WikiLeaks reveals US officials admitting dollarization was hurting Ecuadorian economy - now US-backed right-wing elites want to privatize central bank to secure it

The WIKILEAKS Public Library of US Diplomacy (PlusD) holds the world's largest searchable collection of United States confidential, or formerly confidential, diplomatic communications. As of April 8, 2013 it holds 2 million records comprising approximately 1 billion words. The collection covers US involvements in, and diplomatic or intelligence reporting on, every country on earth. It is the single most significant body of geopolitical material ever published. The PlusD collection, built and curated by WikiLeaks, is updated from a variety of sources, including leaks, documents released under the Freedom of Information Act (FOIA) and documents released by the US State Department systematic declassification review.  

 

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A 2009 cable coming from the US embassy in Ecuador was including estimations for the prospect of the Ecuadorian economy based on the 2010 budget.

 

The most remarkable is that in the final comment, at the end of the cable, the US side was essentially acknowledging that the "dollarized economy" of Ecuador was a barrier against the necessary flexibility that would permit the government to achieve a more stable economy and growth: [emphasis added]

 
                              As Ecuador is a dollarized economy, eliminating the GoE's ability to print money, analysts, therefore, have major concerns about fiscal stability, given the lack of financing, the difficulty in increasing tax rates, and declining oil sector production. 

 

Apparently, the Americans were only interested in controlling the Ecuadorian economy through dollarization.

 

Last month, MintPress News revealed that the US-affiliated, right-wing political elites were seeking to privatize the Central Bank of Ecuador (BCE), in order to secure dollarization. It appears that they were rushing to take action towards that direction in order to prevent undesirable developments from a potential victory of the Leftist candidate Andrés Arauz, in the second round of the general election.  

As the MintPress News reported: [emphasis added]

With just days until Ecuador’s February 7 presidential election and four months remaining on President Lenin Moreno’s mandate, the Ecuadorian government and right-wing elites are still scrambling to privatize the country’s central bank. The process involves fast-tracking an emergency law dubbed the Humanitarian Support Organic Law, which will “lockdown” the central bank, siphon it from the public sector, and place Ecuador’s financial sovereignty at the whims of private interests. According to right-wing figures and the country’s mainstream media apparatus that protects and serves its interest, the unconstitutional move is being touted as a necessity. Both parties have claimed that the measure would “safeguard” the country’s dollarization. In 2000, the U.S. dollar was implemented as part of the country’s national monetary system during the neoliberal administration of Jamil Mahuad. Sixteen financial institutions were bailed out by his government at a whopping cost of $2.6 billion. [...] The current claim that the country’s dollarization needs to be “safeguarded,” a claim repeated by the political and economic elites, local media, and the bulk-some of the 15 presidential hopefuls, is rooted in the work of the leading presidential candidate, Andrés Arauz. Since the end of Rafael Correa’s term in office, Arauz has been in charge of the Dollarization Observatory. This organization informs the public on economic matters, often focusing on the ways in which neoliberal interests threaten Ecuador’s economy. The myth claiming that Arauz wants to forcibly remove the dollar as the national currency comes from an article he wrote last April in which he gave examples of “good and bad” de-dollarization processes. Opponents of the front-running presidential candidate seized on the chance to criticize the piece, claiming that Arauz intends to withdraw all U.S. dollars from circulation. Though the dollarization of the economy was, indeed, a bad idea “at the time,” Arauz has not expressed nor has any intentions of de-dollarizing the economy. The privatization of the central bank, however, will put a dollarized economy at risk, as it would open the floodgates for billions of dollars to be transferred to places like Panama and other tax havens. It would, in effect, force an already crumbling public sector to subsidize the capital flight. The emergency law would also prohibit the central bank from issuing bonds to the government, forcing authorities to increase the foreign debt during the current economic and health crisis. The law would also completely disassociate Ecuador’s principal financial institution from any government oversight. Consequently, a board of directors named by Moreno, a president with a 7% approval rating and who has co-governed alongside powerful economic groups, will be charged with this responsibility. Uncontested authority over the central bank and its economic policies will be wielded by the board and private interests.

It would be worth to note that (according to an earlier 2009 cable from the US embassy in Ecuador), the private bankers in Ecuador were upset for the fact that the Correa administration was seeking to scrutinize and regulate the financial sector:

 

                             Private sector banks are already upset at GoE and BCE over-regulation, interest rate controls, and recent decrees requiring them to repatriate a percentage of their own overseas holdings, and are reluctant to buy additional GoE or BCE bonds of their own volition.

It's obvious that the US imperialists (together with the private financial interests in Ecuador), view a potential Arauz victory in the second round of the general election as a major threat against their plans.