Remember how Correa made the country default on its debt “because he could”? Well, here’s the price:
How China took control of Ecuador’s oil
Shunned by most lenders since a $3.2 billion debt default in 2008, Ecuador now relies heavily on Chinese funds, which are expected to cover 61 percent of the government’s $6.2 billion in financing needs this year. In return, China can claim as much as 90 percent of Ecuador’s oil shipments in coming years, a rare feat in today’s diversified oil market.
After 2009, terms changed in new Chinese loans, documents show. A 2010 deal for another $1 billion credit line from China Development Bank cut the premium that PetroChina would pay for Ecuador’s oil, and granted PetroChina approval to resell the crude in any market.
In early 2011, Ecuador got another $1 billion loan, and authorized PetroChina to collect money from any other companies that owed PetroEcuador if Ecuador failed to meet repayment terms.
This is close to 11 percent of Ecuador’s gross domestic product.
There’s also the decades-long Chevron lawsuit, which has turned many private companies away from dealing with Ecuador. Last September, Chevron won a major arbitration victory when the Permanent Court of Arbitration in the Hague unanimously ruled that
all such “collective” or “diffuse” forms of environmental relief had been settled and extinguished by the 1995 settlement agreement between Ecuador and Texaco. Accordingly, they reasoned, even if individual third parties were later given standing to seek such relief, they had, by that time, no rights left to assert. The only party that possessed such rights in 1995 — the government — had settled all those claims.
Today is the last day of the Chevron racketeering suit against Steven Donziger.
But back to the report on China,
Chinese firms serve as middleman in most of the Ecuadorean oil sales, while keeping a strategic option to divert barrels to China if needed. As China’s trade grows in the region, U.S. relations have soured with Venezuela and Ecuador, whose leaders are outspoken U.S. critics.
The US needs to become totally independent of foreign oil, right now. Until it does, all foreign policy is at someone else’s mercy.