Drug Lords Leave Ecuador Reeling

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In this issue, which is the last of the year, you will find:

•Drug lords leave Ecuador reeling

•Targeting China, FEPA Threatens Latin America

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The GCaM Team

•Drug lords leave Ecuador reeling
603 words | 3 minutes reading time

On January 9, Ecuadorian President Daniel Noboa declared his country was undergoing an internal armed conflict and decreed a state of exception.  Noboa’s actions came after drug-linked criminal gangs wreaked havoc in the country, incinerating citizens in their cars, attacking universities, and executing prison wardens.

• Taking to social media, the gang members have published videos showcasing their methods. Corrections officers have been shot and hanged; gangs, many of them swamped in Mexican and Colombian cash, have developed a penchant for homemade explosives.

• Legally, criminal gangs are now deemed terrorist groups. The country, especially the port city of Guayaquil, is militarized. Military patrols acknowledge that they check suspects’ tattoos for suggestions of gang membership.

• The National Assembly has offered pardons and amnesties to the military if necessary, meaning the Army will enjoy carte blanche to act against drug trafficking. All parties are supporting Noboa in this effort, although disagreements remain in other policy areas.

Archivist’s Corner. Ecuador, previously considered a haven of peace in Latin America, has been mired in instability for several years. The January 9 attack occurred after the president declared a state of exception in the wake of news that José Adolfo Macías Villamar, alias “Fito”, had escaped.

• Fito, 44, is the leader of the criminal gang “Los Choneros,” linked to contract killing, extortion, and drug trafficking. Widely considered one of the most dangerous criminals in the country, Fito is an ally of the Sinaloa Cartel.

• Last Sunday, guards at Guayaquil Regional Prison reported that Fito was missing from his cell, where he had been imprisoned since 2011, after being sentenced to 34 years in prison.

• Fito lived out his sentence in relative luxury and comfort, often boasting of his differentiated treatment on social media. He was due to be transferred to a more secure prison; a friendly corrections officer must have leaked the news to him. 

Between the Lines. Ecuador is located between Peru and Colombia, the two largest cocaine producers in the world. In the last two years, Peru has doubled its production; Colombia’s has increased by 25%. Global cocaine production has more than doubled since 2014, effectively turning Ecuador into a logistics hub.

• Drug-related activity is singularly responsible for the rise in homicide rates, which used to be identical to those in the United States. In 2023, homicides in the country doubled compared to 2022; homicides have increased by almost 500% since 2016.

• The trend is particularly pronounced in Guayaquil, out of whose port up to 65% of drug exports are smuggled. Guayaquil, the country’s economic capital, is a strategic point that cartels must control.

• In the last two years, up to 400 inmates have died in prison riots. The inmates have taken over the prison system through bribes and threats to members of the security forces.

The Balance. For decades, Latin America had not suffered such a blatant attack on state institutions. Ecuador is becoming more and more accustomed to events of this caliber; last year, for instance, it experienced the assassination of presidential candidate Fernando Villavicencio.

• Noboa was elected to complete outgoing President Guillermo Lasso’s term. He lacks a legislative majority; given Ecuador’s dire economic situation, reelection will prove challengeing. Furthermore, due to his reliance on correístas’ legislative support, he has raised suspicions within his natural supporters, the right.

• The situation has been compared to El Salvador’s “black weekend,” which led to the declaration of a state of emergency. In Ecuador, where governments have hesitated to act against drug trafficking, the political chessboard has now undergone a profound change.

• It is an untactful assertion, but this week’s events serve to improve Noboa’s political position. He has the support of all political forces, including correísmo, and will likely receive assistance from Washington.

•Targeting China, FEPA Threatens Latin America
521 words | 2 minutes reading time

On December 14, Congress passed the Foreign Extortion Prevention Act (FEPA), which was signed by the president on December 22. The law aims to combat the the demand-side in the corruption market, penalizing foreign officials who extract bribes from Americans.

• Congress has granted courts an expansive jurisdiction. Bribes requested on U.S. territory are evidently covered, and so are bribes demanded of “U.S. interests,” which includes U.S. citizens and firms. 

• Foreign officials found guilty under FEPA face sentences of up to 15 years. In addition, fines of up to US$250,000 or three times the bribe received (or both) are contemplated.

• FEPA was passed as part of the 2024 National Defense Authorization Act, a must-pass piece of legislation. The link is not accidental: the United States views the battle against corruption as a national security issue.

Panorama. FEPA solves the legal gap left by the Foreign Corrupt Practices Act (FCPA). This statute allows U.S. companies and citizens to be charged for paying bribes, but lacks a mechanism to prosecute foreign officials; its jurisdiction is expansive, albeit only for Americans.

• In fact, FEPA has a very broad definition of “foreign official.” It includes officials as such, but also those who act unofficially, perhaps as the frontmen and associates of formal officials. Employees of state companies are also included.

• Political candidates are excluded, however. Washington is well-aware that FEPA could eventually cause resentment abroad, where it can be seen as an intrusive, insulting violation of nations’ sovereignty.

• FEPA, at least at its inception, will not be a dead letter law. White-shoe law firms have already advised their clients that they expect the law to be applied “aggressively,” regardless of the frictions it may cause.

Between the Lines. The fight against corruption is a sincere concern within Washington’s frankly idealistic foreign policy. Beyond these principles, the United States believes corruption abroad harms its interests, limiting the investments of its citizens and granting market access to less scrupulous rivals.

• While FEPA will doubtless be deployed in Latin America, the region per se is not its sole motivation. China, which makes its way into emerging markets through bribery, is evidently the prime target. 

• This is shown by the statue’s phrasing, which renders employees of state companies liable for U.S. prosecution. This evidently threatens Chinese state-owned enterprises, the largest purveyors of investment.

• In any case, FEPA will affect Latin America. Washington looks askance at both Chinese influence and local corruption, likely leading to ample use of FEPA in the coming years.

To Come. Laws tend to be bombastic and ambitious, not to say chimerical. FEPA will become another weapon in the arsenal of U.S. diplomacy, which seeks any advantage in its cold war against Beijing. Useful as it may be, this does not necessarily mean that it will be deployed frequently or effectively.

• FEPA, for instance, could fall victim to politicization. The law’s nebulous jurisdiction could cause trouble and pique abroad, especially if the United States insists on prosecuting particularly popular leaders.

• In any case, Central America must be aware of FEPA. Although it is not the focus or reason for the law, it is part of the so-called Global South, where the U.S. considers its rivalry with China to be particularly fierce.