IS GLOBAL FREE TRADE DEAD?
Bahia de Caraquez, Ecuador, 29 September 2006

The following article is to appear shortly in a small progressive journal in Canada (www.independentvoice.ca).


IS GLOBAL FREE TRADE DEAD?
Developing countries left to fend for themselves.
Opponents of trade liberalisation fail to provide alternatives for alleviating world poverty

By Ronald J. Bird

The collapse in disunity this past July of the Hong Kong meetings aimed at forging a trade deal that would embrace all countries – rich and poor – has sent the proponents of trade liberalisation and free trade back to their tents to consider next steps. Opponents of trade liberalisation leading to free trade make no effort to conceal their glee. For those who hoped that reducing barriers to trade would help to reduce poverty in the Third World and to raise living standards everywhere, word of the collapse is heartbreaking. The final breaking point was the refusal of the United States to reduce its huge subsidies for cotton farmers.

Developing countries are not the only ones to pay the price

Poor countries will be the main sufferers. It has been the poor countries – not the rich ones - who have so persistently been calling for the opening of First-World markets as a means of alleviating the grinding poverty so often found in developing nations.

But the world’s poor are only the most obvious ones to bear a burden. The citizens – rich and poor - of the USA and Canada, of Europe and Japan, too, can now also go on paying higher prices for food and manufactured goods and coughing up the high taxes that continue to encourage unnecessary, expensive and unused agricultural surpluses. Some of these surpluses will continue to be dumped into poor countries where they will devastate local farm livelihoods. Some of the surpluses will also actually be destroyed to avoid the storage costs or to push prices up. None of this even calculates what American, European and Japanese consumers will pay for the foregone savings on unnecessarily-expensive manufactured goods.

Equally important, before rubbing their hands in glee, opponents of global free trade should remember that they still owe the world realistic alternative proposals for alleviating the scandalous persistence of grinding poverty in the world, proposals that do fall neither, on the one hand, into sterile and poverty-enhancing state socialism of the East German ilk, nor, on the other hand, form part of a naked imperialism such as in a British Raj or an American Iraq.

Free trade means more economic activity

Theoretically, trade liberalisation leading to free trade should benefit everyone. In every case where trade has in fact been liberalised in our age, overall trade between the trading partners has increased. The post-war European experiment is only the most obviously successful. No one denies that there are winners and losers in the process: inefficient businesses are driven out of the market and their employees must find new work. More enlightened governments such as the EU have recognised that there must be assistance for the dislocated and have taken steps to help.

At the same time, with trade barriers down, efficient players gain access to a much bigger market and are theoretically able to absorb at least some of the surplus labour in the declining industries, though this is seldom done without at least temporary dislocations. The beneficiaries however, mainly consumers and those in newly-created jobs, remain silent because they have no organised voice.

Most of the criticism we hear of trade liberalisation in fact comes understandably from those who must bear the brunt of the dislocations, the individuals and their representative organisations (e.g. trade unions) and the businesses. The recent election in Mexico was fought on this basis. All parties agreed that Mexico had benefited in general from free trade with the USA. But one party claimed, correctly, that the benefits have not been evenly spread. Of course, it never once said that it wished to scrap NAFTA, but only that it wanted to help the dislocated.

Stand-alone economies are at best fallbacks

Barriers to trade have been erected in both the rich countries and the poor. The latter try to protect their agriculture and whatever industrial base exists while leaving their farmers to sell their produce on stormy international markets, to beat futilely against the gates of protected consumer markets in the rich North.

Canadians will recognise this as the Conservative Party’s old ‘National Policy’, adopted by the McDonald Government and continued by Laurier and the Liberals. Farmers sold their wheat in open world markets and bought their expensive tractors from Massey Ferguson in Toronto. Economic historians remind us that the National Policy was contrived because it had become clear that the USA was not interested in ‘reciprocity’, as free trade was called back then. It was a fallback position.

Historically, it was argued that Canada’s consistently lower standard of living (compared to the USA) was the outward and visible cost of something inward and spiritual: a distinctive national identity; Canadian national self-determination; an independent role for Canada in the world; perhaps even the ability to tell the Americans where to get off.

Attractive as this might have been in theory, several constituencies refused to play along. Many individual Canadians, for example, felt that they were the main paymasters of the National Policy (call it what you will in later versions). Westerners were not the only group to believe that a stand-alone economy benefited nearly exclusively Southern Ontario and Bay Street (i.e. the same ones who are said to be the main beneficiaries of NAFTA). Quebecers (outside perhaps of Montreal’s business sector) and Maritimers didn’t generally think much of it either. The results of the recent Canadian federal election, which brought to power a strongly pro-American government, only confirm this observation.

Second, the stand-alone Canadian market was and is far too small to permit anything like the large-scale manufacturing needed to lower unit prices. Canadian companies remained until the Car Pact came along barely larger than Mom-and-Pop operations. Only access to a very large consumer market would allow unit costs to drop, i.e., in practical terms, this means unfettered access to the USA, the same thing, after all, that developing countries want now.

There are no markets in the world anywhere comparable to the volume represented by the USA and where Canada has an even break of gaining free access. Britain after all, always relatively small in terms of demand for Canadian industrial products and anyway defended by tariffs, first weakened and then disappeared altogether in the 1940’s as a useful market and by the mid-1950’s even as a diplomatic counterweight to the USA. Indeed, today it seems to have moved completely to the other side of the scales. The European Common Market, to be realistic, was never about to include Canada and Japan did not seem to interest Canadians.

Third, it should not be forgotten that the manufacturing base in Canada was and is largely American-owned anyway. Both the intellectual property (inventions, patents, know-how, copyrights, etc.) and the development capital come from the USA. Without these inputs Canadians, the Avro Arrow notwithstanding, would remain largely slanted towards being hewers of wood and drawers of water. The automotive industry, that economic powerhouse for Canada, is almost without exception American-owned. Certainly, whatever its base, without a strong economic showing, Canada’s independent role in the world was going to be modest. Diplomatically it is already being pushed aside by newcomers like China, India and Brazil, all with much larger home markets.

National self-determination

Despite its economic integration with the USA (Mexico hardly counts for Canada), there is however nothing in recent Canadian history to indicate that Canadians are less independent now than they were before NAFTA. Being a small country next door to a large and powerful one has always meant walking a thin line between independence of action and raising the ire of the Yankees.

Back when Diefenbaker was Prime Minister and long before CUFTA or NAFTA, Ford of Canada did not in the end buck its head office in Detroit or the State Department in Washington to sell trucks to the PR of China. Canada also refused, despite arm-twisting, to become involved in Viet Nam. Later, in the era of NAFTA, despite a public campaign of intimidation by the US government led by its loud-mouthed and condescending ambassador in Ottawa, a recent Canadian Government refused to attack Iraq in cahoots with the USA and in the service of that country’s geo-political aims. Sadly, even that show of independence brought down at home the wrath of the Reform Party and revealed how naively pro-American so much of the Canadian population really is.

Is free trade undemocratic?

The critics who say that trade agreements are inherently undemocratic need to be reminded that CUFTA, NAFTA, CAFTA (Central American FTA) and FTAA (Free Trade for the Americas) have been or are being negotiated by freely-elected governments. The dispute procedures of NAFTA and other organisations could perhaps do with more openness. But surely no one seriously wants the national representatives to NAFTA or the other trade agreements to be elected separately from the governments, legislatures and peoples they are supposed to represent.

How is poverty to be removed?

We can surely agree that the continued existence of so much poverty in a world so rich is a scandal. Let us therefore for one moment assume that it should be our aims, first, to alleviate poverty throughout the world, and second, to raise the material living standards for everyone. Indeed, global free trade has so far been the only practical and actively-pursed grand political policy to that end.

(The only other really serious contender for alleviating world poverty would be an open-door immigration policy by all countries. Although it would have some twenty-five times the impact of global free trade, no one seriously even discusses it, and we all know the reasons why. Some of them, though clearly not all, are even the same arguments the critics of trade liberalisation trot out.)

Global free trade has by no means been the idea of the rich countries. Developing countries at whatever stage of development can and do tell us repeatedly and unisono that they need access to the large markets in North America, Europe and Japan for their products. The negotiations for the Central American Free Trade (CAFTA) and Free Trade Agreement for the Americas (FTAA), for example, were initiated by Latin Americans.

Agriculture is key

While China and India (the latter now approaching China’s size of population) are now becoming serious industrial societies, many poor countries do not have large manufacturing bases and even the larger ones have a very large agriculture sector. So agriculture is key. Even some reasonably large countries like Brazil or Mexico, though much bigger in numbers than Canada, still have populations that are too small to provide economies of scale.

But whether they are large or small, all evidence backs up developing-country claims that they can provide to both the consumers in the rich countries and to their own peoples at home products that are much, much cheaper – which is of course why the rich countries put up tariff walls in the first place. Even the developed world agrees that open markets for agricultural (and any other) products would seriously help to alleviate poverty around the world.

The most obvious first step would be to remove the entry barriers. These barriers include also the invisible barriers to trade like cooked-up sanitary standards, labelling requirements or non-standard measurement levels.

Again, agriculture is the key since it plays such a huge role in the developing nations. Not enough, however, that Europeans, Japanese and Americans put up import barriers on behalf of their farmers, food processors and distributors, they also employ huge amounts of taxpayer money to subsidise uncompetitive farming. Nobody even pretends there is a level playing field here. Europeans and Americans alike seem to have sheer bottomless pockets. If even wealthy countries like Canada and Australia cannot afford to play in the same league, how then are developing countries to manage?

And make no mistake! We are talking about startling levels of monetary support here: the USA subsidises agricultural products from between 20% to well over 60%, in the latter case for cotton, the specific issue on which the USA allowed the Hong Kong talks to collapse. Everyone knows that these subsidies are a scandal. OXFAM, FOOD FIRST and other organisations have been railing against these methods for years.

At the cost of the consumers and the taxpayers in the rich countries, farmers produce far more food than can be consumed by home markets. Having encouraged huge overproduction, the taxpayer then steps in to subsidise exports by direct or indirect subsidies. When even that fails to move the goods, governments pay for storage and eventual destruction of surplus foodstuffs or dump it into poor countries and thereby wipe out the existence of local producers.

Critics are correct to excoriate the farming industry in the developed world for its environmentally corrosive industrial-farming methods. Farm gigantism and capital-intensive methods are an environmental catastrophe: cruelty to animals; soil compaction and soil erosion; mono-cultures of unappetising foods and the resultant lack of bio-diversity; intensive use of pesticides, insecticides, antibiotics, and growth hormones; pollution of water air and soil; creation of new diseases like BSE; the high dependency of agriculture on petroleum; the destruction of rural society. Dealing with these evils however can easily go hand in hand with trade liberalisation measures that will benefit both the rich and poor countries. The above practices must be changed regardless of whether or not trade is liberalised.

Conclusion

Trade liberalisation benefits all economies that take part in it. Governments can and should ensure that the dislocated are assisted to adjust. Individuals cannot be left alone in this.

Too frequently the critics of trade liberalisation are trying to shanghai the agenda for their own ends. Most importantly, without a liberalisation of trade – i.e. the removal of trade restrictions and the creation of a level playing field – there is almost no way in which poor, mainly-agricultural countries can work their way out of poverty.

Perhaps trying to liberalise trade on a global basis has been too cumbersome a task. Regional trading blocks will now therefore certainly increase in importance to the exclusion perhaps of countries like Canada. The rich countries can go back to their misanthropic ways while those small Third World countries which don’t make it into a trading bloc will find their suffering intensified.

The strange alliance of vested interests and grass-roots protesters so vehemently opposed to trade liberalisation is now responsible for coming up with alternatives for ending poverty and raising the standard of living around the world. So far they have remained strangely silent.

VENZUELA FOR THE WINTER; A VISIT TO THE CARPENTERO
Bahia de Caraquez, Ecuador, Thursday, 21 September 2006

Venezuela for the winter

Things look now set for Kathleen and me to be house-sitting in the little town of La Guardia on Isla Margarita off the Venezuelan coast. Our commitment is for three months from mid-November 2006 to mid-February 2007. The house is owned by Americans who plan one day to use it as a retirement home. But for the moment they are only there sporadically and prefer to have someone living there then to letting it stand empty.

You can get some idea of Isla Margarita’s charms by visiting www.casatrudel.com.

Our plan is to leave Bahia de Caraquez with enough time in hand to travel overland north towards Columbia, Panama and Venezuela. Some people warn us against bus travel through the southwestern portion of Columbia because it is infested with ‘insurgents’. FARC is only the best-known outside of Latin America. But the warring political groupings have degenerated, we have heard, into just highway robbery and thuggery. It is not at all unknown for them to stop night busses, pull ‘gringos’ off for ransom or simply plunder them on the spot. This might all be exaggerated. But the central government in Bogota does not readily admit that it in fact does not control about 40 percent of Columbia. Quietly instead, it has licensed ‘privateers’, armed groups who roam the area killing the killers. This is making me nervous! I think we shall take a plane to Bogota or directly to Caracas instead. Kathleen, our social and travel coordinator is working on our plans. Stay tuned for updates.

Unfortunately, Kathleen herself will only get to spend about five weeks of the three months on Isla Margarita. She has committed to a music gig in Frankfurt for January and February. Her travel plans are even more complicated because she will fly straight back to warm and sunny Ecuador from cold, snowy and rainy Germany and meet me in Bahia de Caraquez.

So, what will we be doing in La Guardia to pass the time? When people ask what we do to pass the time on Vilisar, we tend to answer, ‘Oh well! There’s always the fruits and veggies to be picked over. A little boat-painting here and there. And, of course, we have a lot of books that have to be read. And don’t forget the ongoing canasta tournament!’ We have also heard that red wine is very, very cheap in Venezuela. Somehow we shall find something to do.

On a more serious note, we might even have the money to take formal Spanish lessons. By the time we can actually speak Spanish proficiently we shall probably be in French Polynesia.

A visit to the carpentero; shopping in Ecuador

Going about one’s errands in Bahia reminds you that most of Ecuador is basically pre-industrial. There are not many factories. I think there is a Chevrolet assembly works near Quito making Asian-designed small cars, and there are some larg-ish plywood factories around. Otherwise, everything you want or need is either imported or made by hand.

Of course, if you want a fridge, TV or car, you are not going to go to the local tradesman. There is a lot of hand work in making wooden stake-truck bodies and there is even a little jeep-type truck made by hand that you see form time to time. It even includes a wooden dashboard.

In Bahia there are no large supermarkets though they can be found in Guayaquil, Quito and Manta. You do your shopping here at the daily mercado that opens early and closes at noon. If you want a piece of furniture or a piece of metalwork, you go round to the tradesman of you choice, place your order and take delivery of something bespoke.

Maestro Luiz, for Example, has a largish carpentry ‘shop’ just across the street from Puerto Amistad where we are anchored. Maestro himself is typically short for an Ecuadorian but atypical quite overweight which gives his face a rather sad, hang-dog look. His ‘shop’ consists of an open-air lot, part of it covered for storage of some logs and rough-sawn lumber. All of it is tropical, some very light and some very, very heavy. Five and one-half days a week from Monday morning till Saturday at noon, Maestro has about six or eight men working there full time. There is a small lathe for turning table legs and the like and he has an electric planer back under the roof with the lumber. Clouds of sawdust emit from under that roof. Maestro’s ‘office’ is an old and cluttered table under a lean-to attached to the back of a house. He lives with his family next door. Turkeys, chickens and ducks walk around his workyard.

So you get the picture. We are not talking here about those graveyard-still, perfectly sanitary, high-tech/high-engineered, CAD-CAM designed and steered, assembly-line factories producing huge numbers of fully-automatic widgets without the benefit of actual production employees. In the industrialised world, the relationship of actual production workers to other tasks (management, financial, marketing, advertising, etc.) has been sinking for years as machines take over. The ratio would have sunk even more except that computers have largely replaced all of middle-management too. Tradesmen don’t exist in such environments much any more and ‘labourers’ are absolutely a thing of the past. Not here, though. Management (i.e Maestro Luiz) represents about 10 percent of staff; production workers make up the remainder.

Every project starts with the lumber and each project tends to be a one-off. For example, Maestro Luiz does a brisk business in coffins. There always seems to be at least one on the go, so to speak. The wood is sawn and work begins when they have a live customer, again, so to speak. The interior of the box is framed and lesser woods are used to box things up. The outsides and the top are added using better materials. The top opens in two halves and is not just a flat lid: the top has a little pointed roof like a church. In fact there is something gothic about the whole thing.

The coffin stands on sawhorses in the shade and the carpenters move back and forth to work on it rather than, as in a production line, the product moving past the worker. It’s is like a project in your home workshop, or, better, like a boatyard. There is nothing even remotely like an assembly line. I think they really only make one coffin at a time. All the sanding is done by hand and so is the varnishing. I don’t remember seeing any hardware (e.g. handles) though there might have been some hinges at least. The final product was beautiful I saw one in a funeral procession in town once. I also recall that many undertakers (also a handwork) in America grew originally out of carpenter shops and coffin-making. I shall keep an eye out to see if they start bringing corpses over to Maestro Luiz.

This past week I had occasion to visit Maestro Luiz again to order new wooden spreaders for Vilisar. He had already made two new 7-foot oars for our dinghy and a lovely carrying box for an Andean musical instrument that Kathleen is taking to Europe with her. We chit-chat a little to the degree that my Spanish (modesto) allows. Then we discuss the wood to be used (it needs to be light but strong and able to deal with compression pressures from the rig) and when the spreaders will be finished. At the ‘Gretchenfrage’ - i.e., ¿Quanto costa? - he scratches his chin for a while. This time I do not bargain with him since think the price is reasonable.

I also pay a visit to the metalworker, Maestro Quanqui, across the estuary in San Vincente. His employee and his wife take my order and tell me that Maestro is in Guayaquil that day: since only Maestro can negotiate the price, he will have to call me on the cellphone the next day to fix price and delivery date. True to this, he calls me yesterday and I complete my first negotiations completely in Spanish on the phone. His price is pretty much what I expected to pay so there is no dickering this time again.

Working with tradesmen like this and small shopkeepers can be a little taxing at times. But you actually get to meet Ecuadorians in the course of their and your daily activities. Compare that to a trip to a supermarket and you realise how lonely you are there. The only one you get to talk to is the checkout lady. She is, of course, trained in smiling and the friendly remark: ‘How are your today?’ and ‘Have a nice day!’ It is the barely-human face on industrial-scale shopping. It’s not enough to keep the soul alive, really, is it?

The closest in America or Germany you can come to the type of shopping you get here in Bahia is, say, in a florist shop if you want to get bouquet made up, when buying spectacles, perhaps, or when you want to buy a car. By the way, we have compared food prices in the Safeway-type supermarket in Manta with food prices in the Mercado here and in little shops. They are not much cheaper in the supermarkets except, perhaps, for liquor and wine. Wine is pretty expensive in Ecuador anyway so we don’t buy much of it. It is definitely not worth it to spend the extra money and time to go to Manta unless you are doing a big provisioning for a long voyage.

WORKING IN BAHIA
Bahia de Caraquez, Ecuador, Wednesday, 20 September 2006

Since we returned from doing a conducting/singing workshop in Cotacachi on 22 August, things have been enjoyably quiet. We had been putting off doing the necessary repairs to Vilisar so she will be ready to go to sea in the Spring of ’07 but now had the time to focus.

The first thing we did was to put her up on a makeshift tidal grid last month and paint the bottom with red anti-fouling paint and her topsides with glossy white enamel. We even renewed the ‘teal’ accent stripe along the caprail. Now, bobbing at anchor, she looks beautiful again as you row out to her.

But, in the course of going so long to windward on the way here from Mexico via The Galapagos, we suffered some wear-and-tear: we lost the tab from the windvane steering; the bobstay chain broke at the waterline and was hanging straight down from the tip of the bobstay; and the lower shroud tang on the starboard side was ripped right off of the metal base-plate holding it to the mast. The shroud itself dropped to the coach-house roof one night to be discovered at sunrise. We were still pretty much on course, fortunately, but we got sails doused in a big hurry. The shroud was the only broken item that we actually noticed at first. Who knows, we could have been travelling for days with no trim tab on the windvane steering and no bobstay.

While I had planned anyway to replace the (chain) bobstay and the two (chain) boomkin shrouds when we arrived at Bahia de Caraquez, I had not really planned to replace spreaders! But while we had the boat on the tidal grid last month, she leaned against a fence with a shroud which apparently also stressed the starboard spreader. Made of wood, it split along its length. So now we had a broken spreader AND the base-plate holding the shroud tang was also compromised. With no confidence in the whole setu-up now, we decided to replace everything around the spreaders. i.e., both the two metal base-plates and the spreaders so we would not be worrying about them crossing the Pacific.

The plan was to have the metal parts made by Maestro Quanqui across the river in San Vincente and the wooden parts made by Maestro Luiz across from Puerto Amistad. The big job was going to be how to get the spreaders and plates off. We put off getting started thinking we were going to be travelling to Machala for a music workshop. When this fell through we had no further excuses.

Our neighbour-at-anchor, Andrew from S/V Nueva Vida, Nanaimo, B.C., came over on two mornings this week to haul me up the mast. With a lot of banging and hanging, the two wooden spreaders were finally lowered to the deck and, eventually, after hammering the two 6-inch bolts back through the mast, we were able to get the metal base plates off as well. The corner had been torn off one of them where the tang had been and a little cosmetic wood damage done to the mast.

All four lower shrouds – they had been attached to those mast-mounted base-plates – were also lowered to the deck and laid out flat on the deck. So now, there I was, way up there in a bosuns-chair that was hanging from a mast with no athwarthships support. Fortunately, our mast is very strong, about 14 percent of its overall length is buried belowdecks and held in place at deck level by a 5-inch thick mast collar. I swayed a bit when the fishing ‘pangas’ went through. But there did not seem to be any movement in the mast itself. Down I came, stiff and sore and hardly able to feel my legs any more.

The next job was to get the replacements made. Yesterday, therefore, I gathered up the various pieces including all the old bronze turnbuckles, which had over the years become frozen and would not turn. I took the ferry across to San Vincente and found the metal-working shop. They quoted me a decent price to fabricate the windvane tab fitting, free up all the turnbuckles and make two new spreader base-plates. The latter are going to be in ‘acer negra’, i.e. ‘black steel’ that I intend to have galvanised in Manta before remounting them on the mast. The ‘carpentero’, Maestro Luiz, agreed to make two new spreaders of ‘lorel’ (a tropical wood) and two spares as well.

So, things are now well under way and I am relieved to know that soon those weak spots will have been taken care of before putting to sea again. I still have to paint up all the wooden pieces and get the wooden tab made for the windvane steering. I have to slush (i.e. paint) the rig also. But at least I can do this on the ground rather than swinging from in a bosuns chair with a can of paint between my knees and the wind whipping the drips all across the decks below me. Once everything has been re-installed, I shall get the upper shrouds down as well and treat them.

As major jobs, that will leave only getting the dinghy re-painted and getting our new 7-foot wooden oars finished before we leave for Venezuela. Unfortunately, Puerto Amistad is now charging $5 per day to use their little vacant yard for boat work. This seems a little excessive so I shall find another spot. Indeed, at that price I can almost hire somebody to paint things.

ECUADOR AND EMIGRATION
Bahia de Caraquez, Ecuador, 04 September 2006

The following article is the first of what may become a series on topics of interest to us in our travels through Latin America. They should be appearing in a small Canadian progressive journal.


Ecuador & Emigration

Ecuador: that endlessly interesting and beautiful South American country about the size of Tennessee and with a population about half of Canada’s. Tourists are guaranteed fabulous landscape and portrait shots in the high Andes, in the jungle headwaters of the Amazon, along sandy Pacific beaches or in the Galapagos.

Look behind the scenes, however. By official tallies, Ecuador lost over 8 percent of its work force and 4.2 percent of its working-age population in the period between 1993 and 2001, when the last census was taken. In a May 4, 2002, editorial in El Comercio, a nationwide quality newspaper, journalist Angel F. Rajos estimated that Ecuador had already in fact lost about twenty percent of its population to migration. The numbers of emigrations may have declined somewhat for the reasons given below. But the numbers people trying to get out are still substantial. Some rural Andean villages seem to be swept clean of men. If asked, the women tell you that the men are all living in New York City. What’s going on?

The conventional wisdom is that dirt-poor men have left wives, children, barren farms and peonage to sail to America and a brighter future. The truth is a little different.

Large migration flows have push and pull factors. Wars drive people out - Eastern Europeans fleeing the Red Army at the end of WWII, for example. Famines push people to new areas to find food. Pulling them are factors like physical safety, food, free land and job opportunities. The more the factors move away from actual starvation or threat to life and limb, the more emigrants look like “economic refugees”. What’s Ecuador’s story?

The country is not large but it has been, by Third World standards, relatively prosperous and politically stable in the past. Even now, CIDA, the Canadian International Development Agency, categorizes Ecuador as “low-middle income”. That is one reason why Canada provides next to no aid to the country (that and the fact that Canada is nowhere near meeting its stated foreign-aid goal of 0.7 percent of GDP). Also, there are many poorer countries in Africa; Ecuador has petroleum, after all, and is now one of South America’s important oil exporters. Nearly all of it goes to the U.S.A. The Oriente Province at the headwaters of the Amazon is said to contain immense reserves. Ecuador is also the leading shipper of bananas worldwide, it grows roses and other cut flowers for export and it farms shrimp for sale to First-World countries. Surely Ecuador could work its way out of poverty.

In the 1980’s and 90’s, mortgaging future oil revenues, Ecuador shouldered a heavy burden of debt. When petroleum prices took a nosedive in the eighties and nineties, onerous principle and interest payments had to be met out of declining oil revenues. Even today, with oil prices much higher, Ecuador’s international debt is the one of the highest in the world: debt service in 2001 was running at over 89 percent of the country’s Gross National Income.

Government-provided services were pared back: roads, government buildings, health care, education and pensions began to deteriorate and, in 1998/99, there was a major banking crisis. By any ranking, Ecuador’s overall quality of life had sunk to the bottom of every Latin American table. Everybody was hurting, and the numbers under the official poverty line soared, faster in the cities than in the country, higher for indigenous peoples than for the others. Of course, cuts like these hit populations unevenly. Despite its apparent tranquillity, Ecuador has a lot of ethnic, class and economic tensions smouldering beneath the surface and, under economic pressure, a lot of political turmoil has bubbled to the surface in the country.

Behind the economic mismanagement – and Ecuador is by no means alone in this; think of current US administrations! – there are some other factors to be added to the mix. Unlike Canada and the U.S.A., for example, Ecuador is a pure resource cum export economy: its flexibility is therefore severely circumscribed. It doesn’t help that the public administration here is also amongst the most venal and corrupt in the world. The country’s birth rate has also remained at traditional highs while infant mortality rates have dropped. Effective birth control on a meaningful social level would require a major public-health campaign. But family planning is no more a top priority in a solidly Roman-Catholic land than in countries dominated by fundamentalist Christians. With the social security net so unreliable and covering by no means everyone, children are not only a joy, they are a support in old age. You see the results everywhere in Ecuador: lots of very young mothers and fathers with lots of tots. Thirty-three percent of the population is under the age of fifteen (Canada: 18%; U.S.A.: 21%).

Thirty-five percent of the population is rural. A few wealthy families own most of the land in Ecuador while the many work tiny farms. Joy or no, since the little farms are generally not able to support large families, it makes sense for young men and women to head for the cities of Quito (1.6 million) or Guayaquil (2.6 million) even if it means living a mean existence in the barrios. You see the effects everywhere in the cities too: swarms of shoeshine boys; quasi-beggars – many of them indígenas –selling chicklets on the street; young and old men and women hustling to sell you sweets, crisps, and even quack medicines on the busses; streets full of elderly blind people singing for centavos.

Overpopulation, therefore, along with unemployment/underemployment and poverty has been fuelling a flight from the land. Some of these now rootless rural people keep right on going to sub-rosa jobs in Colombia, Venezuela, Chile and Peru. A few even make it to North America and Europe.

Interestingly, however, it has not only been the campesinos that have made it to New York and Madrid. In the country you become poorer and poorer in terms of whatever yardsticks are used internationally to measure these things. There is not enough opportunity - but you might just still have a chance to eat but you will not be able to afford to raise a family. From that point-of-view, it is like being a labourer in Los Angeles. The economic malaise and especially the banking collapse of the late nineties, on the other hand, hit the trained and or educated middle classes in the cities the hardest. By 1999, when it was decided to abandon the nearly worthless Sucre and to adopt the U.S. dollar as the national currency, near-hyperinflation had wiped out two-thirds of the nation’s banks. Overnight, middle-class savings along with small-business, job-creating credit disappeared.

The banking crisis impacted nearly two-thirds of all households and nearly all businesses. Accounts were frozen to prevent runs on the banks. When the economy had finally been stabilised, the government had been shaken badly by an attempted coup (blocked by the military), the president had gone into exile, businesses had failed on a massive scale, employment opportunities had shrunk drastically and the urban middle class had essentially been wiped out. The banking crisis, fuelled by the greed and corruption of banking executives, had cost Ecuador somewhere between $ 2.5 and $ 4.0 billion (23%-34% of GDP), and this does not even include the cost to the public of frozen accounts and lack of business financing. With the flight from the land to the cities still in progress, the exodus to foreign shores by the skilled had been set in motion.

It surprises nobody in Ecuador to learn that the bankers had been feathering their own nests along with those of its cronies in politics and commerce. Recall the S&L debacle or Enron and resist a condescending sneer. The really big depositors could keep their monies in overseas accounts and so were largely protected. But smaller savers, people on the bottom or middle rungs of a shaky economic ladder, people relying on current income rather than inherited wealth, found themselves dumped rudely back to the ground, bruised and bitter. Under such circumstances, it is Amore than rational to consider heading for more prosperous shores. As uneducated farm workers poured into the cities, therefore, the well-educated, energetic and job-mobile middle class left the country for better opportunity.

At first, the United States was fairly welcoming to Ecuadorians. There are after all many small colonies of Ecuadorians dotted around the country. Soon however, feeling threatened by the inflow of immigrants from other Western Hemisphere countries, the gates began to swing shut. Of course, Mexicans make up the bulk of immigrants to the States: Mexico is the U.S.A.’s nearest and most populous neighbour. And nearly every country in Central and South America has been losing citizens abroad; Ecuadorians are just a drop in the bucket. But, there are said to be half a million Ecuadorians in New York City.

With American doors closed, Ecuadorians have been reacting in two ways: on the one hand they try to get in the U.S.A. illegally while, on the other, more and more Ecuadorians now head for the European Union. Spain and, secondly, Italy are natural choices. By 1999 it was estimated that there were some 380,000 Ecuadorians in Spain alone.

Ecuadorians are still trying to get into the U.S.A., of course. More recent figures are hard to get. But, in a study by the US Census Department in 1996, there were already some 5 million undocumented immigrants living in the U.S.A., representing just fewer than 2 percent of the population. Nearly all came from the Western Hemisphere. Sixty percent of the illegal aliens were Mexicans who were living mainly in border states like California and Texas. There were also, however, 55,000 Ecuadorians living and working illegally in the U.S.A., many of them in New York and New Jersey. (Ranking fourth on the list were also 70,000 illegal Canadians in the U.S.A.)

The number of illegals will surely have increased since 1996. For those trying to get in, the risks and the costs have risen astronomically – to about three or four times the average annual income for Ecuadorians. Last year a boat full of Ecuadorians sank with a loss of 95 lives on the way to Guatemala as a first step on the way to Mexico and thence illegally across the US border. Each passenger had paid $10,000 to “coyotes” to get to America. To get the cash together, individuals borrow money from family and friends to be repaid, they hope and believe, by money sent home. Every month the papers report the young corpses washed up on the beaches when a launch capsizes offshore; the newspaper photo of an indigenous woman in her native costume, walking the beaches looking for some sign of her missing 18-year-old grandchild, is hard to banish from your night-thoughts.

So the flow of emigrants became more oriented to Europe around 1999. While some poor campesinos may also be included, the biggest numbers have been middle class and better-educated people. And, for the first time, women have been nearly as numerous as men: Spain and Italy want household domestics and farm workers. Social workers, the church, and the government in Ecuador are still trying to assess the social and psychological costs of small children being left with relatives while one or both parents head for Madrid or Newark. No one can accurately calculate the economic costs of this migration.

In 2003 the European Union also started raising its immigration barriers. Even Latin American countries that once routinely gave out six-month tourist visas at the border now refuse any visas to Ecuadorians as a matter of principle. At present only neighbouring Colombia and Peru permit Ecuadorians to enter with just an ID card. At the anecdotal level, you can meet persons who, despite solid incomes, jobs or small businesses in Ecuador, cannot get visas even to visit family members already legally in the U.S.A. or Europe. So, those who did not join the stampede are now either “trapped” in Ecuador or are faced with usurious rates and huge physical risks to be people-smuggled.

There may be some benefits in this sad tale, however. As the working population downsizes through emigration, the unemployment rate in Ecuador has also fallen. It is now down to about 10 percent - not far, in fact, from the unemployment level in unified Germany. More importantly, Ecuadorians working abroad send money back home. Remittances are now the second largest source of income after petroleum revenues in the country’s foreign exchange balance. (Loans and aid grants are the third largest; other export earnings – fruit, flowers, shrimp, for example - are fourth.)

While pull factors are now weaker as walls go up in more prosperous countries, the push factors at home may be diminishing as well. With the “dollarisation” of the Ecuadorian economy and the resultant stabilisation of the economy, inflation has declined (it is now lower than in the U.S.A.). If the drain of revenues by corrupt officials can be curbed, recent large increases in petroleum prices may give the country some room to breathe, deal with its overseas debt situation, do some work on the infra-structure (roads, harbours, etc.) and spread some largesse to the population generally.

Push and pull factors (including administrative barriers to emigration) may therefore have caused emigration from Ecuador to slow in the past year or two. It is difficult to get a handle on the numbers because of the underground-railroad aspects of emigration. Certainly most of Ecuador’s economic and social problems have not been solved. But, unless they can pull together the money needed to be smuggled into Spain or the U.S.A., potential emigrants will have to stick it out at home. Ecuadorians are still unconvinced and nervous, however. A presidential election will take place in October. Maybe that, too, will help.