A Defiant President

President Rafael Correa stood alone on the balcony of Ecuador’s Government Palace and smiled down at the cluster of people beginning to gather below him in Quito’s Independence Plaza. They were waving and pointing their cell phone cameras at him. In less than a year he would complete his second term as president and, as required under Ecuadorian law, retire from office in 2017. He would leave knowing that he had scored a major victory. He had met with China’s President Xi Jinping and signed the deal of the century. He had beaten the American economic hit men at their own game.

US policies had impacted Correa all his life. It began when he was five years old and his father disappeared behind the walls of a US prison, convicted as a narco-trafficker who fed America’s appetite for drugs in order to feed his family. Shortly after Rafael turned eleven, a CIA-supported coup resulted in the death of one of his heroes, the democratically elected Chilean president Salvador Allende. While he was still in his teens, he was greatly influenced by two of my EHM clients, Ecuador’s president Jaime Roldós and Panama’s Omar Torrijos. He admired the way both men stood up to the fraternity of US corporate, governmental, and banking heads who wanted to exploit their countries’ resources. He was especially impressed by Roldós’s commitment to ending the abuses of Big Oil and Torrijos’s determination to gain Panamanian ownership of the canal that bisected his country. Both men resisted my personal attempts to bribe them and refused to buckle to death threats by the jackals who stepped in when I and other EHMs failed to corrupt them. Both were hated by Ronald Reagan and powerful US CEOs. The year when Correa turned eighteen and Reagan entered the White House, Roldós and Torrijos died in plane crashes that had all the markings of assassinations, as detailed in upcoming chapters.

Correa’s father’s trial and conviction, the shadow of the CIA that hung over the deaths of three heroic leaders, the Vietnam War, and race and social discord in the US drove the young man to learn about a system that seemed biased in favor of rich white Americans and their corporations. He studied hard and earned scholarships to an Ecuadorian college, then a master’s degree from a Belgian university, and finally a PhD in economics from the University of Illinois. He’d experienced humiliation, degradation, and exploitation firsthand. It had motivated him to become an expert in a global system that was promoted by EHMs and called itself capitalism.

“I learned,” President Correa would later tell me, “that your economic hit man game is about enslaving countries with debt. Then you own us.” He understood the US’s EHM strategy. He also wanted to find a way to make his country part of a more just and egalitarian global economic movement. After reading Confessions of an Economic Hit Man, he wrote to me, “I want to thank you for a significant contribution to the new universal way of searching for innovative and better approaches to coexistence.” Under his leadership, Ecuador enacted a new constitution, the first in the world to legalize the inalienable rights of nature, and he established the Ministry of Buen Vivir (Good Living) to bring social-economic-environmental balance to all aspects of Ecuadorian life.

Buen Vivir Secretary of State Freddy Ehlers summed it up for me one day while we walked through Quito’s beautiful El Ejido Park. “This president understands what’s happening to the world,” Freddy said. “He also knows that we are all in trouble, the current system needs fixing. Rafael wants to benefit his country and its environment and, in the process, make Ecuador a model for others to follow.”

Correa raised his arms to the crowd rapidly growing below him. His popularity seemed to increase every day as people recognized that American domination was ending. To make the break from that domination, he had felt he had no choice but to turn to China.

One of the first things Correa had done after being elected president in the 2006 democratic election was to investigate the EHM strategy I had helped implement. He appointed a commission to examine World Bank loans that had been made to unelected military dictators. Correa’s economics education had taught him that the US EHM strategy for domination was grounded in debt. The commission asked: Were the Ecuadorian people obligated to pay interest and principal on debt they had not agreed to and that benefited dictators but not them? Following the commission’s conclusions, Correa declared that much of Ecuador’s $10 billion debt was illegitimate.1 The Minister of Energy and Mines, Alberto Acosta, explained this to me as we sat in his office shortly after Correa’s decision. “Banks that grant loans to unelected dictators,” he said, “knowing they will finance projects that benefit the rich minorities and hurt the poor majorities, have to accept the blame for much of what is wrong here in Ecuador—and so many other places. After true democratic elections are held, elective officials must stand up for the majority.” Acosta had a degree in economics from the University of Cologne, Germany; like Correa, he understood the importance of escaping from the trap of the EHM strategy.

In retaliation for Correa’s actions, Standard and Poor’s Rating Services and Fitch Ratings slashed Ecuador’s credit score. They were determined to send a signal that any country that refused to honor World Bank and other US debt claims, that did not buy into the EHM strategy, would be punished. Ecuador had to be brought to its knees.

But Correa was not about to give in. He recognized that modern capitalism was based on using the EHM strategy to beat the competition and attain monopolistic power. He saw, sooner than most, that the position of the United States as top competitor was being seriously challenged. The American monopoly, the empire, was showing signs of collapse. The “Chinese dragon” had woken up and it did not give a damn about rating services.

China came to Ecuador’s rescue with a $1 billion loan, followed quickly by another billion. Ecuador’s credit ratings immediately rose. Correa had rejected neoliberalism and the Washington Consensus; he had successfully turned to Chinese bankers and their promises to expand trade throughout Latin America and with the rest of the world. To benefit from this New Silk Road, the country had to build up its electrical systems, highways, ports, and airports. All of this, along with the new schools and hospitals, would seal Correa’s legacy as the leader who had used the sea of oil buried beneath Ecuador’s rain forest as collateral to bring the nation out of poverty and set an example that offered hope to other countries.

Correa leaned against the railing and studied the crowd of onlookers that continued to gather below him; they were waving at him, smiling and shouting greetings, and continuing to snap photographs. He had done a good job. In addition to the new constitution and the Ministry of Buen Vivir, he had brought unprecedented political stability to a country that had experienced seven presidents during the ten years before him and suffered from a long history of coups and military dictators. He had followed in the footsteps of his hero, President Roldós, during his first term by reining in foreign oil companies. In his second term, he had built the infrastructure and developed the social services he thought were critical to the well-being of his people. Ecuador had experienced continual economic growth, even during the 2008–2009 international financial crisis. The country’s minimum wage had more than doubled and become one of the highest in Latin America. More than a million people had been lifted out of poverty. All this under his leadership. He raised a hand and gave a thumbs-up to the people in the plaza. The Sino-Ecuador partnership had paid off.

But questions hounded Correa. Reporters kept asking, “Do you think the Chinese will be less exploitative than the Americans?” The reporters brought up the violence against the minority Uyghurs, Hong Kong and Tibet, the extension of Beijing’s imperialistic activities in the South China Sea and toward Hong Kong and Taiwan, and its dismal record around freedom of speech, gender, and other human rights issues. And it wasn’t just the reporters who asked those questions. Opposition politicians asked them. Correa’s own advisors asked them. He himself asked them. And yet, he wanted to believe in China’s stated commitment to spreading global trade. The New Silk Road idea contrasted sharply with Washington’s focus on bilateral US–Ecuador projects and trade. In addition, China’s President Xi had assured him that he would not use debt to impose Beijing’s will on Ecuador. Besides, there was no backtracking. Correa had committed himself to reversing the excessively pro-American policies of his predecessors.

By the end of 2015, Correa had accepted nearly $6 billion from China, around 30 percent of Ecuador’s external debt. And it kept growing. The New York Times reported:

Chinese banks are in talks to lend $7 billion for the construction of an oil refinery, which could make Ecuador a global player in gasoline, diesel and other petroleum products.
Across the country in villages and towns, Chinese money is going to build roads, highways, bridges, hospitals, even a network of surveillance cameras stretching to the Galápagos Islands. State-owned Chinese banks have already put nearly $11 billion into the country, and the Ecuadorean government is asking for more.
Ecuador, with just 16 million people, has little presence on the global stage. But China’s rapidly expanding footprint here speaks volumes about the changing world order, as Beijing surges forward and Washington gradually loses ground.

One of China’s loans was used to pay the Chinese Sinohydro Corporation to construct a massive hydroelectric dam that promised to generate more than a third of Ecuador’s electricity, stimulate business and industry, produce hundreds of thousands of jobs, and expand international trade. Correa knew that electricity was the key to Ecuador’s future development. This particular deal seemed like frosting on the president’s cake.

But the costs mounted. China bailed Ecuador out with more funds. Again and again. Debt piled on debt.

Then everything went terribly wrong—all at once.