US Ecuador Relations

The State of US  Ecuador Relations

You’ve heard the news, seen the articles and, perhaps, even sampled the stinging sound bites, but how serious is the current “war of words” between the USA and Ecuador?  Is there even a war of words, beyond the gossipy headlines?  Are these genuinely two nations at serious odds?   The responses might surprise.  The facts certainly will be complex and rooted in a deep regional history.  Whatever your perspective, the drama most definitely will never be boring. To paraphrase Mark Twain, “Rumors of the demise of US Ecuador relations have been greatly exaggerated.”  That exaggeration is coming mostly from a Western media, which seems intent on creating a heightened sense of alarm and sensationalism, especially as surrounds matters relating to Julian Assange and Edward Snowden.  No less an authority than the Hon. Nathalie Cely, Ecuadorian Ambassador to the USA, recently stated that there remains an open and friendly dialogue on these issues between the two countries.

Any, even brief, analysis of current Ecuador – USA relations must include a point of historical context from which to begin gaining a realistic perspective.  While Ecuador certainly does not stand alone, sharing a historical fate with much of Latin America, it is no less victimized by a verifiable pattern of colonialism within its borders.  When the Spanish Conquistadors laid claim to the land now known as Ecuador, they plundered the riches, leaving behind little except for an established European class-system and the seeds of the Catholic Church.

As the British Empire arose, it began attempting to exert influence in many of the Spanish colonial territories and Ecuador was no exception.  The British approach, apart from the Catholicism, offered little difference and certainly no relief from the cycle of colonial oppression and plundering of the natural resources offered by the bountiful lands of Ecuador.  As Spanish colonialism gave way to the British version, so gave way the British influence to the rising tide of USA global supremacy.  Beginning with the Monroe Doctrine and pointedly strengthened and expanded by the Roosevelt Corollary, the USA eased the European colonial presence out of Latin America, only to replace it with a more subtle, some might argue more insidious, brand of USA colonialism.  While Spain and Britain ruled with an “iron fist”, the USA might best be said to have ruled with a less obvious “velvet hammer”.

During the USA period of colonialism in Latin America – a period some would argue still persists today – the plundering of the land and resources of Latin America not only remained a reality, but likely accelerated in pace.  The USA’s rapid expansion and avarice for natural resources, exotic fruits and fresh seafood, meant feeding an appetite at a prodigious pace. Like the previous colonial masters, the USA reaped the benefits, at an extremely cheap cost, of all that Latin America, including Ecuador, had to offer, without reinvesting much of the profits in local developments or creating local sustainable economies.  It created a “psychology” and, some would argue, reality of dependence between Latin America and the USA, which impacted the free-spirited and strong-willed native populace of Ecuador, in a particular forceful manner.

This cycle of dependency brings us to the modern era and the state of Ecuador – USA relations.  Prior to the Current President of Ecuador, Rafael Correa, most of the previous government executives adopted a “get along” policy towards the USA, even if it meant sacrificing national economic expansion, sovereignty and the betterment of the majority of the citizens of Ecuador.  This was most notably illustrated in the excessive percentage of the Ecuadorian populace, which perpetually lived at “subsistence levels”, well below the internationally recognized poverty line.  The economic crisis, banking system collapse and extreme currency devaluation of 1998-1999 would put an end to this trend that had lasted for almost 500 years.

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In the aftermath of the economic debacle of 1998-1999, but pre-Correa, Ecuador was left little choice but to sacrifice its own domestic currency, the Sucre, and adopt the currency of its post-colonial master, the USA.  With the U.S. dollar (USD) offering brief respite, Ecuador’s economy took a giant gasp of air, barely keeping its head above water.  Hard to imagine, but if Ecuador had suffered economically before, in the post 1998 economic crisis era, its economic future looked even more bleak, despite the all too fleeting comfort granted by the initial stability found in the adoption of the USD.  In fact, what the USD in many ways did was add insult to injury.  While briefly stabilizing the economic collapse, the very lack of any solid economic base or national infrastructure, left Ecuador with few options to grow their way out of the economic morass. Subsequently, still in the pre-Correa era, the only solution offered by the national politicos was to use the globally perceived strength of the USD to “borrow their way out of” the economic morass.  Instead, it was like throwing an anchor to a drowning man.

It was at this juncture that President Correa stepped into the political limelight.  Calling for polices of economic austerity, debt reduction, domestic production and consumption, as well as a radical diversification of the economy and its base of infrastructure, Correa offered a new hope that would spread to all residents of Ecuador.  A disenchanted Ecuadorian populace, vaguely understand that the USD was no panacea and that a return to policies of old could bring about another “1998”, elected the fire-brand Correa to office, in the hopes of something “different”…something…”better”.  An objective analysis makes it difficult to deny that the Ecuadorian people received a hearty helping of both.

While going through the policies of President Correa goes beyond the scope of this brief report and, in fact, the more pertinent issues get covered in separate reports, it is important to quickly glance at some of the more aggressive policies and policy statements, which have framed Ecuador – USA relations, in recent years.  For staters, President Correa was not long in office, before he stated that ultimately, though many, many years down the road, he favored a return to a domestic currency and a move away from the USD.  A policy which many in the USA political elite looked upon as “Anti-USA”.

Correa further complicated this delicate political balance by, well within his rights and political authority, refusing to renew the USA military base lease in Manta, Ecuador.  This was no easy decision, as it was a sword that cut both ways.  Under the premise that the USA base was unnecessary and a violation of Ecuadorian sovereignty, as well as an indirect source of heightened criminal activity, which arose around the local establishments and “services” aimed at the USA military personnel, President Correa said “no” to the lease renewal.  This led to the double-edged result that the USA lost a military foothold on Latin American sovereign soil, but it also meant that the city of Manta, located in Manabí Province, also lost a major source of regional revenue.  To this day, President Correa is likely least popular in Manabí Province than any other region of the country.  This decision also led to one of the best quips from the often loquacious Correa, who during a televised interview suggested he’d have no problem renewing the military base lease in Manta, if the USA would reciprocate by allowing Ecuador a military base in Miami.  Quite “ironically”, the USA declined.

As part of a complicated and ambitious retooling of the Ecuadorian economy, Correa saw the need to expand its global economic reach and reduce the reliance on a limited number of trade partners and foreign direct investment (FDI) sources.  As such, Correa curried favor with everyone from Europe, to China, South Korea, Cuba, Iran and Venezuela.  Many of the nation-states with which Correa established stronger diplomatic ties were not perceived as favorable to USA policies.  Correa retorted with the seemingly obvious fact that he represented the domestic interests of the people of Ecuador, not the foreign policy interests of the USA.  This, again, laid the groundwork for the Western press to emphasize the alleged division between the two nations.

However, likely nothing was given greater importance, at least until recent months, in the alleged deterioration of Ecuador – USA relations than the controversial decision by Correa to have Ecuador default on its bond debt.  This being the very same debt with which post 1998, previous presidential administrations planned to “borrow and spend” their way out of the economic crisis.  Unfortunately, that very crisis meant that Ecuador was seen as a serious  ”credit risk” and had to pay outlandish interest rates to capitalize its debt.  Correa referred to the cycle as perpetual servitude to the Western money markets and, after failing to get any relief through a debt restructuring, defaulted on the debt.  The headlines throughout the Western press assured that Correa had “bankrupted” Ecuador, as they would not be able to return to the debt markets for decades to come.  Within a year, Correa had successfully recapitalized the debt, at more reasonable and manageable interest rates, consistent with existing market realities.  The Western press got it wrong…a posture all too common in their efforts to define Ecuador – USA relations.

Against this backdrop, we usher in the politics of today.  Little introduction is required.  Julian Assange remains holed up at the Ecuadorian Embassy in London, after being granted political asylum by the Correa Administration – a sovereign right of all nations.  Edward Snowden, wandering about somewhere points unknown in Russia, has adamantly discussed Ecuador as a possible finally destination, though Correa has made it clear that no formal and legal asylum request has been made by Snowden, to date.

Still, as alluded to by the Hon. Nathalie Cely, the dialogue between the two nations continues, mostly on amicable terms.  Why shouldn’t it?  The number one export source for Ecuadorian crude oil remains the USA.  Exports of a diverse array of farm products and fresh seafood continues to flow towards the USA unabated.  Ecuador has repeatedly offered and the USA repeatedly accepted overtures of regional cooperation, on equal sovereign footing.  The USD continues as Ecuador’s currency of choice and, as such, inextricably links Ecuador to the fate of the USA economy, to some extent, although just how much is largely debatable.   Ecuador poses no threat to USA hemispheric dominance.  It is not a violent country.  Does not have a history of invading other nations.  Ecuador does not serve as a hub for global terrorism and, in fact, does not even have an active national rebel movement within its own borders (Colombia’s FARC rebels occasionally cross onto Ecuadorian soil, in Ecuador’s northern-most region).

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Overall, the alleged “feud” between Ecuador and the USA is more verbal sparring, than tangible reality.  President Correa, while occasionally acerbic, has passed on the opportunity to criticize the USA, in a manner that the former Venezuelan President Hugo Chavez never did.  Often goaded by both local and international press, President Correa has almost always referred to the USA as a “friend” and a country with which Ecuador wishes to forge greater economic ties.  The caveat with Correa is the whole issue of respecting the independent sovereignty rights of Ecuador and establishing cooperative relations with the USA on equal footing, not the subservient relationship still freshly remembered and a part of the Latin American psyche, stemming from the colonial era.

Where the verbal sparring has tended to occur has been when the USA makes demands of Ecuador, such as on the “return” of Assange, which Correa views as tinged with hypocrisy (think likely NSA civil and constitutional rights violations) and contrary to national sovereignty rights.  The fact that the specter of one, perhaps two, such issues remains at the forefront today, does not invalidate the reality that, for the most part, Ecuador and the USA cooperate more with each other, than they verbally spar.  As such, any premature pronouncement of the “death” of such relations, surely seem as exaggerated, as the previous pronouncements by the Western media that Ecuador would not be able to recapitalize its debt for decades.  Merely because history has a propensity to repeat does not mean we have to willingly and gullibly be fooled again.