Ecuador Defaults on Loans

post from Keystone Progress Blog on 19 December 2008 01:06:00 AM. © Keystone Progress Blog

President Rafael Correa declared on Friday that Ecuador would not make a $30.6 million interest payment on $510 million in bonds due in 2012, calling the debt illegal.

The default on the Global Bonus 2012 bonds means that Ecuador is also defaulting on Global 2015 and 2030 bonds. The default totals $9.937 billion, 19 percent of the country's GDP. Ecuador has assembled a legal team to fight expected lawsuits and hopes to use the default as leverage to renegotiate the debts.

Civil society organizations have long criticized foreign debt as a means of exploiting impoverished countries in Latin America, Africa and Asia. The anti-debt organization Jubilee USA says "countries are paying debt service to wealthy nations and institutions at the expense of providing these basic services to their citizens." In addition, lending institutions often use indebtedness to force cuts in social spending and impose business friendly economic policies.

The Confederation of Ecuadorian Kichwas (ECUARUNARI), the powerful Andean branch of the country's indigenous peoples movement, has long called the foreign debt illegal and illegitimate. "We have not acquired any debt. The so-called public debt really belongs to the oligarchy. We the peoples have not acquired anything or been benefited, and thus we owe nothing."

Mainstream analysts immediately predicted the move would hurt Ecuador economically, cutting off access to international credit from banks and multilateral institutions like the World Bank. Enrique Alvarez, head of research for Latin America Financial Markets at IDEAglobal in New York, told the Associated Press, "They were already sort of headed into isolation. Essentially now they've drawn shut the gate." Critics also say that financial institutions will see Ecuador as risky and may be reluctant to loan to the country's private sector.

But Mark Weisbrot of the Center for Economic and Policy Research argues that those claims are exaggerated. He says that the government does not currently require foreign funds and that any decision to not lend to Ecuador's private sector would be purely ideological. "Ecuador doesn't need to borrow right now, especially if they're not paying the debt. They haven't been borrowing on international markets recently."

Osvaldo León of the Latin American Information Agency (ALAI) in Quito says that international banks and businesspeople are defending a corrupt and unjust system. "Of course the establishment is going to come out and protest this. This is going to affect the interests of capital. There's going to be an offensive from both inside and out." He charges that business friendly economists and financiers unfairly frame their arguments as scientific and opponents' views as ideologically driven. "Ecuador has decided on a political response to a political problem. They always want things like this to be seen as a technical issue, a problem that only economists can deal with."

Although Ecuador currently has the capacity to pay, dropping oil prices and squeezed credit markets are putting Pre sident Rafael Correa's plans to boost spending on education and health care in jeopardy. Correa has pledged to prioritize the "social debt" over debt to foreign creditors.
Ecuador is undertaking a diplomatic offensive in an effort to win political support. Correa will be attending a summit in Brazil next week with presidents from throughout Latin American and Caribbean. Ecuador has called on Latin America to forge a united response to foreign debt. Venezuela, Bolivia and Paraguay have recently created debt audit commissions. Ecuador has also asked the United Nations to help develop international norms to regulate the foreign debt market.

But relations between Brazil and Ecuador have been tense since the September expulsion of the Brazilian firm Odebrecht over accusations of shoddy work on a hydroelectric plant and contract violations. Most recently, Ecuador filed suit in the International Chamber of Commerce to stop payment on a $286 million debt to the Brazilian National Bank for Economic and Social Development (BNDES), credit that was allotted for Odebrecht's hydroelectric project. Many activists in Ecuador see Brazil as a regional bully.

Last month, a special debt audit commission released a report charging that much of Ecuador's foreign debt was illegitimate or illegal. The commission found that usurious interest rates were applied for many bonds and that past Ecuadorian governments illegally took other loans on. The report also accused Salomon Smith Barney, now part of Citigroup Inc., of handling the 2000 restructuring without Ecuador's authorization, leading to the application of 10 and 12 percent interest rates. Ecuador's military dictatorship (1974-1979) was the first government to lead the country into indebtedness.

Commercial debt, or debt to private banks, made up 44% of Ecuador's interest payments in 2007, considerably more than the 27% paid to multilateral institutions such as the International Monetary Fund (IMF).

Daniel Denvir is an independent journalist in Quito, Ecuador and a 2008 recipient of NACLA's Samuel Chavkin Investigative Journalism Grant. He is an editor at www.caterwaulquarterly.com.

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Tainted Inaugural

post from Taylor Marsh on 19 December 2008 01:03:16 AM. © Taylor Marsh

BY TAYLOR MARSH.msnbcLinks {font-size:11px; font-family:Arial, Helvetica, sans-serif; color: #999; margin-top: 5px; background: transparent; text-align: center; width: 425px;} .msnbcLinks a {text-decoration:none !important; border-bottom: 1px dotted #999[...]

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Late Late Nite FDL: Slide Dust My Broom

post from Firedoglake on 19 December 2008 01:00:18 AM. © Firedoglake

Lee Roy Parnell and Arlen Roth showing off some slide work with Dust My Broom. What's on your mind tonight?[...]

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Into the Deep

post from Talking Points Memo on 19 December 2008 12:55:00 AM. © Talking Points Memo

Mark Felt, Watergate's 'Deep Throat', dies at 95. [...]

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No Ambassadors named until after Inauguration

post from DemConWatch - Front Page on 19 December 2008 12:44:32 AM. © DemConWatch - Front Page

President-elect Barack Obama is deeply, personally involved in filling the jobs in throughout his administration, a source said today, sharing some of the details of the president-elect's involvement.
Obama, I'm told, has an 11:00 p.m. nightly call to look at slates of personnel, casting his attention as deep as the assistant secretary level — that is, well into senior agency staff, suggesting a strong White House hand at the agencies, which isn't unexpected.

The goal: Filling 325 jobs by inauguration.

Of particular interest to some of Obama's prominent supporters: The first call about ambassadorial posts is tonight, though none will be named until after Jan. 20. - Politico

Once they start being named, we'll be tracking all the ambassador appointments here.

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The Zaftig Redhead's Considered Opinion on the
Selection of Rick Warren to Deliver Inauguration Invocation

post from The Zaftig Redhead on 19 December 2008 12:30:00 AM. © The Zaftig Redhead

A lot is being made in pundit-land about the selection of conservative super church Pastor Rick Warren to deliver the invocation at Barack Obama's Inauguration. But the move has sparked a furor in the gay community, who overwhelmingly voted for Obama. This is also a community that is pissed off and ready to fight after their Proposition 8 loss -- a measure that Warren endorsed.

Obama's selection of Warren absolutely reflects Obama's lofty intention to govern in a less partisan, less divisive way -- to disagree without being disagreeable. To be inclusive and be every one's president. A conciliatory gesture to evangelicals for taking an ass whuppin' at the polls. Fair enough, if that was the only goal.

But I also think Warren's selection is also very much a purely political calculation. Triangulation, folks, pure and simple. Obama needs to show that he's not beholden to any of the special interests that aided his election. Trust me, right now, Emanuel, Plouffe and company and loving the controversy, because it shows the nation that Obama is not simply going to cave to a liberal agenda or special interests groups. It will not be the last time he appears less than sensitive to a key constituency -- in fact, he'll throw folks under the bus if he has to -- the only question is -- which group will be next, and on what issue?

This blog has been nominated for the Bloggers' Choice '09 awards. Vote for The Zaftig Redhead!

Copyright 2008. The Zaftig Redhead. All Rights Reserved.

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Asking the wrong questions about Rick Warren

post from They gave us a republic... - Front Page on 19 December 2008 12:24:47 AM. © They gave us a republic... - Front Page

Unless you have been floating in the middle of an ocean somewhere on this - or another - planet, you are aware of the controversy over Pastor Rick Warren giving the invocation at Barack Obama's inauguration. If you are not familiar with the issue, you can read up on it here, here, here, and most definitely here (the last link is John Avarosis's first foray into blogging at the Huffington Post and it is very funny). Of course, you could read the many pieces right here at They Gave Us A Republic, too. :-)

There is great unhappiness over this, coming from both sides of the political spectrum. Neither social conservatives or those who support the LGBT community are happy about the choice of and acceptance by Warren; most are rabidly unhappy, actually. But I think everyone is looking at this the wrong way and asking the wrong questions.

The questions which should be asked are not why Warren (someone who goes against everything Obama has said he stands for) was selected, but:

Why is ANY pastor giving an invocation at a presidential inauguration?
Why is, yet another religious leader, giving a benediction?
What happened to the separation of church and state?

Someone needs, to borrow a phrase from Rachel, Talk Me Down.

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No Bailout SaleSigns of the Times

One business in Westwood, the area of Los Angeles adjacent to UCLA, wants customers to know that their money will be well spent: Gift Cards for Holiday Season At Scrubs Unlimited are Safe *We Did Not Apply for Government Bailout *No Multi Million $[...]

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Send Governor Ritter Your Senate Suggestion

Trying to stay as far away from Blago as possible, Colorado Governor Bill Ritter is asking for his constituents to e-mail their suggestions to ussenate.comments@state.co.us

"I will act as quickly as possible to name a successor for Sen. Salazar," Ritter said in prepared remarks. "I take this responsibility seriously, and my most important requirement is to pick the person who can best serve all of the people of Colorado in the U.S. Senate."

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The Political Imperative of Universal Healthcare

Universal Healthcare: A Moral Obligation, An Economic Necessity and A Political Imperative Since 1948 the progressive wing of the Democratic party has fought for universal healthcare largely from the standpoint that it is a moral obligation of the[...]

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