Oil Report

UPDATE 6-Ecuador's Correa wins new powers in "historic" vote

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GUAYAQUIL, Ecuador, Sept 28 (Reuters) - Ecuador’s President Rafael Correa won broad new powers in a referendum vote on Sunday that allows him to push socialist reforms similar to those being forged by his allies in Venezuela and Bolivia.

Correa called the vote a “historic victory” but the new constitution will unnerve investors because it increases state control over monetary and oil policy in the OPEC nation and could allow the left-winger to stay in power until 2017.

“Today, Ecuador has decided on a new nation, the old structures are defeated,” a jubilant Correa told hundreds of celebrating supporters waving the green and blue flags of the government alliance in the port city of Guayaquil. “This confirms the citizens’ revolution.”

Electoral officials were expected to begin releasing official results later on Sunday, but a quick count authorized by the electoral authority showed 63 percent of voters backed Correa’s proposed constitutional reforms and a key opposition leader said Correa had won.

Two trusted exit polls gave the former Catholic missionary 66 percent and 70 percent support.

With the new constitution in hand, Ecuador’s most popular leader in a generation now has more sway over Supreme Court appointments and will control the central bank. The army will now be under firmer civilian control.

Correa, who once taught in a Quechua Indian village, is popular with Ecuador’s majority poor for sharing oil income via handouts and credits to small businesses.

Guayaquil Mayor Jaime Nebot, an influential opposition figure, accepted Correa had won, but asked him to respect the results in the wealthy coastal city, which were too close to call.

Correa’s supporters hoped his victory would allow him to push ahead with his reforms.

“After the referendum I am sure the country is going to get better, it’s going to change,” said William Pauta, 40, in Guayaquil. “Correa has been our best president.”

Like fellow South American socialists Venezuelan President Hugo Chavez and President Evo Morales of Bolivia, Correa wanted a new constitution to take control of the economy and increase spending on health and education.

The new constitution will erode the power of Congress and the army, which helped topple three presidents in the last decade in the poor country of 14 million people.

Critics say the U.S.-trained economist has too tight a hold in the country of Amazon jungle and snowy Andes peaks.

Investors are frightened by his threats to halt some debt payments, a drive to cut private companies out of oil profits and increased scrutiny of banks.

The Catholic Church opposes the constitution for allowing civil unions for homosexual couples. It says it also softens an abortion ban. Correa, who opposes abortion, denies that.


Correa is less radical than Chavez, who has nationalized industries and is a declared enemy of the U.S. “empire.” Correa says he wants to lure more investment, but on his own terms.

Correa softened his tone on Saturday and said he will not make rash moves over the nation’s $10 billion foreign debt.

Eager to diversify the economy away from oil and produce like bananas, Correa may use momentum from the referendum victory to pass a law to promote mining, although with tighter rules.

The new constitution allows him to run for re-election twice more, potentially keeping him in office until 2017. Chavez and Morales have sought similar re-election reforms.

Even now Correa faces challenges. Oil companies are resisting his effort to make them sign contracts that pay them a flat fee for extracting Ecuador’s crude with no share of profits.

If that effort fails, it could lead to a stagnation in already falling oil output.

World economic problems could mean lower prices for Ecuador’s resources, making it hard for Correa to meet expectations on social spending and public works programs.

“Correa is just the medium for the change that the people are calling for,” said office worker Edison Carrion. “If he does not fulfill his promises he will fall, we are a rebellious people.” (Writing by Frank Jack Daniel; Additional reporting by Yolanda Proano; editing by Patrick Markey and Kieran Murray)