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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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From Oil Boom To Cocaine Crisis: Ecuador's Steep Decline

  • Ecuador has become a prime transshipment point for cocaine, attracting international criminal organizations due to its strategic Pacific coast ports.
  • The country's homicide rate surged drastically, with 2023 projections surpassing the already alarming numbers from 2022.
  • Political turmoil and economic challenges hinder Ecuador's capability to combat the surging violence tied to the drug trade.

Cocaine-fueled violence is sweeping across the tiny South American country of Ecuador. The crisis-prone Andean country of less than 20 million, which enjoyed a massive oil boom at the start of the twenty-first century that lifted millions out of poverty, has until recently managed to avoid the bloodshed associated with narcotics trafficking. In a region long troubled by the conflict Ecuador was known as an island of peace despite being wedged between the world’s largest cocaine producers Colombia and Peru. Soaring cocaine production and seizures within strife-torn Colombia made it inevitable that Ecuador would emerge as a key transshipment point for the narcotic. The surge in violence couldn’t occur at a worse time for the South American country, which is embroiled in a deep political and economic crisis.

Ecuador shares a porous northern border with strife-torn Colombia, a country long synonymous with cocaine trafficking and related bloodshed. The international line of demarcation starts at the Güepí River in the Amazon Basin and ends on the Pacific coast at the mouth of the Mataje River in the Sardinas Bight. Authorities in both countries are unable to exert total control over the full length of the border with various Colombian illegal armed groups crossing frequently. The cultivation of coca leaf, preparation of coca paste and manufacturing of cocaine are all lucrative sources of income for Colombia’s illegal armed groups. For these reasons, coca cultivation and cocaine production are spiraling ever higher in the conflict-torn country. 

Colombia is now producing and exporting more cocaine than ever before, even when compared to the early 1980s during the heyday of the Medellin Cartel. The United Nations Office On Drugs And Crime (UNODC) estimates Colombia’s 2021 coca leaf production surged 43% year over year to a record 1,137,700 metric tons despite land under cultivation shrinking by 7% to 353,000 acres. The agency believes this caused cocaine output to hit yet another all-time high of 1,400 metric tons, which was 14% greater than the 1,228 metric tons manufactured a year earlier. Seizures also soared to a record high that year, with authorities 669 kilograms of cocaine in 2021, which forced illegal armed bands to find alternate trafficking routes.

Eight of Colombia’s top 14 top coca growing hotspots, where local economies are dominated by coca cultivation, cocaine manufacturing and the illegal armed groups engaged in narcotics trafficking, are situated close to Ecuador’s northern border. For those reasons, Colombia’s cocaine trade, as well as the strife-torn country’s civil conflict, have spilled over into neighboring Ecuador. It is believed more than a third of Colombia’s cocaine production flows into Ecuador. The tiny Andean country is now an important transshipment point for cocaine, with its Pacific coast ports ideally located to facilitate the exportation of the narcotic to the U.S., Europe and the Asia Pacific. As a result, Colombia’s illegal armed groups, including FARC dissidents and the country’s most powerful criminal band, the Gaitanist Self-Defense Forces of Colombia (AGC – Spanish initials), as well as Mexico’s Sinaloa and New Generation cartels have established a presence in Ecuador. 

Those criminal organizations have forged alliances with Ecuador’s prison and street gangs, who are responsible for providing the coordination necessary to transform coca paste into cocaine and ship the narcotic to key markets. By the end of the 2020 pandemic, Ecuador’s government had lost control of the country’s prison system. Deadly riots causing the deaths of hundreds of inmates are commonplace, while prison gangs are wielding greater power than the authorities. Those gangs provide a willing source of recruits for criminal organizations seeking to control Ecuador’s illicit drug trade. The Andean country’s importance as an international cocaine transshipment is underscored by estimates that more cocaine passes through it than any other country in the world. It is believed a least 700 tons of cocaine passes through Ecuador annually, most of which is destined for the U.S. and Europe. Accordingly, the violence afflicting the country is centered on the Pacific Coast cities of Guayaquil and Esmeraldas, the largest and second largest ports, respectively. 

These events, in a startling development, caused Ecuador’s homicide rate to soar over the last five years, with it hitting an unprecedented high of 26 murders per 100,000 inhabitants during 2022. This represents a nearly fivefold increase from 2018, when there were nearly six murders per 100,000 inhabitants. Sadly, the number of murders keeps rising, and the 2023 homicide rate is expected to eclipse 2022. Ecuador is now experiencing a murder rate on par with neighboring Colombia, a country long caught in the grip of cocaine-fueled violence and a decades-long low-level multiparty asymmetric conflict. That ranks once peaceful Ecuador as one of the most violent countries in Latin America and the Caribbean, with it ranked fifth by homicides alongside Colombia but behind Honduras, Trinidad and Tobago, Venezuela and Jamaica in first place.

The surge in cocaine trafficking, along with the boundless profits the narcotic generates, has allowed the criminal bands to rapidly consolidate significant power in Ecuador, which sees them now capable of challenging a historically weak state. Criminal bands are attempting to corrupt lawmakers and government officials while assassinating those investigators, prosecutors, politicians and lawmakers who are opposed to them, a phenomenon which is quite common in neighboring Colombia. The body count of public officials is steadily rising. The popular mayor of the Pacific Coast resort town Manta, Ecuador’s fourth largest port, was gunned down by hitmen in July 2023

In a devastating first-time event for Ecuador, presidential candidate Fernando Villavicencio was assassinated when a gunman opened first last Thursday after a campaign rally. The Colombian gunman died in an exchange of gunfire with security officials, while a further six Colombians were later arrested for connection to the plot. Villavicencio, a former journalist who was an independent lawmaker in Ecuador’s National Assembly from November 2021 until May 2023, when it was dissolved, has a long history as an anti-corruption campaigner. He was a vocal critic of leftist former President Rafael Correa, who in 2020 was sentenced to eight years in prison for corruption. Villavicienco’s anticorruption activities over the years saw him frequently forced into exile, while he claimed to have received multiple threats from criminal groups when investigating ties between cocaine cartels and Ecuador’s government. 

To avoid impeachment by the National Assembly, Ecuador’s rightwing President Guillermo Lasso, who took office in May 2021, dissolved the National Assembly triggering a general election for 20 August 2023. Since taking office, the banker and conservative president has battled to introduce neoliberal economic reforms aimed at plugging a massive budget deficit and returning Ecuador’s faltering economy to growth. The leftist-dominated National Assembly has opposed his every move, while the planned removal of various subsidies along with a spiraling cost of living sparked violent nationwide protests in 2022. All of these events, along with a flailing economically crucial oil industry, have shoved Ecuador into yet another political crisis which makes it essentially impossible for the state to tackle rising cocaine-fueled violence.

By Matthew Smith for Oilprice.com


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