Agile Ecuador government riles friends and foes

W. T. Whitney Jr.
People's Weekly World, 15 Dec 2008

Pursuing social justice and national independence, the government of President Rafael Correa has gained new adversaries while prodding old foes. Having won a 57 percent majority in a run-off vote, Illinois-trained economist Correa, candidate of the populist Alianza Pais party, became president in January 2007.

Correa, no shrinking violet, is forcing the U.S. military to leave Manta Airbase, advocates “socialism of the 21st century,” and with Venezuelan and Bolivian counterparts resists U.S. imperialism. Last week in Tehran he and Iranian President Mahmoud Ahmadinejad
entered into joint banking, energy, trade and scientific projects. Ecuador is requesting loans from Iraq, according to Foreign Minister Maria Elsa Viteri.

In the same vein, Correa responded in kind to a reprimand last week from Colombian Defense Minister Juan Manuel Santos complaining that Ecuador did little to fight leftist FARC insurgents in Colombia. Diplomatic relations with the U.S. puppet Colombian government were broken last March when Colombia attacked a FARC encampment in Ecuador.

Now, Correa’s government has challenged an ally in the struggle for Latin American unity. Two months ago Ecuador ousted Brazil’s Odebrecht Company because of an unfinished dam project, in the process reneging on four contracts for other company projects worth $700 million. On Nov. 21, Ecuador announced refusal to pay on a $550 million loan provided by Brazil’s state-owned National Bank of Economic and Social Development that had gone directly to Odebrecht.

In response, President Lula da Silva withdrew Brazil’s ambassador in Quito, the first such recall since 1870. Foreign Minister Celso Amorim threatened cessation of trade between the two countries.

International lenders were put on alert in mid-November when Ecuador delayed a $30.6 million interest payment on $3.9 billion in outstanding bonds. A 30-day moratorium period was used to study the possibility of default on all $10.3 billion in foreign debt obligations. Correa and advisors studied a report released Nov. 21 by an international, independent team of debt analysts, a year in the making.

Correa viewed the report as documenting an “illegitimate, corrupt, and illegal debt,” beyond government control. Hugo Arias, one of its authors, indicated that 80 percent of the debt emanated from old debt refinanced, and that $127 billion in principle alone has been paid over decades on loans originally worth $80 billion. Ally Venezuela holds most of the outstanding bonds.

President Correa is following the lead of former Cuban President Fidel Castro who at a conference on foreign debt on Aug. 1, 1985 asked, “Must debts to the oppressor be paid by the oppressed?”
The current debt crisis coincides with a 60 percent drop in oil revenues for Latin America’s fourth largest oil exporter. Ecuador’s government must delve into foreign cash reserves when prices dip below $76 per barrel. Plans to fund social programs through oil earnings inexorably went awry.

A back-up plan to use mining revenues, particularly from gold and copper, to cover state obligations boomeranged. On Nov. 17 demonstrations broke out nationwide led by indigenous and peasant groups opposed to a proposed mining law. Protesters concerned about diminished water and soil quality, land rights and local autonomy rejected promises that mining royalties set at 5 percent would pay for social projects.

Two days later 10,000 indigenous and leftist marchers blocked traffic on the Pan American Highway. Chants and banners called dramatically for water rights. Appealing to the new constitution, community leader Jose Cueva spoke for many marchers: “The president needs to first pass a food sovereignty law, a water law and a biodiversity law. Then we can have a national dialogue over what to do about mining.”

President Correa railed against “romantic notions, novelty, fixations or whatever, to say no to mining,” especially when we are “seated on hundreds of billions of dollars.” Calling for “environmentally, socially and economically responsible” mining, he denounced “infantile” and “fundamentalist” ideas.

The indigenous and social movements had been crucial to the 65 percent popular vote in September putting a new, government-orchestrated constitution into effect, one that embraced indigenous rights. Recently in disarray, CONAIE, the main indigenous federation, has revived.

Under the constitution, Correa and 5,993 other elected officials face re-election in 2009. CONAIE and other social movements have been instrumental over the past decade in overthrowing three presidents.