KAIROS Debt E-Bulletin January 2009
Ecuador Has Every Right to Refuse to Pay Illegitimate Debts
President Rafael's Correa's decision to default on payments on a portion of Ecuador's external debts has received enthusiastic approval from social justice advocates amidst warnings of retribution from private financiers. London's /Financial Times/ accuses Correa of halting payments "on ideological grounds".
In fact, Ecuador made this decision for solid moral, legal and financial reasons that have been ignored by media reports. The default followed an exhaustive audit of Ecuador's debts that uncovered extensive irregularities and illegalities in the way the debts in question were contracted. Moreover, the decision is based on a strong moral case for repudiating illegitimate debts as affirmed by many church and civil society organizations