En Marcha
Ecuador cannot present itself as a country that adequately manages its debt strategy when more than half of its debt is in the hands of China.
Because of the peculiar manner of contracting loans with China, the exact amount of debt with that country has always been unclear; these days the debt has increased by $571 million through an additional loan for the building of the Sopladora hydroelectric dam.
As with the other loans, the interest is high, reaching 6.35%. Altogether the debt with China has reached $7,300 million dollars, according to international analysts interviewed by the Reuters news agency.
In these circumstances China has become Ecuador’s main creditor, which is very convenient for that country but compromises Ecuadorian sovereignty and interests. This has already been seen and the anticipated petroleum sale exemplifies this.
As part of the terms of payment Ecuador received in advance a billion dollars for the sale at market price of 130 million barrels of crude oil and 18 million of fuel oil to Petrochina in six years. This action would be one of Ecuador’s ‘certificates of good behaviour’ to later obtain a loan of two billion dollars, but it commits Ecuador to deliver 60 thousand barrels of oil a day for six years, an important amount that ‘coincidently’ is the same as what the Andes petroleum company extracts from Ecuador’s Amazon basin with Chinese capital.
The situation cannot be analysed without taking into account China’s strategy and its geopolitical position. That country, although it still calls itself socialist, has not been so for decades; the reforms to the Communist Party constitution that allow industrialists to be members is the latest example of this.
Its gigantic productive apparatus serves to increase the profits of the great monopolies of the planet as it hires out the labour of its workers for super-exploitation. But this, among other things, has led it to accumulate enormous economic resources that it has placed mainly in the United States itself, a country which, like Venezuela and now Ecuador, among others, is its main creditor.
The agreements which it generally arrives at envisage the solution of its main problem, which is energy; therefore it is no surprise that it has obtained the anticipated sale of petroleum, because that is its policy; but this is reprehensible for the Ecuadorian negotiators, since it is clear that they became easy prey to the Chinese attempts to obtain high interests for their loans and guarantee of the sale of petroleum.
As the most populous country on the planet, it is always the objective of the transnational companies to gain access to this market; this made it possible to take important steps to join the world capitalist economic order, even being able to place conditions and to now become a defining player in the world economy, being the second largest power on a world level. It is another imperialism.
China has an enormous trade surplus, according to experts, equivalent to the U.S. deficit, which is enormous. It has the money to be the financer of the United States and now of Europe, which are demanding that it increase the value of its currency, the Yuan. This could affect the position of the Ecuadorian debt, which is tied to the value of that currency.
In terms of geopolitics what has happened to Ecuador is simply that it has changed its master. Correa at one time questioned U.S. policy, that of the World Bank and the International Monetary Fund, and earned their distrust, although now it is trying to regain that trust. In that process, Correa has ceased to be consistent with his original proposal and now has led the country into new dependencies, without any advantage for his country. On the contrary, the results of the negotiations of China with several debtor African countries leave serious doubts about the outcome of this new Ecuadorian dependency towards another imperialist country.
En Marcha #1540, Click here to return to the September 2011 index.