President Rafael Correa declared on Friday that Ecuador would not make a $30.6 million interest payment on $510 million in bonds due in 2012, calling the debt illegal.
The default on the Global Bonus 2012 bonds means that Ecuador is also defaulting on Global 2015 and 2030 bonds. The default totals $9.937 billion, 19 percent of the country's GDP. Ecuador has assembled a legal team to fight expected lawsuits and hopes to use the default as leverage to renegotiate the debts.
Civil society organizations have long criticized foreign debt as a means of exploiting impoverished countries in Latin America, Africa and Asia. The anti-debt organization Jubilee USA says “countries are paying debt service to wealthy nations and institutions at the expense of providing these basic services to their citizens.” In addition, lending institutions often use indebtedness to force cuts in social spending and impose business friendly economic policies.
The Confederation of Ecuadorian Kichwas (ECUARUNARI), the powerful Andean branch of the country's indigenous peoples movement, has long called the foreign debt illegal and illegitimate. “We have not acquired any debt. The so-called public debt really belongs to the oligarchy. We the peoples have not acquired anything or been benefited, and thus we owe nothing.”
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