QUITO, June 18 (Reuters) - Ecuadorean President Rafael Correa will not likely nationalize key oil and mining industries even as he vows to be tougher on investors and his leftist allies in the Andes step up state takeovers.
The U.S.-educated economist, who often shocks investors, believes outright nationalizations could be counter-productive for a state struggling to run its own companies, like state oil company, Petroecuador.
Here are some of Correa’s measures against foreign investors since taking office:
FOREIGN DEBT DEFAULT: Last year Correa refused to repay $3.2 billion in global bonds over charges the debt was “illegally” acquired by investors in league with corrupt government officials. His government later bought back most of the debt at very low prices, but analyst say the default will keep the Andean nation out of the debt markets for years.
OIL TAX HIKE: In 2007, Correa surprised investors by taking nearly all of the extra revenues generated by foreign oil companies because of record high oil prices.
He hiked to 99 percent a tax on those revenues to pressure oil companies to rework contracts. Companies filed lawsuits and slashed investment, arguing the tax hike threatened their businesses in South America’s No. 5 oil producer. Correa has so far failed to convince companies to switch to new service deals under which the state would keep all the oil they produce in exchange for a fee.
MINING BAN: Correa last year supported a one-year ban on mining exploration, a decision that battered the stocks of some foreign mining companies working in Ecuador.
Correa, who had vowed to jump-start the sector, said the decree issued by a government-controlled assembly was meant to bring order to an industry in disarray.
Smaller mining companies with operations in Ecuador have struggled since then to secure financing, pushing some to leave the country or sell assets to larger miners.
MASS CONFISCATION: Police and military in August seized hundreds of companies owned by a powerful business group because of a debt dispute with the state. The takeovers included two national broadcasters that are still under government control.
Correa said the seizures aimed to recover millions of dollars the state used to rescue a bank owned by the conglomerate during a financial crisis in the late 1990s. Ecuadoreans, many of whom lost their life savings during the crisis, widely backed the move.
But the mass confiscation led to the resignation of Finance Minister Fausto Ortiz, a Wall Street favorite.
EXPULSION OF BUILDER: Correa in September sent troops to expel top Brazilian constructor Odebrecht and seize projects worth $800 million because of a contractual row.
The expulsion fueled tensions with Brazil, one of the OPEC nation’s key sources of financing.
Correa filed an international lawsuit to halt payments of a Brazilian loan linked to Odebrecht, prompting Brazil to threaten to limit further financing to the Andean country.
For the main story, click on [ID:nN18231988] (Reporting by Alonso Soto; Editing by Marguerita Choy)
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