Wednesday, May 18, 2005

Palast: Ecuador Gets Chavez'd

As regular readers of this lowly and nearly frozen blog will remember, Greg Palast has been reporting from Ecuador recently. Here's his most recent: Ecuador Gets Chavez'd ... Bush has someone new to hate
George Bush has someone new to hate. Only twenty-four hours after Ecuador's new president took his oath of office, he was hit by a diplomatic cruise missile fired all the way from Lithuania by Condoleezza Rice, then wandering about Eastern Europe spreading "democracy." Condi called for "a constitutional process to get to elections," which came as a bit of a shock to the man who'd already been constitutionally elected, Alfredo Palacio.

What had Palacio done to get our Secretary of State's political knickers in a twist? It's the oil--and the bonds. This nation of only 13 million souls at the world's belly button is rich, sitting on 4.4 billion barrels of known oil reserves, and probably much more. Yet 60 percent of its citizens live in brutal poverty; a lucky minority earn the "minimum" wage of $153 a month.

The obvious solution--give the oil money to the Ecuadoreans without money--runs smack up against paragraph III-1 of the World Bank's 2003 Structural Adjustment Program Loan. The diktat is marked "FOR OFFICIAL USE ONLY," which "may not be disclosed" without World Bank authorization. has obtained a copy.
Please read the entire article here. And notice this passage:
But on the oil money and bond payout he's holding his ground, and with good reason. When the oil market went bust in the 1980s, so did Ecuador, and its bonds sold at dimes on the dollar. Now Ecuador's debt sells at a full face value, yielding windfall profits to speculators of as much as 500 percent for those who bought cheap.

Palacio doesn't object to paying off the bonds. The problem is that the World Bank and IMF want the principal of the bonds paid down early, a rare and financially suspect demand to make on any nation.

Who are these guys who hold the bonds? "We don't know who they are, and that's terrible," the president told me. What's terrible, says a United Nations expert who cannot be named, is that Palacio does know who they are: the old oligarchs who originally stripped the nation's banks of assets in the 1980s, fled to Miami and now hold a mortgage on the nation. Palacio's plan to move some of the oil money to social services threatens these bondholders' windfall.
Normally I don't have much to say about Greg Palast's articles. He writes so well, there's usually nothing I can add. This time is much the same, except I want to thank The Nation for publishing him.

See? We still have a few journalists left after all.