Ecuador Inmediato - http://www.ecuadorinmediato.com/noticias/88151

Ecuador, Wednesday September  24, 2008, 5:01:35 PM     Edición N° 1516

(unofficial translation from the original in Spanish)

Report on External Debt reveals that its objective was to benefit financial sector and transnationals

Indications of illegitimacy and illegality confirmed to be present in Ecuadoran public debt

The Comprehensive Public Credit Audit Commission, created in July, 2007, presented its Final Report to the president of the Republic, Rafael Correa, in which it concludes that over the period 1976-2006, the process of indebtedness in Ecuador took place to the benefit of the financial sector and transnational corporations, affecting visibly the interests of the State.  The Report establishes responsibilities and co-responsibilities of lenders and of Ecuadoran authorities and officials.    

According to the Report, "the inmensurable damage caused to the country's economy and to the Ecuadoran people, by the public indebtedness, omnipresent as a system of pressure-submission, and the consequent commitment to hand-over public resources to its servicing, whether or not they were available, motivated the National Government to adopt the first and until now only decision of its kind in the Latin American region, to create the Comprehensive Public Credit Audit Commission (CAIC), with the participation of national and foreign social organizations and research and development institutions.

The Comprehensive Public Credit Audit Commission, created by Presidential Decree No. 472 on July 9, 2007, fulfilled its mandate to audit the external and internal debt contracted by the country with international banks, multilateral organisms and the big powers, between 1976 and 2006.

Over these months, the members of the Commission confronted enormous difficulties in making transparent the behind the scenes dealings that have existed in the contracting of agreements with the multilateral financial system and the national and foreign private sectors.  In the day to day workings of the Commission, they encountered archives totally disordered, in inadequate, humid places, incomplete documentation, and with few exceptions, the refusal of Ecuadoran Central Bank and Finance Ministry officials to hand over documentation necessary for the audit.

Evidence of illegitimacy and illegality

In the Audit process, the Commission made important findings that confirm the allegations of illegitimacy and illegality present in relation to the Ecuadoran public debt; findings that demonstrate that the debt was converted into an instrument used by the international creditors to extract our economic and environmental resources, to damage our sovereignty and contribute to the de-institutionalization of the State.

By means of the debt, the creditors imposed conditions and conspired with the governments of the day to provoke serious economic, social, and environmental impacts.  From the '80s onward, important percentages of the national budget, nearly 70%, were destined to the servicing of the public debt to the detriment of the budget for education, nutrition, health and social programs.  Of all the loans taken out, only 14% were invested in social projects:  potable water, electricity, telecommunications, roadways.  86% of the loans were used to pay debts.

Violation of national and international laws

The Audit establishes that, over the last decades, the system of indebtedness has been used in accordance not precisely with the sovereign interests of the country, but rather under the pressures and conditionalities of the lenders.  It has been characterized by a less-than-transparent management, deriving in the predominance of the payment of amortizations, interest, and commissions in the national budget; in the growing need for new credits; and, as a consequence, in the recurring dependence of the State and the national economy on funds coming from public and private debt.

The Audit process reveals the mechanisms of loan contraction, the pressures, the obsequence of officials with external creditors, the resignation - in the contracts themselves - of any defense of the country, the submission to illegal and illicit clauses.  Over these 30 years, the State Attorney did not defend the State, but rather limited himself to signing whatever the creditors wrote.

In the process of indebtedness, general principles of law (such as good faith, the free determination of peoples, the prohibition of usury, contractural balance, rebus sic stantibus, human rights, environmental rights, among others), international covenants, and fundamental norms of domestic law were violated.

The practical result is to show, on the basis of documentation that until now has been reserved or secret, what were the mechanisms used by the creditors in order to place Ecuador into debt, and to prove how the processes were similar in other countries.  That will show to the world what until now has been ignored.  With respect to the decision to stop payment on the debt, that is a determination that is the exclusive responsibility of President Correa, who will decide what will be the best course of action, in accordance with Ecuador's possibilities, political opportunity, and the support that it is able to garner  for the actions that it decides to undertake",  concludes the document that was presented to the head of State this Wednesday.