Ecuador’s New Dam a Sign of China’s Debt Trap Diplomacy

December 31, 2018 Updated: December 31, 2018

Chinese bribery has established an untenable and highly priced dam in the jungles of Ecuador, according to a New York Times report. Other infrastructure and construction projects from China have filled the nation, racking up nigh-insurmountable debt.

Just like other countries that have fallen victim to the Chinese communist regime’s debt trap diplomacy, Ecuador equity will be paying off these debts. To repay the roughly $19 billion debt to China, Ecuador will instead give 80 percent of its petroleum exports to China, which it can then sell at a profit.

The Chinese regime has used similar methods in Djibouti and Sri Lanka, offering large business projects that can not be repaid by the host country, to eventually be traded for equity. Though Latin American countries are not part of China’s One Belt One Road initiative, they are still lured by similar offers from China.

During the 2008 global financial crisis, China approached many Latin American countries with offers of infrastructure in exchange from breaking with the United States. Many countries agreed, and are now saddled with high-interest Chinese loans.

Shaky Foundations

Reventador Volcano
View of the Reventador Volcano erupting Ecuador, on November 11, 2008 (Photo credit should read STR/AFP/Getty Images)

The dam sits near an active volcano named Reventador, Spanish for “exploder.” The volcano’s most recent eruption has been going since 2008, which brings seismic activity to the region.

Fernando Santos, the Ecuadorian energy minister from the 1980s, said the project was doomed because of the proximity to the volcano, which has been erupting since the 16th century.

Active volcanoes generally bring seismic activity. The equipment of the dam is lined with cracks, due to low-grade stainless steel and poor welding work. The dam is also in danger of mudslides in the area. The Chinese builders did not connect the foundation of the dam to the bedrock, so the dam itself may be brought down by natural disasters.

Constant earthquakes have left the dam almost unusable. When Chinese leader Xi Jinping visited the completed dam in 2016, engineers attempted to run it at full capacity, leading to blackouts across Ecuador. Even if the dam worked properly, it would only be able to provide power at maximum capacity for a few hours a day for half of the year.

The dam’s reservoirs are filled with trees, bushes, and silt. To clean the silt, sometimes massive amounts of water are released, creating flash floods which have killed people living downstream.

Even some translations are blatantly incorrect, confusing DC (direct current) with Washington D.C.

However, official audits performed on construction progress only cited minor work delays.

A Flood of Bribery

Many of the officials originally involved in the project are now imprisoned. Ecuador’s ex-vice president Jorge Glas Espinel is now serving a sentence for taking bribes from a Brazilian construction company.

Bribery is the grease for much business in China. The Ecuadorian officials are now being investigated to see if they accepted Chinese bribes as well. The former anti-corruption official has been caught on tape talking about Chinese bribes. Former President Rafael Correa is now in exile in Belgium, and many of his lieutenants are also looking to escape, or have been convicted of bribery.

The former attorney general who was leading the investigation of the bribery case traveled to China to ask for help. He resigned not long after returning to Ecuador, without comment.