Correa's radical plans spark battle in Ecuador

Duroyan Fertl, 16 March 2007
Green Left Weekly
The small Andean nation of Ecuador is facing a political crisis as the Congress and the courts turn on each other over new president Rafael Correa’s plans for a Constituent Assembly and a “citizens’ revolution” to build “21st century socialism” in the poverty-stricken country.
Correa, a self-described socialist and close ally of Venezuela’s President Hugo Chavez, was elected late last year promising to redirect Ecuador’s oil wealth into social spending, increase popular democracy and limit the power of the traditional political parties. Central to this platform is convoking a popular Constituent Assembly to rewrite Ecuador’s constitution.
In February the 100-member Congress, which is controlled by parties hostile to Correa and his policies, passed a bill allowing a referendum on the assembly after the opposition Patriotic Society Party (PSP) of former president Lucio Gutierrez voted in favour. However there was an immediate dispute over the power that the assembly will have, Correa arguing for a plenary power enabling it to dismiss not only the Congress and courts, but also the president.
While the Congress disagreed, the Supreme Electoral Tribunal (TSE) endorsed Correa’s statements and announced on March 1 that the referendum would be held on April 15. In response, a majority of Congress, including the PSP, voted to sack the president of the TSE. The court immediately fired back, sacking the 57 members of Congress responsible and setting up a police cordon to prevent the sacked members from entering.
The Constitutional Tribunal has refused to rule on an appeal by the fired lawmakers until Congress endorses it. Congress, however, is unable to convene, as it can’t achieve the required quorum of 51 legislators.
On March 13, 20 legislators broke through police lines and entered the Congress before being removed by riot police using tear gas. Correa blamed the ousted members of Congress for the violence, saying, “These people want to create chaos because they know they’re already out”.
The ousted legislators, made up of members of parties with close ties to Ecuador’s financial oligarchy, have threatened to set up a rival congress in Guayaquil, the country’s second major city and base of the right-wing Social Christian Party.
The Constitutional Tribunal has also warned Correa to obey its forthcoming ruling on the validity of the referendum, but Correa disputes the court’s power to rule on the matter, and has threatened to call mass protests to ensure that the assembly goes ahead.
Humberto Cholango from ECUARUNARI, one of the organisations representing Ecuador’s approximately 40% indigenous population, has also called for a massive mobilisation of all the indigenous and social movements of the country to defend the assembly.
If the referendum is successful, it will allow the election of 130 people who will have four months to rewrite the constitution. A recent poll shows that only 17% of Ecuadorians are satisfied with the Congress, which is regarded as corrupt, while over 75% support the Constituent Assembly.

Ecuador: dignity, sovereignty on the rise

W. T. Whitney Jr., Feb 15, 2007
People's Weekly World

Rafael Correa, upon his inauguration as Ecuador’s president on Jan. 15, immediately called for Congress to approve a referendum for a constitutional assembly which he sees as crucial for “a profound transformation” of the country. While campaigning, Correa promised a new constitution, demanded that U.S. troops leave the country and condemned Washington-backed “free trade” agreements.

Despite 80 percent popular support for the assembly, Ecuador’s Congress, controlled by right-wing parties, had rejected the proposed referendum as unconstitutional. Since Jan. 30, widespread demonstrations, led by indigenous groups, have kept the issue open.

Marchers descended upon Congress on Feb. 12, demanding immediate action on the referendum. Indigenous leader Humberto Cholango told the crowd, “We can’t keep on leaving things up to a discredited, neoliberal political sector,” referring to those who advocate NAFTA-like pacts, privatization and public austerity.

Correa promised, if need be, to bypass Congress and set up a special entity to authorize the referendum. The next day, however, Congress, in a compromise, approved the referendum.

The government has also had to deal with a border dispute with Colombia, a U.S. ally. On Dec. 11, Colombian airplanes, fumigating coca plants in Colombia, dispersed the herbicide Glyphosate over inhabited areas in Ecuador, repeating the incursion on Feb. 5. Colombia called off further spraying five days later, after Ecuador announced plans to go to the International Court at The Hague.

The Correa government has outlined a “foreign policy peace initiative” on border problems, especially the humanitarian crisis affecting 250,000 Colombians displaced by that nation’s civil war.

Correa became Ecuador’s eighth president in 10 years after a 57 percent runoff victory on Nov. 26. Speaking partly in the Quechua language, he joined thousands of indigenous people on Jan. 14 for a symbolic inaugural ceremony. “This nation is one of the five Latin American countries with the least investment per inhabitant,” he said, and he has prioritized education, health care and support for the most vulnerable as his goals. Women occupy seven of 17 cabinet posts in his government.

“The neoliberal night is reaching its end,” Correa declared. “A sovereign, dignified, just and socialist Latin America is beginning to rise.”

President Evo Morales of Bolivia, on hand for the ceremony with Venezuelan President Chavez, responded, “The struggle of the Cuban people and Fidel against imperialism was not in vain.” According to the Mexican daily La Jornada, Correa is “taking on responsibility for Indo-America socialism epitomized by José Carlos Mariátegui,” a Peruvian Communist leader of the 1920s.

Under Correa, Ecuador plans to cut its ties with the International Monetary Fund. On Feb. 2, officials announced a 10 percent reduction in foreign debt repayments, allowing for a 6 percent funding increase for social services. Ecuador owes $11 billion, approximately 25 percent of its GDP, to foreign lenders.

In response, Thomas Shannon, U.S. undersecretary of state, advised caution. President Correa, he suggested, should “not place Ecuador in conflict with institutions and countries it needs and that can provide the most help,” adding, “We have an idea of how to do it, based on our experience [which] we are inclined to share.”

According to Correa, Ecuador will re-evaluate foreign debt obligations. He has proposed “an international debt arbitration court” to determine “legitimate foreign debt” and use of the “Bank of the South,” proposed by Venezuela, as repository for monetary reserves.

Under agreements ratified Feb. 9, Venezuela will help modernize Ecuador’s refineries and hydroelectric facilities, process 100,000 barrels of Ecuador’s oil on a daily, no-cost basis, and allow Petroecuador to drill for oil in Venezuela.

A cloud of tragedy, however, pervades these new beginnings. Defense Minister Guadalupe Larriva died Jan. 24 when two helicopters collided during military exercises near the Manta U.S. Air Base installation. She, her 16-year-old daughter, and five officers were passengers. All died.

Larriva, head of Ecuador’s Socialist Party, had condemned Ecuador’s military ties with Colombia, projected military reforms, and confirmed U.S. troop departure from Manta in 2009 when bilateral agreements expire.

President Correa fired Army chief Pedro Machado because of the crash, which, according to an international team, was not caused by mechanical problems. Observers liken Larriva’s death to that of leftist President Jaime Roldos in 1981. His aircraft also crashed under mysterious circumstances.

Lorena Escudero replaced Larriva as defense minister, joining female counterparts serving in Argentina and Uruguay. At Larriva’s funeral, Rafael Correa bade farewell: “Guadalupe, you liked hearing this, from the song for Comandante Che Guevara: ‘Until victory, always.’”

atwhit @ megalink.net

Ecuador, Pondering Debt Default, Turns to Chavez for Funding

By Matthew Walter and Patrick Harrington

Feb. 14 (Bloomberg) -- Ecuadorean President Rafael Correa, who is considering defaulting on the country's $10 billion in international debt, is turning to Venezuela's President Hugo Chavez to cover an expected budget deficit this year.

Ecuador is short of funds to make a Feb. 15 interest payment on its benchmark bonds and will take advantage of a 30- day grace period, Deputy Finance Minister Fausto Ortiz said this week. Correa, 43, will send officials to Caracas Feb. 21 to discuss what kind of backing Venezuela can offer, Ortiz said.

``The intention is to go to Caracas to see exactly what the conditions are, to see if it involves buying bonds,'' Ortiz told reporters in Quito. ``We'll have to see exactly what the conditions of the financing are.''

For Chavez, supporting Correa's socialist government would match efforts to bolster other regional allies as he seeks to expand his reach and diminish U.S. influence. In the past year, Venezuela bought bonds from Argentina and jointly issued international bonds, which allowed the country, after a debt default in 2001, to raise funds in U.S. dollars.

``They're not sure what kind of debt restructuring proposal they'll offer. One of the first steps has got to be to cement support from Venezuela,'' said Gianfranco Bertozzi, a Latin America economist at Lehman Brothers Holdings Inc. in New York.

Ortiz said on Feb. 12 that the government is studying the composition of its debt and though payments are budgeted for this year, the country won't honor any debt found to be `illegitimate.''

Bondholders

Support from Venezuela for Ecuador could come in the form of assistance funneled through a third-party such as the Andean Development Corporation, loans at a favorable rate, or even an agreement to buy Ecuadorean bonds, Bertozzi said.

``If Ecuador defaults, it would be the first time a government does so out of a change in willingness to pay,'' he said. ``Normally, when you go to the negotiation table, there's recognition that there's no money,''

Ecuador's Finance Minister Ricardo Patino last month said the government may pay foreign creditors as little as 40 cents on the dollar to free up funds for heath care and education. Last month, the government doubled a cost of living subsidy for the elderly and disabled at a cost of up to $400 million. Correa has also promised increased housing assistance for the poor.

Default Threat

Default threats sent Ecuador's bonds to a 2 1/2 year low in January and caused Moody's Investors Service and Standard & Poor's to cut the country's credit rating.

Ecuador's 10 percent bonds due in 2030, the most traded in international markets, rose 1.85 cents on the dollar to 83.35 yesterday, pushing the yield down 0.29 percentage point to 12.16 percent, according to JPMorgan Chase & Co. The bond is up from 67 cents on the dollar Jan. 23.

``It's still not fully clear what the government strategy is with regard to their debt,'' Credit Suisse economist Carola Sandy said in a phone interview from New York. ``All the recent statements suggest that the probability of an outright default is declining.''

The bond's rise over the past three weeks has been fueled by speculators, said Raphael Kassin, who helps manage about $8 billion in emerging market fixed-income securities for ABN Asset Management in London. Kassin, who hasn't owned Ecuadorean bonds since 2003, isn't convinced.

``If there is a president who says he will default, what else can I expect,'' he said. ``I'm an investor who is running client money and my clients don't want me to take that kind of risk.''

Ecuador May End Contracts With Petrobras, Cell-Phone Companies

By Matthew Walter

Feb. 3 (Bloomberg) -- Ecuadorian President Rafael Correa said the government may nullify its contract with Petroleo Brasilero SA if it finds the company is violating an environmental agreement, and is reviewing its agreements with cellular-phone companies.

Correa is awaiting the result of an investigation into Petrobras's operations within a national park that is also occupied by indigenous people, to see if it's respecting its agreement with the government, Correa said today in a radio address, according to a statement on the president's Web site.

Correa also said cell-phone companies in Ecuador have a quasi-monopoly, and that the government is studying their contracts to determine if it will revoke or renegotiate them, according to the statement.

The newly elected president is pressing forward with a plan to implement more socialist political and economic policies.

He's threatened to pay only part of Ecuador's approximately $10 billion in foreign debt to free up funds for health care and education spending, and he's proposed a national referendum on whether the country's constitution should be rewritten.

Ecuador's Police Repel Protesters Storming Congress

By Matthew Walter and Bill Faries

Jan. 30 (Bloomberg) -- Ecuadorean police used tear gas to repel a crowd that tried to storm congress to demand lawmakers approve President Rafael Correa's plan for a national assembly to rewrite the nation's constitution.

Police turned back the protesters after they entered the building, then launched tear gas at a crowd waving banners and political flags outside the former central bank building, where congress meets, television station Cablenoticias showed. Inside, lawmakers had been debating whether to hold a referendum on rewriting the constitution.

``We wanted to make a symbolic occupation of Congress to show that the space is ours and the constitutional assembly should be there,'' said Vladimir Paguaj, 27, a law student holding the red flag of Ecuador's Communist Party. ``We want a Bolivarian socialist country integrated with all of Latin America,'' Paguaj added, using a term favored by Venezuela's Hugo Chavez.

Correa, who took office Jan. 15, campaigned on a promise to hold a national referendum on whether Ecuador should draft a new constitution to implement socialist economic and political policies. In a speech last weekend, he rebuked congress and the country's national electoral court for not supporting a national vote on the constitutional assembly, saying that Ecuadoreans should be given the right to decide.

``As of now congress has suspended its session,'' said Edison Guevara Estrella, a congressional spokesman, in a phone interview. Elsewhere demonstrators marched down Quito's Rio Amazonas Avenue, one of the city's main thoroughfares, blocking southbound traffic.

Few Allies

About 5,000 people participated in today's march, and 487 police responded, Colonel Edgar Roy Pino, commander of the metropolitan district police, said. The communications office of the national police said that as of 1:30 p.m. New York time, three policemen and one journalist had been injured, and one demonstrator had been arrested. Protestors threw eggs and stones at the police, who responded with tear gas, he said in an interview outside the central bank building in Quito.

Correa, 43, a U.S.-trained economist who served a five- month stint as finance minister in 2005, won 57 percent of the vote in a Nov. 26 run-off election. Without the backing of an established political party, the new president has few allies in Congress to carry out his proposals.

``Correa will have to decide between negotiating with Congress or pressing his demands through social action,'' said Mark Schneider, vice president of the International Crisis Group, a policy research organization in Washington, DC.

`Political Upheaval'

Correa's push for a constitutional assembly resembles steps taken by Venezuelan President Hugo Chavez, who helped rewrite his country's constitution after he took office in 1999. Chavez attended Correa's Jan. 15 inauguration, along with Iranian President Mahmoud Ahmadinejad, Brazil's Luiz Inacio Lula da Silva, and Nicaragua's Daniel Ortega.

Ecuador has had eight presidents in ten years and 68 percent of the country's 13.3 million citizens live in poverty, according to the U.S. Agency for International Development. Correa has said he may default on part of the country's $11 billion in debt to increase government spending on social programs.

``Ecuador has gone through an enormous amount of instability and political upheaval,'' Schneider said. ``The country has vast needs that will require collaboration on all sides,'' he added.

To contact the reporter on this story: Matthew Walter in Quito at mwalter4@bloomberg.net ; Bill Faries in New York at wfaries@bloomberg.net .

Ecuador's defence minister dies in crash

Thursday Jan 25

Ninemsn

Ecuador's first female defence minister was killed on Wednesday after only nine days in office in a mid-air collision of two helicopters, government and military officials said.

The accident in the Andean nation further rocks the leftist government of President Rafael Correa, who has clashed with Congress over his executive powers and prompted street protests since taking office along with his ministers on January 15.

Minister Guadalupe Larriva, a former teacher and senior official of a socialist political party supporting Correa, died in the crash in a Pacific coastal province east of Quito, presidential spokeswoman Monica Chuji said.

Correa wanted Larriva, one of only a few civilians to lead Ecuador's 176-year-old military, to control an institution that has played a part in the ouster of three presidents in the last decade by publicly withdrawing its support as street protests erupted.

Larriva, one of the most popular members of the Cabinet, had promised to strengthen presidential control of military ranks, improve salaries for the armed forces and make the promotions system more transparent.

US firemen stationed at an air base at the port city of Manta rushed to the scene of the crash, a US embassy spokesman said.

Correa was flying from the southern port city of Guayaquil to the area of the crash, according to a local television station.

Correa asked the country to "pray for the soul of Guadalupe, her daughter, her family and the government of Ecuador".

Ecuador's Correa calls for socialist Latin America

Duroyan Fertl, 19 January 2007

From GreenLeft.

On January 15, Ecuador’s new president, Rafael Correa Delgado, was sworn in, promising to build “socialism of the 21st century” to overcome the poverty and instability of the small Andean country.

The previous day, Correa attended an indigenous inauguration ceremony in Zumbahua, the small Andean town where he did volunteer social work in his twenties. The presidents of Venezuela and Bolivia — Hugo Chavez and Evo Morales — were present as special guests.

Correa, a 43-year-old economist, used his inauguration to call for a “citizens’ revolution”, using wealth to meet social and environmental needs, rather than maintaining the current “perverse system” that has led to over 60% of Ecuador’s 13 million people living in poverty and forced more than 3 million to emigrate in search of jobs.

“The long night of neoliberalism is coming to an end”, said Correa, “A sovereign, dignified, just and socialist Latin America is beginning to rise.”

In a speech laced with the indigenous language Quichua and references to revolutionary figures Simon Bolivar and Che Guevara, Correa called for Latin American integration on the basis of cooperation and complementarity, and called on governments to create regional legislation to protect workers’ rights.

Correa’s radical program for change has already begun. On January 16, Ecuador signed an energy agreement with Venezuela. Venezuela will refine Ecuadorian crude oil, and invest in developing new refineries there. Ecuador, despite being one of Latin America’s largest oil exporters, currently has to import fuel at unfavourable prices.

Correa has also promised to renegotiate contracts with foreign oil companies, in order to free up money for spending on health, education, the environment and housing. The potential benefits for Ecuador are enormous: the oil company Oxy had its contracts cancelled a year ago, and the government has since made US$1.1 billion from those oilfields alone.

Another priority for Correa is Ecuador’s foreign debt, estimated in November last year at over 25% of the country’s GDP. Correa has suggested that at least part of the debt may be illegal, and is planning to renegotiate, or possibly default on it. He has also called for an international debt tribunal to prevent the exploitation of debt-ridden countries and has threatened to cut ties with the World Bank and International Monetary Fund.

On January 17, agriculture minister Carlos Valejo declared the government’s intention to redistribute idle arable land. Ecuador’s vulnerable agricultural sector was a key issue in mass protests last year against a proposed free-trade agreement with the US. Correa is firmly opposed to such an FTA, preferring to focus on national development and Latin American integration.

The most important part of the new president’s platform for change is the promise to convoke a Constituent Assembly to rewrite the constitution to allow the recall of elected officials and greater participation by social movements and community sectors in government, weakening the traditional party system and making his reforms possible.

Correa, whose Alianza PAIS party ran no candidates for the Congress, faces a hostile legislature. His opponents in Congress, which is almost universally regarded to be run by a corrupt and inept “partyocracy”, formed a bloc of 76 out of 100 law-makers to oppose Correa’s reforms.

Correa threatened to call mass protests and to use his executive powers to bypass the Congress, but on January 12, the second largest party in Congress, the Patriotic Society Party (PSP), led by ex-president Lucio Gutierrez (who was overthrown in 2005), changed sides on the issue, giving Correa a temporary majority.

This was not before Gutierrez had expelled his own wife and another member of Congress from the PSP for supporting Correa’s proposal. Neither Correa nor many of the social movements, such as the indigenous federatation CONAIE, trust Gutierrez and the about-face is widely seen as proof of the corruption of the current political system.

Assuming it is approved, there will now be a referendum on March 18 to endorse the initiative, and a Constituent Assembly of 87 members will be elected soon after from provincial, national and immigrant sectors of the population. The assembly will have 180 days to rewrite the constitution.

The task facing Correa is a challenging one. Previous governments that have promised reforms along similar lines have been unable or unwilling to carry them out, making only small reforms in the hope of placating big business and the people alike. In response, mass popular mobilisations, especially by the indigenous movements, have led to the overthrow of the last three elected presidents.

The hope is that Correa has broken the mould. “We’re not talking about little reforms, about making things less bad”, he said during his inauguration. “Latin America isn’t living an era of changes”, he explained. “It’s living a change of eras.”

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.