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Ecuador: Paradox or Paradigm December 23, 2008

Posted by rogerhollander in Ecuador Politics, History, Government, Culture, Ecuador Writing, Ecuador: Paradox or Paradigm.
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(This is an article I wrote (October 5, 1999) and submitted somewhere, I don’t remember.  In any case it was rejected.  It summarizes Ecuador’s political and economic climate and suggests that it might be a paradigm for the rest of Latin America.)


Whereas the vast majority of Ecuadorians would not know what a Brady Bond is any more than they could identify the Brady Bunch, it can only be fear of violent Ecuadorian public reaction to further “belt tightening” measures that prompted the fundamentally conservative center-right government of President Jamie Mahuad to default on $44.5 million in Brady Bond interest payments earlier this month.  While Ecuador may be one of the smallest and least economically developed amongst its Latin American neighbors and thereby easily dismissed as not comparable to the economic “giants” such as Brazil, Mexico or Argentina, to overlook the significance of this event for that reason is to ignore a continent-wide unrest of which Ecuador is as representative as any other Latin American republic.


The relatively mild international reaction to Ecuador’s unprecedented action would indicate that the world banking community is convinced that the tail is not likely to wag the dog.  This, on the one hand, overlooks several key characteristics that Ecuador shares with its Latin American neighbors – large gaps between rich and poor, entrenched governmental corruption and instability, deep poverty, small and shrinking middle classes, overwhelming external debt, and dependency upon unstable world commodity markets.  More importantly, it fails to take into account the single most critical factor that economists love to under-rate: the angry passions of desperate masses.


Ecuador is blessed with abundant natural resources.  It is the world’s largest exporter of bananas and is also a major producer of cocoa, coffee, fresh flowers, coconut, pineapple, rice, and sugar cane.  Its offshore and inland fishing industry yields massive quantities of lobster, shrimp, tuna, tilapia, and other high demand seafood products.  The discovery of large oil deposits in its tropical rainforests in the 1970’s has thrust Ecuador amongst the leading petroleum producing nations of the Americas.  The same Oriente region is potentially rife with precious metals such as silver and gold.  With such natural riches, a diversity of bio-geographic regions (tropical rainforest, the Andes cordillera, lush coastal plains, and the Galápagos Islands) that is amenable to high yield agriculture and aquaculture production as well as regional and international tourism, and with a small population of just under thirteen million, Ecuador should be among the wealthiest nations on earth.


Yet, it is one of the poorest and it suffers perpetual economic crisis.  Ecuador has both the highest inflation rate and per capita external debt in all Latin America.  It has high rates of infant mortality and illiteracy that reflect a minimal public investment in health and education.  Nearly one quarter of its adult population is unemployed and half of those employed are underemployed, managing a bare existence by selling everything from hard candy to tropical fruit, tooth paste to toilet paper, on city streets.  The poverty rate is estimated at 80 per cent, with more than half of that considered to be deep poverty.  It is not uncommon to see children as young as four and five years of age begging and/or working on the streets of Guayaquil, a seaport of over two million inhabitants, which is the country’s largest city and which suffers from a dilapidated infrastructure, disease epidemic due to inadequate sanitation, air and water pollution, and which is experiencing the proliferation of bamboo housing slums on its borders due to the influx of refugees from even more severe rural poverty.


Ecuador returned to constitutional government after a military dictatorship that lasted throughout the 1970’s.  Its political culture is characterized by corruption, greed and incompetence.  Its judicial system is almost entirely politicized.  Over a dozen political parties jockey for power, and the inability of the legislative and executive branches to find common ground leaves the country in a state of almost perpetual political paralysis.  There is constant labor strife, fueled, among other things, by the fact that government workers, particularly teachers and health workers whose salaries are embarrassing low to begin with, are compelled to initiate work stoppages to force government ministries to release their pay checks, which are often several months in arrears.  In addition, there is chronic unrest amongst students, petroleum and utilities workers, Indigenous peoples and campesinos, and other sectors of society as a result unpopular policies that are perceived as throwing the burden of economic crisis on the backs of the poorest and most vulnerable members of society.  Even the Catholic Church, despite its essentially conservative nature, often finds itself along side more traditional dissidents in chastising the government.


In 1996, Abdalá Bucaram, a demagogic and  unbelievably vulgar “populist,” representing a party with  left wing rhetoric and right wing policies, won the presidency and ring-mastered a governmental circus that was overthrown by a Congress-led, military supported and bloodless coup d’etat which followed two days of massive nation-wide general strike in February of  1997.  With more than a bit of theatric irony, Bucaram, who proudly calls himself El Loco, was ousted by the Ecuadorian Congress on the constitutional ground of “mental incompetence,”  and went into exile in Panama. Immediately, the Congress, in violation of the constitution, appointed its own leader, Fabian Alarcón, as interim president, bypassing the legitimate successor, the elected Vice President, Rosalía Arteaga, who had the misfortune to have been born of the wrong gender.


In August of 1998, under the banner of the center-right Popular Democracy party, Jamil Mahuad, a former mayor of Quito, Ecuador’s capital city, began a four year presidential term, having barely edged out Alvaro Noboa, heir to Ecuador’s largest banana fortune and the country’s wealthiest individual, a man with no prior political experience other than an appointed position in the government of Bucaram, who would no doubt have returned from exile should Noboa have won.  Mahuad proceeded to implement a “paquetizo,” a package of economic policies far more stringent and devastating than those proposed by and which lead to the ouster of Bucaram.  By mid-1999 the government had more than doubled the price of gasoline, devalued the currency, and raised the cost of public utilities as much as five hundred percent.  A nation-wide banking crisis in the spring had lead to a week-long closure of all banks and was followed by the freezing of bank accounts.  Hundreds of thousands of Ecuadorians lost their life savings.  Things came to a head in early July, when a two day general strike called for by transportation workers ended up shutting down Ecuador’s inter-regional transportation for nearly two weeks.


The only political party in Ecuador with representation in Congress that as a matter of policy advocates the cessation of external debt payments is the Marxist-Leninist oriented Movement for Popular Democracy (MPD), which draws its major support from the teachers’ union and middle class professionals.  A handful of so-called “center-left” parties, who always morph into center-right should they capture the presidency, will sometimes echo such demand while in opposition.  However, nothing less than extraordinary circumstances can explain the unilateral withholding of a scheduled debt payment, particularly when such an action is taken by a government with no pretence toward or prior history of radicalism.


It is interesting to note that Ecuador is not among those countries for which the IMF is seriously considering the forgiving of past debt.  Ostensibly this is because of Ecuador’s relative “wealth,” which fails to take into account its skewed distribution, and because of the endemic corruption within the political process.  However, even if Ecuador were to be magically freed of the Albatross of external debt, apart from some undeniable short term benefit, this would not begin to solve the structural problems that lie at the root of the nation’s tragic history.


Crippling external debt is the symptom not the cause of Ecuador’s woes, and it can be argued that the same is substantially the same for virtually every Latin American nation.   In short, given its history of external resource exploitation which presents us with today’s reality, a reality characterized by brutal discrepancies in the distribution of wealth and an overall dearth of both physical infrastructure (roads, utilities, sanitation) and social infrastructure (health, education, democratic government), Ecuador simply is not a viable political/economic unit. As government after government has proven, no amount of reform, be it of the strong armed neo-Liberal variety, which is the current style, or the more traditional borrow and spend (or steal) it variety, will get to the root of the problem.


Ecuador lacks a responsible leadership class.  Election to public office is considered tantamount to a license to accumulate wealth.  Presidents, Vice-Presidents, and Congressmen who leave office are almost as likely to go into exile in Panama, Chile, Costa Rica or Miami as they are to return to private life in Ecuador.  There is no sense amongst Ecuadorians that its crisis can be solved at the political level as it presently exists.  An example of this was the Popular Assembly, a by-product of the February 1997 uprising that lead to the ouster of Bucaram, which was seen as a way to reform the Constitution over the head of the Congress, which was considered too mired in corruption to achieve meaningful change.  The interim government, however, set the ground rules for the Assembly, which resulted in the existing political parties being able to get their loyal supporters elected to and in control of the Assembly, which in turn produced nothing that constituted genuine change.


On the other hand, one does find in Ecuador a relatively strong union movement, militant teachers, angry students, a highly organized and effective Indigenous movement, a nascent and growing women’s movement, a discontented and fearful professional class, and millions of suffering and disillusioned “ordinary people.”  Like the Guagua Pinchincha volcano, which as been on low boil for nearly a year and only this week has begun to spew tons of ash and dust over nearby Quito, the repressed and volcanic passions of this small but not atypical Latin nation may erupt at any moment, and without warning.


 And the rest of Latin America may not be that far behind.


One, Two, Three … Many Ecuadors? December 22, 2008

Posted by rogerhollander in A: Roger's Original Essays, About Ecuador, Economic Crisis, Ecuador, Latin America.
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© Roger Hollander, 2008


Four the past fourteen months a Commission appointed by Ecuadorian President Rafael Correa to “audit” the nation’s public debt in the period from 1976-2006 has been labouring away on a report that landed like a bombshell when it was issued on November 20.


 La Comisión de Auditoria Integral del Crédito Público (Commission for the Integral Audit of the Public Debt) was made up of senior government officials, representatives of Ecuadorian social movements and international organizations.  Its mandate was to investigate the legitimacy and legality of external and internal debt incurred by governments in the designated period through the examination of conventions, contracts, and other documents related to acquired public debt and entered into between governments, multilateral financial institutions (IMF, World Bank, etc.), commercial banks, and the private sector both national and foreign.


 If the Commission’s conclusions can be verified, a virtual revolution with respect to public debt could very well occur within the entire Third World, for there is little doubt that the kind of financial shenanigans uncovered by the Commission in Ecuador are not unique to that country.


 The Commission’s 172 page report outlined various categories of illicit and illegal debt, including “odious debts” incurred by the military dictatorship (1970-1979), usurious debts, and corrupt debts (contracted under conditions that do not conform to the legal norms of the lender or debtor or international norms).  It went on to cite instances of illicit and hidden clauses, uncontrolled and disproportionate expenses and commissions, excessive arms sales, capitalization of interest, and fraudulent collusion between lending institutions and government officials that served individual interests at the expense of the Ecuadorian nation.


According to Patrick Esteruelas, analyst at Eurasia Group, the report found “multiple irregularities in debt contracted between 1976 and 2006, such as double payments, abusive clauses, false justifications and negligence on the part of high-level government officials and multilateral institutions.”


 Esteruelas, who has seen a copy of the audit report, said that it recommends that Ecuador suspend payments on all three of its global bonds, at least 45 multilateral loans and its debt to the Paris Club of international lenders.  “The government will likely use these findings to enter into talks with bond holders over restructuring terms, driving a very hard bargain that will hamstring any negotiations and could likely lead the government to default,” Esteruelas said.


 Perhaps the most controversial and explosive finding of the report is that not only private financial institutions but also multilateral lending institutions such as the IMF and World Bank are accused of being guilty of colluding with local government officials to impose impossible conditions and to “socialize” private debt.  It alleges that false and misleading information was used to promote indebtedness and makes the general assertion that the lending institutions were guilty of policies that violated national sovereignty in favor of implementing the neoliberal policies of the “Washington Consensus.”


 The Report advocates the notion of “co-responsibility” for illicit debt, a concept that the industrialized lending countries and multilateral funding institutions have roundly rejected.  The situation may be analogous with the sub-prime rate mortgage lending “scandal” in the United States where lenders knowingly created debt that could not likely be repaid.  Many believe that the lender as well as the borrower should share in the responsibility for the disastrous consequences of such practices.


Beyond narrow legal and financial considerations, the Report speaks of the social costs to the people of Ecuador.  Its external debt rose from $241 million in 1970 to $16.6 billion in July 2006 (a 690% increase).  From 1980 to 2006, the Ecuadorian government’s expenditure on education decreased from 30% to 12% and on health from 10% to 7%, while the percentage of the government budget to service the debt rose from 15% to 47%.  A 2006 Report (“Comparte”) indicates that poverty affects 65% of Ecuadorians, and the 70% of Ecuador’s children live in extreme poverty. 30% of Ecuadorian children do not complete primary education.


When President Correa called into question the $30 million coupon on Ecuador’s Global 2012 bonds that was due on November 15 (with a 30-day grace period) ,Ecuador’s credit rate has plummeted.  S&P has lowered Ecuador’s long-term sovereign credit rating to CCC- from B-, citing the severe uncertainty regarding the government’s willingness and likelihood to pay during the grace period.  Meanwhile, Moody’s downgraded Ecuador’s B3 foreign currency government bond rating to Caa1 and placed them on review for another downgrade. They claim that Ecuador has “ample liquidity” and that the government’s action has demonstrated its “poor willingness” to pay.


 True to form, a Moody’s senior analyst, Alessandra Alecci, was quick to “blame the victim.”  “It seems that the [Ecuadorian] government’s stance towards bond holders is motivated by political and ideological factors, given the very small fiscal relief that a default would bring compared to the damage to the government’s ability to access international markets,” she said.


Now that Correa has announced that he will not meet the final December 15 deadline, the rating is expected to plummet.  According to a report in the Globe and Mail, “Ratings agency Standard & Poor is likely to downgrade Ecuador’s credit rating to “Selective Default” from triple-C-negative, one of the agency’s analysts said after Mr. Correa’s announcement.”


Ecuador’s Alberto Acosta, a highly respected economist who served as President of the country’s recently concluded Constituent Assembly, challenges the position of the lender community.  “Debt and corruption,” he says, “are two sides of the same coin.”  He points out that “the developed countries have denied any co-responsibility whatsoever in their capacity as lenders, and, in fact, have blocked any investigation of the processes of indebtedness, their legality and, especially their legitimacy.”  He cites as an example of the suffering of the underdeveloped nations as a consequence of the vicissitudes of the policies of the wealthy nations the fact that the soaring interest rates of the 1980s resulted in a net loss of financial resources in Latin America of 210 Billion dollars.


 The Ecuadorian government has retained U.S. Attorney Paul Reichler of the law firm Foley and Hoag to advise on international law applicable to their case.  It is considering an appeal to the World Court at The Hague. 


Should Ecuador succeed in its ground breaking attempt to call to account the wealthy nations of the world and their multilateral lending institutions for at least co-responsibility for the enormous social and economic damage to the world’s poorest nations that has resulted from external indebtedness, we very well might see a domino effect.  On December 5, the 22 countries that make up the Parlamento Latinoamericano (Latin American Parliament) threw their support behind Ecuador and urged its member to begin similar actions.  In Spain, a coalition of more than 50 NGOs has sent a letter to the President of Spain asking the government to forgive its part of the Ecuadorian debt and to review its debts with other countries to verify their legitimacy.


Unwanted fuel to the fire given the state of the world’s financial institutions, on the one hand.  On the other, some of the world’s poorest and most exploited nations may be finally taking a stand against the capricious and destructive lending that has deepened their levels of poverty.





 Home website of the Comisión de Auditoria Integral del Crédito Público:

http://www.auditoriadeuda.org.ec/ (contains complete Report)


 Polya Lesova, “Fears Rise Over Possible Ecuador Default,” MarketWatch, November 19, 2008; http://www.marketwatch.com/news/story/Fears-rise-Ecuador-may-default/story.aspx?guid=%7B46EE5CFA-6F60-4688-906C-4889080A83FF%7D


 “Ecuador: A New Perspective on External Debt,” Third World Resurgence #198/199 (Feb/Mar 2007)


 CENSAT, “Informe de la Comisión de Auditoría Integral del Crédito Público de Ecuador,”  En Deuda con los Derechos – Sep 25, 2008,



Paulina Escobar & Julia Chávez, “La sucretización es una ilegalidad por sancionar,” El Telegrafo, Guayaquil, Ecuador, November 26, 2008,http://www.eltelegrafo.com.ec/macroeconomia/noticia/archive/macroeconomia/2008/11/26/La-sucretizaci_F300_n-es-una-ilegalidad-por-sancionar.aspx


“Comisión hace público informe de auditoría,”  Diario El Mercurio, Manta, Ecuador, Novermber 27, 2008



 Alberto Acosta, “Un paso histórico para una solución definitiva,”  unpublished; from [Yapapolitica]  Deuda external illegal de ecuador – Alberto Acosta; private e-mail to the author, kyapa@yahoo.com, November 25, 2008


 “Comparte,” http://www.comparte.org/accion/ecuador.htm


 “Ecuador contrata abogados estadounidenses para disputa de la deuda,” El Universio, Guayaquil, Ecuador, December 2, 2008, http://www.eluniverso.com/2008/12/02/0001/9/2CF4A5CF4CEB48ECB3380718D219763C.html


“Acreedores nerviosos por posible efecto contagio en pagos de deuda,” El Universio, Guayaquil, Ecuador, December 8,2008.  C:UsersrhollanderDesktopEL UNIVERSO – Acreedores nerviosos por posible efecto contagio en pagos de deuda – Dec_ 08, 2008 – Economía.mht


“ONG solicita a España anular deuda ilegal,” El Universio, Guayaquil, Ecuador, December 12, 2008 (paper edition).


Maria Eugenia Tello, (Reuters, December 12, 2008) “Ecuador defaults on foreign debt,” The Globe and Mail,” December 13, 2008.  http://business.theglobeandmail.com/servlet/story/RTGAM.20081212.wecuador1212/BNStory/Business/home



Membership of the La Comisión de Auditoria Integral del Crédito Público (Commission for the Integral Audit of the Public Debt)

Government Representatives

Minister of Finance and Economy

Procurer General

Controller General

President of the Civic Council for the Control of Corruption


National Representatives

International Representatives








Fears Rise Over Possible Ecuador Default November 23, 2008

Posted by rogerhollander in Ecuador, Latin America.
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By Polya Lesova, MarketWatch
Last update: 12:53 p.m. EST Nov. 19, 2008
NEW YORK (MarketWatch) — Fears are rising that Ecuador may default on its external debt, as a national audit commission has identified numerous irregularities in the country’s foreign debt and is likely to recommend Thursday for the suspension of payments.
The left-leaning government of President Rafael Correa chose not to pay the $30 million coupon on Ecuador’s Global 2012 bonds that was due Saturday and is now using the 30-day grace period to consider the legitimacy of its external debt.
The debt audit commission is due to present the full results of a year-long audit of Ecuador’s external debt Thursday.
The commission’s report has found “multiple irregularities in debt contracted between 1976 and 2006, such as double payments, abusive clauses, false justifications and negligence on the part of high-level government officials and multilateral institutions,” Patrick Esteruelas, an analyst at Eurasia Group, said in a note Wednesday.
Esteruelas, who has seen a copy of the audit report, said that it recommends that Ecuador suspend payments on all three of its global bonds, at least 45 multilateral loans and its debt to the Paris Club of international lenders.
“The government will likely use these findings to enter into talks with bond holders over restructuring terms, driving a very hard bargain that will hamstring any negotiations and could likely lead the government to default,” Esteruelas said.
Ecuador’s public external debt amounted to $10 billion in September, or 21% of gross domestic product, according to Eurasia Group.
Correa, who has been in power since January 2007, has vowed to implement a social revolution to improve the lives of the poor. Correa is a close ally of Venezuelan President Hugo Chavez, who is also pursuing socialist policies.
Ecuador is one of Latin America’s biggest exporters of crude oil, with the sector dominating the economy and accounting for about 60% of exports. As a result, the recent sharp slide in oil prices — from about $147 a barrel to $54 a barrel — is very negative for the country’s finances.
“I won’t give a probability, but I will say [debt default is] a material risk and that it’s unclear at this point what their true motive is and what the end result they are aiming for is,” said Nick Chamie, global head of emerging markets research at RBC Capital Markets.
“I’m not even sure they know that at this point. President Correa is probably trying to figure that out now,” Chamie said. “One very possible scenario could simply be that the government looks to extract significant concessions from its creditors and looks to reduce its debt burden. There may be a technical default, and in the end, what I expect is debt restructuring.  “Ecuador’s ratings cut Moody’s Investors Service and Standard & Poor’s both cut Ecuador’s credit ratings Friday after Ecuador said that it would not pay the coupon on its Global 2012 bonds.
S&P lowered Ecuador’s long-term sovereign credit rating to CCC- from B- Friday, citing the severe uncertainty regarding the government’s willingness and likelihood to pay during the grace period.
If the government indicates an intention to pursue a restructuring of its debt with bond holders during this period, S&P said it will likely lower the ratings to SD or selective default.
“The combination of sharply lower oil prices and an expected hit to economic growth resulting from lower exports and remittances is expected to pressure fiscal accounts in 2009,” said S&P credit analyst Lisa Schineller. “However, willingness, not capacity, to pay is currently the overwhelming credit weakness.”
Meanwhile, Moody’s downgraded Ecuador’s B3 foreign currency government bond rating to Caa1 and placed them on review for another downgrade. The agency said Ecuador has “ample liquidity” and the move by the government underscores its “poor willingness” to pay.
“It seems that the government’s stance towards bond holders is motivated by political and ideological factors, given the very small fiscal relief that a default would bring compared to the damage to the government’s ability to access international markets,” Alessandra Alecci, a senior analyst at Moody’s, said in a statement. End of Story


 “La Cruda Realidad” (The Crude Reality), Foto: Lou Dematteis

I regularly receive reports from www.amazoniaporlavida.org, an environmental organization that is waging a campaign to prevent exploitation of petroleum in Ecuador’s ecologically sensitive Yasuni region.

A recent e-mail made reverence to a former U.S. agent, John Perkins, who describes himself as a former “economic hit man,” in a tell-all book.

I found an interesting interview with Perkins on Amy Goodman’s “Democracy Now!” radio program, which sheds light on the problem as seen by today’s Ecuadorian environmental and anti-neoliberal activists.

First, my translation of the “Amazonia por la Vida” Report:

“In the Agenda of the United States and Its Intelligence Services”

When John Perkins was contracted by MAIN (a CIA front) to intervene in the political economy of Indonesia, Ecuador and Panama, he was told that by using macroeconomic statistics, he should be able, for example, to inflate the rate of economic growth in Indonesia from 6% to 19%.  In the case of Ecuador, where he served as an economic advisor, he was told that, by manipulating its macroeconomic statistics, he should be able to put the country in debt to the point where they are trapped with the impossibility of repayment.


The CIA succeeded in manipulating Ecuadorian macroeconomic information to the point where in twenty years the country was in bankruptcy and had to over exploit and privatize its [natural] resources in order to deal with the debt.


In defining the statistics and the conditions of work in transnational corporations at that time [the 1970s] Texaco played an essential part.  The former agent [Perkins] has revealed how Texaco was able to enter Ecuador via the Instituto Lingüístico de Verano [ILV, Summer Institute of Linguistics, a U.S. evangelical missionary organization, also known as the Wycliffe Bible Translators, with ties to the CIA], with whom he was also associated.


The CIA strategy was to establish the conditions for the re-taking of natural resources after they had been partially nationalized.  Texaco, the company most affected, found itself in conflict with [Ecuadorian President] Jaime Roldós, who not only expelled the ILV from the country, but also refused the conditions to which Texaco aspired.  After the assisination [of  Roldós], [his successor] Oswaldo Hurtado reinstated the ILV and Texaco began its greatest campaign of explorations (John Perkins, “Confessions of an Economic Hitman,” 2004).




Evolution of the Total Ecuadorian External Debt (in millions of U.S. Dollars)


CEIDEX (Comisión Especial de Investigación de la Deuda Externa del Ecuador)


1970           217


1975           456


1980           3,530


1985           8,703


1990           12,107


1995           13,994


2000           13,717


2006           16,856


From: www.quiendebequien.org


Now to John Perkins:

From the prologue to the “Democracy Now!” interview:

John Perkins, was a former respected member of the international banking community. In his book Confessions of an Economic Hit Man he describes how as a highly paid professional, he helped the U.S. cheat poor countries around the globe out of trillions of dollars by lending them more money than they could possibly repay and then take over their economies.

20 years ago Perkins began writing a book with the working title, “Conscience of an Economic Hit Men.”


Perkins writes, “The book was to be dedicated to the presidents of two countries, men who had been his clients whom I respected and thought of as kindred spirits–Jaime Roldós, president of Ecuador, and Omar Torrijos, president of Panama. Both had just died in fiery crashes. Their deaths were not accidental. They were assassinated because they opposed that fraternity of corporate, government, and banking heads whose goal is global empire. We Economic Hit Men failed to bring Roldós and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in.


John Perkins goes on to write:


“I was persuaded to stop writing that book. I started it four more times during the next twenty years. On each occasion, my decision to begin again was influenced by current world events: the U.S. invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama bin Laden. However, threats or bribes always convinced me to stop.


John Perkins, from an interview with Amy Goodman on “Democracy Now!”  November 9, 2004.


… I was initially recruited while I was in business school back in the late sixties by the National Security Agency, the nation’s largest and least understood spy organization; but ultimately I worked for private corporations.


… when the National Security Agency recruited me, they put me through a day of lie detector tests. They found out all my weaknesses and immediately seduced me. They used the strongest drugs in our culture, sex, power and money, to win me over. I come from a very old New England family, Calvinist, steeped in amazingly strong moral values. I think I, you know, I’m a good person overall, and I think my story really shows how this system and these powerful drugs of sex, money and power can seduce people, because I certainly was seduced. And if I hadn’t lived this life as an economic hit man, I think I’d have a hard time believing that anybody does these things


Basically what we were trained to do and what our job is to do is to build up the American empire. To bring—to create situations where as many resources as possible flow into this country, to our corporations, and our government, and in fact we’ve been very successful. We’ve built the largest empire in the history of the world. It’s been done over the last 50 years since World War II with very little military might, actually. It’s only in rare instances like Iraq where the military comes in as a last resort. This empire, unlike any other in the history of the world, has been built primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life, through the economic hit men. I was very much a part of that.


Well, the company I worked for was a company named Chas. T. Main in Boston, Massachusetts. We were about 2,000 employees, and I became its chief economist. I ended up having fifty people working for me. But my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan—let’s say a $1 billion to a country like Indonesia or Ecuador—and this country would then have to give ninety percent of that loan back to a U.S. company, or U.S. companies, to build the infrastructure—a Halliburton or a Bechtel. These were big ones. Those companies would then go in and build an electrical system or ports or highways, and these would basically serve just a few of the very wealthiest families in those countries. The poor people in those countries would be stuck ultimately with this amazing debt that they couldn’t possibly repay. A country today like Ecuador owes over fifty percent of its national budget just to pay down its debt. And it really can’t do it. So, we literally have them over a barrel. So, when we want more oil, we go to Ecuador and say, “Look, you’re not able to repay your debts, therefore give our oil companies your Amazon rain forest, which are filled with oil.” And today we’re going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they’ve accumulated all this debt. So we make this big loan, most of it comes back to the United States, the country is left with the debt plus lots of interest, and they basically become our servants, our slaves. It’s an empire. There’s no two ways about it. It’s a huge empire. It’s been extremely successful.


[I worked] … very closely with the World Bank. The World Bank provides most of the money that’s used by economic hit men, it and the I.M.F.


Here is Perkins’ blood chilling account of the alleged assassination of Panama’s Omar Torrijos:


“Omar Torrijos, the President of Panama. Omar Torrijos had signed the Canal Treaty with Carter much—and, you know, it passed our congress by only one vote. It was a highly contended issue. And Torrijos then also went ahead and negotiated with the Japanese to build a sea-level canal. The Japanese wanted to finance and construct a sea-level canal in Panama. Torrijos talked to them about this which very much upset Bechtel Corporation, whose president was George Schultz and senior council was Casper Weinberger. When Carter was thrown out (and that’s an interesting story—how that actually happened), when he lost the election, and Reagan came in and Schultz came in as Secretary of State from Bechtel, and Weinberger came from Bechtel to be Secretary of Defense, they were extremely angry at Torrijos—tried to get him to renegotiate the Canal Treaty and not to talk to the Japanese. He adamantly refused. He was a very principled man. He had his problem, but he was a very principled man. He was an amazing man, Torrijos. And so, he died in a fiery airplane crash, which was connected to a tape recorder with explosives in it, which—I was there. I had been working with him. I knew that we economic hit men had failed. I knew the jackals were closing in on him, and the next thing, his plane exploded with a tape recorder with a bomb in it. There’s no question in my mind that it was C.I.A. sanctioned, and most—many Latin American investigators have come to the same conclusion. Of course, we never heard about that in our country.”