Photos from Ecuador in 2019 of my Mestizo and Indigenous family.
October 28th, 2019 Joseph Cole Hansen
Via Marcantonio Colonna 21A
00192 Roma, Lazio, Italia
IT:+39 339 654-1650
WhatsApp/USA:+1 (510) 229-6855
To my Friends,
Many of you are aware of my deep connection to Ecuador and the recent instability the country is suffering. Below I want to offer my opinion on what is happening, why, and how it connects to us in the United States. To be clear, while I am going to use the facts I have learned through research and speaking with many of my friends who support or detest the current government; this remains my opinion. There are also massive simplifications of complex economic factors within this. Partially for these reasons, I will not be publishing this in Spanish, a decision which I will explain in greater depth at the end.
The protests we are seeing in Ecuador now are the direct result of austerity measures taken by the current government as part of an agreement with the International Monetary Fund and other International lenders in exchange for a 10.4 billion dollar bailout. Ecuador’s current public debt is not sustainable and presented a threat not just to Ecuadorians, but to the entire western hemisphere. Unfortunately, Ecuador has fallen for the Chinese Money Trap, a system of predatory lending the Chinese have become fond of as a means of leveraging countries to their bidding. The Chinese have built a significant portion of Ecuadorian infrastructure including highways, hospitals, telecommunications infrastructure, and most recently, a massive hydroelectric dam. When Ecuador needed infrastructure the Chinese offered to build it outright. The international community offered to support their economy until they could build it themselves and unfortunately for the last 20 years (but especially under Correa and Moreno) the Ecuadorian government has chosen the former. In exchange for these loans the Chinese have received tariff relief on their technology and cheap oil. More recently, we have also learned the Chinese will receive 90% of all Ecuadorian exportable crude at a steeply discounted price should they default on their loans. As the price of oil has fallen, Chinese debt has come due, and the US dollar has gotten stronger (Ecuador is a dollarized economy) the country has moved to the brink of an economic crisis. This drove Moreno to turn to the IMF and as is normal during IMF intervention, there were difficult cuts to social programs (commonly known as austerity measures).
There were three austerity measures the indigenous people were protesting. The first (and perhaps the most important) was the elimination of an oil subsidy which has existed for more than 40 years. The second measure was a lay-off of public employees and the reduction of the remaining employee’s salaries. The last was much less official, but fueled the protests as well. The Ecuadorian government opened oil exploration in previously protected or occupied areas of the Amazon. While each one of these measures affected every Ecuadorian, they disproportionately affected indigenous people.
Ecuador’s indigenous population is powerful and large. But a key distinction must be made in that as Ecuador has developed and created a market economy, Indigenous people have not been effectively integrated into that economy. Somewhat by choice as there is a lot of skepticism of cities and corporations. There is a strong sense of community and a connection to the land that the indigenous people I’ve met both enjoy and see as an integral part of their culture. This difference between the market economy existing in cities and the indigenous world (primarily composed of sustenance farmers, artisans, and small businesses) means any change in the cost of living disproportionately affects them. The majority of indigenous people are not cash-rich, but are supported by their communities. They share land, help each other build homes, grow crops, and when needed fix infrastructure. They have enjoyed a semi-autonomous relationship with the government as the only things the government provides them are education, healthcare, and aid when problems extend beyond their community. They sell their excess crops to buy gas and food they cannot produce themselves, they sell what they make for extra money but, generally, they can feed themselves and build their own communities. If they go to college the majority of the jobs they can get in their communities are through the government. Working in public health, education, agriculture, banking (local credit unions) and public policy. So any increase in the price of oil, the price of goods they cannot produce, or transportation forces the indigenous farther into “poverty;” effectively removing them from the economy and taking what economic freedom they had away. The majority of public employees that were laid-off came from indigenous communities, the oil subsidy primarily benefited them, and taking their land was just adding insult to injury (for lack of a better cliché).
This is why they rose up. This is why they protested the government. It was an expression of anger at a government which has not always cared for them. The government was trying to preserve its’ public health system and public education. Those who lived in the growing market economy could survive. But the indigenous people understandably wouldn’t accept those measures.
Perhaps more important than this particular instance in Ecuador is the forces that Ecuador fell too. In 2013, the Chinese government announced an ambitious plan to connect themselves with the entire world via infrastructure that they would help build by 2049. This project, called the Chinese Belt and Road Initiative, was something they had been working on for years and currently there are 152 countries and organizations working with it. For many of these partners, especially those in the developed world, the deal is a good one. But I believe the purpose of this initiative extends beyond the semi-legitimate dealings the Chinese have been making in the developed world. The initiative is also strategically targeted at second-world countries. Developing economies without enough capital to complete the types of infrastructure they need to continue development. As a result of their lack of explicit poverty and relative stability; the international community has done a poor job of providing them with opportunities to complete these kinds of projects. The Chinese have chosen to fill this gap with a vicious form of debt-trap diplomacy. Often times defaulting on these loans results in Chinese repossession of the infrastructure built, or territorial agreements allowing the construction of Chinese ports or military bases. This is most evident in Sri Lanka. The Chinese helped to build a port there, the debt was too much for the small country to pay and now the Chinese have control of the port. Even though they say it will only be used for “civilian purposes” there is no guarantee that will not change in the future.
China has chosen to occupy a space the international community has left behind. I believe the United States is the only country left in a position to counter this form of neo-colonialism by China, but is currently stepping off of the world stage. The only way to stand up to this is to further support our partners and understand that the US economy is deeply connected with the entire world. Should more of our allies fall, the US will lose influence and power. Our economy will suffer because of it and our allies will too. The “aid” we give is not the free money many elected officials try and portray it as. It is an attempt to support democracy around the world. It is an attempt to seek economic prosperity for our partners and build symbiotic relationships with them. Our military bases abroad were often not built by force, but through the economic partnerships and alliances we have created over years of strong diplomacy. We cannot allow for the dismantling of that infrastructure. The Chinese have and will fill the void we leave.
So I ask the politicians and voters of my country to think beyond the next election. I ask them to think about the 1.7 trillion dollar deficit (debt) we’ll create over the next 10 years, a significant portion of which China will come to own. If the Belt and Road Initiative succeeds, which by all measures of China’s ability to sustain efforts for decades at a time it will, what position will the United States be in? When that debt comes due will my generation be able to pay it? Will a non-superpower United States be able to turn to its’ former allies? Will the austerity measures we are forced to take cut Social Security, Medicare, and Public Education? Will the majority of my taxes one day go towards paying the debt you voted for when I was young? You might not care about Ecuador now and what happened. But there is a very real possibility that without a serious change in the American public’s outlook on the importance of foreign policy and fiscal responsibility we could be in a similar situation in 30 years. You might not be alive to suffer the consequences, but I will be and so will my children.
Sincerely,
Joseph Cole Hansen
P.S: Since writing this the Ecuadorian government has canceled the austerity program in a deal they made with the indigenous nations. There has yet to be an explanation of what comes next, the IMF and the Chinese government have not yet said anything. Currently, the Chinese penalty is 90% of Ecuadorian crude oil (their primary export and cash-cow) at a reduced price until they can pay back the debt.
P.S.S: I said at the beginning I would explain my decision not to publish this in Spanish as well. Unfortunately, much like the US, Ecuador has a rather significant fake news problem. Bias in the media and on social media has prevented the facts from being adequately portrayed. This problem has existed for as long as I’ve known anything about Ecuadorian politics and there are people I deeply care about on both sides of this issue. Each side would take offense to what I’ve written here (many of my English speaking friends will as well). But I feel as though I might be able to offer some perspective using what I came to college to learn.
Some Sources:
-https://www.silkroadbriefing.com/news/2019/05/29/chinas-belt-road-initiative-south-america/
“ The China-Celac Forum serves as a stage for dialogue and agenda-setting between international and regional leaders, and has become a Chinese priority as a push for deeper influence within the region, and by some to reduce the significant influence of the United States on the politics and economics of Latin America. China’s influence on the region has been accelerating fast.”
Correa also made deals to sell the Chinese millions of barrels of oil in advance on favorable terms, committing the country to ship 90% of all its exportable crude to the Asian giant through 2024. Terms of the deals, by which he mortgaged to China much of the country’s future production of crude, its principal source of export dollars, remain shrouded in mystery.