It is traditional for a Latin American nationalist to criticize people who take their money out of their country and invest it somewhere else. President Rafael Correa has done it several times. In 2009 he forced private banks to repatriate part of their assets.

What is unusual is finding evidence that he who preaches does not necessarily practice what he preaches. Last week, Ecuadorians were surprised to hear the news—with our tax authority (Servicio de Rentas Internas–SRI) and then the presidency as a source—that Correa had transferred $330,000 to his bank account in Germany. The President then clarified (“…don’t be stupid, the money was sent to Belgium not Germany”) [in Spanish] that the money was transferred to pay for an apartment for his family in Belgium, given that his children may pursue studies in that country.

But the story did not end there. Earlier this week, the director of the SRI, Carlos Marx Carrasco, announced [in Spanish] that he will publish a list of all citizens that have taken money out of the country with the amount they have paid in taxes for doing so (currently there is a 2% tax on all transactions that imply taking money out of Ecuador). Marx Carrasco said that this has to be done “so that the citizens can see (the behavior) of those who represent El Universo, Diario Hoy, El Comercio and all media, who with human misery have allowed themselves to question (what the president has done)”.

This is how, those who concentrate political power in Ecuador, use information collected for the purpose of charging taxes to take reprisals.

Rafael Correa’s Flat in Belgium is a post from Cato @ Liberty - Cato Institute Blog

Political chaos and institutional meltdowns are all too common in Ecuador’s recent history. A cynic could even interpret yesterday’s violent police uprising that threatened the continuity of President Rafael Correa’s government as “a return to normalcy” in a nation that has had 10 presidents in the last 15 years.

Yet, despite the chaotic nature of its politics, Ecuador has enjoyed relative economic stability since it adopted the U.S. dollar as its official currency on January 9, 2000.

In a country where presidents are regularly toppled by mob protests or popular uprisings, it can be expected that the economy—and particularly the value of its currency—would go into a tailspin with every crisis. This was precisely what happened in the decade prior to 2000, when inflation averaged 37.5% per annum. However, in the 10 years since dollarization, the yearly inflation rate has averaged 6.8%. This number is itself inflated by the fact that inflation reached a peak of 91% in the first year of dollarization, and remained high the following year too. (That initial high rate is explained by the fact that, at the time of adopting the dollar, the government set a particularly high conversion rate for the sucre, Ecuador’s old currency, forcing a massive devaluation that led to high inertial inflation that year.) However, Ecuador’s inflation rate rapidly went down and has largely converged with that of the United States in recent years.

Of course, there are no silver bullets in economic development. Ecuador’s sound monetary policies have not been matched by similar coherent reforms on taxes and spending, or in the areas of trade policy, or labor and business regulations, for example. Ecuador stands in dismal 109th place (out of 141 economies) on economic liberty, according to the latest Economic Freedom of the World report. However, even as their country’s political and democratic institutions constantly fall apart, Ecuadorians can take satisfaction that the value of their currency is not under threat thanks to dollarization.

Dollarization Keeps Ecuador Economically Stable Despite Political Instability is a post from Cato @ Liberty - Cato Institute Blog

The World Cup is over but not the Ecuadorian government’s propaganda campaign vilifying the free press.

For those Ecuadorians who don’t have Direct TV, but only have cable TV or the local network channels, the only place to have watched the much-awaited matches was on one of the state-owned TV stations and with constant state propaganda. (You can watch the videos depicting the private press as a snake or as shooting bullets coming out of the TV here, here, here and here.)

When I say constant, I might be understating the frequency: according to Infomedia — a media monitoring company— during the weekend of June 18-20 these ads were broadcasted 414 times for a total of 7,988 seconds or 133 minutes.

To make matters worse, the ads continue to be aired at the same time the not-so-independent National Assembly is debating a new communications law that would create a Communications Council — controlled by the executive branch — with the power to impose severe sanctions on radio and TV stations and newspapers.

For starters, the proposed law contains this contradictory statement in its preamble:

Every person . . . has the right to . . . search, receive, exchange and distribute information that is truthful, appropriate, contextualized, plural and without previous censorship. . .

Of course, it will be up to the council to decide what is truthful (and appropriate, contextualized and plural, whatever that means).

Additionally, the Council would have the power to impose sanctions on TV and radio stations and the written press, including fees of 1-10% of the average sales of the media company during the previous three months. The long list of actions that could provoke a sanction includes the following:

• not complying with the obligation to broadcast at least 40% of nationally produced material during the daily programming schedule;
• broadcasting or publishing ads that “provoke violence, discrimination, racism, addiction to a drug, religious or political intolerance and all publicity that threatens human rights”;
• broadcasting commercials that do not “promote consumption that is social and environmentally sustainable”

Again, the government-controlled Council will judge whether media stations are in compliance.

Moreover, the proposed law stipulates that several positions (editors, general directors, news directors, reporters) at TV and radio stations and newspapers be held by individuals with college degrees in communications and journalism. 

The current communications regime also gives similar powers to a body charged with regulating radio and TV stations, but at least on paper, it is not controlled by the executive branch and does not have the power to impose sanctions on the written press. Even so, the current communications regulation was drafted by a military dictatorship in the 1970s and partly amended since the return to democracy in 1979.  President Correa relied on the content control provisions of the law — mostly ignored since 1979 — to shut down privately owned Teleamazonas TV for three days last year.

The Ecuadorian penal and civil codes already define sanctions for individuals who commit libel. These codes, applicable to all citizens, have been useful for Correa’s government: the op-ed page editor of El Universo, Emilio Palacio, was sued by one of Correa’s allies (Camilo Samán, the president of one of the state-owned banks) and convicted to three years in prison for libel (more on that here). Palacio appealed and then Samán mysteriously lifted all charges against the accused a couple of days before Hillary Clinton met with Correa in Quito.

During the last week of the World Cup, the editors-in-chief of the country’s main newspapers published public letters to the secretary of communications of the presidency (read them here, here, and here), Fernando Alvarado, in which they protested being accused in the government propaganda of being “thieves,” promoting “violence” and lying. The editors also demanded that Alvarado specify which media outlet is guilty of these charges and on what precise occasion they committed these punishable crimes. Guadalupe Mantilla, the editor-in-chief of El Comercio stated in her letter that this regrettable abuse of public funds for propaganda has been characterized “by an aggressiveness never before seen in Ecuador during a democratic regime.”

The government reacted to these letters with another offensive ad on TV that was aired during the Spain vs. Germany match. Last week, the Ecuadorian Association of Newspaper Editors issued a statement, endorsed by the country’s 12 most important newspapers and magazines, that read: “This attack from the executive branch happens at a time when the National Assembly is about to approve a new Communications Law . . . that flouts all international principles and agreements pertaining to rights and freedoms. Given these facts and given the lack of independence of the judiciary, we affirm that freedom of expression continues to be violated in Ecuador. . .”

The Ecuadorian Government’s Campaign against the Free Press is a post from Cato @ Liberty - Cato Institute Blog

On Monday I wrote about an Ecuadorian court’s sentencing of Emilio Palacio, editor of the opinion section of El Universo, to three years in jail. Since then, the Inter-American Commission on Human Rights (IACHR) has expressed “profound concern” about the prison sentence for Palacio, and the Inter-American Press Association (IAPA) and Reporters Without Borders (RSF) have strongly condemned it.

Op-ed writers from leading national newspapers have signed a statement condemning the court’s decision. This statement was published in El Comercio, El Universo, Diario HOY and La Hora. So far 47 columnists have signed on. See an updated list here of those of us who express our solidarity with the accused journalist.

Journalists Condemn Attack on the Free Press in Ecuador is a post from Cato @ Liberty - Cato Institute Blog

Ecuadorian President Rafael Correa has long labeled the free press as his “main enemy.” His attitude has unfortunately resulted in official intolerance of individuals critical of the government.

The latest example is that of Emilio Palacio, the editor of the op-ed page of El Universo — the newspaper with the highest circulation in the country — who was sentenced on Friday to three years in jail for an op-ed he wrote in August 2009. Palacio accused Camilo Samán, director of a state-owned bank, of having sent protesters to El Universo’s offices after the newspaper reported on possible acts of corruption at the bank. The President has repeatedly stated that Palacio should be punished for what he wrote. In a country where everybody knows that the courts are not independent of political power, it’s not surprising that the ruling went against the editor.

I have known Palacio since I began writing op-eds for El Universo in late 2006. Although we hardly ever agree on policy issues, I certainly don’t believe he (or anyone else) deserves to go to jail (and possibly pay a fine of $3 million) for expressing an opinion. (The court actually found Palacio guilty of libel, but even if we were to agree with that finding, the punishment surely does not fit the crime.)

Correa’s government has accused at least 31 people of offending “the majesty of the presidency,” jailing many of them for short periods of time. To do so, the President revived a law that the first military dictatorship of the 1970s put into place that made such an offense a crime and that was never taken off the books.

The government regularly vilifies its critics including journalists, university students, businessmen, and indigenous leaders. For example, during his weekly national radio shows, the President has attacked Carlos Vera and Jorge Ortiz, the two most popular news anchors in the country. The government’s frequent nationally televised messages (that every TV station on public airwaves is forced to broadcast) usually have the sole purpose of attacking a person or group that opposes official policy. Sometimes these messages were broadcast during Vera’s and Ortiz’s programs, thereby keeping their viewers from watching them. In 2008 Correa took over several privately owned TV and radio stations. Last year, he apparently had his eyes set on Teleamazonas, another TV station on public airwaves. In December, the government shut down Teleamazonas for three days and now has a frivolous legal case pending against it.

Sadly, Correa is following the pattern of his fellow populist Hugo Chávez in curtailing freedom of speech, though receiving virtually no international scrutiny.

A Columnist Sentenced to Three Years in Prison in Ecuador is a post from Cato @ Liberty - Cato Institute Blog

Ecuadorean President Rafael Correa announced Monday that his government is reviewing the broadcast licenses of radio and television stations and that it is finding “irregularities” to which sanctions will be applied, including revoking licenses. “Some sacred cows will fall,” he warned. The measures could affect hundreds of stations. The announcement was made just days after President Hugo Chavez of Venezuela also used an administrative pretext to close down 34 radio stations critical of his regime. Last week the Venezuelan congress began considering a press crimes law that would criminally penalize with prison sentences of up to four years members of the media “or any other person that expresses himself through any medium of communication” for reporting news that is false, harmful to mental health, or that produces instability. It’s not clear that Correa will also copy Chavez on a press censorship law or that he will close as many stations. But at the very least, Correa is seeking to significantly muzzle the independent press through intimidation and self-censorship.

Ecuador Copies Venezuela on Press Freedom is a post from Cato @ Liberty - Cato Institute Blog

Mary O’Grady writes in today’s Wall Street Journal on the Kirchners’ threats to press freedom in Argentina. Unfortunately, the attack on free expression is part of a worrying trend that is intensifying in some of the region’s populist countries. For more, see Gabriela Calderón’s post on Ecuador here; and my posts on Ecuador and on Venezuelan President Hugo Chávez’s efforts to close down Globovision TV here and here.

The Populist Assault on the Latin American Press is a post from Cato @ Liberty - Cato Institute Blog

Last year the Ecuadorian government seized two TV channels broadcasting on public airwaves and one cable channel along with hundreds of other businesses supposedly owned by the Isaías family, an unpopular Ecuadorian business group that the government bailed out in the late nineties. In seizing those assets, the current government claimed to be cashing in on a long overdue debt owed to it by the Isaías family. Leaving the violations of due process aside, this was a significant attack on freedom of the press in Ecuador given that the two public access channels garnered almost half the country’s TV audience. Back then the government said it was going to sell off the seized channels but it has not done so yet.

The last elections in my country, held on April 26, showed how government ends up manipulating state media: 79% of the political ads aired on these channels went for the official candidates despite the fact that the new electoral rules require every candidate to have equal air time.

Since those elections, Carlos Vera, the most popular morning news anchor in the country, quit his channel Ecuavisa because he claims to have been subject to the self-censorship imposed by Ecuavisa’s owner. According to Vera, the owner wanted to dictate whom he should interview on his show and chose not to air one of his interviews which, coincidentally, was with the President’s main political opponent. Vera issued a public statement explaining that he would not censor his show nor would he let anybody else do so. Since then, Ecuavisa’s independence has been severely questioned.

This leaves us with one important public airwaves channel that is still independent: Teleamazonas.

For the past couple of weeks there have been growing rumors that the government might shut down Teleamazonas applying the laws of Conartel, the regulator of TV and radio stations. According to Ecuadorian regulations, which have their origins in the military dictatorship of General Rodríguez Lara of the early 1970s, a TV channel or radio station can be sanctioned symbolically for $20 the first time it commits a violation; suspended for up to 90 days the second time; and lose its concession to operate for good the third time. Conartel has already imposed two sanctions on Teleamazonas.

In the first case Teleamazonas was sanctioned for showing bull fighting images, which Conartel has considered to be “conducive to violence” and thus, in violation of its regulations. This is a questionable rule, especially in a country in which bull-fighting takes center stage every December in Quito. In the case of the second sanction Conartel is applying a clause that forbids the live reporting of unconfirmed events. Such a law would make illegal most of the news reported in CNN or other news networks that report in real time. In this particular case, Teleamazonas aired images of what appeared to be a clandestine vote-counting center.

For now, we are waiting to hear from Conartel about the third sanction and what it is going to do about the second sanction, which would, if enforced, mean the suspension of Teleamazonas for up to 90 days. I wonder what freedom of expression Ecuadorians would be left with if the government decided to apply Conartel’s rules consistently to every TV and radio station.

Meanwhile the former Minister of the Interior, Gustavo Larrea, called attention to “journalists whose salary comes from foreign powers” including the CIA, though he did not specify what individuals he was referring to.

When asked about details he merely replied that it was the duty of a legislative commission to find out. I guess he is suggesting that individuals like myself, who write for an Ecuadorian newspaper but are not employed by an Ecuadorian company, should be investigated…

What is happening in Ecuador, and what has been happening in Venezuela over the last few years — the shutdown of RCTV, and the ongoing persecution of Globovisión — shows that in countries with a weak rule of law and public ownership of the airwaves, regulations can easily serve those in power who want to silence independent voices. Nobel Laureate Ronald Coase warned Americans about this potential abuse of power in 1959 in his classic “The Federal Communications Commission.” Back then he wondered, “In other fields it is almost always agreed that the use of property rights and of the price system serves the public good, why not in the case of radios [and TV]?”

Ecuador’s Continuing Attack on the Free Press is a post from Cato @ Liberty - Cato Institute Blog

The White House announced today that President Obama called Ecuadorian President Rafael Correa to congratulate him on his recent re-election and “to commend the people of Ecuador for their commitment to democracy.”

I’ve lauded Obama before for avoiding picking fights with Latin American populist leaders such as Correa. But I think that trying to befriend them sends the wrong signal to defenders of democratic institutions throughout the region. After all, a year ago Correa confessed that he wasn’t a democrat if that represented allowing the opposition to participate in the debate for a new constitution. More recently, he stated (in Spanish) that he preferred “a thousand times” to be a friend of Fidel Castro and Hugo Chávez than be an ally of the United States.

Obama should pick his friends in Latin America more carefully.

Obama Congratulates Correa is a post from Cato @ Liberty - Cato Institute Blog

Freedom of speech is coming under attack again in President Rafael Correa’s Ecuador. Last year Correa sent armed soldiers before dawn to some 200 private businesses, including three television stations, on the pretext that the owner (an unpopular businessman and critic of the government) had not paid money owed to the government.

It was never clear why the government had to place its own people in charge of running those businesses rather than go through the usual auditing or bankruptcy procedures. The result was to reduce criticism of the government at those TV stations and send a message to the rest of the media. At the time, Gabriela Calderón, Cato’s Ecuador-based editor of our Spanish language web site, www.elcato.org, hosted a weekly talk show program on CN3 TV station with two other market-liberal commentators. The station was one of the ones taken over, after which, Gabriela and her colleagues were told that from then on, their show had to “balanced” and include pro-government spokespersons. Gabriela and her colleagues quit in protest and the show went off the air.

Now Correa is enforcing a law that explicitly violates freedom of speech. Ecuador has been an officially dollarized country since 2000, before Correa came to power. Years of high oil prices have financed an explosion in government spending. With oil prices down, Correa’s populist project is quickly running out of money and people are speculating that he will de-dollarize Ecuador, allowing him to run the printing presses. However, it is illegal in Ecuador to suggest that the country will de-dollarize, as that would violate the law against spreading rumors of devaluation. The first victim has been Rómulo López Sabando, an attorney and long-time columnist for the Diario Expreso. On March 24 he wrote a column indicating that the government is planning to dedollarize. For committing that crime, the government ordered his arrest. He has been in hiding since.

It’s a very good bet that the government will de-dollarize this year, yet the Ecuadorian press has been silent on the matter. As the law victimizes the press and, more generally, Ecuadorian democracy, López remains in hiding and the arrest warrant still holds. Will Obama and other hemispheric leaders meeting at the summit of the Americas later this week denounce these abuses?

Freedom of Speech Under Attack in Ecuador is a post from Cato @ Liberty - Cato Institute Blog