Ecuador to Israel: We can’t pay off debt
Gad Lior
Published: 20.09.06, 11:34
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14 Talkbacks for this article
1. "Uncle from America?"
Jeff ,   Herzliya   (09.20.06)
What does the Israeli official's comment mean?
2. debt uncle
harry ,   london   (09.20.06)
and if they refuse to pay, what will they do, send a bailiff to Ecuador?
3. #2 If they refuse, they will have trouble getting more loans
RA   (09.20.06)
And not just from Israel, but from anyone. The international loan process works on an honor system. If you break the trust, you will have a hard time getting another loan.
4. Countries Defaulting on Int'l Debt
Lee ,   US   (09.20.06)
When a country defaults on Int'l debts, it's credit score crashes, which causes an economic crash, huge inflation, and economic depression for poor countries unless other countries bail them out (like US bailed out Mexico in the 90's).
5. was this loan known to the public ????
puzzled   (09.20.06)
6. Instead of wasting $ millions per day
Antonio ,   Haifa   (09.20.06)
bombing empty fields in Gaza, they try and accomodate reasonable requests from friendly countries.
7. #1 *I* am an uncle from America :-D --- also #5
howard ,   pacific coast, usa   (09.21.06)
Actually, he means "Uncle Sam", a nickname for the US government. To #5: Most of the loans were probably made by the Israeli government to help Ecuador buy products from Israel. This is a common practice among trading nations. Here is how it works. * Ecuador borrows $1 from the Israeli government. * Ecuador spends the $1 on Israeli export products, creating $1 worth of business for Israeli companies and generating jobs and profits (and taxes) in Israel. * Ecuador pays back the $1 loan with interest over time -- say, $1.50. * The original $1 loan therefore becomes $2.50 in the Israeli economy ($1 export revenue + $1.50 repaid debt with interest). The US loans money to Israel for exactly the same reason: to buy products from the US, creating export-related jobs in the US. Under normal circumstances, transactions like this are good for both sides. Ecuador gets Israeli products that it might not be able to buy without borrowing, and Israeli exports go up. Unfortunately, Ecuador is now teetering on the edge of defaulting on the Israeli loans (and probably on loans from other countries). This is terrible for everyone. Defaulting would ruin Ecuador's credit rating, making it very hard for Ecuador to borrow more, and defaulting on a $1 loan means that the remaining principal and interest (up to $1.50) are gone. The Israeli government has to eat the losses, and this in turn hurts Israel's own balance sheet. The delegate's comment about Uncle Sam refers to the fact that Israel is not as rich as the US and has its own fiscal problems. It can't afford to simply eat this loss.
8. Pay in Bananas
John ,   NZ   (09.21.06)
9. Don't ya just love the chutzpah.
Andy ,   London   (09.22.06)
I'm not even going to try to explain how international debt works and how corrupt the whole thing is, because Aaron Russo does it so very eloquently in his film "America: From Freedom to Fascism." -(just do a search on - this film is a must see) And from which country do you think Israel gets mose of its money to lend? Hmmm, tough one that!
10. Ecuador Loans
Bill Fullbright ,   Little Rock, USA   (09.22.06)
I'm not sure I understand the problem. Why can't Israel simply cancel the loan obligation, in the same manner that the US forgives repayment of huge Israeli debts? Aren't there lots of pro-Ecuador members of the Knesset, comparable to the pro-Israel members of the US Congress, to press for this obvious resolution? Turnabout, after all, is fair play, and Equador has helped Israel at least as much as Israel has helped the United States.
11. Israel Not Uncle From America
Shoshanna ,   Haifa   (09.23.06)
No but it seems Israel certainly has had a lot of uncles/aunts, etc., from America for a long time as well as a lot of other places, many non Jews. Just goes to show why Israeli is not liked anywhere.
12. debt is slavery
joe ,   houston, texas   (09.23.06)
It would be better if ecuador manufactured their own weapons and told the debt masters to go away. Credit scores, credit ratings are just indicators of how enslaved you they go down, your slavery index goes up.
13. Uncle Sam's Money (my money)
Edi ,   Fort Worth, USA   (09.23.06)
Too bad Ecuador doesn't get all the free billions of dollars Israel gets each year from the US. I don't see Israel paying any THAT back.
14. shnorrers
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