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Ecuador at Risk: Drugs, Thugs, Guerrillas and the Citizens Revolution

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by Douglas Farah, Glenn R. Simpson
Published on January 24th, 2010

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Download file Read the full report in spanish.

Executive Summary

When Rafael Correa assumed the presidency in Ecuador in January 2007, it was widely hoped his administration would use its strong mandate to end a decade of debilitating political and economic turmoil. The chaos and corruption had led to the collapse of the nation's political and judicial institutions completely discredited the traditional ruling class. From 1997 until Correa's election, Ecuador had six presidents, none of who served a full term in office. The economy and banking sector had collapsed, wiping out two decades of GDP growth and leading Ecuador to adopt the U.S. dollar as its official currency.

By Ecuadoran standards Correa's mandate was stunning. A novice on the national political stage, he won 56 percent of the vote while his political coalition, Alianza País (National Alliance) fielded no congressional candidates. Rather, he staked his political survival on convoking a constituent assembly that would bring "rapid, radical and profound change" to Ecuador and amassing almost unchallenged power for himself and the office of the president.

The changes he proposed in his "Citizens Revolution" were largely of the traditional left, advocating a strong executive, a strong state role in the economy, heavily redistributive tax policies, and an end to the U.S. military presence at its Forward Operating Location in Manta. But perhaps his most important promise was to end the traditional bickering and corruption that had characterized the prior governments and to usher in a new era of "clean hands," honesty and accountability.

The new constitution was overwhelmingly approved on Sept. 28, 2008. As part of the reforms, new presidential elections were held on April 26, 2009. Correa won in the first round, beginning a new four-year term.

In his second inaugural address Correa promised to "deepen democracy and radicalize this revolution," reiterating his "revolutionary" commitment to carry out "deep, rapid transformation, in peace, as we postulate for this citizens' revolution."

It is not hard to understand the appeal of radical change in a country that had become Latin America's most unstable for more than a decade. After a relatively smooth transition from military rule to civilian government in 1979, the country enjoyed 17 years of comparative stability under five democratically elected presidents. As in much of the hemisphere, the transition resulted from a pact between the military leadership and the civilian political elite that excluded most of the country's indigenous population and, while observing some of the trappings of democratic governance, left much to be desired. It unraveled with astonishing speed and consequences.

The pressing challenges to the Correa administration include:

  • o Credible charges that his campaign received funds generated by the sale of cocaine from the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia-FARC);
  • o Strong evidence that senior members of his government have supported the armed insurgency that has been designated a terrorist organization by the United States and European Union;
  • o Evidence that members of his inner circle had direct contact with transnational drug trafficking organizations tied to the FARC;
  • o Strong indications that the judiciary remains deeply corrupt, including the freeing of important drug traffickers who have been caught escorting loads of cocaine;
  • o Persistent accusations from his older brother (who ran his presidential campaign's finances) that members of his inner circle are engaged in extensive corrupt business practices;
  • o Strong evidence that the Correa government has illegally manipulated the international debt bond markets to benefit itself and the Venezuelan government;
  • o Increasing drug trafficking and organized crime, largely but not exclusively attributable to the FARC that have led one government commission to lament that Ecuador is on the verge of becoming a "narco-state;"
  • o Constant and internationally condemned attacks on the media and efforts to curb freedom of expression, in large part because the private media are among the few levers of power and influence Correa and the AP do not control.

Many of the underlying issues of structural corruption, drug trafficking, money laundering and the presence of the FARC predate the Correa administration by many years. Ecuador's geographic position has also made it a vulnerable and attractive crossroads for transnational non-state armed groups. Ecuador's decision to adopt the U.S. dollar as its official currency in 2000 also created numerous new vulnerabilities for the state and advantages to criminal organizations.

These factors, taken together with the changing internal situation in Colombia and the expanding influence of the Mexican drug cartels have, over the past three years, helped turn Ecuador into an important and growing center of operation for transnational organized criminal gangs. This poses a significant threat not only to the Ecuadoran state but all of Latin America and the United States.

After decades as a transit route for cocaine and a secondary money laundering center, Ecuador is emerging as a key meeting ground for multiple transnational criminal and terrorist organizations and an important part of a pipeline that moves not only cocaine but human cargo, weapons, precursor chemicals and hundreds of millions of dollars a year.

Many of these pressing transnational issues remain relatively low priorities for the Correa government and many have grown markedly worse over the past two years. Among the most worrisome developments are:

  • o The significant growth of FARC drug trafficking networks through Ecuador, driven by the guerrillas' increasing dependence on the cocaine trade for financing and the Colombian military's success in pushing the rebels out of the center of the country toward the border regions with Ecuador and Venezuela.
  • o The increasing reliance of the FARC on its Ecuadoran supply lines for precursor chemicals, food, medicine and weapons, and the size and permanence of the FARC base camps in Ecuador.
  • o The growing presence in Ecuador of Mexican drug trafficking organizations, who now do business directly with the FARC in Ecuadoran territory, delivering cash (dollars) and chemical precursors in exchange for cocaine.
  • o The growing presence of Russian and Chinese organized crime groups in Ecuador, drawn in part because Ecuador lifted visa requirements for almost every country in the world.
  • o The growing role of Ecuador as a money laundering center for multiple transnational criminal organizations including some such as the FARC that are also designated terrorist organizations.
  • o The official presence of Iranian financial institutions at the invitation of the Correa government that have been placed on United Nations and U.S. sanctions list.
  • o The increasing unwillingness to honor international law and arbitration in the rapidly growing number of international disputes in which the Correa administration is engaged.

Related Links
   Ecuador at Risk (PDF)  
   Ecuador at Risk (Spanish Translation)  

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