Ecuador’s economic, political and security dilemmas.

There is considerable conjecturer as to how Ecuador emerged as a crucial staging point for cocaine shipments to the U.S. and Europe. Firstly, it is all about location, with Ecuador sandwiched between the world’s largest cocaine producers, Colombia, a lawless country locked in a decades-long multiparty low-level asymmetric conflict, and Peru. The Andean country’s ports and export-reliant economy, where petroleum, shrimp and banana are the top exports, provide a convenient method for shipping concealed loads of cocaine to key markets in North America, Europe and Oceania. Years of political crisis, which intensified after Correa left office, a flailing economy along with a weak, fiscally drained state, and endemic corruption all provided fertile ground for organized crime to gain a solid foothold in Ecuador

Another key reason is the 2017 demobilization of the Revolutionary Armed Forces of Colombia (FARC – Spanish initials). The leftist guerillas, up until the 2016 peace accord, controlled vast sections of Ecuador’s porous northern border, particularly in the northern provinces of Esmeraldas and Sucumbios, which are the primary entry points for coca paste, cocaine and other illicit goods. Indeed, a major trafficking route operates between Colombia’s Pacific port of Tumaco, a long coca-cultivating hotspot, and Ecuador’s remote northern town of San Lorenzo in Esmeraldas province. The FARC regulated much of the cocaine trafficking in Ecuador’s northern border region, which has long been a hotbed of conflict, illicit activity and smuggling. 

At times, various elements of the FARC, including senior leaders, sought refuge in northern Ecuador, which exasperated Colombia. Quito, for years, especially during Correa’s term in office from 2007 to 2017, maintained an uneasy but stable relationship with the leftist guerillas. That association allowed Ecuador to avoid direct conflict with the FARC, which, even during the 2010s, when their strength was waning and were incapable of securing a major battlefield victory, still had an estimated 14,000 armed combatants. This uneasy truce ended when the 2016 peace agreement was ratified by Colombia’s Congress on December 1, 2016, and the FARC started demobilizing, which was completed on August 15, 2017.

The FARC’s demobilization created a power vacuum in many parts of rural Colombia, particularly in the south along Ecuador’s northern border. This triggered a rush by smaller illegal bands to fill the void left by what had been the largest guerilla movement in South America. Competition for control of Colombia’s coca-cultivating hotspots in the southern departments of Nariño and Putumayo and lucrative smuggling routes along Ecuador’s northern border departments of Esmeraldas and Sucumbios saw a sharp rise in violence. 

There are frequent clashes in the region between bands of FARC dissidents, those guerrillas who refused to accept the 2016 peace treaty, paramilitary groups and the National Liberation Army (ELN – Spanish initials) as they scramble to gain control of coca fields, cocaine laboratories and smuggling routes. Those illegal groups finance their activities by participating in various parts of the cocaine supply chain, including processing coca leaves, converting coca paste into cocaine and smuggling the narcotic to key markets. 

Colombia and Peru’s soaring cocaine production, which hit another all-time high in 2021, and record interdictions by authorities are responsible for the massive surge in the volume of coca paste and cocaine flowing into Ecuador. In fact, the Andean country is now such an important transshipment point that it is believed more cocaine flows through Ecuador than any other country in the world. It is estimated up to 800 tons of the narcotic passes through the country annually for shipment to primarily the U.S. and Western Europe. 

Ecuador’s importance as a staging point for cocaine shipments to Europe, which is the second largest market for the narcotic globally, is underscored by the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), claiming Ecuador is the largest exporter of cocaine to Europe. The agency’s director in February 2023 said: “Most of the cocaine shipped to Antwerp comes from Colombia, via the port of Guayaquil in Ecuador.” The agency’s statements are supported by a record August 2023 seizure in Spain of 9.5 tons of cocaine concealed in a banana shipment from Ecuador.

Ecuador’s considerable importance as a cocaine transshipment hub motivated various criminal organizations, including European crime groups and Mexican cartels, to establish a strategic position in the country. This was achieved by making alliances with local prisons and street gangs. This is further fueling the violence sweeping across Ecuador, with those criminal groups resorting to bribery, extortion and even the murder of public officials to conduct their illegal activities. Tragically, Ecuador’s homicide rate is spiraling out of control at a terrifying pace, soaring almost fivefold between 2018 and 2022 to 25.9 murders per 100,000 inhabitants. This ranks Ecuador as the third most violent country in South America, behind Colombia in second place with 26.1 homicides and Venezuela ranking first with 40.4 murders per 100,000 inhabitants. 

Government officials, including police and prosecutors, politicians and elected representatives, are being targeted by the gangs vying for control of Ecuador’s lucrative cocaine trade. This has not only led to heightened institutional corruption, which Villavicencio was known for rooting out, but also a litany of assassinations and attempted murders of public officials. These included the assassination of the Mayor of coastal resort town Manta, a state prosecutor in a town near Guayaquil, the city at the heart of the violence, and the organizer for presidential candidate González’s Citizens Revolution party.

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Whoever wins the October 2023 presidential run-off is facing an extremely challenging term in office with little time to develop and implement effective policy. Ecuador is gripped by a deep political and economic crisis that shows no sign of easing any time soon. That predicament, coupled with the fallout from the 2020 pandemic, was responsible for weakening an already frail state to the point where organized crime not only established a solid foothold but is coopting and even challenging the government. Quito’s extreme indebtedness, coupled with strained finances, makes it near impossible for the next president to significantly bolster spending to tackle Ecuador’s security crisis. If the victorious candidate funds additional spending by slashing costly fuel and other subsidies, existing simmering civil dissent will likely flare into widespread anti-government protests once again.

By Matthew Smith for Oilprice.com

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