The people of Ecuador are rising up to refound their country as a pluri-national homeland for all. This inspiring movement, with Ecuador's indigenous peoples at its heart, is part of the revolution spreading across the Americas, laying the groundwork for a new, fairer, world. Ecuador Rising aims to bring news and analysis of events unfolding in Ecuador to english speakers.

Wednesday, June 25, 2008

New constitution set to bolster Ecuador's Correa

By Enrique Andres Pretel and Alonso Soto

MONTECRISTI, Ecuador, June 20 (Reuters) - Ecuadorean President Rafael Correa will bolster his authority this year if voters approve a new constitution extending state control over the economy and opening the way for his possible re-election.

If ratified in a referendum, opponents fear the new constitution could stunt much-needed investment in South America's No. 5 oil producer and undermine key institutions already susceptible to political interference.

The constitutional changes hint at leftist Correa's long-term plans for the OPEC member, where controlling the economy -- and therefore cash flow to the military -- is key to survival after his three predecessors were toppled by street protests and congressional turmoil.

Correa, a popular former economy minister who says he wants to wrest power from corrupt elites, already has foreign investors jittery over his drive to renegotiate oil and mining deals. He pledges to annul some foreign debt, which he brands as "illegitimate" deals signed by past governments.

Alberto Acosta, head of the government-controlled assembly rewriting the constitution, told Reuters it will allow the state to take a majority stake in oil and mining deals though it is still unclear how that will happen.

"We have to regain the state's role in those sectors," said Acosta, a close Correa ally. "We would like joint ventures ... with a state majority stake, but there could be exceptions."

Correa's close ally Venezuelan leader Hugo Chavez has used broad powers to nationalize key sectors of his OPEC nation's economy.

Critics say Chavez is amassing dictatorial powers to establish a Cuban-style socialist state. But Venezuelans balked at his attempt to lift a limit on re-election when they rejected a constitutional reform in December 2007.

After closing down the opposition-led Congress last year, Ecuador's assembly has already approved laws giving Correa more control over the budget and plans constitutional reforms that could allow him to stay in office until 2017.

The assembly's government majority is proposing to lift a ban on immediate presidential re-election and call for an early general election next year.

A weakened opposition accuses the ex-college professor, who took office last year, of amassing power and undermining institutions in the world's No. 1 banana-exporting nation that returned to democracy in 1979 after years of military rule.

"They want a super president which is very dangerous for a democracy," said Cesar Rhon, a member of the conservative Social Christian party, after an assembly debate.


Ecuador's new constitution would also enshrine the idea of "illegitimacy" in foreign loans, which could serve as a legal premise if the state challenges any of its credit deals in court, Acosta said.

"If Correa approves the constitution he will have total control of economic activities of this country," said Alexandra Vela, an analyst with think-tank Cordes in Quito. "The economy will suffer from a growing state that will push aside the private sector for a bigger role."

Ecuador's economy grew only 1.96 percent last year and private investment in oil and mining has already stalled after Correa started to renegotiate deals and revoke concessions.

The new constitution, expected to be finished by late July, has to be ratified in a referendum later this year.

A Cedatos-Gallup survey showed 37 percent of Ecuadoreans would agree to the new constitution if it were up for vote in June, short of the more than 50 percent needed for approval.

But analysts say Correa's charisma, image as an outsider battling entrenched elites and an expected boost in public spending will help him lure enough votes to win the vote.

"It's too early to say, but Correa has the clear advantage in the referendum," said Paulina Recalde a pollster with Perfiles de Opinion in Quito. "There is no real opposition that could challenge his strong leadership."

(Editing by Patrick Markey and Jackie Frank)

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