Office of the Historian

391. Paper Prepared in the National Security Council1

Washington, undated

Ecuador Earthquake Update

To follow-up on your conversation on Monday with Ecuador’s President Febres-Cordero, NSC staff chaired a meeting to coordinate our response to the disaster and economic crises caused by last week’s earthquake in Ecuador.2 The following is an update on USG efforts:

Disaster Relief: Between 20–60,000 Ecuadorans have been affected by the earthquakes. Under the direction of The Office of US Foreign Disaster Assistance (OFDA), tents, blankets and other equipment were sent to Ecuador immediately. We have encouraged the Government of Ecuador (GOE) to make an appeal to the UN Disaster Relief Organization so donor countries can make donations of funds to be used for local procurement of goods and services for the disaster relief effort. US Agency for International Development (USAID) specialists are on the ground to assess and assist the GOE with the human dimension of the disaster. Their efforts are proceeding effectively and expeditiously.

Economic Crisis: Rarely does a natural disaster destroy the economic lifeline of an entire nation. But that is precisely what has happened in Ecuador. Prior to the earthquake, Ecuador’s revenues from oil exports had fallen by half over 1986 because of the drop in oil prices, and Ecuador was unable to service its debt in January and February of this year.3

The most significant damage is to 25 miles of the principal oil pipeline, which extends from jungle oil fields to the Pacific coast. The estimated cost of repairs exceeds $350 million, and Ecuador’s already limited ability to service the international debt will be further reduced. Two major bridges located in the difficult Andean terrain were also destroyed. A US Army Corps of Engineers team has tentatively assessed that the most optimistic estimate to repair the bridges is about four months. The economic loss has enormous consequences: the disaster may cost Ecuador as much as 2 percent of its GDP this year.

Early this week, Treasury officials contacted World Bank and Inter-American Development Bank (IDB) officials to discuss possible responses. We have been supportive of Ecuador’s request for an emergency loan from the World Bank. The IDB may be able to piggyback an emergency loan on the World Bank loan. Eximbank officials have indicated their receptivity to request from US firms for financing for US-sourced exports.

Once US evaluations of the scope of the disaster are complete, we will most likely consider sending a supplement request for Emergency Support Funds (ESF) to the Congress or develop a reprogramming. Either will obviously be problematical both within the executive and with the Congress. A supplemental will require offsets; reprogramming will require shifting funding from other regions. But we must assess the costs of not exercising a leadership role; it is doubtful that other countries will respond adequately if the US does not take the lead.

Political Repercussions: Indications thus far are that the dimensions of this crisis offer Febres-Cordero a unique opportunity to reinvigorate his presidency and rescue his reputation, so damaged after he was taken hostage in January.4 If Febres-Cordero can put past rancors behind him and maximize the political “truce” that has developed because of the disaster, his presidency may recover. Time will tell.5

  1. Source: Reagan Library, NSC Records, Latin American Affairs Directorate, Action File, Ecuador (01/16/1987–04/02/1987). Confidential. Reagan wrote his initials at the top of the first page. Sorzano sent the paper to Carlucci under cover of a March 12 memorandum.↩
  2. The Washington Post reported about March 8: “Two earthquakes that burst a natural dam on a rain-swollen river have killed at least 100 people and left 15,000 homeless in the Andes Mountains of eastern Ecuador, a local official said today.” (“100 Said to Die in Ecuadoran Quake Zone,” Washington Post, March 9, 1987, p. A15) No memorandum of conversation for the March 9 phone call has been found. According to the President’s Daily Diary the call took place from 11:00–11:04 a.m. (Reagan Library, President’s Daily Diary)↩
  3. In telegram 11817 from Quito, November 24, 1986, the Embassy reported on Febres-Cordero’s November 21 meeting with Mulford in which Febres-Cordero raised a warning about “Ecuador’s coming inability to service its external debt.” (Reagan Library, NSC Records, Latin American Affairs Directorate, Country File, Ecuador (03/24/1986–01/15/1987))↩
  4. See Document 390.↩
  5. In telegram 3447 from Quito, March 23, the Embassy reported on Bush’s March 22 meeting with Febres-Cordero in which Bush, on a humanitarian mission in response to the earthquake, “promised to present Ecuador’s case within United States Government circles, to commercial banks and to multilateral institutions.” (Department of State, Central Foreign Policy File, Electronic Telegrams, D870222–0907) A copy of Bush’s March 27 letter to the President of the World Bank, Barber Conable, urging “the bank to do all possible to be helpful to Febres-Cordero and Ecuador,” is in the George H.W. Bush Library, Vice President Records, Office of National Security Affairs, Samuel J. Watson Files, Country Files, OA/ID 19865–030, Ecuador Disaster.↩