Otto Reich: US Should Not Sign New Trade Agreements with Ecuador

Friday, 22 Jun 2012 03:38 PM

By Otto J. Reich & Ezequiel Vázquez-Ger

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Otto J. Reich’s Perspective: The reputation of Ecuador under President Rafael Correa has taken many hits lately. By now anyone with access to the Internet knows that accused sex-criminal Julian Assange has taken refuge in the Ecuadorian Embassy in London so as to avoid extradition from Britain to Sweden, where he faces very serious charges.

Correa has said that Ecuador will "take its time" in considering Assange's asylum request. But many Americans may not know just how much damage Correa has done to US-Ecuadorian relations and democracy in his country, and how he is trying to influence Washington to overlook those transgressions.

london-embassy.jpg
Julian Assange has taken refuge in the Ecuadorian Embassy in London.
(Getty Images)
Since her arrival in the U.S., Ecuadorian Ambassador Nathalie Cely has been tirelessly lobbying the U.S. government to sign new trade agreements with her country. We are for free trade, except with countries that permanently violate the human rights of their own people and which, in turn, trade with anti-American dictatorships.

US policy should be “Free trade with free countries and controlled trade with controlled countries.”

Below are some reasons why the US should not sign new trade agreements with Ecuador:

Ecuadorian relations with Iran grow at an accelerated but hidden pace. High ranking Ecuadorian officials have travelled openly and covertly to Iran and Russia with the intent of constructing a money laundering system that will permit Iran to short-circuit the financial sanctions imposed by the US, UN and the European Union. This system includes several elements, among them:
  • The creation of a “Unique System of Regional Compensation” (SUCRE, in its Spanish acronym), a virtual currency unit adopted by ALBA (Cuba-Venezuela-Ecuador-Nicaragua-Bolivia alliance) nations in order to replace the dollar in regional trade. The SUCRE’s existence makes it possible for ALBA countries’ central banks to bypass foreign banks’ supervision when they wish to hide certain international transactions. Consequently, the only judges of the legality of these transactions are the very same suspect central banks that use the SUCRE for their foreign transactions.
  • The alleged signing of a $400 million credit line from the Export Development Bank of Iran (EBDI) to Ecuador, for the commercialization of gasoline and other petroleum derivates. EBDI is on the U.S. Treasury Department Office of Foreign Assets Controls (OFAC) list of Specially Designated Nationals as companies that do business with Iran’s defense establishment.
  • The signing of four contracts between Petroecuador and Petrochina between 2009 and 2011 through which Ecuador commits to export some 385,560,000 barrels of oil to China at highly discounted prices (between 2 and 8 dollars below the spot price). Why would Ecuador willingly lose money in a commercial transaction?
  • A joint project between the governments of Iran, Venezuela, Ecuador — and allegedly China — to build the “Refinería del Pacífico,” a $12 billion project. Confidential information to which we have had access indicates that the Pacific Refinery project will be created by a tri-country conglomerate of PetroEcuador, Petroleos de Venezuela (PDVSA) and Petropars (Iran). The company name will be PETROVENPERSA.
As a result of the above, Ecuador is on the edge of being included once again in the Financial Action Task Group (FATF) black list of countries that are not combating money laundering.

In May 2011, President Correa called for a referendum to restructure the Supreme Court. Correa's purpose was to dominate the court, and the result of the referendum was the replacement of the system through which judges were appointed with a new system controlled by him. As a result, all 21 new judges have been appointed to the court. One of them is Wilson Merino, who as a lower court judge sided with President Correa in a sham defamation lawsuit launched by Correa against the newspaper El Universo. Merino not only ruled for Correa but awarded the president $40 million dollars in "damages." This sentence was later "forgiven" by Correa due to severe criticism by international organizations and media.

Merino’s appointment to the Supreme Court was only possible because Correa shamelessly manipulates the judicial appointments process. This process establishes a series of requirements, qualifications, and tests that the candidates must pass in order to be selected. Wilson Merino did not meet the minimum qualifications, but Merino's final score was artificially increased, giving him the necessary points for appointment to the Supreme Court, as the president wished.

President Correa has tried by all means to destroy the independent press in his country, as demonstrated by his efforts to bankrupt newspapers such as El Universo, and the persecution of journalists too numerous to mention here. Moreover, earlier this month, during the 42nd general assembly of the Organization of American States (OAS) in Cochabamba, Bolivia, President Correa, in a renewed attack against freedom of the press, sought to block the release the Inter-American Commission on Human Rights' (IACHR) report of press freedom in the Americas. International human rights and press organizations have condemned these attacks.

Earlier this year, President Correa boycotted the Summit of the Americas in Colombia, a regular meeting of the freely elected presidents of western hemisphere nations.

Correa cited one reason only for avoiding the meeting: The fact that the 53-year old totalitarian dictatorship of the Castro brothers in Cuba has been excluded from the meeting. Cuba has never been invited because its government is not a democracy, as required by the Summit's rules.

Most of these subjects have been widely discussed by the international press. The US government is aware of them. Signing or renewing trade agreements with Ecuador will only allow Rafael Correa to continue undermining US foreign policy, trading with our enemies, and destroying his country’s democracy.

Otto J. Reich is a former U.S. assistant secretary of state for the western hemisphere, U.S. ambassador to Venezuela and senior staff member of the National Security Council. He is president of the consulting firm Otto Reich & Associates LLC. Ezequiel Vázquez Ger is an associate at Otto Reich Associates LLC.

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