Even fairly well-off Ecuador is joining the call for debt relief

Ecuadorean President Le'on Febres-Cordero has been called ``a model leader'' by President Reagan. The monetarists in Ecuador's Central Bank are great allies of the International Monetary Fund. And Ecuador was once slated to be an example of the functioning of the ``Baker Plan,'' which called for foreign lending in exchange for laissez faire economic policies.

But now there are signs that even right-wing Ecuador, the model debtor, is joining the countries pushing for debt relief. Foreign Minister Edgar Ter'an Ter'an warned in a recent interview of ``a big convulsion in Latin America'' if creditor banks and governments don't soon agree to significant concessions in the repayment of foreign debt.

This year's fall in oil prices is part of the explanation for the shift, but not the whole explanation. The country will have lost about $1 billion this year, government officials estimate, or a third of its export revenues, as a result of the fall in oil prices. But the free-market measures adopted by the government to spur nonpetroleum exports have had the side effect of depressing the domestic economy and increasing pressure for radical solutions to the foreign debt.

In a country that lacks current employment statistics, Quito's system of street-corner labor markets is a barometer of the current effects of the crisis.

``I've been coming here for 10 years now,'' says Marcelo Hern'andez, married with two small children, in an interview on the Avenida de los Granados. Here workers congregate in hopes of finding work with employers who negotiate with the crowd from their cars.

``Things started getting bad in 1982. The rates right now are from 350 to 450 sucres a day for general labor,'' or the equivalent of $2.50 to $3. ``It isn't enough to feed a family and pay for transportation, not to speak of clothing and rent.''

A painter by trade, Mr. Hern'andez expects to make a little more than that when he can get work. He says his long-term aim is to get to Mexico, in order to enter the United States to find a job.

``It's really alarming,'' says economist Zonia Palan, director of the Institute for Economic Investigations at the Universidad Cat'olica in Quito, commenting on the income levels of the Avenida de los Granados laborers. ``And in the present crisis, what we call the `informal sector' is growing at an accelerating rate. It's happening in all sectors.''

Ms. Palan says the government's policy of tight credit and high interest rates, designed to help ease the foreign paymemts crisis, is causing companies to resort to systems of contracting and subcontracting to avoid compliance with Ecuador's labor laws.

On the other side of town, an economist at the Universidad Central agrees with this assessment. The university was wreathed in tear gas as police drove back students blocking streets in a protest against inflation and delays in funding the university's budget.

``That's normal,'' a local journalist says. ``After four consecutive days of the same, it might become a small news item.''

In business and government circles, there is a growing feeling the country has stretched itself to the limit for its foreign creditors. Foreign Minister Ter'an gave vent to the frustration in a recent interview in Quito.

``The creditors don't want to come to grips with the problem in a fundamental way,'' he noted. ``It has become a source of the alienation of Latin America from the industrialized world. It is an attitude that merely encourages the approaches of `I won't pay,' or `I'll only pay so much.'

``The leaders of the industrialized world,'' he says, ``have to to realize that without a radical solution to this problem, we're going to have a big convulsion in Latin America.''

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.