Triumphant Correa fights for Ecuador assembly power

By Alonso Soto

QUITO, April 16 (Reuters) - A triumphant President Rafael Correa faced off against a weakened opposition on Monday at the start of a battle for control of a new assembly that Ecuadoreans overwhelmingly voted to create in a referendum.

Correa, a leftist and friend of Venezuelan President Hugo Chavez, said he wanted a radical overhaul of Ecuadorean politics after he won Sunday's vote in a landslide that should enable him to wrest power from a Congress reviled as corrupt.

With 59 percent of ballots counted, 82 percent of voters backed Correa's call for an assembly to rewrite the constitution and strip powers from a Congress they see as tainted for appointing cronies to state firms and the courts.

"This assembly with broad powers could reform the legislative, judicial and even the executive branch," Correa said of the body whose 130 members will be elected around September.

"Let's move ahead with this assembly to have a real representative democracy."

Correa, 44, a U.S.-educated economist and former economy minister, wants the new body to make lawmakers spend more time in their small constituencies and to weaken traditional parties that have been pivotal in ousting his three predecessors.

In power for just three months and with little support from traditional parties, Correa has sustained huge popularity by confronting political elites.

The referendum campaign exposed political fault lines in the world's largest banana exporter. More than half of Ecuador's congressmen were fired last month after opposing Correa's plans for the referendum.

'STRONG MANDATE FOR CHANGE'

The opposition vowed to fight on, concerned Correa could become too powerful by centralizing government around himself as Chavez has done in Venezuela.

"We have not lost yet," Gloria Gallardo, one of the 57 fired lawmakers, said on television. "We will participate in the assembly to defend the free market and our personal freedoms."

Old foes of Correa such as former President Lucio Gutierrez, who is widely popular among the poor, hope to get a strong foothold too.

"I will defeat him in the assembly," Gutierrez said.

Powerful Indian groups, which have helped unseat presidents in the past, could also turn against Correa if their call for the nationalization of oil and land is sidelined.

Economists predict investors will welcome Correa's win.

It could defuse the political confrontation and push Ecuadorean bond prices higher on Monday because the president is expected to feel less pressure to implement radical policies such as slashing debt payments to maintain his approval ratings.

The clear referendum win is expected to bolster Correa's mandate and allow him to push ahead with other initiatives such as ending the lease on a U.S. military base, renegotiating oil deals and restructuring the national debt.

"Correa and the new constituent legislators (have) a very strong mandate for change and to go far and deep in terms of the scope for the reforms," Alberto Ramos, a senior economist at Goldman Sachs, wrote in a research note from New York.