Ecuador's Correa enjoys re-election, seeks investment

QUITO Mon Feb 18, 2013 9:47am EST

1 of 7. Ecuador's President Rafael Correa celebrates with his Vice President-elect Jorge Glass after hearing results at Carondelet Palace in Quito February 17, 2013.

Credit: Reuters/Gary Granja

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QUITO (Reuters) - Ecuadorean President Rafael Correa on Monday reveled in a sweeping re-election victory that allows him to deepen his socialist revolution even as he seeks to woo foreign investment in the resource-wealthy Andean nation.

The pugnacious 49-year-old economist trounced his nearest rival by more than 30 percentage points on Sunday to win a new four-year term. He has already been in power for six years, winning broad support with ambitious social spending programs.

His resounding victory could set Correa up to become Latin America's most outspoken critic of Washington as Venezuelan President Hugo Chavez is locked in a battle with cancer and may be unable to stay in power.

"We will be present wherever we can be useful, wherever we can best serve our fellow citizens and our Latin American brothers," Correa told supporters who celebrated in front of the presidential palace in Quito, waving the ruling Alianza Pais party's neon-green flags.

Chavez made a surprise return to Venezuela on Monday after two months of cancer treatment in Cuba, but his health is delicate and it is not clear if he will be able to stay in power and maintain his decade-long role as Latin America's leftist standard bearer.

Correa is now the region's loudest voice arguing against the free-market reforms promoted by Washington and in favor of state-driven economies and expanding ties with China.

Still, the continued success of Latin American socialism will depend on strong commodities prices that underpin generous social spending, and Correa needs to both improve Ecuador's stagnant oil production and spur a nascent mining industry.

In a sign he wants to deepen socialist reforms, Correa's legislative agenda includes a new law that would regulate television and newspaper content, part of his ongoing confrontation with opposition media. He also plans a land reform campaign to redistribute idle land to the poor.

"Our Ecuador needs a president like Rafael Correa. He has been strong and has not allowed anyone to intimidate him," said Julieta Moira, an unemployed 46-year-old as she celebrated outside the presidential palace on Sunday night. "I'm very excited, happy and thankful."

Correa is also expected to seek changes to a mining law that would help close a deal with Canada's Kinross to develop a large gold reserve. That will be a major test of his ability to offer investment security while ensuring the state keeps a large portion of revenue.

"Correa's electoral-victory statements suggest he would single out domestic economic groups, as part of his policy to support the poor. The sectors most likely to be affected by Correa's renewed radicalism would be the banking, media and banana industries," risk consulting firm IHS said on Monday.

"On mining, however, we expect Correa to ease conditions as he is very keen in attracting foreign direct investment to this sector."

LEFTIST ALLIES

Chavez, in a statement sent by Venezuela's government, celebrated Correa's re-election as a triumph for the ALBA bloc of leftist nations in Latin America and the Caribbean. The group has been left rudderless since Chavez was sidelined with cancer.

"It is a victory for ALBA, for the Bolivarian and socialist forces of our America, and will help to consolidate an era of change," the statement said, referring to Venezuelan-born South American independence hero Simon Bolivar.

Correa dedicated his victory to Chavez.

With almost two-thirds of votes counted by Monday morning, Correa had 57 percent support, compared to 24 percent for nearest opposition candidate Guillermo Lasso.

Lasso, a former banker from the coastal city of Guayaquiil, did better than expected on Sunday and established himself as the face of the opposition by winning about a quarter of the votes.

The six other opposition candidates including former Correa ally Alberto Acosta, former President Lucio Gutierrez and banana magnate and five-time presidential hopeful Alvaro Noboa.

Critics call Correa a dangerous authoritarian who has curbed media freedom and controlled state institutions. Even some supporters disapprove of his tempestuous outbursts, fights with media and bullying of adversaries.

Ecuadoreans also chose a new Congress on Sunday, and Correa said he expected the ruling Alianza Pais to win a majority. That would let him avoid negotiating with rivals to pass proposed laws, including the new media law and land reform measures.

Correa needs to lure investors to diversify the economy and finance the investment in social welfare and infrastructure that helped him win another four-year term.

Ecuador has been locked out of capital markets after a 2008 debt default on $3.2 billion in bonds, and Correa's government has taken an aggressive stance with oil companies to squeeze more revenue from their operations.

PRAGMATIC APPROACH

Foreign investment will be key to boosting oil output that has been stagnant for five years and to expanding a mining industry that has barely begun to tap the country's gold and copper reserves.

"We can't be beggars sitting on a sack of gold," is a catch phrase Correa has used in recent months to argue that Ecuador needs to better exploit its natural resources despite opposition from rural communities to some projects.

In that vein, Correa appears to be cautiously willing to cut deals and soften his image as an anti-capitalist crusader.

"The advantages of our country for foreign investment are political stability, a strong macroeconomic performance ... and important stimulus to new private investment," he said last week while hosting the emir of gas-rich Qatar.

Foreign direct investment has generally been less than $1 billion a year since Correa took office in 2007. By comparison, neighboring Peru and Colombia last year received $7.7 billion and $13 billion, respectively.

Correa's government is also in talks with China to secure funding for the $12.5 billion Pacifico refinery, which would allow Ecuador to save up to $5 billion a year in fuel imports.

(Editing by Andrew Cawthorne, Kieran Murray and Sandra Maler)

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Comments (3)
Captain47 wrote:
Seems to take Latin countries a series of good lessons by by way of the evil socialist president going into full-tilt dictator (ie. Pinochet ect…) before they realize that conservative governments bring foreign investment and improved economic infrastructure to a country and socialist promises of “free money” (“at the expense of the U.S. blah blah controlling blah blah more lines of B.S…”) always seem to leave them driving 60 year-old cars like Cuba and all of their friends & family either living in the same hut with them or in prison for being “subversive”. Ecuador must need to go around the mountain once again! Of course NOT educating them at all always helps; Over-educating a few helps as well… just don’t let them own small businesses!!!

Feb 17, 2013 10:38pm EST  --  Report as abuse
chilupiano wrote:
Captain47 Your post makes it painfully obvious how ignorant you are when it comes to Latin America. Small business’ are thriving in Ecuador. We are managnng to kick out the United States’s coorporations and replacing them with our own. This is “socialism” in “America’s” eyes. America feels threated we can have our own economy not dependent on them. We are open for trade, not American monopoly.

Feb 17, 2013 11:46pm EST  --  Report as abuse
Robocop5626 wrote:
Sure we defaulted on 3.2 BILLION dollars in bonds, and we hate capitalism because it is evil. Please US corporations hurry down and infuse a few billions in our economy to upgrade our oil facilities and infrastructure so we can nationalize them. Thanks and we look forward to seeing you soon.

Feb 18, 2013 10:50am EST  --  Report as abuse
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