Day 2 from Ecuador

Yesterday afternoon we were lucky enough to have a presentation from a member of the Ecuadorian Debt Commission. The Debt Commission is in more or less permanent session at the moment, as it needs to report to the President at the weekend (the picture to the right is from the launch of the Commission last July). He told us of the challenges the Commission had faced in recent months, especially institutional challenges - many in the government system still disagreed with the purpose of the Commission.

But he posed us other challenges. While some of Ecuador's debts bore all the signs of illegitimacy (notably had been used for projects unhelpful to Ecuador's people), others had been used for projects which were helpful for the people of Ecuador. But even those good debts had had serious
impacts on the fight against poverty in Ecuador because they had been used to impose unhelpful economic and political conditions on the government and had led to the massive outflow of funds from the country in the long-term and reinforced Ecuador's dependency on Northern countries and banks.

Most people probably think of illegitimate debt as something that arises from lending to dictators. But we've heard over the last day how the situation is much more complex and widespread, and most delegates here thought the fact that loans were so often used to infringe a country's sovereignty - through economic or political conditions - should in itself be grounds for judging that debt illegitimate. Of course loans are going to have terms of mutual accountability that must be abided by - but this is quite different from using these loans to force additional and
unrelated changes on a government.

One of the delegates gave a brilliant example to understand this issue better. If I go to the bank to get a loan to buy a car, the bank will of course want proof that I actually buy that car. That's a term of the loan. But if the bank says to me that I must always wear red while driving the car or that I must always play rock music in the car - or even worse that I must never stop at red traffic lights - this is totally unacceptable and in the worst case very damaging to me. Even if the bank forces me to do sensible things like stopping at stop signs or wearing my seat belt, I'm likely to be pretty irritated because that isn't the role of the bank. By imposing even sensible conditions, the bank is usurping the role of other state actors - like the police - and making itself a more powerful player than is justified in my life and my society.