By all accounts, Rafael Correa is a smart guy. If you've never heard of him, he's the President of Ecuador. For the geographically-challenged, Ecuador is next to Peru, and got its name from the equator. Peru has been mining silver and gold since the days of the Incas. Since geology doesn't respect national borders, there's a lot of that stuff in Ecuador, too.
Back in 1999, Ecuador finally got tired of being mired in poverty, and the new government (they have a new one every year or two) invited foreign companies to come in and explore for its untapped mineral wealth. Many companies came in and exploration has been going quite well.
Enter Mr. Correa, who has often been described as a leftist and close ally of Venezuelan president Hugo Chavez. That may or may not be correct, but part of that perception was due to Chavez making a speech at the UN in New York, in which he compared our president George W. Bush to Satan.
At the time, Correa was campaigning for the presidency, and when asked about Chavez' comments, he said it was Satan who should feel offended. Because, he explained, Satan may be evil, but at least he's smart.
I won't argue that point; in fact I think Correa may have been on to something. Unlike Chavez, Correa is no thug. He speaks four languages, and has a Ph.D. in Economics. However...
Last week, Correa and Assembly President Acosta passed a mandate that would expropriate (that's a fancy word that means "steal") as much as 90% of the land from the foreign companies that staked property back in 2000, with no compensation or right of appeal. Correa also ordered all exploration work suspended for 180 days, thereby throwing thousands of people out of work for six months.
My impression is that Ecuador is a rich country that insists on being poor by electing men like Correa and Acosta. I'm also starting to wonder how many box tops Correa had to send in the get his Ph.D. (Just kidding, it's from the Univeristy of Illinois.)
That's why people are rioting in Ecuador now. Because Correa and Acosta (who is an environmentalist) want to preserve their country's pristine environment while the people starve.
The runner-up for Dumb Thing of the Week goes to an executive of one of the foreign companies that just got ripped off. When asked by angry shareholders WTF just happened, he said this:
- he said the mandate was completely ridiculous in its lack of clarity.
- he said there appeared to be some serious backtracking going on down there.
- he said if things stand as they the media has portayed them to be, Correa is gone immediately and there will be a mass exodus of foreign investors. He said Correa is practical and will not allow this to happen.
- he said he has heard there are more protesters coming in from the outlying areas.
- he said he doesn't care if the state takes a portion of the company as it is really just another word for tax.
- FIPA is getting involved.
- the Chinese are aware of what is happening and want clarity and are not happy.
- he said Correa is smart and cunning and his theory is that he is going lay this whole mess on Acosta to get him removed and Correa will look like the white knight.
- this whole mess was under the guise of appeasing a few country folk who like their environment.
- he said now there is nowhere for Correa to hide and things are only going to get worse.
- he said Correa now needs to find a fall guy to prevent him looking like a buffoon....I think Acosta fills the bill here. He said Correa is an egomaniac who will hang on to power at all costs and therefore he has no choice but to fix this mess.
Nice stuff to say when your bosses are about to start negotiating with the buffoon and the egomaniac who just ripped them off. I think that guy is gonna have some splainin' to do! And he probably won't be so candid with shareholders in the future, assuming he still has a job.
The moral of the story: If you walk into a library, and ask to see a copy of the country's constitution, and the librarian says, "sorry, we don't carry periodicals," then don't invest any money in the country.
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