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ATFA Condemns Ecuador's Debt Default Decision Defaulting on Foreign Debt
Press Release
December 17, 2008

FOR IMMEDIATE RELEASE
December 17, 2008

Contact: media@atfa.org
1-888-662-2382

ATFA Condemns Ecuador's Debt Default Decision Defaulting on Foreign Debt
Continues the Atrocious Precedent Set by Argentina

WASHINGTON - American Task Force Argentina (ATFA) today condemned Ecuadorian President Rafael Correa's decision to default on $3.8 billion in government debt owed to foreign lenders, the country's second such default in the last decade. Ecuador currently holds $5.65 billion in reserves - sufficient to pay off the entire debt, and much more than enough to pay the $31 million interest payment that prompted the default - but President Correa has called these bonds "illegal" and "illegitimate."

"Ecuador is making a grave mistake in following Argentina in defaulting on its financial obligations to international bondholders," ATFA Co-Chair Nancy Soderberg said. "Ecuador's actions could drive foreign capital out of Latin America and create more economic instability in the region."

Argentina defaulted on $81 billion in obligations to investors in 2001 - the largest sovereign debt default in history - and then offered the worst restructuring terms on record. When half of its foreign lenders declined those terms, Argentina illegally repudiated those debts. The Argentine government's refusal to honor its debt obligations has cost American lenders, investors and taxpayers more than $10 billion. Like Ecuador, Argentina can afford to repay its foreign debts, but instead followed a course which has effectively barred it from foreign credit markets. ATFA is working with U.S. Representatives Sheila Jackson-Lee (D-TX) and Ed Towns (D-NY) to enact the Judgment Evading Foreign States Accountability Act (JEFSA) to encourage economic accountability for nations to deal fairly with creditors.

"Most citizens incur some sort of financial penalty when they default on their creditors and defy court judgments, but sovereign nations aren't being held to a similar standard," said ATFA Executive Director Robert Raben. " JEFSA seeks to correct this problem by protecting U.S. investors and taxpayers, and promoting respect for U.S. courts and the rule of law."

ATFA sent letters today to the chairs, ranking members, and key members of congressional committees with an interest in the foreign debt issue to seek their support for JEFSA and emphasize how financial instability in Latin America affects American taxpayers and investors. To view the letter, visit http://atfa.org/files/12.17.08_ATFA_Ecuador_Letter_-_Final.pdf.

"We hope both Ecuador and Argentina will enter into good-faith negotiations with their creditors, who in their own good faith lent those countries many billions of dollars," said ATFA Co-Chair Robert Shapiro. "If they fail to do so, they will pay a very large price in reduced foreign direct investment and access to the capital their economies need."

Made up of an alliance of organizations, ATFA's leadership includes Executive Director Robert Raben, a former Assistant Attorney General at the U.S. Department of Justice, and is co-chaired by The Honorable Robert J. Shapiro, former Under Secretary of Commerce for Economic Affairs in the Clinton Administration, and Ambassador Nancy Soderberg, Ambassador at the U.S. Mission to the United Nations in New York from 1997 to 2001.

For additional information, please visit our website at www.atfa.org, or contact media@atfa.org, or +1-888-662-2382

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