Ecuador fails to reach financing agreement with China

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I don't know the details, but it seems Ecuador has been trying to get financing for a hydroelectric power plant from the Chinese, and they haven't been able to come to terms. According to the press report below, the Chinese are demanding terms tougher than the IMFs's. Probably because Ecuador has been known to default on its loans, so they're getting a bad reputation.

http://www.laht.com/article.asp?ArticleId=353971&CategoryId=14089

"President Rafael Correa had set March 15 as the deadline for reaching a deal on the financing of the Coca-Codo-Sinclaire hydroelectric plant, following eight months of talks.

Last September Ecuador and Chinese company Sinohydro signed a contract for the construction of the hydroelectric plant, which would be the country's largest.

According to the contract, Sinohydro should finance 85% of the project' construction through the Export-Import Bank of China, while the government should finance the remaining 15%.

Last December President Correa said that negotiating with China is "worse than (with) the IMF," and that some of the terms China's Eximbank demanded for the loan threatened Ecuador's sovereignty.

Last year Ecuador and China suspended negotiations for another loan worth $1.0 billion, with the government saying China had wanted to impose "unacceptable conditions.""

http://www.smartmoney.com/news/ON/?story=ON-20100317-000752&

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1. Correa's smart move

Here's a story about Correa's smart move to unwind Ecuador's debt. It was smart indeed...but now the Chinese, knowing how smart he is in this area, are insisting on terms to tie him up into knots, so he can't cheat again.

http://www.businessweek.com/news/2010-01-28/ecuador-bond-default-a-clear-and-present-danger-s-p-says.html