Dollarization of Ecuador’s economy has been a thorn in the side of the country’s socialist president Rafael Correa and leftist allies like Alberto Acosta for some time.  This is not only due to obvious ideological reasons—though Correa’s anti-U.S. bent is justification enough to expect the worst.

Replacing the Ecuadorian sucre with the U.S. dollar in 1999 stabilized the country following a period of hyperinflation and a massive devaluation of the sucre.  But, Ecuador’s use of the U.S. dollar deprives the government of the ability to devalue a native currency relative to trading partners to gain a competitive advantage in goods exports.  The absence of an independent monetary policy is especially irksome to Correa since oil prices are low and oil revenue represents the largest portion of the government’s fiscal budget.  Correa, who faces re-election this month, has little to offer his mostly-poor constituencies save for high social spending.  He knows his popularity will diminish if he can’t sustain transfer payments and other myopic antipoverty initiatives in a country where poverty persists.  Debt is rising, the mining industry requires more time to produce, and there is no way to pay the price of longstanding corruption, traditional oligarchy and rising protectionism.

Now Bloomberg and The Wall Street Journal are reporting how Ecuador’s crises of revenue and lack of sound governance have converged, to the detriment of individual freedom and human rights.  Rumors abound that the government plans to de-dollarize the Ecuadorian economy through the recall and replacement of U.S. dollars immediately following a Correa re-election victory.  One scenario envisions that post-election, a bank holiday would be enforced, U.S. dollars recalled, and a new currency called the condor swapped out for the dollars.  This is a widely circulated rumor backed up with further talk of 11 containers filled with newly minted currency arriving in Ecuador from Iran via Chile. 

Recently, the highly-regarded Ecuadorian columnist Romulo Lopez Sabando wrote about the rumors and commented on the misguided nature of the move.  Sadly, he has paid for his outspokenness by having to evade an arrest warrant for defying the president’s efforts to silence anyone who dares to mention the de-dollarization controversy.

Explaining this topic in full, Fausta’s Blog has a podcast featuring a radio interview with guests Eneas Biglione of HACER and Romulo Lopez Cordero of the Spanish-language blog Cambiemos Ecuador. 

Lopez Cordero is the son of Romulo Lopez Sabando, the man being persecuted by the Correa government.

The podcast is long but do remain tuned in for Lopez’s and Biglione’s closing comments on the curious nature of Ecuador-Venezuela-Iran relations and the fate of the U.S. forward operating location (FOL) in Manta, Ecuador.  The base is set to close this November thanks to the Correa administration, which strangely doesn’t care that the absence of U.S. forces will facilitate the free movement of FARC terrorists and drugs.

FreeMarketeros.com stands with Romulo Lopez during this tenuous moment for his family, the people of Ecuador, and liberty.  Whether more of the U.S. media use their influence to tell this important story is still an open question.