The impact is likely to be significant for a country that is already reeling from an economic crisis and whose government is in the process of unleashing yet another round of IMF-approved austerity.
Almost exactly a month ago, Ecuador’s US-born and -raised, son-of-a-billionaire president, Daniel Noboa, announced his controversial decision to deliver outdated weapons of Russian origin to the United States. To justify the decision, Noboa insists the equipment is no longer war material, but rather “scrap metal.” As such, giving it to the US does not not violate any end user certificates signed with Russia, as Russia claims, since those agreements only apply to “usable” military hardware.
The Russian government is, of course, having none of it. Russia’s ambassador to Ecuador, Vladimir Sprinchan, warned at the time of Noboa’s announcement that Moscow would consider the delivery of Russian weapons to the US as an “unfriendly move.” As has now been confirmed by Washington, the Russian-made weapons will soon be on their way (if they are not already) to Ukraine where they will be used to kill Russian troops.
Moscow has decided to retaliate on an economic front. And its main targets are two of Ecuador’s most important export sectors: bananas and flowers.
Bananas, Carnations and Humpback Flies
On February 5, the Russian Consumer Protection and Phyto-Sanitary Inspectorate requested the suspension of import authorisations for five Ecuadorian banana exporters after allegedly detecting an infestation of humpback flies in a shipment of bananas from the Andean nation. Today (Feb 9), the Phytosanitary Contol Service applied the same measure to certain flowers coming from Ecuador, including carnations. For the sake of appearances, Moscow insists the restrictions are purely for health reasons and have nothing to do with the weapons deal.
Their impact, however, is likely to be significant for a country that is already reeling from an economic crisis and whose cash-starved, debt-bloated government is in the process of unleashing yet another round of IMF-approved austerity in the hopes of securing further loans and credit lines from the Fund. Two days ago, Ecuador’s congress refused to sign off on a proposed law to finance the war on the drug cartels by increasing VAT, from 12% to 15%. Noboa has proposed instead to gradually increase the tax rate to 15%, “depending on the conditions of public finances and balances of payments.”
For Ecuador’s embattled economy, bananas and carnations matter, a lot. The country is the world’s largest exporter of bananas and Russia is its second biggest customer after the European Union. “Russia is an extremely important market for our country’s banana producers and exporters,” said the Association of Banana Exporters of Ecuador (AEBE) in a press release:
“It is the final destination of 21% of all banana exports. 1.46 million crates [of the fruit] are sent weekly to Russia, meaning that this market generates around $757 million per year… In addition, 25,000 workers work across the nation on plantations dedicated to supplying this market, which is particularly important for small producers.”
This is a fact that even Noboa, as a presidential candidate, openly acknowledged, even going so far as to caution against letting “ideological passions” shape Ecuador’s relations with Russia:
“Russia is our third biggest trade partner. Many people do not understand this. And sometimes they get swept along by ideological passions. Russia helps to feed roughly a third of this country’s banana exporters.”
Noboa’s family has a significant stake in Ecuador’s banana business. His father, Alvaro Noboa, is the owner of Noboa Corporación, Ecuador’s biggest banana company. He is Ecuador’s richest man. But as his son admitted before the election, Noboa Corporación does not export a single crate of bananas to the Russian market. This admission, now doing the rounds on social media, has fuelled speculation that Noboa’s decision to give the Russian-made weapons to the US, rather than being a reckless act by a political novice, is actually a ruthless business move against Noboa Corporación’s biggest competitors.
Whether true or not, Ecuador’s banana growers are hurting. As the Ecuadorian economist Pablo Dávalos notes, they are bearing the brunt of the fallout from Noboa’s decision to involve the country in the Ukraine conflict and there are no compensatory measures in place. At a recent rally, Fulto Serrano, a representative of Oro farmers group, said the sole cause of the problem was the government’s donation of Russian-made weapons. Noboa, he said, will not be affected by the closure of the Russian market, while thousands of farmers around the country will. The result will be a glut of bananas, leading to a collapse in the price.
“A Clear Violation”
Before taking this step, Moscow gave the Noboa government a number of warnings. At a recent press conference, Russian Foreign Ministry spokesperson, Maria Zakharova, said the transfer of Russian-made weapons to the US represents a clear violation of the arms contracts Ecuador signed with Moscow:
In the framework of the military-technical cooperation between Russia and Ecuador, the transfer of military material to third parties is forbidden without Russia’s prior written consent. Therefore, in [such an] event, Ecuador will be breaching its international obligations, which could have negative consequences for our future bilateral cooperation.
Zakharova described Noboa’s decision as “rash,” taken under “extreme pressure from interested overseas parties”. She also tore to shreds Noboa’s “scrap metal” alibi:
If [the weapons] were indeed scrap metal, as they call it in Ecuador, it would be hard to imagine Washington proposing to swap it all for modern equipment, for a not inconsiderable sum.
The US has pledged to provide Ecuador with $200 million worth of pristine US-made weaponry, military equipment and defence systems in exchange for the Russian “scrap metal”. Until yesterday (Feb 8), neither Quito nor Washington had publicly confirmed why the US wanted the Russian-made weapons in the first place, which allowed the Noboa government to maintain the charade that it was not violating the End User Certificate the Ecuadorian State had signed with Russia.
But now the US government is openly admitting that Ecuador’s Russian-made weaponry will be heading to Ukraine. In an interview with Teleamazonas, Kevin Sullivan, the deputy assistant secretary for South America in the US State Department, described the weapons swap as “an arrangement for transferring equipment to the government of Ukraine which is fighting against the Russian invasion.” In other words, the weapons, rather than being consigned to the scrap heap, are in good enough condition to be used on the battlefield against Russian soldiers.
Of course, the impact Ecuador’s arsenal of Russian-made weapons has on the Ukraine-Russia conflict will be practically zero. But the mere fact the Biden Administration is still requesting the weaponry at this late stage in proceedings speaks to the desperate shortages of weapons and other equipment Ukrainian forces continue to face, as many of its European allies have themselves run low on supplies. To fill the gap, the US and EU have been trying to source ammunition for the Russian-made weapons that Ukrainian soldiers are more familiar with from countries around the world, with varying degrees of success.
“[N]ow they are buying Soviet and Russian weapons in Asia, in Africa, in Latin America to send them to Ukraine,” Andrey Koshkin, a professor of Political Analysis and Socioeconomic Processes at the Plekhanov University of Economics, based in Russia, told Sputnik (in Spanish). ” We are up against this, because it means [Russian weapons] will be pointed at us.”
By hitting Ecuador where it hurts most — i.e. its export economy — Russia is sending a very clear message to other Latin American economies that donating Russian weapons to the US cause in Ukraine will have very serious consequences…
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Nick Corbishley 