The ECUADOR Story.

Previously posted on my Facebook page.

NEWS: “Ecuador Roiled by Protests Set Off by Rising Fuel and Food Prices.” And adds: “The country’s capital has been virtually paralyzed by demonstrators, and the government says it has lost control of a small city in the Amazon to protesters wielding guns, spears and explosives.” Seems like “bad, bad news” is the constant on earth these days, or is it just news mojo? The media narrative: Darkness Cool. Rallies and protests are not totally unexpected but it’s the telling that gets a bit out of whacked, reangled for (geo)political convenience. You know, propaganda drama?

       Not to go against the report, yes—tempest is a-brewing in Ecuador’s streets. I am shakin’ my head because, of recent years, poverty in the country decreased from 36.7 percent to 22.5 percent and annual per capita GDP growth was 1.5 percent. But those data, from the Center for Economic and Policy Research, were about 8 years ago.

       Similar unrest, which began in Oct 2019, shuddered Ecuador again versus the end of fuel subsidies and austerity measures adopted by President of Lenín Moreno. Eventually, on the same month, the government gave in and thus the protests ended. 🇪🇨🇪🇨🇪🇨

THE 2021 narrow win by conservative former banker, Guillermo Lasso over left-wing economist Andrés Arauz, who was supported by exiled former prez Rafael Correa, should have restored some order. Nope.

       Social unrest seems to be the thing in South America right now. The current protest stems from the "structural social exclusion of indigenous peoples in Ecuador" and rising prices, is mainly led by the Confederation of Indigenous Nationalities of Ecuador, and by student and worker collectives.

       Ecuador’s chief industry is petroleum, which accounts for 40 percent of exports and contributes to maintaining a positive trade balance. Since the late 1960s, the exploitation of oil increased production, and proven reserves are estimated at 6.51 billion barrels as of 2011. The protests, quite obviously, point at the economic policies of President Lasso.

       Protestors demand that gasoline prices be cut by 45 cents a gallon to $2.10, price controls for agricultural products and a larger budget for education.

      Other prominent industries are food processing, textiles, wood products, and chemicals. The United States is Ecuador’s top trading partner, accounting for almost 25 percent of total exports. Panama is next, 15.1 percent; then China, almost 14 percent. But there’s more to that, of course. 🇪🇨🇪🇨🇪🇨

APPARENTLY, Ecuador and its 17 million people are banking a lot on the U.S. for support amidst the current turmoil. Relations between the two nations have been strained following Julian Assange's bid to seek political asylum in the Ecuadorian embassy in London. Ecuador first offered political asylum to Mr Assange in 2010; he entered the embassy in 2012 but the asylum was revoked in 2019.

      Washington/Quito relations improved from 2019, especially following the ouster of democratic socialist Rafael Correa from office as President of Ecuador. Relations further advanced during the presidency of Lenin Moreno since 2017. In February 2020, his visit to Washington was the first meeting between an Ecuadorian and U.S. president in 17 years. In June 2019, Ecuador had agreed to allow US military planes to operate from an airport on the Galapagos Islands.

       Then, of course, President Guillermo Lasso attended the Summit of the Americas in Los Angeles in June this year. But then this post wouldn’t be done unless I mention China, right? Meanwhile, Would the United States under President Joe Biden step in while Quito is in tempest? Guillermo Lasso smells a coup. Now here comes The China Factor. 🇪🇨🇪🇨🇪🇨

THE China Factor. Oil has a fundamental role in the Ecuadorian economy, and, to China, is its most desirable commodity, along with other mineral resources. Oil exports have allowed Ecuador to secure an important line of credit from China,

       As Beijing widely opened its arms to global trade in 2001, it also needed oil—lots of it. The giant nation is already #6 in oil production and it ain’t selling. It is buying, #1 oil importer globally. China has been searching outside its national borders to find a solution for its rising energy needs. China already controls growing volumes of oil from Venezuela, where it has negotiated at least $43 billion in loans; from Russia, where the amount may exceed $55 billion; and Brazil, with at least $10 billion. In Angola, the deals total around $13 billion.

       Shortly after taking office in 2007, President Rafael Correa declared a large chunk of Ecuador's $3.2 billion in foreign debt “illegitimate” and “odious,” and the country defaulted the next year. As expected, China came to the rescue by handing Correa a $1 billion loan.

       Part of the loan agreement stipulated that PetroEcuador, Ecuador's state oil company, sell Amazonian crude to PetroChina. Other loans came, in Correa’s tenure: Mostly from China Export-Import Bank and Chinese Development Bank. Many of the loans that have followed have been in the $1–2 billion range, with interest rates of between 6 percent and 8 percent, and demand payment in barrels of crude oil through 2024.

       Hence, U.S./Ecuador relations resumed only after Rafael Correa was ousted in 2017. Yet it was during his administration when poverty in Ecuador decreased. 🇪🇨🇪🇨🇪🇨

Photo/visual credits: Chimu Adventures. BBC.