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Economics & Politics

Ecuador has deserved political notoriety – seven presidents have governed since 1996. This political instability has been linked to who sways the indigenous Indian constituency, to who keeps multi-nationals in their pockets, to who can paint his face on the most crumbling walls. These discussions, however, are only interesting when being held over a jug of gluwin. Independent of social drinking, the most interesting Ecuadorian political decision was the recent one to dollarize the economy.

Late in the 90’s, Ecuador suffered economic freefall as El Nino and falling petroleum prices knocked the bottom of the economy that relies 40% on exported oil. The banks then skipped gaily down the rocky road of general collapse, and in 1999 Ecuador defaulted on its external debt. The then-president, Jamil Mahaud, announced dollarization. This annoyed quite a few people, and was followed in January 2000 by the predictable coup. This bunch proved inept, and the then-vice-president Gustavo Noboa borrowed the reins indefinitely. Are you keeping up?

In March 2000, the Ecuadorian sucre was no more and the dollar came into currency. This means the USA economy receive benefits of seigniorage – this basically means that the Americans get paid for each note or coin in use. Not perhaps very ethical to take royalties from a poor, economically devastated country, but that’s capitalism for you.

The economy stabilized and climbed back to its pre-crisis levels – but Ecuadorians are still, for the most part, poverty-stricken, with no financial security. Even worse, they have the quintessential representative of the USA – the greenback – breathing down their necks.

In typical Ecuadorian fashion, though, the people have refused to simply take that lying down. They have created little coins and notes that do not exist in the USA system and confuse the hell out of Americans who belly-ache about the odd change they are given. Let’s hear it for the small victories.

Robyn Leslie

I am a South African, which means I like sunshine and sticky-tape coins together so no-one knows I have money in my pocket. An environmental scientist by qualification, I studied at the University of Cape Town. My years there taught me about the grand narratives of communism, neo-liberalism and post-modernism, and how shitty people can be when they can't find a spot to park their car. After that I needed a break and went off to South America, where I lived and worked for a year. Now I am freelancing as a writer and holding out for a job that combines a morally specific mission with valuable, practical development goals. With a salary. Hmmm. By the way, I was just being snarky before. South Africa is totally safe. Really. Come and visit.