Ecuador's Correa takes oath, vows socialism shift

BY CHRIS KRAUL

from the Miami Herald

QUITO - Declaring that ''inhuman and cruel globalization'' has failed his country, leftist economist President Rafael Correa took office Monday with a promise to shift his nation toward socialism and to renegotiate its $10.2 billion foreign debt.

Correa, 43, who received his doctorate at the University of Illinois in the United States, became Ecuador's eighth president in 11 years. He is one of a half-dozen leftist Latin American leaders to win office or be reelected in little more than a year.

In the campaign that culminated in his November victory, Correa pledged to overhaul a political system that many people here view as corrupt, fragmented and inefficient.

At times, Correa employed the anti-American rhetoric favored by his ally, Venezuelan President Hugo Chávez, promising not to sign a free-trade agreement with the United States or to extend the U.S. lease on an air base in western Ecuador used by surveillance planes to monitor drug traffickers.

Although he made conciliatory gestures after the election, including meeting with U.S. Ambassador Linda Jewell here, Correa used the term ''empire'' to refer to the United States during a speech at an indigenous ceremony Sunday, before Monday's official inauguration.

LEADERS ASSEMBLED

Correa took the oath of office at the newly restored national assembly building as some 17 heads of state looked on, including Chávez, Iran's Mahmoud Ahmadinejad, Nicaragua's Daniel Ortega and Bolivia's Evo Morales. The highest-ranking U.S. official present was U.S. Commerce Secretary Carlos Gutierrez.

Hours later, Correa delivered on one of his campaign promises by signing a decree requesting that the electoral tribunal organize a national plebiscite on March 18 to ''approve or reject'' a constitutional assembly.

An assembly to rewrite the constitution is the critical first step of his reform plan because Correa has no party allies in the Legislature to help enact his agenda. But the assembly would have to be approved by the sitting Congress, which effectively would be putting itself out of a job.

''Whether it's by consensus, a deal or through popular pressure, my expectation is that Correa will get his constitutional assembly this year,'' said Adrian Bonilla, a political scientist at a Quito think tank known by its Spanish initials, FLACSO. ``It's why he won the election.''

Bonilla said he doubts that Correa would use such an assembly to concentrate as much power in his hands as Chávez has done.

''Venezuela is different. Here, we are more heterogenous, more fragmented. I don't think Correa would succeed in what Chávez did,'' Bonilla said.

FOCUS ON FINANCES

Correa said he would begin immediate negotiations to alleviate ''the insupportable weight'' of Ecuador's external debt.

Fear that Ecuador would default on its debt, which it has done three times in the past quarter-century, has sent the value of its bond prices plummeting 20 percent since Correa won in November.

''It looks like he is going to play hardball,'' said Gianfranco Bertuzzi, an emerging-market bond specialist at Lehman Bros. investment bank in New York. ``Bond holders are bracing for some kind of renegotiation, but what it means is still up in the air.''

Bertuzzi said 15 Wall Street firms holding billions of dollars in Ecuadorean debt will meet with Correa's new finance minister, Ricardo Patiño, in Quito this week to find out how Correa plans to proceed with the renegotiation. In February, Correa probably will announce a comprehensive plan, he added.

OIL LEGISLATION

Correa also is expected to push legislation to make foreign oil companies turn over majority interests in their oil fields, taking a cue from Chávez in Venezuela. Legal analyst Diego Delgado of Quito said Correa might also follow Chávez's lead in reversing the privatization of some utilities, including telephone, power and water companies.

Economist María de la Paz Vela of Multiplica consultants said Correa is inheriting a reasonably healthy economy growing at a 4 percent annual rate, with low inflation of 2.8 percent.

The economy got a $1.1 billion boost from the confiscation of Occidental Petroleum's oil field in May and a new hydrocarbon tax that together bumped up Ecuador's total 2006 oil revenue to about $3.8 billion, she said.