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06/25/2005:

"The pirate who inspired the bankers: The roots of Ecuador's crippling debt go back two centuries"

by Colin MacInnes
I have watched a young mother die because she did not have the money for a simple appendix operation, and neither did I.
I have looked on in despair as whole families were thrown on to the street because they could not pay their rent. Of the 700,000 Ecuadorean children whose parents could not afford to matriculate them for this school year, I know that many are from the barrio where I have lived and worked for the past 20 years.

Why refer to these facts? Because they remind me of one element that will continue to condemn the young and innocent to permanent poverty, to disease and to life on the margins of civilisation - the country's external debt, often referred to in Spanish as the eternal debt.
The Ecuadorean, and indeed Latin American, foreign debt has a long history, but I believe that as a world community we are quite capable of solving the human, social and economic problems of our times. I also believe that we are doing very little about it. I consider that our politicians, bar a few exceptions, do little more than parade on the world stage. They have betrayed their vocation towards humanity. They are cowardly, incompetent and incapable of facing up to the challenge of world poverty.

There is a desperate need to construct a world where justice is not just another supermarket commodity to be bought by the rich and powerful but denied to the poor and marginalised; a world where poverty is not just another topic for presidents and prime ministers who have lost their scripts; where solidarity is not merely preached from the pulpits but practised in the streets and in the Wall Streets of the world. I am convinced that if the people of Britain knew of the unjust manner in which the debt was accrued, of how it is used to perpetrate a system of exclusion and oppression, of how it affects the dignity and self-esteem of peoples and nations, they would become unrelenting crusaders in the fight to solve this problem.

Our mistake is to consider the foreign debt as a mere mathematical calculation illustrating how much is loaned by one party and therefore to be paid back by the other. It is far more complex than that; it is a socio-economic and human tragedy going back more than two centuries to a time when many Latin American countries were involved in wars of independence against Spain and needed arms. It was also a time when Britain wanted to exploit the weakness in the Spanish empire and so bundles of pound notes were dangled before the eyes of desperate peoples in need of ready cash to finance their wars.

At times ignorant of financial transactions, of the impact of interest rates that could rise as high as 40%, Latin American leaders were only too ready to sign along the dotted line. After all, as a General Trujillo remarked: "These English gentlemen are so generous with their money." The more astute Andean liberator, Simon Bolivar, was soon to comment: "We have more to fear from the English debt than the Spanish sword." How right he was.

British interests were well served. Apart from weakening Spanish power in the region, the British opened up lucrative markets for their developing industries. They were able to gain rights to gold and silver mines and the extraction of pearls and other raw materials for their more advanced industries. Areas of land with no predetermined valuation were often negotiated as collateral.

"With conscience wide as hell," as Shakespeare wrote in another context, English bankers and entrepreneurs floated around Latin America trading pounds for inestimable political and commercial advantages. The Scots did not lag behind, and, in the person of Gregor McGregor, provided a bizarre example of the exploitation that was rife at the time. McGregor was a soldier in the Colombian patriotic army and later a pirate on the Caribbean. In 1820 he negotiated a treaty with the Miskitos indians of Nicaragua and obtained the title of "Prince of Poyais".

With this most prestigious position, he was made more than welcome in the British court and the London financial world and so was able to negotiate loans and underwrite bonds to the tune of £200,000. With money so readily available on the London markets, it is little wonder that he felt disinclined to return to pirating in the Caribbean.

These initial experiences in the international credit market were just a taste of what was to follow. Corrupt dictators were desperate to borrow money to secure their often precarious political posts. "Borrow now and someone else will pay later" was their persistent ideology.

The frequent revolutions and civil wars in Latin America were ready-made territories for the arms traders, who became international bankers overnight. The international corporations could not miss out on the spoils. One outrageous example happened when an ingenuous government signed an improbable contract to build a railway across the mountains of Honduras to transport "ocean-going liners" from the Atlantic to the Pacific and secure perpetual prosperity for the country.

There is, however, a growing awareness among ordinary people of this type of blatant misappropriation and the injustices of the international money-lending system. The peoples of Latin America have moved from questioning the debt to outright declarations of protest. Ecuador paid 57% of its national income in the jubilee year of 2000 for the interest on its debt, and this year will have to borrow money in order to meet premium debt payments. The foreign debt is an immoral imposition, an illegal burden, a death sentence on future development and prosperity.

All Ecuadorean children are saddled with a debt of $1,212 the day they are born. This debt will increase to $25,000 before they receive their first wage. No wonder a litany of protest is spreading: "We have already paid the borrowed money many times over. We should not be made responsible for money that we never had access to nor ever benefited from. They stripped us of our gold reserves as war booty. They exploited our wealth in minerals and raw materials. Their industries have caused unknown ecological damage. Our forests have been savaged to extract oil, our mountains to open mines. Our coasts and seas have been plundered by industrial fishing. We say that we are not the debtors." What do you say?
Full: guardian.co.uk