International Campaign on Illegitimate Debt

Resolution of support for Ecuadorian Debt Audit

19 September 2008

The undersigned participants in the First South-North Study and Strategy Meeting of the International Campaign on Illegitimate Debt, representing 50 global and regional networks and organizations from 36 countries from throughout the world, meeting in Quito, Ecuador, on September 9 – 15, 2008,


1.That the people of Ecuador have been demanding that their government fulfill its right and obligation to take necessary measures in the face of the debt claimed illegitimately of their country, in order to favor the wellbeing of millions of families who for years have suffered the consequences of the inhumane policies of structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

imposed by the organisms of international credit and other lenders;

2.That the President of the Republic of Ecuador and his government, in July 2007, took the sovereign decision to designate a pluralistic Special Commission, comprised of national and international experts on the Debt and its impacts, in order to undertake a Comprehensive Audit of the Public Credit of Ecuador;

3.That the Commission conducted its work with scientific criteria and technical objectivity, throughout the period of time established by the Ecuadoran government, in order to present its final report in September, 2008;

4.That the jurists who have been involved and who have advised the Commission have corraborated that, with respect to the legal situation of the debt in Latin America, general principles of law (such as those of good faith, the free determination of peoples, the prohibition of usury, contractual balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. , rebus sic stantibus, human rights, environmental rights, among others), international covenants, and fundamental norms of domestic law have been violated;

5.That the decision to undertake the Audit is complemented by other initiatives whose aim is to promote the building of a new regional and international financial architecture, including the creation of the South Bank and partial withdrawal from the International Center for the Settlement of Investment Disputes (ICSID ICSID The International Centre for the Settlement of Investment Disputes (ICSID) is a World Bank arbitration mechanism for resolving disputes that may arise between States and foreign investors. It was established in 1965 when the Washington Convention of that year entered into force.

Contrary to some opinions defending the fact that ICSID mechanism has been widely accepted in the American hemisphere, many States in the region continue to keep their distance: Canada, Cuba, Mexico and Dominican Republic are not party to the Convention. In the case of Mexico, this attitude is rated by specialists as “wise and rebellious”. We must also recall that the following Caribbean States remain outside the ICSID jurisdiction: Antigua and Barbuda, Belize, Dominica (Commonwealth of) and Suriname. In South America, Brazil has not ratified (or even signed) the ICSID convention and the 6th most powerful world economy seems to show no special interest in doing so.

In the case of Costa Rica, access to ICSID system is extremely interesting: Costa Rica signed the ICSID Convention in September, 1981 but didn’t ratify it until 12 years later, in 1993. We read in a memorandum of GCAB (Global Committee of Argentina Bondholders) that Costa Rica`s decision resulted from direct United States pressure due to the Santa Elena expropriation case, which was decided in 2000 :
"In the 1990s, following the expropriation of property owned allegedly by an American investor, Costa Rica refused to submit the dispute to ICSID arbitration. The American investor invoked the Helms Amendment and delayed a $ 175 million loan from the Inter-American Development Bank to Costa Rica. Costa Rica consented to the ICSID proceedings, and the American investor ultimately recovered U.S. $ 16 million”.


1.To express our support for this sovereign decision of the Ecuadoran government, that will make it possible to know in a transparent manner the characteristics of the process of public indebtedness, to establish precise responsibilities for the illegitimate indebtedness that has been to the detriment of the national interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. and the dignified life of the population, and to develop criteria in order to avoid the accumulation of new illegitimate debt;

2.To support the actions that the President of the Republic, the Government, and the social movements and organizations of Ecuador undertake so as to implement and and put into practice in a sovereign manner the conclusions and recommendations that the Audit Commission formulates in its final report, including the possible suspension of payment on all credits which the audit has established and demonstrated to be irregular, illegal, illicit and therefore illegitimate, in accordance with their rights and obligations to defend and promote the human, collective and environmental rights of the population and on the basis furthermore of the principles incorporated into the new Constitution;

3.To respectfully ask the government of Ecuador, in order to avoid unjust payments that generate irrecoverable losses from the public budget, to extend the comprehensive audit to all pending debt claims that exist at all levels and were not included in the sampling or initial process of this audit, and to suspend payment on those debts until such time as the final results of the audit be made known, at which time payment on those credits that are neither illegal nor illegitimate would be resumed;

4.To manifest our commitment to to disseminate at all levels internationally the process and results that are officially published by the Integral Audit Commission, in order to seek the support of governments, parliaments, movements, and others, with the objective of achieving the restitution of and reparations for all that the Ecuadoran people have unjustly paid and the realization of comprehensive audits in all those countries that have suffered the same illegitimate processes of indebtedness, as is now happening in the form of Citizen Audits in several countries around the world.

5.To support as well the actions that the government, the peoples, and social movements and organizations of Ecuador undertake with the aim of advancing in the construction of an alternative financial architecture, such as the sovereign decision to withdraw from the ICSID and contribute to the creation of a South Bank that serves the interests and rights of the people and constitutes a break with the structure and functioning of existing International Financial Institutions.

Quito, Ecuador, September 15, 2008


Jubilee South, Africa Jubilee South, Jubilee South/Americas, Jubilee South Asia-Pacific Movement on Debt and Development, European Network on Debt and Development EURODAD, Jubilee USA Network, CADTM Belgium, CADTM Ecuador, African Network on Debt and Development AFRODAD, Lutheran World Federation Program on Illegitimate Debt, LATINDADD, Southern Peoples’ Ecological Debt Creditors Alliance, Norwegian Church Aid, SLUG- Norway, Debt and Development Coalition of Ireland, Observatory on Debt in Globalization of the Spanish State, French Plataform on Debt and Development, Aktion Finantzplatz -Switzerland, Jubilee Debt Campaign-Great Britain, Jubilee Scotland, Jubilee Australia, ATTAC Japan, Freedom from Debt Coalition Philippines, Equity Equity The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’. Justice Working Group Bangladesh, Indian Social Action Forum, INFID Indonesia, KAU Indonesia, National Debt Group-Ecuador, Jubilee Peru Network Jubilee South Brazil, PAPDA Haiti, Dialogue 2000 Argentina, Jubilee South Colombia, “In Debt with Rights” Campaign-Colombia, CADTM Colombia, Red Sinti Techan-El Salvador, Economic, Social, Cultural and Environmental Rights Platform–Uruguay, ANEEJ Nigeria, Jubilee Zambia, Economic Justice Network Malawi, Campaign Against Debt-Mali, National Forum on Debt and Development-Ivory Coast, CADTM Morrocco, Southern Africa Economic Justice Network




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