It's probably not a huge story when a poor South American country defaults on its foreign debt. The case of Ecuador is interesting in that it is being done as a protest against a former regime:
Ecuador is to default officially on billions of dollars of foreign debt it considers "illegitimate", says President Rafael Correa.Ecuador's problems stem from oil--it's an exporter that is suffering from the price drop. We cannot think of only ourselves at this time--the restructuring of American society along greener and more fuel efficient lines is going to impact poor oil exporting countries like Ecuador, Nigeria, and Venezuela in ways we cannot imagine. The idea the Venezuela, for example, will turn into Saudi Arabia is ridiculous. Venezuela is closer to Ecuador and being broke than it is to Saudi Arabia, especially if oil prices continue to fall.
Mr Correa said he had given the order not to approve a debt interest payment due on Monday, describing the international lenders as "monsters".
The president said the some of Ecuador's $10bn debt was contracted illegally by a previous administration.
It is the first debt default by a country in Latin America since 2001 [Argentina].
"We'll present a proposal to restructure the debt in order to resolve this problem as fast as possible," added the US-trained economist and ally of left-wing Venezuelan President Hugo Chavez.I would opine that this another thing we had better get a handle on, and, by that I mean, the leftist movements in Latin America. We don't want a repeat of the 1980s and we don't want to be an isolated and resented partner. We need every single ally, and Latin America should be our natural ally against any other kind of influence. Want to counter the rise of a unified Europe?
His decision follows a government audit in November which recommended that Ecuador default on almost 40% of the $10bn foreign debt, accusing former officials and bankers of profiting irresponsibly from bond deals.
The country's foreign debt amounts to about a fifth of its Gross Domestic Product, or GDP.
In the past, Mr Correa has vowed to put money he has earmarked for spending on public programmes - ahead of paying foreign debt.
Correspondents say Ecuador's decision to effectively cut itself off from outside financing could lead to a budget shortfall, especially if the price of oil - the country's main revenue earner - continues to fall.
Oil is Ecuador's main source of income and accounts for 40% of the national budget.
Well, if the United States had more allies in South America, and I'm thinking of Brazil in particular, that would certainly help.