By Stephan Kueffner
Sept. 30 (Bloomberg) -- Ecuadoreans head to the polls today to choose delegates for a constitutional convention, a vote that will determine President Rafael Correa's power to expand state control of the Andean nation's economy.
About 9 million citizens will choose 130 delegates from more than 3,200 candidates for the convention, which will revamp the country's constitution for the third time since 1978. The assembly fulfills Correa's campaign pledge last year to craft a new basic law that bolsters political stability and purges traditional ``elites'' from power.
``Certainly, the assembly will generate fundamental changes in the economic structure,'' the Central Bank said in a document posted on its Web site.
An economist with a U.S. doctoral degree who calls himself a ``friend'' of Venezuelan President Hugo Chavez, Correa, 44, has been mostly vague about his goals for the assembly. Among specifics, he's seeking to end central bank independence and lift the bar on re-election of a sitting president. Overall, the convention will signal ``the long night of neo-liberal policies is over,'' Correa told rallies around the country in past months.
``Foreign equity funds are looking at Ecuador with great care,'' said Diego Borrero, who works in mergers and acquisitions in Quito, the capital. ``South America may still be en vogue with them, but not Ecuador, which is named in one breath with Venezuela and Bolivia.''
Investment Decline
In the second quarter, investment in infrastructure, housing, vehicles and other fixed assets fell 2.3 percent from the previous quarter. That was the biggest decline since the same quarter in 2003 and the second-largest since 1999, when a fall in oil prices combined with natural disasters to trigger a 6.3 percent plunge in GDP, the Central Bank reported Sept 28.
The bank earlier this month cut its 2007 growth forecast to 3.4 percent from 4.3 percent, as ``the outlook for the oil sector isn't optimistic.'' Crude oil output is likely to decline 5.7 percent this year to about 184.6 million barrels from 194.2 million barrels last year, the bank said.
By contrast, the United Nation's Economic Commission on Latin America and the Caribbean estimates the region's average growth will be 5.0 percent after a 5.6 percent increase last year.
Congress
Domestic demand growth slowed to 0.6 percent on quarter in the second quarter, from 3.1 percent in the first quarter, the bank also reported. In the same period, government demand rose by 1.6 percent after contracting 0.2 percent in the first quarter. Gross domestic product in 2006 was $21.6 billion.
Since taking office in mid January, Correa has accumulated the strongest power base in the country's recent memory.
Though he enjoys a majority in the 100-member Congress -- a rare occurrence in Ecuador for a president -- the assembly could decide to disband Congress and call for new elections.
If Correa supporters win the elections, ``Congress should take an unpaid vacation,'' Alberto Acosta, the candidate leading the list for Correa's Alianza Pais party, said at a news conference Sept. 28. ``The simultaneous existence of two legislative powers will generate tensions.''
Oil
Acosta, a German-educated economist, is one of Correa's top policy advisers and was his first energy minister, overseeing the country's oil industry, which accounts for about half of government revenue.
A draft constitution written by academics at the president's request specifies that the state's ``benefits from sustainable profit'' from oil or minerals ``will never be inferior to those of the company'' exploiting those resources. The present constitution doesn't include any minimum return for the state for natural resources.
Ecuador produced 46.4 million barrels of crude oil in the second quarter from 45.2 million in January through March.
According to pollster Cedatos, Correa's popularity weakened through August to an approval rating of 56 percent from a peak 76 percent in April after the referendum on holding the constitutional assembly passed with 82 percent of the vote.
Correa Favored
Cedatos estimated that Correa supporters will win 44 to 65 seats in the 130-member assembly, while Santiago Perez Investigaciones y Estudios, a pollster close to the administration, estimates that Correa will hold an absolute majority.
A complex election system and numerous little-known parties and candidates may slow both the balloting and counting of votes, electoral observers say. Voting ends at 5 p.m. local time. Consultar, close to opposition businessman Alvaro Noboa, and Santiago Perez Investigaciones y Estudios plan to publish exit polls around that time.
Other, better-known polling agencies have decided not to provide early estimates of the result, citing the complexity of the process. Participacion Ciudadana, a non-governmental organization, will publish an early vote-count at 8 p.m. local time.
To contact the reporter on this story: Stephan Kueffner in Quito at skueffner@bloomberg.net
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