Transcript: Ecuador’s ‘unprecedented’ Mexican embassy raid

This is an audio transcript of the FT News Briefing podcast episode: ‘Ecuador’s “unprecedented” Mexican embassy raid’

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Sonja Hutson
Good morning from the Financial Times. Today is Wednesday, April 10th, and this is your FT News Briefing.

AI is getting closer to superhuman learning. And Australia wants to start making its goods at home again. Plus, Ecuador’s new president gambled big by storming the Mexican embassy. 

Joe Daniels
It’s a massive deal. It’s practically unprecedented at a state level. 

Sonja Hutson
I’m Sonja Hutson, and here’s the news you need to start your day.

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OpenAI and Meta are getting close to releasing new artificial intelligence models that are capable of reasoning. This is a big step towards creating AI that has superhuman abilities. Meta will launch its new tool called Llama 3 in the next few weeks, and OpenAI says its ChatGPT-5 is coming soon. In just one example, Meta says it plans to integrate it into smart glasses, the idea being that you could look at a broken coffee machine and the glasses would tell you how to fix it. 

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Police in Ecuador stormed their way into the Mexican embassy late last Friday night. They were after the country’s former vice-president, Jorge Glas. Mexico had granted him asylum after he was charged with corruption. The country has since cut diplomatic ties with Ecuador. The episode made people sit up and pay attention to Ecuador’s new president, Daniel Noboa. Here to talk to me about the situation is the FT’s Joe Daniels. Hey, Joe. 

Joe Daniels
Hey, Sonja. 

Sonja Hutson
So, Joe, bring us up to speed here. Who exactly is Jorge Glas? And how big of a deal was this raid? 

Joe Daniels
Jorge Glas is an Ecuadorean politician. He served as vice-president of Ecuador from 2013 to 2017 during the government of the leftist, authoritarian really, Rafael Correa, who is a very influential figure in Ecuadorean politics. Jorge Glas was accused, as have many people from Correa’s political movement, of involvement in drug trafficking. But his sentences relate to corruption.

And it’s a massive deal to raid the embassy of a foreign country. It’s practically unprecedented at a state level. It’s something that could set a very dangerous precedent, and that’s very concerning for the stability of diplomatic relations in the region. 

Sonja Hutson
And what about Ecuador’s president, Daniel Noboa? What should we know about him? 

Joe Daniels
Well, the thing about Noboa is we don’t actually know that much about him as a person. He is the son of one of Ecuador’s richest men. He is educated abroad. But he was a pretty much a political neophyte when he entered the race in the snap election last year. He surged to popularity during the campaign, and he has benefited politically from being an outsider in a country that was really kind of yearning for one. 

Sonja Hutson
And so why do you think that he would take such a big risk like this? 

Joe Daniels
Well, the political situation in Ecuador is very much tied to the security situation inside Ecuador. In the last sort of five years or so, its murder rate has exploded. There’s been gang and cartel violence dominating swaths of the country, prison riots, prison breakouts. And then in January, we saw gangs launch a kind of series of attacks, including the takeover of a TV station live on air. In response to all of that, Daniel Noboa has launched a crackdown. He declared a state of emergency that lasted for 90 days, that empowered the military to take control of the prisons and to basically police crime. 

Sonja Hutson
Is this raid a gamble then by Noboa to show that he’s really serious about tackling corruption and tackling crime? 

Joe Daniels
Exactly. That’s the logic, the only logic that many people can see in his decision to raid the Mexican embassy and arrest Glas. It’s a domestic political gamble to shore up his support. I mean, he was elected in a snap election last year, and so he is actually only serving out the term of his predecessor. There’s scheduled regular elections in February 2025, so in less than a year the Ecuadorians will go to the polls to vote on the president. He’s widely expected to run.

There’s also another dynamic at play, which is, in order to cement his policies, he has called a referendum on the 21st of April. So some people think that he’s also attempting to kind of buoy support for the questions on his referendum, which largely relate to security measures that would make those into a kind of more permanent law. 

Sonja Hutson
So, Joe, just zooming out here a little bit, we’ve been hearing a lot about drug trafficking and violence in this region for a while now. And we’ve also been hearing about the increasingly harsh tactics to contain it. Can you put this raid in Ecuador into context for us? 

Joe Daniels
What it shows is that countries are becoming essentially more and more bold in what they’re willing to do in the name of fighting drug trafficking. This shows that governments like that of Ecuador are really willing to do new things, and apparently with the public’s backing, in order to fight narco trafficking. 

Sonja Hutson
Joe Daniels is the FT’s Andean correspondent. Thanks, Joe. 

Joe Daniels
Thank you. 

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Sonja Hutson
Big investors are selling US Treasuries and buying more European government bonds. They’re betting that the European Central Bank will cut interest rates faster than the Federal Reserve will. That’s because Europe has cooler inflation and a weaker economy than the US. Investors also think the ECB is likely to make more cuts. Markets are currently pricing in three or four rate cuts in the eurozone by the end of the year, compared with only two or three for the Fed. 

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Australia has outsourced a lot of its manufacturing for decades, but supply chain shocks and geopolitical tensions over the past few years have made the country think twice about that. Now the government wants to revitalise the industry to make its economy more resilient. I’m joined by Nic Fildes, the FT’s Australia and Pacific correspondent to discuss. Hi, Nic. 

Nic Fildes
Good day. How are you doing? 

Sonja Hutson
Doing well. Thanks. So can you tell us a little bit more about why Australia decided to make this pivot? 

Nic Fildes
I think two factors. One is the Covid situation. Obviously, during the pandemic, a lot of focus was given to the fact that Australia doesn’t manufacture a lot. So things like vaccines. Certainly this became a big focal point for how vulnerable we are when supply chains are disrupted. And the second thing, I guess, is the well-publicised 2020 trade dispute with China, where some of our most high-profile industries like wine, cotton, timber became subject to various forms of sanctions and tariffs. We rode it out fairly well as it turns out. We found other export markets for our goods. But the knock-on effect was that it did highlight that Australia is very dependent on countries like China for a lot of our imports. 

Sonja Hutson
All right. Well, what’s the plan to fix that? 

Nic Fildes
The plan is to reduce Australia’s dependence, economic dependence on a very large and very influential mining industry. So the Labor government has established a A$15bn fund for the National Reconstruction Fund. And what that’s looking to do is to transform small, innovative companies in various sectors into potentially globally significant businesses that can manufacture important goods within Australia to reduce our dependence on the rest of the world. Very much we’re looking at things like renewable energy, medicines, defence, and also those sectors that do dominate our economy — agriculture and mining. You know, there are technological developments around the companies that are building up around that, that could, with support, become, you know, interesting global players as well. So the idea is to target those sort of sectors where Australia can make a mark, rather than just trying to aim for everything and hope that it works. 

Sonja Hutson
And how have companies responded to this plan? I mean, does it seem like it’s gonna work? 

Nic Fildes
Broadly, there is positive reaction to this, yes. We will see how it plays out. This is all relatively new. I think there is a recognition that Australia is a high-cost place to do something like manufacturing. We have high wages, you know, high energy costs. So you need to be able to provide a subsidy or a loan that would enable you to compete with lower cost. So similar to the IRA, right. You know, America is also a high-cost economy. The Inflation Reduction Act there has been used for companies to tap into, to say, OK, we will, you know, set up a manufacturing facility here, which we might not have done under our own steam due to cost pressures, but with this secured loan or with this subsidy, we’re able to do it. 

Sonja Hutson
Nic Fildes covers Australia for the FT. Thanks, Nic. 

Nic Fildes
No problem. Thank you very much. 

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Sonja Hutson
Before we go, the FT Weekend Festival is coming to Washington, DC on May 4th. The event will include conversations with political leaders like former House Speaker Nancy Pelosi and national security adviser Jake Sullivan. You can find out how to register by clicking the link in our show notes. And podcast listeners get 10 per cent off by using the code: weekendpodcast.

This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news. 

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