Brazil said on Friday it recalled its ambassador from Quito after Ecuador contested a US$243 million loan it took from Brazil’s state-owned BNDES bank to build a power plant that broke down a year after it was completed.
“The government was very concerned over Ecuador’s decision ... [so] we are recalling our ambassador to Ecuador for consultations, and everybody who knows something about diplomacy knows what that means,” Brazilian Foreign Minister Celso Amorin told a press conference.
He said “eventually we will take other actions and we’ll review trade cooperation with Ecuador.”
It was the first time Brazil recalled an ambassador to a South American nation since the 1870 Triple Alliance war that pitted Brazil and Uruguay against Paraguay.
Quito’s foreign ministry issued a statement deploring Brazil’s decision and its “firm disposition” to maintain good relations with its neighbor, which, it added, the court action against BNDES should not affect in the least.
The diplomatic spat was triggered by Ecuadorean President Rafael Correa’s announcement on Thursday that he had taken the BNDES loan to the International Chamber of Commerce in Paris for arbitration.
Ecuador contends the US$243 million loan is no longer its responsibility since it was paid to Brazilian construction firm Odebrecht, which built the now defective San Francisco power plant.
Odebrecht was expelled from Ecuador after the plant broke down and Correa rescinded US$600 million worth of contracts he had signed with the firm. He also said he would sue Odebrecht for refusing to compensate Ecuador for contract violations.
BNDES issued a statement on Friday saying it had “rigorously complied with all requirements” in the contract on the plant.
It also said it was ready to “give all the technical support needed to legally defend [Brazil’s] national interests.”
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