Monday’s column for World Politics Review outlined many of my thoughts on President Noboa’s decision to have the police raid Mexico’s embassy in Quito and detain former Vice President Jorge Glas. In the days since that published, Glas has had serious health issues, his lawyers have worked to get him released from prison, and international condemnation of Ecuador’s move has continued including a vote at the OAS.
Internationally, there will be a huge diplomatic cost but no real consequences economically. I’ve received a few questions about whether this diplomatic scuffle could lead to economic punishment, the blockage of an IMF deal, or trade sanctions. The answer is largely no. It is possible that Mexico or a few other minor trading partners of Ecuador cut trade with the country for some brief time period. But the United States, Canada, Europe, and China, even as they oppose Noboa’s bold move as a violation of diplomatic law, aren’t going to engage in any sort of serious economic pushback on someone who has worked hard to be an international ally.
There is hypocrisy by those who have cut diplomatic ties or called for economic restrictions on Ecuador. If broad sectoral economic sanctions and cutting diplomatic relations are both bad policy and ineffective when it comes to issues like US policy towards Venezuela, then they are almost certainly also bad and ineffective when it comes to Ecuador. It’s awkward to watch Mexico press to cut all ties with Ecuador (as they did with Peru last year) even as they encourage diplomacy by others around the world on issues that less directly impact them.
Bloomberg speculated that Noboa could benefit politically in terms of domestic support from this move. Ecuador’s public opinion is angry at corruption. Noboa’s move can be portrayed as a blow in favor of the rule of law against a corrupt former official. Prior to the raid, Noboa’s polling has declined to just below 70%, which is to say below its peak two months ago but still very popular. I’d say the decline was inevitable, but Bukele has proven sustained security can bring sustained popularity for longer than can be expected.
There are more points to that polling worth digging into. First, while Noboa’s popularity remains high, the right/wrong track numbers suggest people aren’t totally convinced the situation has improved. Some of this may be due to the ongoing security crisis. As I wrote a few weeks ago, security is better than four months ago, but still not great and there are questions about the sustainability. Beyond security, the polling challenges are likely due to economic issues, as the country is far from boom times and government assistance and safety nets are not strong enough to keep many people out of poverty.
Second, other institutions in Ecuador are not as popular as the president and none of the president’s political opponents are gaining amid his slight decline in support. In fact, the legislature has lost more support than the president has in recent months and is now net negative. Correa’s political movement announced they are in opposition to Noboa and other political movements seem to be sitting on the sidelines waiting to see how the next few weeks and months play out. But none of them are seriously challenging the president right now.
Third, there is a referendum coming up in a few weeks. The Cedatos polling as well as some private polling I have seen suggests all the referendum questions should pass. However, I have my doubts about the one question involving international arbitration. It feels tacked on to other more popular questions about security and voters may be cautious about simply checking yes down the line on the ballot. I think a likely scenario (but certainly not the only potential outcome) is one in which most or all of the security measures pass but the president loses on the arbitration clause and perhaps one other question. That mixed result would give Noboa space to work with in terms of security but would also signal trouble spots ahead on his economic agenda that his opponents could successfully attack.
Imagine Noboa wins most if not all of the referendum questions, there are two scenarios ahead on economic reforms:
Scenario A: Noboa uses the political momentum from the referendum win to press ahead with security and economic reforms in the coming months. He tackles tax reforms and cut subsidies, a sort of shock therapy, to get a better relationship with the IMF and get the economy back on track before the election next year. The risk, of course, is that any economic reforms could lead to political clashes and serious protests similar to those seen when President Moreno and Lasso attempted similar efforts. At the very least, Noboa’s popularity will take a hit for a few months while those reforms cause more harm than good in their early stages.
Scenario B: Noboa basks in his popularity, presses forward on security, but doesn’t use his political capital to change the country’s economic situation. He finds a way to juggle the fiscal issues for another year without addressing subsidies and attempts to remain popular through the next election cycle through hardline security measures and smart campaigning.
I’m leaning toward Scenario A at the moment based on what I’ve seen from Noboa so far and what sources in Ecuador are saying. That means a lot more drama in the months ahead including a potential round of protests when the austerity measures are announced. It’s been a wild year for Ecuador so far and that will continue into May and June.
It’s funny that many have compared Noboa to Bukele. Bukele is definitely a scenario B sort of leader, basking in popularity due to his security measures without doing the hard economic reform work to put the country on a more sustainable track. Noboa is likely to take the risk that Bukele refuses to do. Whether those economic reforms work in time will determine whether he wins reelection next year.