Ecuador takes center stage, again, in U.S. secrecy saga
* Ecuador already hosting WikiLeaks' Assange at UK embassy
* President Correa buoyant after sweeping re-election this year
* Trade benefits with United States could be put at risk
By Alexandra Valencia
QUITO, June 23 (Reuters) - Tiny Ecuador is once again at the center of an international diplomatic saga over U.S. data secrecy that will thrust the country's leftist President Rafael Correa into the limelight and stir fresh controversy with Washington.
The government of the South American nation of just 15 million people, which has thumbed its nose at the West before, said on Sunday that fugitive former U.S. intelligence contractor Edward Snowden had asked it for asylum.
Ecuadorean Foreign Minister Ricardo Patino was due to give more details on Monday during a visit to Vietnam.
Anti-secrecy group WikiLeaks, whose founder Julian Assange has spent a year taking refuge in Ecuador's embassy in London, said the American fugitive was bound for Quito via "a safe route" from his current location in Moscow. He flew to Moscow from Hong Kong on Sunday.
"They should give him (Snowden) political asylum because we all have the right to freedom and no country or government such as the United States can override that," said Yolanda Acosta, 35, a small business owner in Quito.
If Correa's administration does give sanctuary to Snowden, it would put a new strain on relations with the United States, which had appeared to be improving in recent weeks despite strong disagreement over the year-old Assange case.
"If they gave asylum to Assange, in very complicated conditions, they have to give it to Snowden," said Alberto Acosta, a former energy minister in Correa's government.
Correa has said Assange is right to fear that if he leaves the embassy in London he might be sent from Sweden, where he is accused of sexual assault, to the United States to face charges over WikiLeaks' publication of thousands of secret U.S. cables in 2010.
Correa, 50, a vocal member of an alliance of left-wing Latin American presidents who was a close friend of Venezuela's late socialist leader Hugo Chavez, is riding high after winning re-election in February with about 57 percent of the vote.
He has won broad support from Ecuador's low-income majority thanks to heavy spending on welfare, health, education and infrastructure projects. But the U.S.-trained economist also has irked investors with his anti-capitalist rhetoric.
Correa has pushed through a new constitution that gave him more power, and this month passed a controversial law creating a state watchdog to regulate media content. Critics called the move a blow to free speech, while supporters say it enshrines principles of balance.
Michael Shifter, president of the Inter-American Dialogue, a think tank focused on U.S. relations with Latin America, said another chance to defy the United States again was probably irresistible for Ecuador's pugnacious president.
"It's hard to argue that it's a matter of principle given what's going on in Ecuador with the recent communications law and the severe limits on press freedom there," he said.
"There is a real irony ... But of all the Latin American countries, Correa is the one who's most willing to stand up to the United States. He'll couch it in terms of principle but I think this is all about defying the United States."
Correa has seldom shied away from a fight, be it with the Roman Catholic Church, international bondholders or local media bosses, many of whom he says are corrupt and manipulative.
Any further deterioration in ties with Washington now could put at risk Ecuador's trade benefits under the Andean Trade Preferences Act, which dates to the early 1990s.
Congress first passed the program in 1991 to help create jobs in the region and discourage the illegal drug trade. It allowed Colombia, Peru, Bolivia and Ecuador to ship thousands of goods to the United States without paying duties.
Ecuador is now the sole beneficiary of the program since Colombia and Peru have negotiated free-trade pacts with the United States and the White House suspended Bolivia in 2008, saying it had failed to cooperation in the U.S. war on drugs.
The trade program is set to expire next month unless Congress votes to renew it. Several U.S. business groups have called for Ecuador's trade benefits be terminated or reduced.
Most of those calls are based in part on Chevron Corp's long-running legal battle with Ecuador over pollution blamed on Texaco, which Chevron purchased in 2001.
An Ecuador court ruled against Chevron in 2011 and later increased the damages stemming from the decision to $19 billion from $18.2 billion. Chevron says Texaco settled the case with Ecuador in 1998 and the ruling against it was obtained by fraud.
A tough stance from Quito against Washington on the Snowden case would likely have won firm backing from Chavez, whose death this year from cancer led Correa to weep in public.
Following Chavez's departure, Correa said he was not interested in replacing his late friend as the most vocal figurehead of Latin America's socialist leaders.
"He's not seeking to replace Chavez as a regional leader," Shifter said. "He is, though, trying to occupy some of the rhetorical space Chavez occupied, and this is a very tempting issue to seize on."