Posts Tagged ‘Ecuador’

Ecuador socialist revolution ‘past destructive stage’

By Naomi Mapstone in Quito
Published: October 21 2010 19:16 | Last updated: October 21 2010 19:16

Rafael Correa mobbed by the public

Rafael Correa limps into a wood-panelled room in Ecuador’s presidential palace and sinks into a gold-leaf rococo chair beneath portraits of Latin American independence heroes.
Just weeks ago the US-trained economist, who has led a “citizen’s revolution” in this oil-rich Andean nation since 2006, was held hostage by police in what he says was a failed coup.
“We were all losers from September 30 – the country’s image, the image of police themselves and especially the five families who lost their loved ones and the dozens of injured,” Mr Correa says in an interview with the Financial Times.
This most paradoxical of presidents – he is a close ally of Hugo Chávez and Evo Morales, the radical leftist leaders of Venezuela and Bolivia, and yet friendly enough with Washington to call Hillary Clinton “dearest” on a recent visit – rubs his knee as he recalls the moment a mob turned on him “with such brutality, such savagery”.
“They fired tear gas at me, the president! … They tried to remove my gas mask; I was choking. I had 25 stitches in my knee because I had had a knee operation the day before … They tried to break my leg and one of my advisers took the blows for me,” he recalls.
Mr Correa had gone to face down rioting police officers after they closed airports and abandoned their posts to protest against cuts to their benefits.
Instead of seeing Mr Correa broker a peace, however, Ecuadoreans watched on live television as their president fled angry officers and later taunted them from a window, ripping open his shirt and daring them to kill him.

More FT video

Even for a society accustomed to volatility – seven presidents came and went in the decade before Mr Correa’s election – the subsequent wait was tense. It took almost four hours for the military to broadcast its support for Mr Correa, and about 10 hours for elite police and military units to rescue the president amid a hail of gunfire.
Mr Correa, 47, has since blamed opposition leader Lucio Gutiérrez, who was in Brazil and denies the accusation, leftwing groups and “corrupt” union leaders. He also believes extreme rightwing US groups were involved. “We have no hard evidence [of US rightwing involvement] but we are investigating. I trust fully in [US] president [Barack] Obama – he has nothing to do with this. These groups are also against president Obama.”
Opposition figures and many analysts contest the coup theory, saying no alternative leader was ever presented and that the government is using the uprising as an excuse for a witch hunt.
Scores of police and a former army officer have since been arrested and Ecuador remains under military control, with state broadcasts interrupting television programming to promote the government’s “coup” message.
Luis Hernandez, former commander of the special forces brigade that rescued the president, told the FT the revolt was intended to overthrow the law cutting civil servants’ benefits, not the president.
“There are always those who take advantage of a chaotic situation and try to put more wood on the fire, but who would have replaced Correa? There was nobody,” he says.
Before the police protests, Mr Correa had brought a measure of political continuity to Ecuador. His government spent heavily on education, health and infrastructure, widened the tax base and delivered on election promises to enact a new constitution and close down a US military base.
However, Mr Correa’s default on $3.2bn in foreign debt and the decision to renegotiate foreign oil company contracts alienated investors, and his domination of Congress by veto drew criticism at home.
He also faced opposition within his own party over cuts to police and military benefits, and had threatened to dissolve Congress if he did not get his way. But thanks to a post-revolt surge in his approval ratings, that threat is off. Now Mr Correa is forging ahead with his “21st century socialist” revolution.
“This is a revolution and a revolution is first a process of destruction … we had to destroy the old country with its institutions made for the few,” he says. Ecuador has now passed “its first stage of destruction” and “constructive chaos”, he adds, and has rules in place to attract investment.
The government wants to double investment by 2011 with the introduction of a tax cut of 3 percentage points for businesses, down to 22 per cent.
This does not indicate a softening of Mr Correa’s stance, however. Renegotiations with foreign oil companies are “progressing well”, he says, but if they are not finished by December the contracts will be cancelled.
“That is not our desire, but companies need to understand they should be governed by the rules of the game the country puts in place,” he says. / Americas / Politics & Policy – Ecuador socialist revolution ‘past destructive stage’

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Mugabe Cancels Visit to Ecuador Following Wiesenthal Center Protest

Buenos Aires, September 28, 2010

Zimbabwe’s dictator, Robert Mugabe cancelled a scheduled trip to Ecuador, where he was to receive a Doctorate Honoris Causa in Civil Law from Bishop Walter Crespo Guarderas, self-declared head of “the Anglican Province of Ecuador”. Mugabe’s host has been linked with former Bishop of Harare, Dr. Nolbert Kunonga’s “Anglican Province of Zimbabwe”, and was charged, in 2001, with allegedly supplying arms to the FARC terrorist movement of Colombia.

The Simon Wiesenthal Center had expressed indignation at the planned visit to Quito, due to take place following the UN General Assembly in New York.

In a letter to Ecuador’s Foreign Minister, Ricardo Patiño, Dr. Shimon Samuels (Wiesenthal Center Director for International Relations) and Sergio Widder (Director for Latin America) had noted that “Mugabe’s dictatorship has, for over three decades, set a record in human rights violations… his troops’ massacre of over 20,000 Matabele, in 1983-84, has been denounced as genocide and documented by the African Union”, adding, “Mr. Minister, lead the way in declaring this tyrant persona non grata throughout the Americas”.

“Investigate Mugabe’s host, Reverend Walter Crespo, for reported links with Zimbabwe’s oppressive system and publicly condemn this honorary doctorate award initiative”, had urged Samuels.

“Mugabe’s presence in Ecuador would offend human rights victims and whitewash such abuses in Latin America”, had added Widder.

Following its protest, the Center received an official letter from Ecuador’s Foreign Ministry stating that Mugabe had cancelled his “private visit” to that country.

“We construe from this diplomatic response that the tyrant is not welcome in Ecuador and hope that this sets a precedent throughout Latin America”, concluded Samuels and Widder

For further information contact Shimon Samuels at +336 09770158, or Sergio Widder at +54911 4425-1306, join the Center on Facebook,, or follow @simonwiesenthal for news updates sent direct to your Twitter page or mobile device.

The Simon Wiesenthal Center is one of the largest international Jewish human rights organizations with over 400.000 members. It is an NGO at international agencies including the United Nations, UNESCO, the OSCE, the Council of Europe, the OAS and the Latin American Parliament

Mugabe Cancels Visit to Ecuador Following Wiesenthal Center Protest | Simon Wiesenthal Center

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Ecuador: The Consequences of Default  <>
     December 18, 2008 | 1744 GMT


Ecuadorian President Rafael Correa
Ecuador’s decision to default on its debt opens the question of how the country will manage the investor abandonment guaranteed to result. A likely outcome will be that Ecuador will be forced to drop the U.S. dollar as its national currency, which comes with its own host of problems. Analysis
With the recent decision to default on $3.9 billion worth of foreign debts, speculation has begun to circulate that Ecuador will drop the U.S. dollar as its national currency. If Ecuador decides to go this route, it will need to invent a new currency system, essentially out of whole cloth. Ecuador’s decision to default made it the first country to turn to default as a way of managing the challenges of the international financial crisis (aside from Iceland, which is a special case <> ). The effects of falling oil prices have hurt Ecuador greatly. Oil makes up more than a third of the country’s exports, and with prices down nearly 70 percent from highs in 2008, Ecuador will find itself struggling to prop up an already strained oil industry while maintaining the social spending that forms the basis of Ecuadorian President Rafael Correa’s policies. Debt default is not new to Ecuador. The last debt default occurred in 2000, in the wake of a banking sector collapse that was partially a result of an explosion of credit in Ecuador and throughout the region. In this case, Correa has long threatened to default on the debt, which the government has deemed “illegal” or “illegitimate.” The default will take the form of the forced renegotiation of the value of a series of bond issues that Ecuador has released over the past decade, prior to Correa’s rise to the presidency. The effect of the default will be — in addition to cutting Ecuador’s debt obligations by about 40 percent — to immediately restrict Ecuador’s access to international capital. There is not an investor on the planet who finds debt-defaulting countries attractive, and in the current climate of highly restricted credit <> , Ecuador’s access to credit will be severely hampered. Ecuador’s total outstanding external government debt now totals around $6.1 billion, approximately 42 percent of which is financed through bonds. The remaining portion of external debt is financed through loans from international organizations and investors, and the replenishing of this source of financing will be frozen as investors react to the default. Much like Argentina after its 2002 default <> , Ecuador will be confined to its domestic capital markets for loans. Luckily, Ecuador’s banking sector has strong state controls and a number of domestically-owned banks. Of the $18.8 billion public and private banking sector, just over 14 percent of the sector’s assets are controlled by foreign interests (and thus reliant on increasingly scarce foreign financing). The remainder of the sector is in national hands, which gives the country some leeway because it means Ecuador has sequestered reserves of dollar-denominated cash. Unfortunately, switching to complete reliance on a domestic credit system poses major challenges to any capital-poor developing country, and it creates a particularly difficult situation for Ecuador. Ecuador adopted the dollar as its national currency to control the currency crisis that resulted from the 2000 debt default. This means that Ecuador has no control over its own monetary policy. Essentially, Ecuador is about to find itself in a position where it will have to expand the credit available to its population without being able to revalue the currency or print additional units. Thus, there is a big chance that Ecuador will be forced to abandon the dollar as its only currency in order to generate credit. With no choice but to create its own currency, the country will be faced with an extremely tricky economic situation. There are innumerable — and for Ecuador, unknown — problems associated with introducing a new currency. In the first place, it is difficult to get anyone to accept and use the currency. Money only has value inasmuch as people believe it has value, and new currencies must struggle to gain a foothold when they seek to replace an established and respected alternative like the U.S. dollar. As a result of this dynamic, the natural uncertainty about new currencies creates a great deal of pressure to use dollars on the side, creating an instantaneous black market for the dollar, which would undermine the official currency. Furthermore, Ecuadorians are not in a particularly good position to manage their own currency. Just taking into account the inexperience of the Correa administration and Ecuador’s eight-year stint with the dollar, the country quite likely has lost the expertise necessary for molding a new currency system. The biggest risk in implementing a new currency system that requires the outright creation and printing of a new currency is inflation. If the government begins to crank out new bills, it must carefully regulate the value of the money supply in order to avoid creating an inflationary spiral resulting from rapid monetary expansion.
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