On October 15, 2023, 35-year-old businessman and former Congressman Daniel Noboa won the presidential election and became the second-youngest president-elect in Ecuador’s history. By obtaining 52 percent of the vote, Noboa—alongside his DNA Party—beat Correísta candidate Luisa González. With his win, Noboa has prevented, at least until 2025, the return of totalitarian 21st-century socialism. However, he will face two major challenges: (1) the deepest insecurity crisis in the country’s history and (2) impotent economic growth. The latter also means the national government is struggling to pay its bills.
Hoy hemos hecho historia, las familias ecuatorianas eligieron el Nuevo Ecuador, eligieron un país con seguridad y empleo.
Vamos por un país de realidades donde las promesas no se queden en campaña y la corrupción se castigue
— Daniel Noboa Azin (@DanielNoboaOk) October 16, 2023
While his father Álvaro Noboa, one of the richest men in Ecuador, ran five times for the presidency and lost every time, Daniel won with his first attempt. During his campaign, Daniel Noboa connected with the electorate despite failing to be eloquent in the runoff presidential debate against González.
There is no official date set by the National Electoral Center, since this was an irregular election, for Noboa to take office. However, it will be between December 11 and 20. Then he will be in office until May 24, 2025. If he wants to win a possible reelection campaign, Noboa will have to negotiate with other political actors such as opposition parties, unions, and activists to improve his administration’s governance.
For example, Leonidas Iza is leader of the indigenous organization CONAIE. This month he threatened Noboa with revolts if the soon-to-be president does not comply with the 15 demands of the CONAIE political agenda. In addition, Iza said that he would combat any attempt to implement “neoliberal policies.”
La CONAIE dirigida por Leonidas Iza, condiciona al presidente electo Daniel Noboa. La organización advierte con responder si se toman “medidas neoliberales”.
🎙️ @diegopuente1 con el informe.
— Ecuavisa (@ecuavisa) October 21, 2023
This hornet’s nest proved insurmountable for the Guillermo Lasso administration. In the National Assembly, the DNA Party has only 14 out of 137 seats, while Correísmo has 52.
Insecurity Ecuadorians Do Not Accept
Compared to its neighbors Colombia, Venezuela, and Peru, Ecuador is no longer a peaceful oasis in the region. The violence spiral started in 2021 when criminal groups began fighting over narcotrafficking routes to sell drugs internationally. In 2020, Ecuador’s homicide rate was eight per 100,000 inhabitants. In 2023, the country’s homicide rate has more than quadrupled to 35. If the trend continues, Ecuador’s rate will reach 43 by the end of the year. To put the numbers in perspective, in 2022 Honduras and Venezuela had the highest homicide rates in the region with 36 and 40, respectively.
Under the incumbent administration, the state has evidently lost its authority over prisons. Criminals—who work together with Colombian and Mexican cartels—have turned prisons into their own operation centers. Ecuadorian political science professor Fernando Carrión explains: “Prisoners are classified [by prison officials] according to their affinity with a criminal organization instead of the crimes they have committed.” In other words, gangs now manage prison placement and defy purported authorities on the inside.
Over 500 people have died in recurring prison riots since 2020. In the week prior to the runoff, for example, six suspects in the Fernando Villavicencio murder case were killed inside Guayaquil’s prison.
The state is also failing to control its borders with Colombia and Peru—where drug, weapon, and people smuggling are common. Renato Rivera, coordinator at the Ecuadorian Observatory of Organized Crime, contends that 70 percent of police drug seizures happen at seaports before the shipments leave the country, suggesting that criminals easily transport drugs within the country.
The state has failed to fight criminal organizations for over a decade and has tarnished its legitimacy. Rafael Correa weaponized the intelligence agency Senain to persecute his political adversaries rather than study criminal groups. The institution’s authorities carried out the kidnapping of dissident Fernando Balda when he was in Bogotá, Colombia. Ecuadorian officials released Balda from Ecuadorian prison two years after his capture in 2014. In 2020, the National Court of Justice sentenced former Intelligence Secretary Pablo Romero to nine years in prison for Balda’s kidnapping.
According to Article 483 of the Penal Code, the intelligence agency cannot use undercover agents or purchase drugs to set up criminals without Prosecutor Office authorization, which forces the institution to react to rather than prevent criminal operations. In his campaign platform Noboa offered to develop the “Phoenix Security Plan,” in which he mentions the creation of a new intelligence agency. However, he failed to provide further details on the proposal, its implementation, and its funding.
In spite of the difficulties, the Noboa administration can take important steps to improve the insecurity crisis. For example, it can regain the state’s control over prisons and borders, without needing a consensus in the assembly. This just means enforcing laws already on the books, although that is easier said than done.
Further, the administration can clean house and rid itself of law-enforcement officials with ties to narcos. For example, the Inter-American Commission on Human Rights has identified complicity between prison authorities and criminal gangs across Ecuadorian prisons since 2021.
The Noboa administration must guarantee the safety of judges and prosecutors. This will prevent criminals from manipulating justice by threatening authorities in exchange for their release or lighter sentences. Further, Noboa can strengthen intelligence and law-enforcement cooperation with the United States.
Efficient security policies are the first step towards tackling the economic crisis. According to a 2018 Inter-American Development Bank report, insecurity impedes Ecuador from producing an additional 3 percent of GDP growth per year.
Someone Has to Pay the Bills
International markets have reacted positively to Noboa’s electoral victory. One day after the election, Ecuadorian bonds increased in value by two cents. That is relative to a market value of around 50 cents and face value of one dollar. However, market participants are aware that Noboa’s government is most likely transitional. The administration will not be able to pass substantial reforms that could promote investment and job creation for citizens. The latter is acute because seven out of 10 Ecuadorians work in the informal sector of the economy.
According to the DNA campaign platform, the Noboa administration will strengthen dollarization through fiscal discipline and increase international reserves. To avoid wasting public resources, the party proposes balanced or “zero-based” budgeting. Whether this was mere campaign rhetoric remains to be seen.
Noboa also stated he could use $1.5 billion of Ecuador’s international reserves to invest after the arrival of the El Niño phenomenon, which is set to cause an increase in rainfall on the Pacific coast. The day after Noboa’s statement, according to the Central Bank, Ecuador’s Country Risk Index score increased by 66 points. This means a percentage risk premium higher by 0.66, and the estimated risk of default reveals the nation’s financial fragility.
While Noboa’s economic team remains a mystery, his administration will face a fiscal deficit that will likely reach 4 percent of GDP in 2023. He also has to navigate the possibly devastating results of the El Niño phenomenon, a lack of job opportunities, and a Country Risk Index rate of over 1,800 points. That means a risk premium on sovereign debt of 18 percent, which is crippling for any deficit spending.
Noboa’s challenges are enormous, and time is against him. He will need immense intelligence and decorum to carry out his government plan and bring peace to the country and its citizens. If he intends to get reelected, he will also have to avoid following in Lasso’s footsteps.
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