The President and the Finger-Flipper

Ecuador's president, Rafael Correa, is making a fool of himself again. This time a teenager flipped off Correa's motorcade, Correa jumped out of his car, screamed at the kid and apparently had him arrested (I haven't seen anywhere what for). The kid was sentenced to do community service. You can't make this stuff up.

Ecuador’s notoriously thin-skinned president took his hypersensitivity to the next level last week when he abruptly ordered his motorcade to halt in the middle of the street to berate a teenager for mocking him from the sidewalk. 

Correa gets pissed and goes after a kid.

President Rafael Correa stopped his motorcade in downtown Quito on May 1 after spotting a 17-year-old teen flipping him the bird from the sidewalk. 

Bravely surrounded by his bodyguards, Ecuador’s most powerful man stepped from his bullet proof vehicle and aggressively huffed and puffed towards the teenager to confront him and his mother. 

The startled teenager, Luis Carrera, says President Correa poked him repeatedly in the chest and scolded him on the sidewalk. He said the president was so angry that tears were forming in his eyes. 

“He screamed ‘Show some respect, little kid! I am your president, you rude scoundrel!’” Carrera said.

Team Correa denied the part about poking the kid in the chest. Oh, well, that makes everything much more presidential, right?

Correa a couple months ago had a twitter snit about a comedian, John Oliver, who made fun of him on HBO for his hypersensitivity (thus, of course, proving Oliver right). Here's a link to the YouTube – it's really, really funny.

Correa also used his weekly TV show to attack a private citizen who had set up a Facebook page that had mocked him, as recounted here in The New York Times Magazine.

These examples are ludicrous, of course, and rather amusing, but it gets more serious when Correa sues newspapers for millions of dollars for criticizing him, in order to shut down dissent in the country.

This doesn't bode well for Ecuador's future.

Random Thoughts on Ecuador's Oil Boom

Commodity-driven economies, history tells us, can be counted on to go through boom and bust cycles. The politicians who are lucky enough to ride the boom are, not surprisingly, very popular. The bust, of course, is less fun.

Ecuador had two such cycles in the twentieth century -- the cacao boom in the early 1900s, and the banana boom in the middle of the century. In both cases, the bust brought on periods of instability (there were military coups in the twenties and seventies).

Currently, the country is enjoying the oil boom, but there are signs that it may be nearing an end. Will that mean a bust sometime soon, and what consequences might a bust have? We'll just have to see, but Ecuador should prepare for problems if oil prices drop, and I doubt if Rafael Correa's favorability ratings will stay where they are.

Ecuadorian Asylum Report

Ecuador has attracted considerable attention on the world stage by granting asylum in their London embassy to Wikileaker Julian Assange, who is charged with sexual assault in Sweden, and offering asylum to Edward Snowden of NSA fame. Ecuador is now threatening to sue the UK to force them to allow Assange free transit to Ecuador.

In hopes of breaking the deadlock, Ecuador has proposed creating a bilateral commission to resolve the issue. 

"We are hoping for a response, including one in writing, from (the British) and if they do not do so in a few days we will have to prepare an international suit so that the United Kingdom respects international law," Foreign Minister Ricardo Patino said in an interview with Ecuadoran public radio. 

If London rejects the proposal, Mr Patino said, "we will have no alternative but to go to international judicial venues to compel respect for Ecuador's right to grant asylum, and their obligation to provide safe conduct."

One wonders how they think they will enforce such a ruling, assuming they get it. But in any case, I was amused to find, on the same day, this reminder that the asylum card can be played both ways. Panama has granted asylum to a member of the Ecuadorian opposition who was convicted, in absentia, of murder.

Panama granted asylum Saturday to an Ecuadoran opposition politician sentenced to prison last month for his role in a multiple homicide case, finding that he was subjected to political persecution. 

Tito Galo Lara Yepez fled to Panama and requested asylum on grounds that his opposition to Ecuador's leftist government had placed his life in danger.  [ ... ]

"Granting asylum (to Lara) could be a measure that supports the need to respect human rights and social and political stability in the region," the decree said.

On Taxes and Subsidies and Smuggling

An interesting item appeared in Cuenca HighLife, an expat publication in Cuenca, Ecuador. Apparently unconsciously, it makes a valuable point about one of the almost inevitable results of both subsidies and taxes – smuggling.

The article is actually about liquor retailers who have seen a terrible plunge in their sales since the government began raising liquor taxes a few years ago. The taxes are so high now that the price of a bottle of booze is more than double what it is in neighboring countries.

Cordovez said that a bottle of Johnny Walker Black Label whiskey that can be purchased for $37 in Peru, costs about $80 in Ecuadorian stores.

What would you do in such circumstances (assuming you had both entrepreneurial and criminal tendencies)? You’d buy booze in Peru and smuggle it into Ecuador, that’s what. And if your such tendencies were a bit less pronounced, but you needed to save a few bucks, you’d probably buy your booze from the neighborhood bootlegger. And apparently, there’s a lot of that going on.

Quito customs officer Luis Cortez says that as much as 60% of foreign liquor purchased in Ecuador is smuggled in. “We do not have the personnel to keep all of it out. We can control it in stores and bars but it is difficult with prívate sales.”

That’s what happens when the governments distort markets. Another way the Ecuadorian government distorts markets is by subsidizing natural gas (which most people there use for cooking). This subsidy gives the smugglers the opportunity to make money on both ends of the trips between Peru and Ecuador – why send empty trucks down to Peru to bring back liquor?

The government admits that there is a growing black market for foreign liquor brands, almost all of it coming over the borders with Peru and Colombia. According to Cordovez, much of it crosses the borders in gas trucks smuggling low-price LP gas out of the country.

So the Ecuadorian government is losing money twice (and Peru doubling up their wins) – Ecuador is subsidizing Peruvians’ use of gas and Peru is collecting taxes on the liquor Ecuadorians drink.

The funny thing is that Ecuador could probably make a lot more money by charging reasonable taxes. If they charged the same tax as Peru, or even just a little more, there would be no reason to smuggle booze (they are planning to cut out the gas subsidies soon). If 60% of the liquor is smuggled, then Ecuador is collecting $0.00 tax on most of the country’s liquor sales. It shouldn’t take an economics PhD to figure out that such high taxes actually reduce tax revenue rather than increasing it.

I mention the PhD, because the President of Ecuador, Rafael Correa, under whom the taxes have been raised so much, is an economist; his degree is from the University of Illinois. He is not reflecting much credit on the ol’ alma mater.

US Rescinds Tariffs on Ecuador Shrimp

In this post last month, I speculated that tariffs imposed on imports of Ecuadorian shrimp by the US might have been retaliation for Ecuador’s offer of asylum to Edward Snowden.

Whether or not that was the case, the tariffs, which had been imposed as a penalty for dumping by Ecuador, have been withdrawn.

The U.S. International Trade Commission (ITC) has dropped countervailing duties on imports of shrimp from Ecuador, local media reported Friday. 

In a divided vote, the ITC ruled that the Coalition of Gulf Shrimp Industry, the complainant, failed to present a strong enough case that it suffered from cheap imports of frozen shrimp from Ecuador as well as four other nations.

The Ecuadorian Media Crackdown Reaches the Internet

The Ecuadorian government is seeking to extend its media crackdown to the internet.

A senior Ecuadorian government official proposed a bill Wednesday that would criminalize insults posted on social networks, opening them up to receive similar treatment to those in the media. 

The head of the office of the legal secretary of the presidency, Alexis Mera, said he introduced the proposal to the Justice Committee of the National Assembly, which is discussing the new penal code. 

"There is injury in this media, as well as in a social network," Mr. Mera said in a television interview. "I think there are more people reading a person with 100,000 followers [on Twitter] than people following local media." 

The current criminal code provides penalties of between 15 days and three years in prison and fines for the crime of libel. The legislation doesn't state anything about new technologies, or social networks like Twitter or Facebook.

I absolutely agree that if I falsely state that “Jose Gomez is a drug dealer”, that I should be held accountable for it, regardless of whether the statement was printed in a newspaper, posted on a blog, tweeted, or said in conversation.

What concerns me is that I doubt that this is about stopping people from falsely calling Jose a drug dealer; it is much more likely to be about stopping people from calling Rafael Correa a bad president; whatever the truth or falsity of such a statement, we know for certain that the government will consider it false.

Ecuador's Media Fights Back

I’m pleased to see that Ecuadorian media is suing over the country’s repressive new media laws.

Journalists, commentators and others in the media industry in Ecuador filed a lawsuit on Tuesday in the Constitutional Court, the country's highest court, aiming to declare unconstitutional a recently passed law to regulate communications. [ … ] 

In June, Ecuador's legislature approved the law tightening media regulations, which raised concerns about an erosion of press freedoms and which gave an important victory to President Rafael Correa, who has clashed repeatedly with independent journalists. [ … ] 

Among other things, the law orders that a third of radio and television frequencies be in the hands of the state, another 33% in the private sector and the rest for community media, which would be run by communities or NGOs across the country. 

The law creates a government communications superintendent position that will audit, intervene and control the media and be able to impose sanctions.

That last paragraph pretty much summarizes the problem, since I fail to see any difference between a “government communications superintendent”, as defined, and what I would call a “censor”.

I’m not terribly hopeful, unfortunately, since Correa has control of the courts, and I doubt they will have the courage to defy him.

The Snowden Effect?

The US has decided to impose tariffs on imports of shrimp from Ecuador. When I first saw the reports about it, my first assumption was that this was retaliation for Ecuador’s offer of asylum to Edward Snowden, similar to the recent withdrawal of trade preferences on certain products, as I mentioned here.

Then I read a bit about it, and decided I was wrong, since this is a result of a complaint filed late last year by shrimpers in the Gulf against several countries that they claim are subsidizing exports to the US. The US has a law requiring the Commerce Department to impose tariffs on imports that are subsidized by foreign governments, with the amount of the tariff calculated to offset the amount of the subsidy.

The Department of Commerce of the United States (DOC) decided to impose an anti-subsidy tariff of 13.5 per cent for Ecuadorian shrimp exports, which so far have been imported free from tariffs to that market. 

Tariffs were also set for Malaysia (54.5 per cent), China (18.2 per cent), India (11.1 per cent) and Vietnam (7.9 per cent), but decisions were taken to exempt Thailand and Indonesia. 

This decision came following a complaint from the US organization Coalition of Gulf Shrimp Industries (COGSI) in December 2012 that accused the seven countries of using subsidies that contribute to make their production cheap and generate alleged unfair competition.

So Ecuador got hit, but so did several others, and Ecuador was by no means hit the hardest. Therefore, retaliation seems to not be involved.

But then I read on, and switched back (maybe) to my original opinion, that this may be retaliation, at least in part. Because the next paragraph says that the original findings were that Ecuador would get a pass, same as Thailand and Indonesia.

Last May, a preliminary report of the DOC determined that no tariffs would be imposed on Ecuador. But now the DOC changed its mind because in its research it was found out that only Indonesia and Thailand were not granted substantial subsidies …

It’s quite possible, I admit, that Commerce simply got some more info about subsidies in the meantime. My cynical guess, though, is that the change has more to do with Snowden than with shrimp.

President-for-Life?

My next stop on The Adventures of Bob World Tour is likely to be Ecuador. Such things are always subject to change without notice, but I’ve pretty much decided on moving to Quito early next year, after a visit home for Thanksgiving and Christmas.

This has caused me to be following Ecuadorian politics rather more than I have at any other point in my life. Which isn’t saying much, since the amount of time I spent thinking about Ecuadorian politics in the years 1947 through 2011 is pretty close to zero. In the past year+, though, I’ve been paying some attention, and let me tell you, it’s not a pretty picture.

Don’t worry, I’m not going to give you an in-depth report in this post – that will follow, bit by bit, over the coming months – but just as a bit of background, the current president of Ecuador is Rafael Correa, who is now in his third and final term.

Or maybe not.

Only a few months since the election have passed. But Correa's political allies are now proposing a law that would eliminate term limits for Ecuador's president, the same move Chavez took in Venezuela back in 2009. 

This worries Ecuadorians who believe that Correa has already gathered too much power in his hands by building up a state-owned media empire that responds to his interests, going after media critics with multi-million dollar lawsuits, and interfering in the country's judiciary.

More to come …

The First Casualty in Ecuador’s War on the Free Press

Rafael Correa has claimed his first scalp in his effort to silence all criticism of his government. The country’s only newsmagazine, Vanguardia, which frequently opposed Correa, has ceased publication

The owner said the country’s contentious new news media law had killed the magazine by creating restrictions that threatened to strangle a free press. The magazine’s last issue, due out on July 1, never appeared in print. 

President Rafael Correa, whose government was often the subject of critical coverage in the magazine, gloated over the corpse, saying it had starved to death: no one read it, he said, and the money ran out.

The former workers blame both the government, for censorship, and the magazine’s owner, for giving in.

“It’s illogical to think that you have to quit instead of fight,” said Mr. Calderón, 50, Vanguardia’s editor. “This reflects fear, and it reflects impotence.” 

Santiago Preckler, 72, a copy editor who worked at the magazine for almost all of the eight years of its existence, was more blunt. Yes, he said, the new law would make it much harder to publish hard-hitting journalism, but the owner’s decision to silence the magazine was the wrong response. 

“He’s a coward,” Mr. Preckler said.

A brief look at the law’s provisions show what the magazine would have had to face (and what surviving publications will be facing in coming years):.

Beyond penalties for publishing or broadcasting material that harms a person’s reputation or honor, the law prohibits something called media lynching, which it defines as the publication of material intended to reduce someone’s prestige or credibility. 

It also sets restrictions on the coverage of court cases, creates government bodies with wide powers to regulate and penalize journalists, and bans the publication of personal communications, including e-mails and conversations.

Update on Ecuador's Trade Status with the US

I mentioned yesterday that Ecuador might suffer job losses (and American expats there might suffer hostility) if the US failed to renew Ecuador's trade preferences.

President Correa of Ecuador made a big show of saying Ecuador wouldn't be bullied and renounced the preferences. Ecuador has indicated that the preferences didn't mean much anyway.

That is belied, however, by the fact that the Ecuadorian Embassy in Washington was actually running an ad campaign to get the preferences renewed, according to The Washington Post. Here's an ad currently up on Washington's public transit system.

The initiative also featured an extensive Web site, according to a news release lauding the launch, featuring “videos, infographics, photos and testimonials from those affected in both countries – from Ecuadorian farmers to the owners of U.S. flower shops,” as well as a social-media presence. 

The message is (was?) that the trade deal was pretty much the best thing since sliced bread, keeping Ecuadorians from resorting to the drug trade, while sending the very finest fresh-cut roses, tuna, broccoli and mangoes to American consumers. 

“KeepTradeGoing.com serves as a forum for educating, encouraging action, and stimulating a very important conversation: ways that Ecuador and the U.S. can further develop our trade relationships for the economic and security benefits of both countries,” Nathalie Cely, the Ecuadorian ambassador to the U.S. said in the release.

The website has been taken down.

Ecuador Learns First-Hand about Leaks

Ecuador may be having second thoughts about its asylum practices. The Guardian (UK) says that President Correa is piqued about the UK embassy, where it appears Julian Assange may be running things.

The plan to spirit the surveillance whistleblower Edward Snowden to sanctuary in Latin America appeared to be unravelling on Friday, amid tension between Ecuador's government and Julian Assange, the founder of WikiLeaks. President Rafael Correa halted an effort to help Snowden leave Russia amid concern Assange was usurping the role of the Ecuadoran government, according to leaked diplomatic correspondence published on Friday. Amid signs Quito was cooling with Snowden and irritated with Assange, Correa declared invalid a temporary travel document which could have helped extract Snowden from his reported location in Moscow. Correa declared that the safe conduct pass issued by Ecuador's London consul – in collaboration with Assange – was unauthorised, after other Ecuadorean diplomats privately said the WikiLeaks founder could be perceived as "running the show".

Although The Guardian mentions only that Correa had revoked the safe pass, and that he claimed it was unauthorized, Univision says that's false -- that they have proof Correa had initially approved the documents, but then backed off.

In an ironic twist, Univision used metadata attached to an electronic copy of the safe pass to verify that it was composed at the work computer of Javier Mendoza, the Ecuadorian deputy consul in London (see photo above). Mendoza has acted as an intermediary for Wikileaks founder Julian Assange, who is wanted in Sweden in connection with sexual assault allegations, but maintains that U.S. authorities are hunting him for Wikileaks' political activities. Metadata also showed that the Snowden pass was last edited, for 48 minutes, by the consul in London, Fidel Narvaez. Ecuadorian Press Secretary Betty Tola did not directly address the pass' authenticity but told Univision today that "any document in this regard is not valid and is the sole responsibility of the person who has issued [it]," suggesting that the London consulate might have acted alone in issuing it. That does not appear to be the case, however. According to communications obtained by Univision, Narvaez wrote the pass at President Correa's request, and the consul recounted speaking directly with the president about the "unique circumstances" of Snowden's case.

After the pass was revealed publicly, sources tell Univision, Correa instructed his staff to deny any role in its creation. "The official position is that the Ecuadorian government has NOT authorized any pass for anybody," those instructions read. "Any document that exists about has no validity."

Hoist by their own metadata, one might say.

Reconsidering Ecuador

Since I am planning to move to Ecuador (probably Quito) later this year, I have been following events there fairly closely of late and trying to learn as much as I can about the country. The recent events involving Edward Snowden’s request for asylum there have been of particular interest, of course.

If Ecuador gives Snowden asylum, regardless of how I may feel about him or his actions or whether he deserves asylum, it could have an impact on US expats in Ecuador (meaning: me).

Here’s the situation – Ecuadorian exports are currently given tariff preference in the US under the Andean Trade Promotion and Drug Eradication Act, which happens to be coming up for renewal next month. If Ecuador gives asylum to Snowden, it seems unlikely the preferences would be renewed.

Sen. Robert Menendez, D-N.J., head of the Senate Foreign Relations Committee, promised Wednesday that he would block renewal of the pact should Snowden be granted asylum. 

"Our government will not reward countries for bad behavior," he said in a statement, following other lawmakers who have spent years saying that the pact should be allowed to lapse, partly down to the country's links with Iran.

This matters considerably to Ecuador, since more than 50% of their exports go to the US. More than 100,000 Ecuadorians, for one example, work in the flower-growing business, almost all of which is based on export to the US).

If the US cuts off imports from Ecuador, Ecuadorians will lose jobs. With the government controlling the media, one can be certain that this will be trumpeted loudly (and every job loss, related to exports or not, will be blamed on the US).

So here’s the question: How unpleasant will things become for American expats if/when Ecuadorians start losing their jobs? This situation is making me think twice about my plans to move to Quito later this year. With luck, there will be some clarity about how things will play out before I have to make a decision.

Ecuador and the Free Flow of Information

One of the places Edward Snowden may end up is Ecuador. Since I am probably headed to Quito as the next stop on my world tour, I have been following events there fairly closely.

As I mentioned in an earlier post, I have mixed feelings about Snowden, and am awaiting further developments before trying to resolve them.

I have no mixed feelings at all, however, about the hypocrisy of Ecuador's president, Rafael Correa. With giving asylum to Julian Assange in Ecuador's London embassy as well as offering asylum to Snowden, Correa is posturing as the great defender of free speech. When it comes to the freedom of Ecuadorians to criticize him, however, Correa takes rather a different stance:

Correa's administration is in the process of rolling out a controversial new media law that restricts press freedoms. The law’s article 47, for instance, creates a Council of Content Regulation with the power to sanction press outlets that fail to report issues the state considers news. Ecuador’s El Comercio newspaper warned the law was a “coup against liberty.” 

Alberto Acosta, a former Ecuadorian minister of energy and mining, summed up the irony in atweet: “My support for Snowden and Assange … what they did would be penalized in Ecuador by the new media law.”

This could bite Ecuador in the butt. Ecuador's current preferential trade agreement with the US is set to expire, and this increases the likelihood that it will not be renewed.

Business leaders fear that giving Snowden asylum could prompt the United States to take retaliatory measures, with a preferential trade deal set to expire at the end of July unless Washington renews it. 

"We don't have the luxury of taking the wrong steps," the head of the Ecuadoran Business Committee, Roberto Aspiazu, told AFP. 

"What would we gain from giving political asylum to Snowden -- confirming Ecuador's international image as an anti-imperialist country? I don't think we need that." 

The United States is Ecuador's main trade partner, buying 40 percent of the Andean nation's exports, or the equivalent of $9 billion per year. 

Foreign Minister Ricardo Patino said Tuesday that the US State Department had contacted his ministry about the case.