Moreno regime in Ecuador escalates persecution of its opponents

By Denis Rogyatuk.

The arrest, sentencing and the plans for the extradition of Julian Assange from the United Kingdom to the United States continue to prompt waves of condemnation from all around the world, along with disgust at the Ecuadorian government of Lenin Moreno (pictured) and his increasing subordination to the US.

This was the first time in living memory that a government allowed a foreign law enforcement agency to enter its sovereign territory, the Ecuadorian embassy in London, and take into their custody a publisher whose status as a refugee has been recognised by the United Nations, the Inter-American Commission on Human Rights, Amnesty International and other international organisations.

As confirmed by a number of investigative articles and publications, this act of political cynicism was motivated by the acquisition of $4.2 billion in IMF loans, as well as the revelations published by Wikileaks of secret offshore bank accounts in Panama operated by Moreno’s family members, known widely as the INA Papers scandal.

Repression intensifies against political foes

Yet this is only a part of a larger campaign of repression against free speech and persecution of political opponents that the Moreno government has been actively conducting in the past couple of years.

Ola Bini, the Swedish software developer, internet activist and a longtime advocate for internet privacy, was arrested and held in detention for almost 30 hours without a hearing on April 11 in Quito, Ecuador, for his alleged collaboration with Julian Assange and the attempts at illegal computer hacking. Once the hearing commenced, no official charges against Bini were presented, with the legal authorities instead asking for 90-day pre-trial detention.

Along with the absurd allegations that he collaborated together with yet-to-be-named “Russian hackers” inside the country, the only pieces of evidence presented against Bini has been his personal friendship with Assange, his visits to the Ecuadorian embassy in London, and his support for Wikileaks’ exposure of war crimes and government corruption around the world.

The provincial court of Pichincha’s decision of May 2 to deny him an appeal and return him to El Inca Detention Centre was allegedly based on Bini’s possession of a number o books on privacy rights and hacktivism, as well the apparent fear that he would flee the country.

Bini himself, his parents, his legal team and a number of prominent political figures around the world consider him to be a political prisoner of the Moreno government – his persecution being politically motivated in order to further criminalise Julian Assange and silence any evidence of Moreno’s corrupt personal dealings.

In a letter published on May 6, Bini talks about his experience of living in the system of Ecuadorian penitentiary detention, describing it as a “maddening mixture of long stretches of isolation and boredom interspersed with random threats and acts of violence”. Yet despite his ordeal, he does not feel any grudge towards Ecuador or its people, insisting instead that he “has his life here and, if he was allowed to, he would continue to live it” there.

Censorship

Moreno’s disregard for human rights and the freedom of speech and press have been further highlighted by the continuous campaign of censorship of radio stations, news portals and websites publishing information critical of the Moreno government, as well evidence of the INA Papers and the links between Moreno himself and the illegal funding received from the Chinese construction company, Sinodyro, and other sources.

Up to this point, Ecuadorenmediato, Ruta Kritica online journal, Radio Pichincha Universal, and Hechos Ecuador website have been either censored, experienced a large number of online attacks, had their broadcasting signal cut or have been forced off-air by the Ministry of Communications or the Moreno government’s supporters.

Furthermore, a number of journalists and communication experts appointed during former President Rafael Correa’s government – including Fernando Alvarado, Marco Antonio Bravo, Carlos Bravo, Patricio Pacheco, Carlos Ochoa and Richard Macias – have also suffered persecution and harassment by Moreno’s government.

Targeting leaders of the Citizens’ Revolution

Moreno’s regime is showing no signs of slowing down its continuous persecution of the historic leaders of the Citizens’ Revolution, with the pre-trial arrest warrant being issued by the Ecuador attorney general against Ricardo Patiño, the former minister of defence, economy and foreign relations, on charges of “inciting of violence” based on a speech he gave at an internal meeting of his political party in October 2018 in which he called for “combative resistance” involving “resistance” and the “seizing of public institutions” as the means of opposing the Moreno regime and its increasingly neoliberal policies and repression against dissenting political voices.

Patiño was among the most prominent of leaders in Correa’s government, playing a crucial role in the establishment of the Union of South American Nations (UNASUR), granting and organising the asylum for Julian Assange, as well as playing a leading role in the Citizens’ Revolution Movement (MRC) of groups and organisations opposing Moreno and his neoliberal turn. Patiño left the country on April 17 and is residing temporarily in Mexico, a country he has a long personal and political relationship with.

Finally, the political and psychological warfare waged against Rafael Correa and former Vice President Jorge Glas appears to be entering new stages of absurdity, as Moreno’s government feels more and more pressure from the fallout of the INA Papers scandal. In an attempt to further invalidate the legitimacy of Correa’s and Glas’s 2013-2017 term in office, Moreno’s government and the attorney general’s office have now begun producing claims and alleged testimonies that the construction company Odebrecht was involved in the illegal financing of the 2013 electoral campaign of Allianza Pais for the presidential and general elections that year.

Two more of Correa’s advisors from his time in office, “Pamela M” and “Laura T” were detained on May 5 after the discovery of emails and communications allegedly showing a transfer of up to $11.6 million from the Brazilian construction giants into the account of Allianza Pais political party during the period of 2013-2014, in a case that has now become known as “Arroz Verde”.

The most apparent evidence to refute these claims has been the complete lack of any previous testimony on the part of Conceição Santos, a key witness in the case against Jorge Glas, regarding any financial transfers to Allianza Pais during this time.

Even the time period of the alleged transfers does not appear to correspond to the electoral campaign period itself, as Correa and Glas were elected in February 2013 with an overwhelming majority of 57.17 per cent of the vote.

In the meantime, the attorney general is yet to take any concrete actions against the actual, existing and well-known corruption cases, such as the INA Papers. This further illustrates the cruel irony of “justice” under neoliberalism – the jailing of activists, journalists and progressive leaders, as the cover for an implementation of the policies of austerity, and a distraction for the corrupt personal dealings of the ruling political elite.

Denis Rogatyuk is a Russian-Australian freelance writer, journalist and researcher. His articles, interviews and analysis have been published in a variety of media sources around the world including JacobinLe Vent Se LéveSputnikGreen Left WeeklyLinks International Journal of Socialist Renewal, Alborada and others. Follow him on Twitter @DenisRogatyuk. This article first appeared on The Grayzone and has been reprinted here with the permission of the author.

Ecuador’s neoliberal turn: Corruption and voter fraud behind Julian Assange’s arrest

By Denis Rogatyuk.

The scenes of six Metropolitan police officers dragging Wikileaks founder Julian Assange out of the Ecuadorian embassy in London as he was clutching a copy of the History of the National Security State by Gore Vidal have sent shockwaves of horror and an avalanche of condemnation from all around the world. Assange had been granted asylum in the embassy since 2012.

Although Ecuadorian President Lenin Moreno has been working towards expelling Assange from the embassy since at least December 2018, a chain of events in the last several months shows a clear pattern of increasing political instability, revelations of mass corruption in Moreno’s family, a further turn towards neoliberal economic reforms with the implementation of the IMF deal, and the gradual and total embrace and support for the US foreign policy in the region.

The INA Papers Scandal and growing political instability

Wikileaks’s decision to re-publish the details of Moreno’s use of offshore bank accounts in Panama, titled the INA Papers after the name of the shell corporation at the centre of the scandal (INA Investment Corporation) allegedly served as the main cause for his decision to expel the Australian journalist from the embassy. The Ecuadorian Communications Minister Andrés Michelena event went as far as claiming that the INA Papers were a conspiracy plot between Julian Assange, the former president of Ecuador Rafael Correa and Venezuelan President Nicolás Maduro.

The INA Papers scandal has cast a long shadow on Moreno’s regime and its rhetoric of allegedly fighting against institutional corruption. Most notably, the scandal reveals a close associate of Moreno, Xavier Macias, lobbying for the contract of the Coca Codo Sinclair hydroelectric power plant (valued at $2.8 billion) as well as the ZAMORA 3000 MW plant to be awarded Sinohydro, a Chinese state-owned construction company.

The money route from the Chinese corporation passes through bank accounts in Panama belonging to INA Investment Corporation – a shell company originally founded in the tax haven Belize by Edwin Moreno Garcés, the brother of the current President. The most crucial pieces of evidence indicate that the INA Investment funds were used for the purchase of a 140 m2 apartment in the city of Alicante, Spain, and a number of luxury items for President Moreno and his family in Geneva, Switzerland, during his time as a special envoy on disability rights in the United Nations.

As the pressure mounted on Moreno, the Attorney General of Ecuador issued a statement on March 19, indicating that it was commencing an investigation into the INA Papers scandal involving President Lenin Moreno and his family. Furthermore, on March 27, the National Assembly of Ecuador approved a vote in favour of investigating Moreno’s alleged off-shore bank dealings in Panama. According to Ecuador Inmediato, 153 public service officials, along with all members of the National Assembly, were also included in the initial public hearing scheduled for April 1.

The corruption scandal comes amid a number of other prominent crises and changes undergoing both the Moreno administration and the Ecuadorian economy. The local and regional elections of March 24th, as well as the election to the Council of Citizens’ Participation and Social Control (CPCCS) on March 24, have been riddled with a series of controversies and irregularities with regards to vote counts and allegations of fraud, including the attempts to invalidate null votes, disqualify and smear the candidates endorsed by ex-President Rafael Correa, as well as a lack of transparency and legitimacy as highlighted by the report of the mission of electoral observers of the Organisation of American States. In a way, this mirrors the 2017 Honduran presidential elections, where mass voter fraud and other irregularities proved to be the key in returning of the hard-right Juan Orlando Hernandez government to power.  

The IMF deal and a turn towards the US

During the recent meeting of the Executive Board of the IMF, the financial body approved a loan package of $4.2 billion to the government of Lenin Moreno for what it called a “more dynamic, sustainable, and inclusive economy for the benefit of all Ecuadorians”. The agreement coincided with layoffs of more than 10,000 public sector workers, in addition to the ongoing policy of reduction in the public and social spending, a decrease in the level of minimum wage and the removal of secure work protections that marked the sharp neoliberal turn of the Ecuadorian government under Moreno.

The IMF deal coincided with the increasing attempts by the Ecuadorian government to proceed with the expulsion of Julian Assange from its London embassy, and his arrest is likely a sign that the Moreno regime is willing to give up any part of its sovereignty – political, diplomatic, or economic, to comply with the demands of the international finance agency.

The same pattern has been observed in his increasing level of collaboration with the Trump administration and its foreign policy in Latin America. From holding private meetings with former Trump campaign chief Paul Manafort, to publicly hosting US Vice President Mike Pence in the Ecuadorian presidential palace, to authorising the opening of a new ‘Security Cooperation Office‘ in place of the old US military base in Manta, Moreno’s embrace of the new Monroe doctrine has become all too apparent, just as the efforts to hand Assange over to the US authorities have grown over the last two years.

At the same time, he has gone to great lengths to undo the progress of Latin American unity and integration initiated by his predecessor and other progressive leaders in the region. On March 13, Lenin Moreno announced that Ecuador would leave the Union of South Ameircan Nations (UNASUR) international agreement originally founded in 2008 by the leaders of South American nations, most prominent among them Nestor Kirchner of Argentina, Hugo Chavez of Venezuela and Lula da Silva of Brazil. The project was inspired by the long-standing vision of Simon Bolivar who envisaged South America as a federation of various republics, and was meant to consolidate the growing economic and political integration among the increasingly progressive governments across the region, eventually emulating the current structure of the European Union.

Moreno alleged in his press release regarding the exit from UNASUR that the project has been as a result of the lack of participation of the right-leaning governments in the region, as well as the “irresponsible actions of certain leaders that replicated the worst vices of Socialism of the 21st Century”. In a manner similar to Francisco Santander and the project of Gran Colombia during the 1820s, Moreno has opted for a pro-US foreign policy and commercial relations based on free trade and liberalisation.

He has also increasingly followed the path of other right-wing leaders in the region such as Jair Bolsonaro and Mauricio Macri in officially recognising Juan Guaido as the President of Venezuela. Moreno was also one of the attendees of the founding summit of Prosur, a newly convened regional block of US-aligned neoliberal governments.

In another unusual twist, the US ambassador, Todd Chapman, was spotted visiting the headquarters of the CNE during the March 24th election day and allegedly participating as an official electoral observer in the elections. This display of interference was widely condemned on social media as illegal under the current electoral rules, which forbid foreign powers from playing any active role in the observing or interfering the electoral process.

Silencing Wikileaks

Moreno’s decision to silence Julian Assange and expel him serves a dual purpose – to gain the trust of the Trump administration, and to direct the national and international public away from his corrupt dealing and offshore bank accounts, the fraudulent elections of March 24, and his mishandling of the Ecuadorian economy.

This has also been echoed in the comments made by Rafael Correa, the former President of Ecuador who first authorised Julian Assange’s asylum back in 2012. After having his page blocked on Facebook, Correa stated that, “In his hatred, because Wikileaks published corruption of INA papers, Moreno wanted to destroy Assange’s life. He probably did it, but he has also done a huge damage to the country. Who will trust in ECUADOR again?”.

Overall, Ecuador has come to resemble the neoliberal regimes of the 1990s across the continent, with IMF-sanctioned austerity, increasingly unstable state institutions and an almost complete obedience to the US foreign policy in the region becoming the new policy standard. By contrast, the decade of political stability and the economic progress enjoyed by the Ecuadorian citizens under President Correa’s government now seems like a cherished (albeit distant) memory that his supporters, and even his detractors, now seek to recover.

Denis Rogatyuk is a Russian-Australian freelance writer, journalist and researcher. His articles, interviews and analysis have been published in a variety of media sources around the world including Jacobin, Le Vent Se Léve, Sputnik, Green Left Weekly, Links International Journal of Socialist Renewal, Alborada and others.

How do we make the tech giants pay their fair share of tax?

By Verónica Grondona.

Examples of massive corporate tax avoidance by multinational technology giants active in the digital economy have been widely covered in the media, prompting outrage among people across the world.

So how do they get away with it? Google, Facebook, Amazon and Uber are all large enough companies for tax authorities to notice them. They are digital, but their activities in the countries we live in are not invisible. We can see their advertising, or we even buy goods or services through them, and we clearly see that they are using our data.

However, for tax authorities, it is not that easy to legally “see” them because most legislation and tax treaties involving EU states say that tax authorities can only tax a “taxable presence”, a tax resident, or a permanent establishment (PE) with physical presence in a country – and we all know that one thing these companies need not have in order to operate in our countries is a physical presence.

This has resulted in different court cases around the world with different, even contradictory results.

To name just a couple of them: In July 2017, France’s “Google Tax” was ruled illegal by a Paris court. The tax authority was not allowed to assume a PE of Google Ireland in France. On the other hand, in June 2018, the United States Supreme Court decided the case of South Dakota vs Wayfair, Inc., ruling that “a business does not need a physical presence in a State to meet the requirements of due process which call for some definite link, some minimum connection, between a state and the person, property or transactions it seeks to tax.”

The most bizarre aspect of this situation is that governments around the world are reluctant to change their treaties and their regulations in order to improve their chances of taxing such companies in the places where they carry out their economic activities, due to – among other things – the lobbying powers of such companies.

Nevertheless, some interesting developments have been taking place in this regard in the international sphere, even though the final direction remains unsatisfactory, particularly for those of us who would like the United Nations to have the leading role in global tax rules instead of the rich-country club, the OECD.

Between 2013 and 2015, the G20/OECD base erosion and profit shifting(BEPS) Action Plan identified as its Action 1 some of the problems of taxing the digital economy. It recognised three possible solutions: to modify tax treaties to allow for a broader definition of PE that considers the existence of a company’s significant economic presence and not only physical presence; to introduce withholding taxes at the source; or to introduce unilateral taxes.

Following such recommendations, several countries around the globe reacted by introducing reforms in their tax systems. On September 21 2017, the European Commission issued a ‘Communication on a fair and efficient tax system for a digital single market’, and on March 21 2018, the Commission presented a short-term and a long-term proposal for new rules to tax the activity of businesses in the digital economy. Though, because these proposals relate to taxation, it is the Council of the European Union who has the last word, and member states do not seem to be reaching an agreement any time soon.

In October 2017, the OECD launched a consultation, to which a lot of individuals, organisations and companies responded, and on March 16 2018, the OECD Inclusive Framework’s Task Force on the Digital Economy (TFDE) published its Interim Report on the “Tax Challenges Arising from Digitalisation”, after monitoring what was going on in the world in respect to actions implemented in different countries.

On the same date of the publication of the interim report, the US warned the OECD about any unilateral move regarding the taxation of tech giants. However, after the ruling in the South Dakota vs Wayfair case, the US seemed more willing to participate in discussions at the OECD level.

In this context, the OECD/G20’s inclusive framework on BEPS Action Plan issued a policy note on “Addressing the Tax Challenges of the Digitalization of the Economy” on January 23 2019, underlining that there is an agreement to examine proposals involving the allocation of taxing rights.

A few days before the policy note was issued, a group of G-24 developing countries advocated for the consideration of a proposal incorporating “a substantial economic presence [permanent establishment] threshold combined with unitary taxation with formulary apportionment.”

The policy note mentions that the solution would require discussing the allocation of taxing rights, though it also notes that the scope of such discussion would be limited, probably because the OECD countries have never been very willing to discuss taxing rights together with developing countries.

Nevertheless, although limited in scope – coming as it does from the OECD – this seems to be a drastic change of direction. Moreover, the OECD is now considering proposals that go beyond the arm’s-length principle, a principle promoted by the OECD since 1973 that has resulted in practice in the legalisation of tax avoidance. (This principle holds that intra-group transactions should be carried out at ‘arm’s-length’ – i.e., that the two parties are acting in their own self-interest and are not subject to any pressure or duress from the other party. In reality, two subsidiaries of the same corporate group rarely act as independent entities.)

Some venture there is a high chance that consensus will be built around a US position, which seems to move around a minimum corporate tax level plus a modest increase in tax allocated to market jurisdictions based on the concept of marketing intangibles, something that would allow all jurisdictions to get a portion of the pie, but always favouring high-income countries the most.

Regarding other base erosion issues being discussed by the inclusive framework, the OECD’s policy note also acknowledges that in the absence of international coordination and the existence of low-tax jurisdictions, a proposal will be discussed around two inter-related rules, an income inclusion rule and a tax on base eroding payments. Coming from the OECD this seems almost revolutionary.

However, before claiming victory, it would make sense to wait for the results of these discussions, which will be concluded in 2020, with some progress being reported at different stages in February, May and June 2019.

Verónica Grondona is a contributing editor for Irish Broad Left.