10. Ecuador Challenges Legitimacy of Foreign Debt
In November of 2008, Ecuador became the first country to undertake an examination of the legitimacy and structure of its foreign debt.
In the 1970s Ecuador fell victim to unscrupulous international lending, which encouraged borrowing at low interest rates.
From 1970 to 2006 the country's debt grew from $1.174 billion to over $14.250 billion, a twelve fold increase.
US banks and Federal Reserve raised the interest rate on their loan from 6% in 1979 to 21% in 1981.
An independent debt audit commissioned by the government of Ecuador documented hundreds of allegations of irregularity, illegality, and illegitimacy in contracts of debt to predatory international lenders.
The loans, according to the report, violated Ecuador's domestic laws, US Securities and Exchange Commission regulations, and general principles of international law.
Over the years, Ecuador has made debt payments that far exceed the principal it borrowed.
Sources: Alternet, November 26, 2008
Title: “As Crisis Mounts, Ecuador Declares Foreign Debt Illegitimate and Illegal”
Author: Daniel Denvir
Utube, Fall 2008
Title: “Invalid Loans to Ecuador: Who Owes Who”
Producer: Committee for the Integral Audit of Public Credit
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