Trump wants to help Pakistan drill oil: Ecuador did the same, and now China owns its barrels

The U.S. is offering to help Pakistan tap into its untapped oil reserves—but Lokesh Ahuja, an IIM alumnus, has a cautionary tale. In a LinkedIn post, he says: don’t celebrate too early. Just ask Ecuador.

“This is what the resource trap looks like,” Ahuja writes, drawing a sharp parallel between Pakistan’s current opportunity and Ecuador’s painful history of trading away its future.

In the 1980s and ’90s, Ecuador turned to the U.S. and IMF for loans—but those came with conditions: privatize, cut subsidies, and open markets. The result? “The economy didn’t boom. Debt did,” Ahuja notes.

By 2008, unable to repay, Ecuador pivoted to China. The offer seemed simpler: infrastructure loans to be repaid in oil. No policy strings—just long-term supply deals.

But there was a catch. Ecuador pledged not just its current output but future oil production. When global prices crashed, the math turned brutal. Ecuador had to ship more oil to cover the same debt—locked into Chinese contracts with no option to wait for better prices or diversify its buyers.

“Today, more than 80% of Ecuador’s oil exports go straight to China,” Ahuja writes. “Not by choice, but by contract.”

It didn’t stop at oil. China financed and built Coca Codo Sinclair, Ecuador’s largest hydroelectric dam. Promised as an energy gamechanger, the dam developed thousands of cracks within years. Now Ecuador pays for repairs—while still repaying the original Chinese loan.

So what’s left? Oil. A dam. And heavy debt. “But what it doesn’t have,” Ahuja warns, “is control.”

His post arrives just as Pakistan eyes deeper energy collaboration with the U.S. But Ahuja’s warning is blunt: natural resources don’t guarantee prosperity—especially if you're not careful about the fine print.