September 23, 2008 / 9:10 PM / 10 years ago

UPDATE 3-Ecuador sends troops to expel Brazilian company

(Recasts with expulsion of company)

By Alexandra Valencia

QUITO, Sept 23 (Reuters) - Ecuador expelled a top Brazilian construction firm on Tuesday, sending troops to seize projects worth $800 million days before a vote expected to extend the leftist president’s powers.

President Rafael Correa ordered the government to take over the projects, which include a small regional airport, two hydroelectric plants and a rural irrigation project.

The president is battling with the firm, Odebrecht, over a dam the government says was badly built. His decree accused Odebrecht of “putting public services at risk.”

Correa usually enjoys good relations with regional powerhouse Brazil but often uses nationalist measures to drum up domestic support.

On Sunday, Correa is expected to win a referendum on a new constitution that will give him greater control over Ecuador’s oil-dominated economy and will increase presidential power.

The U.S-trained economist is popular for spending oil wealth on the poor and for his tough policies against large foreign companies and local wealthy elites.

He is aggressively renegotiating contracts with foreign oil and mining companies and only a few days ago persuaded Brazil’s state oil company, Petrobras, to abandon an oilfield in the Amazon jungle after clashes over taxes and the ecological impact of the project.

In the past, Correa has sometimes taken positions against foreign companies only to roll back later.

The government has clashed with Odebrecht over the San Francisco hydroelectric dam — the second largest in Ecuador — which was completed last year but is not functioning because of damaged machinery. Correa wants the Brazilian giant to pay millions of dollars in compensation.

In Tuesday’s decree, he banned Odebrecht officials working in Ecuador from leaving the Andean country.

The move may strain relations with Brazil, which firmly defends the overseas interest of its top companies.

Brazil’s foreign ministry said it had no immediate comment.

Esteban Michelena, an Odebrecht spokesman in Ecuador, said only one of its projects had so far been militarized and that was two weeks ago.

In a statement, Odebrecht said it had made Ecuador an adequate proposal to fix the problems at San Francisco. (Additional reporting by Alonso Soto in Quito and Roberto Samora in Sao Paolo; Writing by Frank Jack Daniel; Editing by Doina Chiacu)

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