Oct. 06, 2006: CDES celebrates the Norwegian Government's Decision to Cancel Its Illegitimate Debt with Ecuador

Publish Date: 
Friday, August 3, 2012
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The Centro de Derechos Económicos y Sociales (CDES) celebrates the Norwegian government's decision, announced on Monday Oct. 2, to cancel the debt of five countries, including Ecuador, equivalent to 80 million dollars. With this act, the Norwegian government has recognized the illegitimate nature of those debts contracted during the decade of the 70s to favor its Ship Export Campaign. This case has been widely documented by CDES since 2001. It was also presented to the Ecuadorian Commission on Civic Corruption Control (CCCC), whose report was key for later proceedings, receiving the adherence and support of important national and international networks such as the National Working Group on Debt and the Campaign for the Cancellation of Third World Debt-SLUG/Jubilee Norway.

The debt with the Norwegian state was contracted en 1980 by the Ecuadorian Banana Fleet company (FBE in Spanish) for the purchase of four boats at the price of 52.5 million dollars. This credit was termed a “development-aid loan,” even though it was given to a private enterprise, as its objective was to rescue the Norwegian naval industry which was at the time in crisis. The FBE went out of commission in 1987, and the Ecuadorian state took over the majority of its debt, as public debt. Of the total credit, 12.7 million dollars was negotiated as a bilateral loan between Norway and Ecuador (an amount already cancelled). Then, 13.5 million dollars was negotiated with the Paris Club, which by 2002 had reached a sum of 50 million dollars, despite 14 million dollars in interests and capital having already been cancelled that year.

With the recent cancellation, the Ecuadorian state will save 38 million dollars, which were to be paid until the year 2018.

The role of Ecuadorian civil society, of which CDES is a part, in alliance with regional networks and Norwegian civil organizations has been of particular relevance in pressuring for the cancellation of this debt, as well as the recognition of its illegitimate nature.

In its announcement, the Norwegian government explicitly recognized its “co-responsibility” in this sort of debt, and in its inadequate risk and impact evaluation process in approving credits to countries like Ecuador for “development aid.” For its part, the Ecuadorian state is co-responsible for having assumed a private debt, taking upon itself excessive interests detrimental to the country. The state is furthermore co-responsible for having purchased ships whose whereabouts is still unknown.              

On Monday, September 2, the Norwegian government, through its Chancellery, announced the official, unconditional and unilateral cancellation of the debt obligations of Ecuador, Peru, Egypt, Jamaica and Sierra Leon. This unprecedented event is an advance for our country. We believe that it should be taken advantage of by the Ecuadorian government, in order to negotiate the cancellation of other debts acquired in similar situations with other governments.

Domestically, this decision emphasizes the need to identify the legitimate or illegitimate nature of a series of international credits contracted by the country. For this, a serious and sustained national auditing procedure is required. Internationally, the valiant position of the Norwegian government confirms that lending governments have a co-responsibility in the contraction of questionable debt. It also questions the existing mechanisms for debt resolution, in which the lenders are both judge and defendant, as is the case in the Paris Club. Further, this case could just imply a new moment in the international struggle against illegitimate debt, which essentially would mean the ability to discuss just and definitive solutions to this urgent problem.

With this action, the Norwegian government offers a challenge to the international financial system: Will lending IFIs and governments implicated in external debt be able to assume their responsibility in annulling illegitimate debts, and therefore begin to put into practice their rhetoric of creating a more just and sustainable world? What other governments in the coming months and years will be disposed to follow the constructive example of the Norwegian government?

We believe that the current and future Ecuadorian governments have a great responsibility. This exceptional triumph came largely as a result of critical pressure from the civil societies of Ecuador and Norway, supported in this instance by the CCCC. The previous and current Ecuadorian governments, however, did very little in its political reticence to assume a different perspective on its debt than that of its lenders. From today into the future, the Ecuadorian state and government must seriously begin searching for creative, definitive and sovereign solutions to the debt crisis. Such actions would permit an important step forward in the fulfillment of its human rights responsibilities.


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