December 14, 2009 / 1:42 PM / 9 years ago

Will Ecuador drought dry up Correa's popularity?

* Correa’s popularity dips to 42 pct as economy lags

* Blackouts caused by drought, lack of energy investment

By Hugh Bronstein

BOYACA, Ecuador, Dec 14 (Reuters) - A drought in Ecuador is causing power blackouts throughout the country, slowing the economy’s recovery and helping to push Rafael Correa’s popularity to the lowest point of his presidency.

The approval rating of the firebrand socialist fell to 42 percent in a recent Cedatos Gallup poll, half of what it was in the early days of his government in 2007.

Already frowned upon by some investors for his 2008 bond default and the tough stance he has taken with international oil companies, Correa faces a growing domestic challenge posed by the power outages spreading across this Andean country.

“Rolling blackouts are just going to further deteriorate Correa’s political standing,” said Patrick Esteruelas, analyst at the Eurasia Group consultancy in New York.

Water and electricity rationing in Venezuela has caused political problems for President Hugo Chavez, a Correa ally, as well. But with the opposition in disarray in both countries, Correa and Chavez still have a firm grip on power.

“The blackouts are affecting Correa’s popularity, but there is no sign so far that his government is being destabilized,” said Adrian Bonilla, head of the Latin American Faculty of Social Sciences in Quito. “The military is calm and there is no widespread public unrest.”

Correa does not go before the electorate again until 2013 elections. Eyes are on the drought because Ecuador is known for ousting presidents during hard economic times. Correa’s three immediate predecessors were forced from office by protests.

The president alienated the markets last year by defaulting on $3.2 billion in bonds. Now he is renegotiating oil contracts to increase state control over the sector.

All this has scared off private investment in electricity generation as hydroelectric plants gasp for water. The pain of the resulting power outages is widely shared by factories, business offices and households rich and poor.

“No one has money to spend. There was no corn crop this year. The ranchers are hurting too,” said Efren Munoz, owner of the corner food store in the western village of Boyaca.

Business is also bad at Nidia Arteaga’s farm down the road. It has not rained here in Manabi province since March.

“Without moisture the grass dies, without grass we don’t have milk, without milk there is no cheese, without cheese there is no suero (a byproduct used to feed pigs) and without suero our pigs go hungry,” she said.

Three of her 40 cows have died of thirst. She fears the rest will perish if the drought lasts another two months.

ECONOMIC DOWNTURN

Low oil prices brought by the world slowdown have walloped revenues in this OPEC-member country while the president’s confrontational style has taken its toll on his image.

Correa still has more political leverage than his recent predecessors ever did, but polls show people are tiring of his regular televised harangues of the media, business groups and anyone else who criticizes his “citizen’s revolution.”

Ecuador’s gross domestic product expanded 6.5 percent last year. The government says it expects growth to slow to about 1 percent this year before rebounding to 6.8 percent in 2010.

Wall Street considers next year’s growth estimate optimistic but the government is standing by the target.

A positive byproduct of the energy crisis could be closer relations with neighboring Colombia, which normally provides about 10 percent of Ecuador’s electricity.

Correa severed diplomatic ties with Colombia in March 2008 after President Alvaro Uribe ordered the bombing of a rebel camp on Ecuador’s side of the border. The second-in-command of Colombia’s biggest guerrilla army was killed in the raid.

Relations between Colombia and Venezuela have deteriorated over a military cooperation pact signed in October between Bogota and Washington. Correa also disapproves of the deal but he is repairing ties with Colombia nonetheless.

“Part of the reason why Correa is willing to mend fences with Colombia is to secure energy supplies and offset politically costly power blackouts,” Esteruelas said. (Additional reporting by Santiago Silva; Editing by Doina Chiacu)

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