The Socialist Who Gave Up Julian Assange and Renounced Socialism

(Bloomberg Businessweek) -- For WikiLeaks founder Julian Assange, the morning of Thursday, April 11, arrived as most others had over the almost seven years he’d lived as a refugee in the Ecuadorian Embassy in London. Granted asylum there in 2012, he was hiding from British authorities for having jumped bail to avoid extradition to Sweden on rape allegations and to the U.S. for publishing secret government documents. Australian by birth, Assange had been granted Ecuadorian citizenship and was therefore officially an Ecuadorian sleeping on Ecuadorian soil. He was untouchable.

That morning, at 9:27 a.m., police entered the embassy and arrested him on the bail charge. The question most have asked since is whether Assange, viewed as either a free-speech icon or a Russian-sponsored nihilist, will be extradited first to Sweden or to the U.S., where he’s just been indicted on 17 counts of violating the Espionage Act. Less attention has been paid to the man who, half a world away, made the decision to expel him: Ecuador’s president, Lenin Moreno. As Assange spent his last night under Ecuadorian protection in London, Moreno in Quito recorded a speech throwing him out. “Ecuador is a generous country with open arms,” he began. But enough was enough. Assange had repeatedly violated international law. Ecuador could no longer offer him shelter. Later that day, Moreno called Assange a “spoiled brat” and a “miserable hacker.”

Moreno’s shift on Assange was about more than just one man’s case. It was the latest but also the most dramatic signal that Ecuador, previously linked with the authoritarian left in Venezuela, Bolivia, and Nicaragua, is moving in a new direction—and back into the good graces of the U.S. For Washington the expulsion was a vital step. Michael Fitzpatrick, nominated by President Trump to be the next ambassador to the country, said at his confirmation hearing four weeks earlier, “Mr. Assange does damage to our national security, and the United States will have to assess the bilateral relationship accordingly.” Now that barrier has been removed, and relations are accelerating.

When Moreno took office two years ago, most observers assumed he’d continue to lead the country along the path forged by Venezuela; Rafael Correa, his former mentor and predecessor, thought he’d selected a seat warmer in Moreno. Today, Correa is living in Belgium, evading charges that he had a political opponent kidnapped. With a mix of cunning and openness that blossomed after a robber shot him in the spine 21 years ago, Moreno has purged the government of those close to the former president—including his running mate, a onetime Correa aide who’s serving a jail sentence for corruption.

The Correa era, which lasted from 2007 to 2017, mixed populist largesse with propaganda and repression. Correa embarked on a string of ill-considered public works projects, including power plants, refineries, pipelines, airport terminals, and a railway. Having defaulted on $3.2 billion in bonds for political reasons in 2008, he turned to China to fund many of these projects, with plans to repay in oil shipments. Only three of the eight hydroelectric power plants Correa started building, costing a combined $3.7 billion, were on line by the time Moreno took over. In addition to cost overruns, they’ve suffered from major construction and design flaws, according to international audits, adding substance to the cloud of corruption allegations that’s gathered around them. The same goes for $3.7 billion that went to refineries, including $1.5 billion on a project that’s still a vast empty lot. In total, Ecuador owes China $6.74 billion.

Correa also created a bloated state bureaucracy, where civil servants earned almost twice what private-sector employees made on average, and took on a debt load above the legal limit of 40% of gross domestic product. Harboring Assange was an attempt to position himself as a defender of press freedom, even as Correa tried to shutter the country’s largest newspaper, El Universo, sued individual journalists for millions of dollars for alleged libel, and hit other papers and radio broadcasters with fines.

Moreno, who’s 66 and the world’s only elected head of state in a wheelchair, has established a different tone. He’s launched a national dialogue on economic and political reform, railed against corruption, and worked to restore an independent press and judiciary. He pushed through a referendum that established term limits for elected officials and set the stage for judicial reformers to replace a constitutional court so discredited that several members were under suspicion of money laundering. He reoriented the country’s economic policy, including appointing a young business leader as finance minister, which led to a decrease in yields on Ecuadorian bonds and a deal with the International Monetary Fund to restore dollar reserves and stabilize public debt. He nudged his country away from China and welcomed private investment. And he’s begun a cleanup of hundreds of oil-spill sites that had been allowed to fester for a generation while the previous government sponsored losing international litigation against Chevron Corp.

In one sense it’s unsurprising that a small, indebted Latin American country reliant on commodity cycles (oil, copper, shrimp, and bananas) has shifted to the right, as its neighbors Brazil and Argentina have done in recent years. But those countries elected conservative leaders. Moreno—whose first name, after all, is Lenin and who spent years as a member of the Marxist Movement of the Revolutionary Left—ran on what appeared to be a platform of unabashed populism. Some of those who voted for him now consider him a traitor, while many who favored his opponent embrace him. “Look around this room,” says Michel Deller, one of Ecuador’s biggest real estate developers, at a business conference that drew 250 participants to the southern city of Guayaquil in May. “Maybe two people here voted for Moreno. But most everyone at this conference is now happy he won.”

Among the surprised converts are members of Moreno’s own cabinet. “I didn’t expect it,” the new vice president, Otto Sonnenholzner, a 36-year-old radio host who took office six months ago, says of Moreno’s policy shift. “I saw him as part of a huge, powerful train taking us straight to Caracas.”

One person who had an indication of the coming changes was Todd Chapman, the outgoing U.S. ambassador. In 2011, after a WikiLeaks dump of secret diplomatic cables, Correa threw out U.S. Ambassador Heather Hodges, who’d been exposed saying Correa seemed perfectly content with the corruption of his police chief. Over the next few years, several U.S. agencies were either expelled, including the U.S. military assistance group, or left because of a lack of cooperation from the Ecuadorian government, such as the U.S. Agency for International Development and drug interdiction officers. 

Days after the 2017 Ecuadorian election, Chapman was called to a meeting with the president-elect, who spoke of his strong desire to rebuild relations with the U.S. and reorient the country’s policies. The ambassador told his bosses in Washington that this was a moment to seize, urging a renewal of abandoned cooperation deals and bringing in a parade of high-level visitors. Following a trip to Ecuador last summer by Vice President Mike Pence—the first such bilateral visit since Richard Nixon’s in the late 1950s—U.S. agencies are returning to Quito. Recent guests include Admiral Craig Faller, commander of U.S. Southern Command; Mark Green, administrator of USAID; and members of the U.S. Trade Representative. Next year Ecuador will, for the first time, host Unitas, the large U.S.-led naval exercise carried out annually in Latin America.

Moreno has denounced Venezuelan President Nicolás Maduro—who was known as “comrade” in Quito as recently as a year ago—and recognized U.S.-backed opposition leader Juan Guaidó. The call for Maduro’s departure has been seen as a victory in Washington, while the arrival of more than 250,000 Venezuelan refugees in Ecuador gives the matter domestic urgency. Longtime hosts to hundreds of thousands of Colombian immigrants, Ecuadorians have generally sympathized with Venezuelans, though there’s been some backlash as the refugees are seen to strain resources and increase unemployment.

“Having a government elected on a left-wing platform in favor of American policy is really important for making it look like this is acceptable to the region and not just built up by Donald Trump’s team in Washington,” says Francisco Rodriguez, a Venezuelan who runs economic and political analysis of the region for Torino Capital in New York. Other governments whose relations with Ecuador had been cool have joined in supporting Moreno. In recent months, Quito has hosted German President Frank-Walter Steinmeier, South Korean Prime Minister Lee Nak-yeon, and U.K. Trade Minister George Hollingbery, who in May became the first British cabinet minister to visit the country in almost a decade.

Moreno’s own life story is full of dramatic shifts that forced him to rethink longstanding assumptions, both personal and political. Born to a schoolteacher in an Amazon hamlet on the Peruvian border with no outside road access, he attended public school in Quito and got a degree in public administration; his father became a legislator for a populist party. Moreno was at one point president of Ecuador’s chamber of tourism, which won him friendships among high-level executives, some of whom are now in his cabinet.

In an interview at the presidential palace, Moreno describes himself as a “former cafe socialist” who, until he was shot in a bakery robbery in 1998, liked to “read a lot of dialectical materialism.” After the shooting, he went through four years of searing pain and depression. When he emerged, he says, it was with a conviction that joy, jokes, and helping others were life’s salvation. He became a motivational speaker, then a scholar of the healing power of humor, and finally he was pulled into Correa’s orbit by mutual friends. Moreno had been active in left-wing circles since high school, but his first run for office was on Correa’s ticket in 2006, when he was elected vice president. In the beginning, like many, he believed in the former president. Now he says that under Correa, Ecuador was “like a frog in water slowly heating up. The frog gets used to it,” including “limits on association and speech.”

While serving as the United Nations’ special envoy for disability in Geneva starting in 2013, his perspective changed further, fueled by the distance and exposure to other systems. “I thank God for the opportunity to stop and consider other circumstances and people, to examine what happened,” he says. “My view broadened.” He made another political leap when he attended Maduro’s presidential inauguration in Venezuela that year. “I saw that these people actually didn’t produce anything,” he says. “I said to myself, This isn’t going to happen to us. I won’t allow Ecuador to become a failed society, a failed state.”

He says his turn to the U.S. is in keeping with his appreciation for democracy and human rights; although he says he has his criticisms of U.S. policies, he didn’t specify what they were. So far, Moreno has secured $10.2 billion in loans over three years from the IMF, the World Bank, and the Inter-American Development Bank, which he’ll use to fund public housing and clean water delivery, beyond the economic stabilization program.

Moreno says socialism gets one thing right: that helping those in need and pursuing economic equality are indispensable. “That’s why my government will produce with the right and distribute from the left,” he says. In the predawn chill one morning, he demonstrates what he means. After wheeling himself onto the narrow streets of Quito’s historic center, in the shadow of Ecuador’s neo-Gothic national basilica, he holds the hands of the elderly and homeless there sleeping under blue plastic tarps. His government is going to build them homes and give them dignified funerals, he says. (His aides confirm that some 200,000 units for the homeless are already being built.) After an hour, Moreno invites the homeless to breakfast in the courtyard of a nearby art museum, where aides have laid out plates of fruit and pastries along with coffee.

There he gives a Yoda-like discourse mixing philosophy and pragmatism—an event Ecuadorians are getting used to. In his talks, Moreno likes to cite disparate sources, sometimes quoting John Donne and Che Guevara in the same paragraph. At a Quito convention center in May, Moreno took the stage with his vice president and two others—a gay activist and a woman entrepreneur—and talked for half an hour without notes about what it means to reconcile different perspectives. He often discusses the mysteries of quantum physics.

His lofty words sometimes make him seem like an observer of the political scene rather than its driver, notes Simon Pachano, a political scientist at Quito’s Latin American Faculty of Social Sciences, or Flacso. “Moreno’s great strength is his apparent weakness,” he says. “He places himself outside the political struggle and presents himself as someone working for the people.” Adds Santiago Cuesta, a top adviser to Moreno who’s known him for 30 years: “It’s hard to attack a man in a wheelchair.” Within days of Moreno’s call for a popular accord, a majority in Congress including opposition parties agreed to pass economic, pension, and labor reform laws and to strengthen the free press over the remainder of his term.

Ecuador’s most dogged investigative journalist, Fernando Villavicencio, offers a dissenting view. He says Moreno has eased up on repression, but to argue that the president is corrupt, he points to alleged kickbacks from Chinese construction company Sinohydro, the purchase of an apartment in Spain through an offshore shell company, and a Swiss bank account belonging to his wife. Moreno has denied the accusations and said he’ll open accounts he had while in Geneva to investigators; prosecutors have begun to review the matters.

Ana Marcela Paredes, a political scientist who used to serve as deputy chief of the country’s election council, is also not a fan. She says Moreno’s philosophical penchant consists of greeting card clichés uttered by someone who doesn’t like to get his hands dirty. During the runup to the crucial referendum, she explained to him a complex aspect of electoral law and thought he was taking notes. She later saw that he’d been doodling, Paredes says. (Moreno’s press office says it doesn’t comment on his private meetings or conversations.) Others argue that regardless of whether Moreno should be taken seriously, Ecuador, with its $51 billion national debt—representing almost half of the country’s economy, with only a decade to repay much of it—isn’t going to recover quickly.

Still, there’s a fair amount of optimism. Andrew Taunton, vice president for Ecuador Subsidiaries at Solgold, says newly identified copper deposits will go a long way in wiping out the country’s public debt. And Pablo Campana, a former tennis pro and entrepreneur who’s now Moreno’s foreign trade minister, says Ecuador’s 17 million inhabitants are at the threshold of a new era.

Moreno has committed to serving a single term, which adds to his credibility. Susan Segal, a former banker who’s president of Americas Society/Council of the Americas, which has sponsored two conferences in Ecuador in the past couple of years after staying away for eight, considers Moreno “incredibly thoughtful and pragmatic, and potentially transformational.” She draws a parallel with Chile, where Patricio Aylwin was a one-term president starting in 1990, following the dictatorship of Augusto Pinochet. Aylwin restored key institutions, setting an impoverished country on the path to stable prosperity, she says.

Jean Cano, a press freedom activist, says that had Correa remained in power, he and other journalists would be abroad or in prison. Fabricio Villamar, a conservative member of Congress and an opponent of the president’s, puts it more poetically. “There’s no question that things have changed for the better,” he says. “You can feel the liberty in the air.”

To contact the editor responsible for this story: Jillian Goodman at jgoodman74@bloomberg.net

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