Galapagos Marine Preserve or a Cheaper Lousiana Purchase?

Galapagos Marine Preserve or a Cheaper Lousiana Purchase?

By Germanico P. Vaca

Guillermo Lasso proposed a debt swap deal with the world on Monday, November 1, 2021. He surprised the world and his own countrymen with a rather bold initiative, Lasso is willing to place another 60,000 square kilometers as a marine reserve in the Galapagos Islands, adding to the already existent reserve of some 130,000 square kilometers (50,200 square miles), which was already the world’s second-largest and home to some 2,900 marine species, and established back in 1998. It is listed as a Natural World Heritage Site.

Ecuador finds itself cash strapped due to an international debt of 45% of its GDP left as inheritance by the dictator wannabe Rafael Correa. Lasso was able to capture the world's attention with this proposal. But there are questions as to how effective can it be and if it can be done in the first place. The question to be answered first is who is really behind this proposal?

Ecuador is being taken through a car wash of sorts by the IMF. The draconian conditions imposed on the country mandate that they cannot provide any subsidies, reduction of the massive socialist bureaucracy left by the Camelot created socialism aka socialism XXI, and under conditions that make the Ecuadorian economy look like a farmer trying to mass produce with a drip irrigation system. It can never be done and as a result mass demonstrations by indigenous groups have threatened to derail the Lasso government.

So, Ecuador needs to find a way to raise enough money to service debts and at the same time encourage investment in manufacturing and processing, diversification to intensive natural resource extraction, diversify the industry, commerce, and import cleaner technologies while devising a way to export to the world all kinds of products.

In short order, Lasso’s proposal is nothing but a swap of what he is about to do in the country to mine the shit out gold, silver, and copper filled mountains no matter how much this will affect and degrade the rain forest and the country in exchange of five minutes of fame giving away a great part of the ocean that does not even belong to Ecuador.

Suddenly, a Debt-for-Nature Swap is intended to address the problems of Ecuador simultaneously, and the same pony trick was played by Rafale Correa back in 2007. Lasso claims that reducing debt in exchange for ensuring greater protection of valuable environmental assets will help the world. But I am afraid that as the previous record shows, the promises can be great, the results can be disastrous.  

The Debt-for-Nature Swap is a financial mechanism first created by international conservationists to protect endangered rainforest areas in a manner consistent with development goals. A conservation group takes on the responsibility of purchasing and retiring a portion of a country's international debt, thus in paper contributing to the country's development. In reality, such exchange is truly being promoted by the multinational companies and their puppet NGO’s to gain access to all the vast resources of a country, and hence the largest lobbyist in the world, the World Economic Forum who is the silent gun that applies pressure on humanity for the largest world polluters and destroyers of the financial wellbeing of humanity are probably behind this play by Lasso. The other player of course is the United States who is protecting its strategic military interest and the Secretary of State Anthony Blinken paid a visit to Ecuador and Colombia just days before Guillermo Lasso traveled in his world tour of slashing the Pacific Ocean to his will.

The Ecuadorian government then will agree to allocate local monies, resources and usually by issuing conservation bonds, for local conservation activities, such as to maintain a preserve purchased by the conservation group. Thus, the exchange is analogous with debt-for-equity swaps because on paper Ecuador will exchange debt denominated in Federal Reserve Notes or so-called US dollars (that it does not control) for its debt obligations. Thus, under Lasso’s proposal, the swap represents a much greater improvement than switching one form of debt for another might first suggest. Conservation bonds are financial instruments designed to ensure that the commitment of the country will reinforce the $US dollar and not cause inflation in Ecuador. Usually, care is taken to ensure that indigenous groups using the designated areas for economic activities have their livelihoods protected. In this case, the whales, sharks, tortoises, iguanas, and animal life will be protected and of course, the world has applauded the effort. But there are several problems with the concept.

The First Debt-for-Nature Swap

Back in 1987, Conservation International (CI), an offshoot of the World Wildlife Fund, shocked the world with the first Debt-for-Nature Swap. A secretive and never revealed source of a $100,000 grant had been donated to CI, thus enabling them to purchase $650,000 of Bolivia’s debt on the secondary market, offered at a huge—approximately 85%—discount at that time. (Note that most discounts on international debt instruments are no longer nearly this large.) CI then canceled this debt in exchange for the Bolivian government's agreement to raise legal protection on the Beni biosphere reserve to the maximum extent allowed by Bolivian law. In addition, Bolivia was to establish a multiple-use conservation buffer zone around the reserve, together totaling 2.7 million acres. In addition, the government established an endowment fund in the amount of $250,000 worth of local currency to cover the operating costs of managing the reserve. (Information provided under a study by Eva Canoutas)

Precisely this could well make investors of Ecuadorian debt bonds nervous because tacitly they would be talking about making financial runs so that the bonds collapse and then be taken advantage of and bought at a huge discount. Something that would not be difficult to manufacture with a simple announcement that Ecuador will not pay the bond debt a few days before its expiration, and the moment that the bonds fall in value, be it Ecuador itself or institutions of conservación can purchase these bonds for just 25% of their value. Then a minister sacrifices himself saying that he spoke without consulting the president and that Ecuador will faithfully pay its debt. Far from being something that will help attract financing, this may become the reason that no one wants to invest in Ecuador

 But perhaps this is key to understanding why this is being proposed and more importantly that Guillermo Lasso had nothing to do with the idea and the decision. This has many players behind the scenes. First Uncle Sam guns though South Command of the United States and pressure from the United States was already worried in trying to stop the ever-expanding reach of the Chinese fishing fleets that rob and steal over $25 billion of fishing in South American waters and most people agree that about $4,000 billion come from the area around Galapagos, now declared a nature preserve by Guillermo Lasso. The stupidity of giving up the possibility of profiting of at least $4,000 million dollars a year having their own fishing fleet to solve the economic issue should be the first question to ask:

- who does that?

-Why is the United States not making a payment directly to Ecuador and just establishing a Military base in Galapagos to protect such vital strategic military interest?

-Why does the United States not act in a decent way and at least give the Ecuadorian navy a couple of old navy ships to patrol the waters to stop the Chinese fishing fleets?

We all know that otherwise, they will auction for $1 as they did with the Kitty Hawk. So, to that end, this action is in reality a military and strategic move to protect what the United States considers a vital geographic place to control the Pacific. This has nothing to do with greater environmental protection and enforcement, and to the extent that environmental problems, such as global warming and loss of biodiversity are real. This is a move by South command that cost them nothing and Guillermo Lasso was either too stupid to ask for something in return, which should have been offered and paid by the United States, or did not even realize the implications. Yet it has everything to do with controlling international boundaries, the most strategic place to control the Southern hemisphere of the Pacific Ocean and to control other countries while stopping the Chinese expanding influence and ambitions.

Never mind that I am in total favor to continue a great presentation by the United States. As a dual citizen of the United States and Ecuador as I was born in that country and I have called for much greater oversight. But the United States who will give billions to other nations just gave nothing for the privilege and that is a rotten game. The United States has taken Ecuadorian for fools and Lasso just demonstrated he is a good nice puppet, but not a very smart one.

The Proposed marine reserve encompasses a massive area all around the Galapagos islands and no one can be opposed to the protection of close to 3,000 species. I could never oppose such an ambitious agreement. But I am afraid that this swap has nothing to do with their protection as Ecuador does not have neither the money nor ability to enforce its protection. It is a propaganda stunt, plain and simple. The Chinese would continue fishing as long as the United States does not act and give Ecuador the tools to actually enforce such marine preserve. They have been fishing at will and Ecuador has been able to do nothing with the current size of the marine preserve, how can they protect an area twice as big?

We need to examine the motives and actions of the major parties to the agreement, and factors that might affect the direct and indirect, or transaction, costs of their participation.

Who would be the International organization that buys “The debt-for-nature swap”

On paper, there must be a contract, something that will be stipulated that “someone” would serve as an official advisor to the Ecuador government in the design and planning of the marine preserve region, as well as the steps that will take to make such work possible.

But first, no one has reviewed the Ecuadorian law and constitution, and to see on what legal grounds the executive branch of the Ecuadorian government declares a massive piece of their territory ready and able to be swapped for debt? Does it need the legislative branch to vote on the proposal by the executive? Can Ecuador be government act at the will of the president and swap territory or any resource for that matter at will?

One thing is clear, it will take massive amounts of money to protect a fleet of scientific research ships that will care for wildlife management and monitoring of the protected areas.  At the same time who can provide technical, financial, scientific, and administrative support to the area. In other words, Ecuador is willing to take on a massive undertaking and yet the idea is being sold as a benefit to the rest of the world and a swap for debt when in reality the amount of money to do such a thing is probably bigger than the debt forgiveness that could be given.

Is the role of start-up funding going to be provided by his own bank, Banco de Guayaquil? Who will do the funding and manage such funding? What will be the institutional development, training, and coordination of international assistance for the protected areas? All those questions will have to be answered and I am afraid there will be an enormous constitutional mess once those questions tried to be answered.  

The question that I ask myself is why and how is it possible that Guillermo Lasso or whoever had the idea did not conduct a study about all these implications. The Ecuadorian assembly and the ministers of his own cabinet had to set up an Interinstitutional Technical Commission. A study committee should have been composed of the regional and national government and non-governmental organizations (NGOs).

There are other countries involved and I can foresee a massive mess with creating a Commission to be responsible for local programs in Colombia, Costa Rica, and Ecuador for environmental education.

At the same time, Ecuadorian universities will have to produce graduates in sustainable socioeconomic systems, as well as wildlife and forestry management. In addition to national, local, and regional planning.

The effort will cost probably billions of dollars that will involve government and non-governmental agencies at the national and international level in such areas as environmental law, technical training, institution building, and conservation planning. Money that of course Ecuador does not have and is pretending that it actually will benefit from a debt swap that it will end up as a great idea and chances are that a Chinese investor may buy the rights and will end up making it a Chinese swap for the Galapagos unless the United States is open about the strategic purchase for nothing like a second Louisiana purchase.

One can only hope that representatives of different organizations are willing to provide an array of experts including individual organizations such as UNESCO, (The Nature Conservancy, WWF), government agencies such as the several ministries of Ecuador, USAID, the Environmental League (LIDEMA), Conservation Data Center, NASA, the National Institute of Ecology, academic organizations, including the National Academy of Sciences. All Ecuadorian Universities and several world-class Universities should and must play a more direct role in creating an agreement.

The benefits that Guillermo Lasso has claimed to enter this swap agreement are clear. But the realities of such dealings are not as clear and I am afraid is too early to fully appreciate the logistical difficulties of implementing and maintaining such a program, but worst yet, the benefit to Ecuador may end up being a comet worth of problems. In the end, such agreement will have to be honored by either private and public sectors, and yet the proposal claims as beneficiary Ecuador, the world, and marine life.

The Ecuadorian Government

The Ecuadorian government of Guillermo Lasso has suddenly won praise despite the fact that no one seemed to have given any serious thought about the implications and realities that such a debt swap could mean. It is not enough that the president of a country is maybe willing to take on the initial task and his willingness to agree to the implementation of the exchange and issue of bonds in a certain amount to cover costs of protecting the Marine preserve of the Galapagos. The sad reality is that if they cannot protect the existent area, then how come you announce you can take on a much biggest responsibility as long as they forgive your debt?

If the bonds are held by the Central Bank of Ecuador and are set up as an endowment; What is the Federal Reserve who dictates Ecuador’s monetary policy going to say? Who will manage such an endeavor? The biggest question is perhaps how can Lasso hope to achieve to establish the laws and appropriate legal mechanisms needed to administer the Debt-for-Nature transaction with a National Assembly willing to oppose all his mandates. As a matter of fact, they may even declare that Lasso broke the law for not asking their permission and initiating impeachment proceedings.

Other questions must be answered. How is it possible that Lasso announces to the world such a massive undertaking when in reality all new projects and programs require the approval of Ecuador's Ministry of Planning and Coordination as well as other ministries that do not have the budget and apparently never conducted even a study about the feasibility of the project?

The decision to enter into this agreement is being sold as the sole idea of Mr. Guillermo Lasso. Of course, it was not his idea. As a sovereign state, even one very committed to environmental protection needs the consultation and agreement of the branches of government and needs to comply with the Ecuadorian constitution.

There is the danger that the government of Guillermo Lasso has already overstepped its powers and as a matter of fact, he may have violated the constitution by surrendering its sovereignty and prerogatives

to foreigners, even though the agreement is being sold as a marine preserve there is no doubt that the Chinese will see as a military strategic move by the United States who wanted to get on the cheap and used Ecuadorians as they have always done, treating them with no respect as fools that will grab the pill of sugar Daddy Uncle Sam.