Ecuador's Correa targets Congress, pushes reforms

By Alonso Soto

QUITO, Nov 28 (Reuters) - President Rafael Correa will seek to shut down Ecuador's opposition-dominated Congress when a new assembly under his left-wing party's control starts work on Thursday to craft a new constitution.

Correa, elected last year promising a citizens' revolution, plans to use the assembly to push through reforms that have been blocked by his foes in Congress.

His drive comes as his Andean allies, Venezuelan President Hugo Chavez and Bolivia's Evo Morales, face mounting and sometimes violent opposition to their own attempts at sweeping constitutional change.

Setting up a 130-member assembly was Correa's main campaign pledge and its broad powers will likely allow the U.S.-trained economist to boost state control over the economy and curb the power of traditional parties he calls "pillaging pirates."

"The assembly will bring changes at the root, radical reforms ... so this country can finally advance freely," Correa told supporters recently in the town of Montecristi, where the assembly will meet to debate a draft of a new constitution.

Correa plans to use his majority bloc of 80 seats in the assembly to force Congress into a recess and take over its legislative powers during the six months of debate on drafting a new constitution. The move could come in the assembly's opening session on Thursday.

Opposition lawmakers in Congress have rejected or weakened some of Correa's major proposals, including a far-reaching banking reform bill to increase state control over banks and force them to lower interest rates.

Some congressional opponents have vowed to resist Correa's plans and stay in office, raising tensions in a country where unrest has ousted three presidents in the last decade.

Voters gave Correa a clear mandate for challenging the old guard, blamed by many for instability in South America's No. 5 oil producer. But his promises to renegotiate foreign debt, his high public spending and the anemic economy worry Wall Street.

Opposition leaders accuse the former economy minister of using his popularity to control institutions such as the courts and say he is seeking to bolster his presidential powers, as Chavez has done in Venezuela.

'DICTATORIAL'

But opposition leaders question how much decision-making power the assembly has as its own statute says all reforms will have to be ratified in a referendum next year.

"The government is interpreting the statute as they please in an attempt to concentrate power," said Gilmar Gutierrez, the top assembly member for the center-right Patriotic Society party. "We are going to fight those dictatorial tendencies."

Still, he and other opposition leaders will have little power in the assembly and they have failed to form alliances to counter Correa.

Correa wants the assembly to call for an early presidential election, curtail the influence of political parties in the courts, and reform tax and financial laws to lower taxes and interest rates for the poor.

Analysts warn the assembly's broad powers could in the long-run hurt Correa as Ecuadoreans, tired of instability and corruption, expect too much from the new body.

"The government bloc has enough power now to approve whatever it wants," said Alexandra Vela, an analyst with the think-tank Cordes in Quito. "But as they take so much power the assembly will also assume the pressures felt by Congress and that could come back to bite the government."

Chavez, a fierce foe of the United States, used a similar assembly to consolidate presidential powers in Venezuela in 1999, but he faces a tough referendum vote on Sunday on whether to approve deeper reforms.

A similar assembly in Bolivia has divided public opinion and generated violent street protests with four people killed over the weekend and opposition leaders calling for a general strike in six of its nine provinces.

Since taking office in January, Correa has won strong backing with his tough stance against foreign oil firms and promises of social programs for the poor, although weak economic growth threatens his popularity.

"The economy will be the breaking point for the government," said Paulina Recalde, a pollster with Perfiles de Opinion in Quito. "Correa has created a lot of economic expectations and he needs to deliver quickly."