...but not for the reason they say it is. According to this article, 44% of Ecuador's debt is to private banks. Ecuador has declared this and other foreign debts "illegitimate" because of the following:
"The commission found that usurious interest rates were applied for many bonds and that past Ecuadorian governments illegally took other loans on. Debt restructurings consistently forced Ecuador to take on more foreign debt to pay outstanding debt, and often at much higher interest rates. The commission also charged that the U.S. Federal Reserve's late 1970's interest rate hikes constituted a "unilateral" increase in global rates, compounding Ecuador's indebtedness."
Hey, those are all great reasons for Ecuador to declare its debt illegitimate. But, as we've seen, the overarching reason the debt is illegitimate is that the money loaned to them was fake. That is to say, it didn't and doesn't exist except as entries in computer databases.
So are we going to invade Ecuador?
The article notes that:
"Ecuador's findings could set an important precedent for the poorest of indebted countries, whose debt burden has long been criticized as inhumane."
Holy crap, that's the one thing the corporatists absolutely hate--setting an example for other countries, especially when the example being set is throwing off the chains of fraudulent debt slavery. Presidents are hunted down and killed and/or countries are invaded and/or overthrown via black ops for that kind of stuff.
U.S. declares debts illegitimate, why not Ecuador?
A former Ecuadorian government official points out the following:
"The United States itself has embraced the concept of illegitimate debt in encouraging countries to forgive the debt accrued in Iraq under Saddam Hussein."
Good point. Especially when one takes into account that the U.S. put Saddam in place to begin with.
The article makes a similar point:
"In fact, the U.S. originated the concept of foreign debt after the Spanish-American war. The U.S. refused to pay Cuba's outstanding debt to Spain, arguing that it was created by agents of Spain in Spain's self-interest, a matter in which Cubans had no say."