NN was a musician from Norway who arrived in Ecuador in 1999 when Ecuador was experiencing an economic, social, and political catastrophe due to a banking crisis. Bank owners lent themselves depositors' money and invested it in the shrimp industry—that is, in farms that raised shrimp for export—while others engaged in financial speculation. They offered depositors up to 160 percent interest on their deposits in sucres, the national currency. With this money, they bought dollars circulating on the street and took them to tax havens. Then, when the dollar's value rose, they knew the government would put oil dollars into circulation, depleting the Central Bank's reserves, which backed the sucre. Immediately, using depositors' money, they bought dollars back on the street. This generated inflation and a drop in wages, as the sucre, used to pay salaries, rent, etc., fell in value against the dollar. Adding to this, a plague called white spot arrived, which destroyed shrimp farms and bankrupted wealthy shrimp exporters.
NN went to study Spanish at the Ecotrackers Foundation and witnessed the lines that formed on Amazonas Avenue of people buying dollars. No one wanted to hold sucres; the banks closed their doors, and the government declared a bank holiday. No one could withdraw more than a small amount of money. This created panic among depositors, especially retirees who saw their money disappear.
NN took advantage of the situation and traveled to Otavalo in search of musicians like himself. He found them at the market, where he bought wool and leather crafts, guitars, and charangos, which he planned to sell back home to recoup his travel expenses. Then he boarded the Ibararra-San Lorenzo train, which was still running its entire route from the Andes to the port of San Lorenzo in Esmeraldas. He was delighted to travel on the roof of a railcar for 30 passengers, alongside mostly Black farmers, who make up the majority of the population in this part of the country. Finally, he went to Cabo San Francisco, a fishing village in the south of Esmeraldas Province, where he was able to photograph the rainforest and the old lighthouse built by the Spanish conquistadors—the first lighthouse in South America that is still functioning and preserved.
Back in Quito, while writing his report, he learned that in Ecuador's capital, Indigenous people were arriving on foot from the Amazonian and Andean provinces to protest against the government. For this Norwegian, who had never witnessed an Indigenous protest, it was more fascinating than anything.
In the Agora of the House of Culture, the Indigenous people, including children, women, and the elderly, were sleeping, and he went to visit them. Among those protesting were Otavalo Indigenous people, whom he had photographed. Every night he returned to the Agora of the House of Culture, bringing food for the protesters, as well as copies of the photos he had taken.
Faced with the situation, the government decided to dollarize the economy. This meant that the sucre disappeared and was replaced by the dollar. This made Ecuador the first dollarized country in South America. Meanwhile, Pablo Escobar and the Cali and Medellín cartels found Ecuador to be the best place to launder drug money.
The three poorest countries in the region—Guatemala, Ecuador, and Bolivia—were invaded by backpackers because they had become the cheapest countries in Latin America. Furthermore, buying Colombian cocaine and marijuana, which was expensive in Europe and the United States, became part of the attraction, especially in Ecuador and Bolivia, where there was no prohibition on the consumption and sale of cocaine, in particular. Nor was it a problem to hide the drugs in a backpack or anywhere on the body to later sell them in their countries of origin. Thus, backpackers became the first cocaine traffickers from South America, and the banks that survived the banking crisis became money launderers for the Colombian cartels. This is how what would become narco-tourism began, and places like
Montañita, Baños de Ambato, Mishualli, and Vilcabamba in the province of Loja became the new havens for narco-tourists, while Ecuador's banks and industry were revived thanks to money from the Colombian cartels.
Montañita, Baños de Ambato, Mishualli, and Vilcabamba in the province of Loja became the new havens for narco-tourists, while Ecuador's banks and industry were revived thanks to money from the Colombian cartels.
But the main consequence of dollarization was the great wave of migration of Ecuadorians to Spain, Italy, and the United States, which produced the worst social and family crisis in Ecuador. On the coast, the fishermen and guards of the shrimp farms that went bankrupt with the arrival of the shrimp plague, dedicated themselves to smuggling goods to Colombia, migrants and cocaine to Central America.
