So I thumbed through my purloined IMF “Strategy for Ecuador” looking for a chapter on connecting Ecuador’s schools to the world wide web. Instead, I found a secret schedule. Ecuador’s government was ordered to raise the price of cooking gas by 80 per cent by November 1, 2000, it says. Also, the government had to eliminate 26,000 jobs and cut real wages for the remaining workers by 50 per cent in four steps in a timetable specified by the IMF. By July 2000, Ecuador had to transfer ownership of its biggest water system to foreign operators, then Ecuador would grant British Petroleum’s ARCO unit rights to build and own an oil pipeline over the Andes.
That was for starters. In all, the IMF’s 167 detailed loan conditions looked less like an “Assistance Plan” and more like a blueprint for a financial coup d’etat.
The IMF would counter that it had no choice. After all, Ecuador is flat busted, thanks to the implosion of the nation’s commercial banks. But how did Ecuador, an OPEC member with resources to spare, end up in such a pickle? For that, we have to turn back to 1983, when the IMF forced Ecuador’s government to take over the soured private debts Ecuador’s elite owed to foreign banks. For this bail-out of US and local financiers, Ecuador’s government borrowed $1.5 billion.
For Ecuador to pay back this loan, the IMF dictated price hikes in electricity and other necessities. And when that didn’t drain off enough cash, yet another “Assistance Plan” required the state to eliminate 120,000 workers.
Furthermore, while trying to pay down the mountain of IMF obligations, Ecuador foolishly “liberalized” its tiny financial market, cutting local banks loose from government controls and letting private debt and interest rates explode. Who pushed Ecuador into this nutty romp with free market banking? Hint: the initials are I—M—F—which made liberalization of the nation’s banking sector a condition of another berserker Assistance Plan. The facts of this nasty little history come from yet another internal IMF report that flew my way marked “Please do not cite.” Pretend I didn’t.