Ecuador on Brink of Collapse Amid Internal Armed Conflict

A Perfect Storm of Crises: Economic Instability and Armed Conflict

QUITO, ECUADOR - Ecuador is facing a catastrophic convergence of crises as the government struggles to contain an internal armed conflict with 22 terrorist organizations. The country’s fragile economy is under severe strain due to sustained mobilization and equipment of military forces for the ongoing conflict.

The Surge in Gang Violence

President Daniel Noboa declared in early January that Ecuador had entered an “internal armed conflict” against gangs responsible for a wave of attacks, including prison riots, car bombings, homicides, and kidnappings. While gang violence is a significant problem across many Latin American countries, Ecuador has witnessed a notable surge in recent months.

Economic Costs: A Devastating Impact

The economic costs of this instability are already being felt. According to the Institute of Economics and Peace, Ecuador suffered a loss of over $12 billion (6 percent of its GDP based on purchasing power parity) in 2023 due to violence, an annual per capita hit of approximately $1,127. This is expected to increase this year.

The IDEA Act: A Potential Lifeline

The U.S. Congress is considering a bill that could have an almost immediate positive economic impact on Ecuador. The Innovation and Development in Ecuador (IDEA) Act would help eliminate U.S. tariffs for 99 percent of Ecuadorian export products. However, without support from the Ecuadorian legislature to create a long-term economic plan that addresses structural problems in the country’s deficit, multilateral institutions such as the International Monetary Fund and World Bank are unlikely to provide Ecuador with the resources it needs.

The Importance of Multilateral Support

Ecuador’s instability has implications for the entire Western hemisphere. The country’s various crises require more than military aid from the U.S. Quito’s allies, including drug-producing nations such as Colombia and Peru, as well as major drug consumers like the U.S. and Europe, must engage in meaningful economic cooperation with Ecuador to address the root causes of organized crime and violence.

The Migration Surge: A Linked Issue

The surge in migration from Ecuador to the U.S. coincides with rising levels of criminality and violence in Ecuador. Economics, security, and migration are linked, meaning that all three issues must be combated in tandem. Across Latin America, countries incur substantial economic losses due to organized crime.

International Aid: A Hope for Ecuador’s Recovery

There is no sign that the internal armed conflict will end anytime soon, and the country remains in dire economic straits. Economic and security support must be linked to address these issues together. International aid packages that realize this may be Ecuador’s only hope for recovery.