UPDATE 2-Ecuador warns oil companies to pay $317 mln in Oct

QUITO, Oct 15 (Reuters) - Ecuador told foreign oil companies on Monday they had two weeks to pay the government $317 million in what the government says are unpaid debts from a windfall royalty approved in 2006.

State oil company Petroecuador said in a statement that the debt stems from the royalty that forced oil companies to hand over at least 50 percent of extra oil revenues generated above a set benchmark price in their contracts.

President Rafael Correa earlier this month surprised investors by hiking the windfall royalty to 99 percent amid record high oil prices.

Petroecuador said companies that fail to comply with their debts could face "legal actions."

Petroecuador said the debtor companies included China's Andes Petroleum, U.S.-owned City Oriente and Brazil's Petrobras.

These companies are also scheduled to start talks with the government that aim to overhaul their contracts so that the state keeps all the oil extracted by the firms. Current oil deals allow companies to keep part of the oil they produce in South America's No 5 oil producer.

The companies were not immediately available for comments.

Leftist Correa's move to hike royalties has echoed ally Venezuelan President Hugo Chavez drive to nationalize the oil industry in the OPEC nation. Ecuador's oil firms trade group has called the hike a virtual nationalization of the sector.

Ecuador's Attorney General Xavier Garaicoa has recently called on Petroecuador to pressure companies to pay their debts, and has warned that the state could terminate their contracts if they fail to comply.

Analysts say Ecuador's tough renegotiation stance could hurt the country's already feeble oil industry by scaring foreign investment. Private firms produce nearly half of the country's daily output of 530,000 barrels.

Correa's massive constitution victory confirmed

Digital Journal, 15 October, 2007

Ecuador's leftist President Raphael Correa has won a massive victory in elections for a constituent assembly that will allow his party to rewrite the country's constitution unhindered, according to official results released Monday.

Correa's Alianza Pais party won 69 per cent of the votes in the poll held in late September, giving him 80 out of 130 seats in the new assembly, the country's central electoral commission said with 99 per cent of the votes counted.

That absolute majority should allow Correa to make the constitutional changes he needs to create what he has described as "Socialism for the 21st Century" without being hindered by the opposition.

The election results are still not final, as votes from a few outlying territories are still being tallied. The start of constituent assembly's work was therefore pushed from October 31 to mid-November.

The assembly is charged with drawing up a constitutional text within six months, after which it would go to a referendum. The assembly's mandate could be extended for an additional three months if needed.

The country's opposition-controlled Congress is expected to be dissolved as soon as the assembly begins its work, supposedly in order to prevent Congress from interfering in the process.

There are no representatives of Correa's party in the current Congress as the president declined to field candidates in last year's election, instead seeking to create a constituent assembly to reshape Ecuador's institutions.

Correa announced Ecuador returns to OPEC next month

MercoPress, October 14, 2007
Ecuador is to rejoin the Organisation of the Petroleum Exporting Countries, OPEC, next month after a 15-year absence, announced on Saturday President Rafael Correa during his weekly radio program. The move reflects the increased state control over energy being taken by President Correa as promised during his electoral campaign. Correa also announced he would be asking Venezuelan advice on how to renegotiate oil contracts with international corporations. His administration is interested in changing current association contracts for simple service contracts and in that line of thinking he recently decreed that profits will be split 99% for the government and 1% for foreign companies, a radical change from the 50/50 split.

Correa returned late Friday from Venezuela where he met with his counterpart Hugo Chavez to talk on “integration and energy” issues after having participated in Colombia at the opening ceremony of a gas pipeline linking Colombia with Maracaibo, Venezuela. Correa was invited to the event by Colombian president Alvaro Uribe.

At Opec meetings, Ecuador is likely to side with its ally Venezuela, one of the group’s most hawkish members. Ecuador would be the smallest producer in Opec: it produced an average of just 545.000 barrels a day last year, according to the BP Review of World Energy, a standard industry reference.

Opec’s next heads of state meeting is scheduled for November 17/18 in Riyadh in Saudi Arabia. Opec oil ministers next meet in Abu Dhabi in December 5.

The return of Ecuador, which was a member from 1973 until it suspended its membership in December 1992, will raise the number of Opec’s members to 13. Its entry will raise the group’s share of world oil output from about 41.9% to about 42.7%, based on BP’s figures for last year.

Because Ecuador has never formally left the group, it can re-enter without the long entry process demanded of new members. However, its re-entry will further complicate the already delicate negotiations over allowed production levels for the group’s members.

Correa: Gas pipeline is an example that political will gives results

Via Mathaba
Caracas, Oct 12 (ABN).- The President of the Republic of Ecuador, Rafael Correa, considers that the start of operation of the Trans-Oceanic Gas Pipeline Antonio Ricaurte “is an example that the political will can generate concrete results promoting the integration that region needs so much”.

The Ecuadorian Head of State, who attended to the inauguration act of the gas pipeline as special guest, assured that the construction of this structure is a step forward to make the integration project a reality.

“The man whereby is baptized this gas pipeline, Antonio Ricaurte, who gave his life for the independence, he would be proud of this work. The dream of building an integrated nation of nations is finally becoming a reality”, he stressed.

“This is part of the South American integration. And we are only talking about energetic diversification, not only in Ecuador, but in the region. At the Guayaquil Gulf will start the gas exploration, which should have started 25 years ago, but it was consigned to oblivion by the neo-liberal interests that dominated the country”, he noted.

Correa also congratulated all those people who made possible the gas pipeline construction in such a short period of time.

“The construction of this infrastructure that will benefit initially Venezuela and Colombia, and that in long term will bring prosperity to all the region, took only 14 months to be built, which is a proof that with political will, with union and integration vocation , results can surely be achieved”, he added.

Furthermore, Correa explained that with the recent measures took by his Government about Ecuadorian hydrocarbons, he expects to give a new boost to the economy of his country.

“And all the paths seem to go to the Bank of the South, because we need to have an organization with integration vocation not an annuitant one like those banks we have depended on to generate a development that has never arrived, because we have got into debt up to the top”, he assured.

Correa reminded that regional strength could start not only with the creation of the Bank of the South, “but also a South American regional currency that would mean the confidence in the economies of the countries working on a definitive integration”.

The Trans-Oceanic Gas Pipeline Antonio Ricaurte was inaugurated after presidents Hugo Chávez, Venezuela, Álvaro Uribe, Colombia, and Rafael Correa, Ecuador, as special guest, opened the main filling valve, located in Campo Ballena, Manaure Municipality, Guajira Department, Colombia.

This gas project, with an investment of 325 million dollars, initially expects that Colombia will supply gas to Venezuela until 2011, and later on the relation will be on the contrary.

For the stretch located in Colombian territory, the investment is a little more than 100 million dollars, without including the 10% aimed to social investment.

Last year, presidents of Venezuela and Colombia invited Panama to be part of this energetic initiative.

Translated by Ernesto Aguilera

South American Presidents Call for Integration

Bogota, Oct 12 (Prensa Latina) Presidents Hugo Chavez (Venezuela), Alvaro Uribe (Colombia) and Rafael Correa (Ecuador) called for integration on Friday as they inaugurated the first section of an important transoceanic gas pipeline.

In a speech after opening the valve to make the fuel flow, Chavez described the work as "136 miles of integration, an artery through which the unifying blood of the continent flows." He referred to the project to achieve that all Venezuelan cities have gas over the next few years, with this work playing a main role.

He also insisted in the ideas of the Liberator Simon Bolivar that precisely this area became the mind and heart of the greater Latin American homeland.

For his part, Correa backed the Colombia-Venezuela energy integration process, which with this gas pipeline becomes the first step in a greater effort by adding Central America too, also including Ecuador, Peru and Bolivia in the future.

He also urged Venezuela to return to the Andean Community of Nations (CAN), and with this aim he suggested the signing of a document with new challenges for member countries to strengthen integration and remove what he described as stagnant bureaucracies.

Meanwhile, Uribe said to be ready to start a gas interconnection with Panama and Ecuador, offering the latter the gas pipeline scheduled to be constructed between the cities of Cali and Popayan as a point of linkage.

He also requested the admission of Colombia in the Bank of the South and declared himself a "firm supporter of integration." Uribe said, though, that this does not mean a rejection of the World Bank or the Inter American Development Bank, but rather shows that his government also supports integration in the continent.

He also pleaded for Caracas returning to CAN and appreciated efforts made by Venezuelan Foreign Minister Nicolas Maduro to solve the conflict triggered by the toll collection in their common border.

Correa invites Chávez to rejoin the Andean Community

El Universal, October 12, 2007

During the opening ceremony of the Venezuela-Colombia gas pipeline, Ecuadorian President Rafael Correa once again invited his Venezuelan counterpart Hugo Chávez to return to the Andean Community of Nations (CAN).

"Dear Hugo, once again we are making this invitation to you, a petition for Venezuela to go back to the CAN, its natural setting, a setting it should have never left. We are aware of CAN deficiency, so let us draft a document with the minimum requirements -just like we talked earlier- and all the presidents are going to sign it. If, within one year, CAN does not work, then we all will leave, because we are not willing to waste time."

Correa also talked about the execution of the articles of agreement of the Bank of the South, scheduled for November 3 in Caracas. He branded the institution as "a new powerful development bank in the region."

He suggested taking "another step" towards regional integration by creating a "Latin American fund of reserves."

Correa visits Venezuela to discuss integration mechanisms with Chavez

Via Mathaba
Quito, Oct 11th (ABN).- The President of Ecuador, Rafael Correa, will arrive in Venezuela this Thursday to hold a meeting with his Venezuelan counterpart, Hugo Chávez, and discuss about economic and political regional mechanisms such as the Andean Community (CAN), the South American Nations Union (Unasur) and the Bank of the South.

According to a communiqué issued by the Ecuadorian Presidency, Correa will arrive in Caracas along with some members of his cabinet, among them, the Ecuadorian Foreign Affairs Minister, María Fernanda Espinosa, and the Oil and Mining Minister, Galo Chiriboga.

Chávez had announced President Correa’s visit to Venezuelan during his weekly TV and radio show last Sunday Aló, Presidente, and added that they will discuss about the Venezuela’s return to the CAN.

Concerning this issue, the Head of State said once again that he aims his aspirations at the Andean Community that gives priority to the social agenda of the economy.

Correa will travel with President Chávez to Puerto Ballena, Colombia, where they will meet with President Álvaro Uribe to inaugurate the Transguajiro Gas Pipeline.

Translated by Natalia González

Ecuadorian President Highlights Che’s Transcendence in South America

Periodico26, October 10, 2007

QUITO.— Ecuadorian president Rafael Correa spoke about the importance of Ernesto “Che” Guevara’s ideas and examples during a ceremony held in the city of Guayaquil to mark the 40^th anniversary of his assassination in Bolivia.

“Four decades after his death, the example of the Heroic Guerrilla still resonates through South America, a region in the midst of historical changes,” said Correa, who also spoke about the examples of Cuba, Venezuela, Brazil, Bolivia and Ecuador, countries which have undertaken significant social transformations to the benefit of their peoples.

Correa affirmed that Ecuador is promoting a non-violent people’s revolution that has been overwhelmingly successful using votes, in reference to his party’s recent victory in Constituent Assembly.

The Ecuadorian president also spoke about the need to foster solidarity and love toward human beings, two concepts which defined the Argentine-Cuban revolutionary Che Guevara

Ecuador’s Popular Revolt: Forging a New Nation

by Roger Burbach
From ZNet, October 08, 2007

Upon his inauguration, Correa issued a decree calling for a plebiscite on the constituent assembly. The oligarchy and the partidocracia moved almost immediately to gut the call for the assembly. Congress refused to accept the president’s initiative, passing its own law saying that such an assembly would not be empowered to refound the country’s institutions, and that it would not have the right to limit the tenure of congressional deputies or any other elected officials until their terms expired.

Then, with the intent of turning the election of assembly members into a virtual circus, the Congress declared that anyone could put their name on the ballot. No signatures or petitions were required, meaning hundreds or more could simply sign up to run for any given seat, making the balloting practically impossible to administer.

Correa responded by eliminating the onerous clauses from the congressional legislation, tailoring it to his original decree for a constituent assembly, and sending it to the country’s Supreme Electoral Tribunal. Hopes were not high, since the Tribunal is historically viewed as part of the partidocracia. The popular movements began to demonstrate in front of the Tribunal and Congress, calling for Correa to simply issue a decree for the Constituent Assembly.

“To the surprise of virtually everyone,” says Rene Baez, a political analyst at the Catholic University of Ecuador, “the popular repudiation shook the consciousness of the Supreme Electoral Tribunal.” Led by its president, Jorge Acosta, a member of a traditional right-wing party, the Tribunal declared that Correa’s original statute proposing to refound the country’s institutions would be the one voted up or down in April.

Outraged, 57 of the 100 congressional deputies voted to depose Acosta. The next day Acosta and the Tribunal responded by expelling them from Congress for their unconstitutional actions.

The people took to the streets in a jubilant mood. Backed by demonstrators, Correa ordered 1,500 policemen to surround the Congress to enforce the Tribunal’s decree, preventing any of the 57 deposed representatives from entering. The deputies dispersed to various hotels around the city. At the Hotel Quito, they attempted to convene a rump session, but it went nowhere, with demonstrators ridiculing them outside, showering them with chicharones (pieces of dried pork fat) as they entered and left.2 Since a quorum of 51 members is required in Congress to conduct business, the deposed members hoped to provoke an institutional crisis. But through a quirk of Ecuadoran law, each congressional deputy is elected along with a substitute legislator from the same party. The Correa government made it clear it would seat any of the substitutes if they accepted the Electoral Tribunal’s ruling. Twenty substitutes almost immediately broke ranks with their parties, and Congress had the quorum ! necessary to function.

Some of the deposed deputies went to Bogotá, Colombia, asking for political asylum; others went to Washington to lodge a protest with the Organization of the American States, claiming that the country’s constitution had been violated. But these appeals and protests achieved nothing. More than 70% of the country’s voting-age population went to the polls April 15, with four out of five voters casting their ballots in favor of the Constituent Assembly.

But how far will the Constituent Assembly go in “refounding the nation”? Will it be simply reformist or will it establish a framework for a new socialism of the 21st century? In Bolivia, the oligarchy and the right-wing political forces have mounted a virulent offensive both inside and outside of the halls of the assembly. They managed to tie up the assembly for months, mainly because a two-thirds majority is required for enacting a new constitution, and the MAS and its allies control only 60% of the vote. In Ecuador just a majority vote is required, but even more importantly, the right wing is now a less potent force.

“One thing is clear,” says Alejandro Moreano, a sociologist who is active in the social movements. “The back of the partidiocracia is broken. A new constellation of political and social forces will come to the fore with the Assembly, and they will predominate in the new governing institutions that are founded.” Correa has already announced that if the forces aligned with him take control of the Assembly, one of its first acts will be to abolish Congress and establish a constitutional framework for a new legislative chamber that will be more responsive to popular interests.

*

Refounding the Ecuadoran nation involves an international realignment that runs deeper than a mere rejection of neoliberal economics. The Correa government has moved assertively in its relations with the United States and international financial institutions during its early months in office. Minister of Foreign Relations María Fernanda Espinosa, in a meeting with the Foreign Press Association in Quito, declared that Ecuador intends to close the U.S. military base located at Manta, the largest of its kind on South America’s Pacific coast. “Ecuador is a sovereign nation,” she said. “We do not need any foreign troops in our country.” The treaty for the base expires in 2009 and will not be renewed.

Manta was ostensibly established in 1999 to help monitor narco-trafficking over the ocean and in the nearby Amazon basin. But it has become a major operations center for U.S. intelligence gathering and for helping coordinate counter-insurgency efforts against the leftist guerrillas in neighboring Colombia. The base’s runway, built at a cost of $80 million, can accommodate the largest, most sophisticated U.S. spy aircraft. Manta is also used as a port for U.S. naval operations in the Pacific Ocean.3 Upward of 475 U.S. military personnel are continually rotated between Manta and the U.S. Southern Command, based in Florida.

The Manta base has little relevance for narco-trafficking in Ecuador. Even though the coca plant grows well there, the country has never produced cocaine or other illicit drugs in significant quantities for the international market. However, after it adopted the U.S. dollar as its official currency in 2000, international drug traffickers, particularly from Colombia, began to use Ecuadoran-based banks, some of which are controlled by the likes of Citibank, to launder their ill-gotten gains.

Popular sentiment in Ecuador overwhelmingly supports closing the base. In the years since it was established, the civil war in Colombia has spilled over into Ecuador, bringing refugees, violence, and social conflict, particularly in the Amazon basin. The spraying of herbicides by planes originating in Colombia wipes out food crops and poisons Ecuadoran children and adults.

The Colombian and U.S. governments claim that the defoliants are used only on the Colombian side of the border and that there are no flights over Ecuador. Correa vehemently disagrees.

“We will not permit the continual violation of Ecuadoran air space by planes, that are not even Colombian, but from the United States,” he has said. “They enter our country and then fly back to Colombia.” Correa has ordered the Ecuadoran air force to intercept any planes that violate the country’s air space.4

At the same time, Ecuador is negotiating special bilateral trade and economic agreements with presidents Chávez and Morales. Venezuela has agreed to refine Ecuadoran oil and help fund social programs in Ecuador, while the Bolivian government has concluded an agreement to import foodstuffs from small- and medium-size producers in Ecuador. Correa has also signed several petroleum accords with Venezuela, of which the most important is a $4 billion project for a refinery backed by PetroEcuador, a state-owned company, and the Venezuelan state firm, PDVSA.

While there has been no direct confrontation with the United States over Ecuador’s assertion of its sovereignty, the Pentagon has manifested its displeasure. Every year since 1959, the U.S. Southern Command, together with the Pacific coast nations of South America, have undertaken joint naval exercises called Unitas. This year they were to be hosted in Ecuador, but the United States opted to conduct them in Colombia, its closest regional ally. Ecuador responded by announcing it would not participate in this year’s exercises, with Correa proclaiming, “It appears the Southern Command believes we are a colony of the United States, that our navy is just one more unit controlled by their country.”5

Correa is also standing up to Occidental Petroleum, a U.S.-based corporation whose Ecuadoran holdings were taken over by PetroEcuador last year for selling some of its holdings to a Canadian company, violating its contract with the Ecuadoran state. Significant deposits of petroleum were first discovered in eastern Ecuador in the 1960s, leading to a bonanza as transnational petroleum corporations rushed in to tap the fields during the 1970s. The corporations crudely exploited the tropical rain forest where indigenous peoples have lived for millennia, strewing it with contamination from thousands of seismic grids, oil wells, and open waste pits.6 Like the 16th-century conquistadors, the corporations tore the indigenous communities apart through displacement, disease, and efforts to buy off and divide villagers. The workers, many of whom were brought in from the highlands because most rainforest Indians refused to work, were harshly exploited.

With the takeover of Occidental’s holdings, PetroEcuador now controls more than half of the country’s petroleum exports, which themselves account for about 40% of Ecuador’s total exports and one third of government revenues. Meanwhile, Correa has denounced Occidental’s “lobbying” the Bush administration to regain its holdings. “We are not going to allow an arrogant, portentous transnational that doesn’t respect Ecuadoran laws to harm our country,” he said.


*

After the euphoria of Correa’s May Day speech, Ecuador’s popular forces encountered difficulties as they drew up lists of candidates for the Constituent Assembly. Correa and his close political allies sought to unify all the progressive forces under the banner of “Movimiento Pais,” the Country Movement, but it quickly met with opposition, mainly from left political parties and their allies in the social organizations, some of which questioned the government’s commitment to fundamental change.

“All the sectors of the left claim they want unity with us,” says César Rodríguez, an organizer of the Country Movement. “But they pull back when their leaders are not put at the head of the list of candidates for the Constituent Assembly.”

On the other hand, Luis Macas, the head of the Confederation of Indigenous Nationalities of Ecuador, declared that he “feels distant from the government” and demanded that it immediately nationalize all petroleum companies while fearing that it will renege on its promises of agrarian reform.7

Because of this discord, distinctive lists of progressive candidates were put forth in the balloting for the 30 national candidates for the assembly.8 At the provincial level, however, where 100 assembly members will be elected, local coalitions did come together in some cases to present more unified tickets. In spite of this factionalism, the Country Movement and the other left forces are expected to win a clear majority in the Assembly, given that the right-wing parties are also divided. Due to Correa’s popularity and the broad support he enjoys among the forajidos and most of the social movements that are generally disgusted with all the established political parties, the Movement candidates will likely predominate in the Assembly.

Correa has indicated that the Assembly may enshrine a ”socialism of the 21st century” in the new constitution, but it remains unclear exactly how this will be defined. The move to socialism in Ecuador will be an unfolding process, impossible to predict this early. But the transformation will definitely go beyond the reformist policies of the past, largely because a consensus exists among the candidates of the Country Movement and others on the left that neoliberal capitalism, particularly the ascendant role played by the banks and finance capital, must be taken on. Correa has already expelled Ecuador’s World Bank representative and has virtually terminated the country’s relations with the International Monetary Fund. Ecuador has also joined the Bank of the South, an alternative international lending institution proposed by Chávez, with Argentina, Bolivia, and other South American nations participating.

Correa has also repeatedly denounced the private banks in Ecuador for their exorbitant profit-taking and high interest rates. And in six months his government has taken stronger measures to rein in local and international finance capital than the Brazilian government of Luis Inacio Lula da Silva has in more than four years. The Assembly will no doubt empower the new government to exert tight state control over the country’s financial system and the role of foreign banks.

Many think the Constituent Assembly will assert greater control over Ecuador’s petroleum and natural resources for the benefit of the country’s 13 million people, almost half of whom live below the poverty line.

With some of the richest agricultural lands and maritime resources in all of South America, the country’s resource base has mainly benefited the corporate agribusiness interests that control the country’s diversified exports of bananas, shrimp, coffee, cocoa, cut flowers, and fish. As Pedro de la Cruz, the head of the National Federation of Peasants, Indians and Blacks, notes, “We need to reclaim the country’s lands for the people who work them and achieve food sovereignty, breaking the hold of the large landed and foreign interests who have kept us in misery for centuries.”

In early June, the local populace in the gold-mining southern highland province of Azuay, backed by environmental and human rights organizations, blockaded major highways, demanding the expropriation of the mining companies, many of which are controlled by transnational corporations that have polluted local rivers and aquifers. Former minister of energy and mining Alberto Acosta, one of Correa’s closest and most progressive advisers, who resigned his post to lead the Country Movement ticket for the Assembly, met with the protesters and told them the mining concessions couldn’t be annulled outright.

“This is a task of the Constituent Assembly,” he said. “It can establish a legal framework that will enable us to revise all the concessions.”9 Mobilizations continued in Azuay and in other provinces over natural resources as the popular organizations make it clear they are not content to rely simply on promises by the Correa government.

In Ecuador, as well as in much of Latin America, we are witnessing a revolution from below, a popular awakening that is challenging the traditional political parties and demanding a new system of governance that responds to the interests and needs of the popular classes. It is this rich mixture of forces at the grass roots that is opening up new vistas as the 21st century advances.

An “Open Letter to Ecuadoran Society,” signed by many of the individuals and organizations that are partisans of the Constituent Assembly, declares: “Never before has the theory that it is the people who make history been so certain. Today we are at the beginning of an era of popular power, of the Constituent Assembly’s power. The impulse flows out of the depths of the Ecuadoran people. It is potent and tumultuous.”10

###

*Roger Burbach is director of the Center for the Study of the Americas (CENSA), based in Berkeley, California. He has written widely on Latin America and U.S. policy and is currently working on a book titled The New Fire in the Americas. For more information on CENSA’s publications, projects, and activities, see http://globalalternatives.org/


1. For a more in depth account of the rise of the popular movements, see CENSA’s strategic study, “Ecuador: The Popular Rebellion Against the ‘Partidocracia’ and the Neo-Liberal State,” http://globalalternatives.org/strategicreports.

2. Roger Burbach, “Hard Correa,” The Guardian (London), March 23, 2007, http://commentisfree.guardian.co.uk/roger_burbach/2007/03/ecuador.html.

3. Manuel Salgado Tamayo, Drogas, terrorismo e insurgenica (Quito: Ediciones La Tierra, 2002), pp. 319–25.

4. Burbach, “The Pink Tide Flows,” The Guardian (London), March 16, 2007, http://commentisfree.guardian.co.uk/roger_burbach/2007/03/the_pink_tide_flows.html.

5. “La Cancillería alista una nota de protesta contra EE.UU,” El Comercio (Quito,) May 7, 2007.

6. Suzana Sawyer, Indigenous Politics, Multinational Oil, and Neoliberalism in Ecuador (Duke University Press, 2004), p. 13.

7. “La izquierda ecuatoriana, otra vez, irá dividida a las urnas,” El Comercio, June 3, 2007. See also “Luis Macas propone nacionalizar los hidrocarburos sin esperar a la asamblea,” El Comercio, June 4, 2007.

8. Of these 30 candidates, six will be elected internationally, given Ecuador’s large emigrant population, estimated at more than 1 million: two from Europe, and two each from North and South America.

9. “Gobierno dejará que la asamblea regule las concesiones mineras,” El Comercio, June 8, 2007. Acosta has written an excellent economic history of Ecuador, Breve historia economica del Ecuador (Quito: Corporacion Editora Nacional, 2001).

10. “Carta abierta a la sociedad ecuatoriana,” Quito, February 21, 2007, www.asambleaconstituyente.ec/asamblea/index.php?option=com_content&task=view&id=172&Itemid=13.

ECUADOR: Landslide triumph for the left

By Duroyan Fertl

6 October 2007


On September 30, Ecuador went to the polls for the fourth time in under a year and gave supporters of left-wing President Rafael Correa a massive majority in the new Constituent Assembly.

The assembly is a project of Correa — a 44-year-old left-wing economist and former finance minister — who came to power this year promising a “citizens’ revolution” to overcome the country’s massive poverty and to build “socialism of the 21st century”.

Final results won’t be known until late October, however preliminary results indicate that Correa’s party, Alianza Pais, won around 70% of the vote, giving it some 80 of the 130 assembly delegates. Correa can also expect support in the assembly from representatives of the Socialist Party of Ecuador — Broad Front, the Movement for Popular Democracy and indigenous party Pachakutik — Nuevo Pais.

The outcome was a huge blow to the right-wing opposition, whose traditional parties all scored pitiful votes. The Social Christian Party, the country’s largest party, scored less than 4%. The “anti-corruption” PRIAN of Alvaro Noboa — Correa’s opponent in the presidential election run-offs last year and Ecuador’s richest man — scored around 6%.

The Patriotic Society Party of ex-president Lucio Gutierrez (now led by his brother Gilmar) was the most successful opposition party, winning some 8% of the vote — less than 15 seats.

During general elections last year, Correa refused to stand candidates for the national congress, which is widely considered to be inept and corrupt. Instead he called for a constituent assembly with the power to dissolve congress and re-write the constitution.

Declaring victory in the assembly elections, Correa claimed that the “Ecuadorian people have won the mother of all battles”. He called for the assembly, which will convened on October 31 for six months, to dissolve the unpopular congress, which is controlled by opposition parties, and to call for fresh elections for both the presidency and a new national legislature once the new constitution is approved by two-thirds of voters by referendum.

The opposition, too weak and unpopular to resist the reforms in Ecuador, is calling on the Organization of American States and European Union to pressure Correa not to dissolve congress while it tries to find a way of bogging the debate down, like Bolivia’s right-wing has done with the similar process in that country.

In response to Correa’s call for a “socialism of the 21st century” the opposition has accused Correa of trying to impose a “Venezuelan model” on Ecuador, referring to the democratic project to overcome poverty being led by Venezuela’s socialist president, Hugo Chavez. Correa rejects the claim, saying on October 1 that “every country must decide according to its own realities”.

On September 26, Correa addressed the UN General Assembly, criticising the much-vaunted Millennium Development Goals (MDGs) as inadequate in aiming only for a minimum standard of subsistence. Instead, said Correa, the world should be focusing on achieving “social maximums” — not only providing a decent livelihood, but also time for contemplation, leisure and artistic creation.

Correa also criticised migration law, declaring that there are no “illegal” human beings and contrasting “the free flow of goods and capital searching for maximum profits” with “the punishment people receive for using their freedom to travel globally in search of a better life”. “This cannot be tolerated”, he said.

Correa also criticised the MDGs for defining development in terms of consumption and economic liberalisation. “We view development in a different way”, he said, “as a way to create welfare for all, peace and harmony with nature and fostering measures to prolong human lives”.

Correa’s government has also placed environmental issues centre stage with a unique initiative for the Ishipingo-Tambococha-Tiputini (ITT) reserve in the Ecuadorian Amazon, one of the most biologically diverse areas in the world.

The ITT sits atop oil reserves equivalent to 920 million barrels. In a world-first, the government has declared that it will leave the oil (an industry that accounts for half of Ecuador’s foreign exchange) and the fragile ecosystem untouched in return for contributions from the international community.

Ecuador is also pursuing foreign oil-giants Texaco and Encana for extensive pollution causing cancer and birth defects. On October 4, Correa signed a decree announcing that Ecudaor will increase its share of profits with foreign oil companies from 50% to 99% of windfall profits, with the revenue to be spent on social welfare and infrastructure.

Over the past decade, Ecuador has seen three out of eight presidents overthrown by mass protests, crippling foreign debt, environmental destruction, and a poverty rate of over 60%.

According to political analyst Felipe Burbano, the victory for Correa “reflects the collapse of the old structure of power in Ecuador”. “There is an old power that’s being knocked down”, said Correa. “If they’re scared, they should take a Valium.”

Correa: If oil companies complain, Ecuador takes 100% of windfall profits

via EFE, October 6, 2007

Ecuadorian President Rafael Correa warned Saturday that if oil companies complain about the new distribution of windfall oil profits, of which the state treasury is set to take 99 percent, he'll also take back the 1 percent he's allowing them as a "concession."

"If they get annoyed, I'll pass a new decree saying that 100 percent" of these surplus profits are for "the oil's rightful owners" who are the Ecuadorian people, he said, and recalled that according to the constitution, the nation's natural resources are the property of the state.

Correa said on his weekly program that next Monday the government will meet with representatives of foreign oil companies to discuss the new contracts.

"If they complain, I won't give them even that 1 percent because this is a concession we're giving them," he said with reference to the tiny percentage of windfall profits from the surge in world oil prices that he is granting foreign oil companies.

The head of state said that in the meeting that Energy and Mines Minister Galo Chiriboga has scheduled with representatives of the oil companies next Monday, he will insist that the oil belongs to Ecuadorians and that the ideal contract for their operations in Ecuador would be one for "services rendered."

For that reason, he said that on Monday they will have a "sample contract" ready for the meeting for the information of oil company representatives.

"No more plundering, no more surrender, no more waste," Correa said, adding that oil "now belongs to all Ecuadorians."

The head of state, a 44-year-old economist, again denied that his decision to grant only 1 percent of windfall profits to the foreign oil companies is a "confiscatory" measure, as the lawyers of those companies have claimed.

The measure is nothing like confiscation "because crude, according to the constitution, is the property of the Ecuadorian people," and what is shared out is the additional value that private companies obtain from the high value of crude on the international market.

The profitability of private companies, laid down in contracts established with the government, "is being respected," the head of state said.

Ecuador is the fifth largest producer of crude in South America, with some 500,000 barrels per day, which makes it the most important sector of its economy and the source of financing for approximately 35 percent of the government's budget.

Ecuador: doors open to change

People ratify their support for the changes announced by Correa

BY MARINA MENENDEZ—Special for Granma International—

ONCE again in Latin America, the people have spoken out for a constitutional revolution with an awareness that is the outcome, in the first instance, of the social depredation brought about by neoliberalism, and the undisputed sign of the failure of a model that, inevitably, is impelling people to change.

The change has been the course announced by Alianza País and President Rafael Correa in Ecuador, and the way is virtually clear after their landslide victory on September 30 in the third electoral vote in that country in less than 10 months.

In addition, the general lines of the new nation, symbolized in the initials of the governing Alianza Party PAIS; ‘Homeland Proud and Sovereign’ are now clearer, giving faith to the aspirations of independence, self-determination and social justice proposed in order to return their dignity to Ecuadorians.

If the majority that gave the presidential victory to Correa last January basically represented a punishment vote to the old party democracy and its corruption, the resounding ‘Yes’ that opened the doors to the Constituent Assembly in April, and now the widespread support for government candidates to draft the new constitution, validate popular backing for these changes, better outlined and clearer precisely during these few months of the Correa mandate. Without beating about the bush, the president has announced the construction of 21st century socialism, and Ecuadorians have voted for it.

Although the official results will be announced in a few weeks, surveys at the polls just before stations closed on September 30, threw up a majority for the Alianza País aspirants, who were given 65 to 80 of the 130 seats in the Assembly. That confirms a consensus in favor of the constitutional precepts essential to sustain the pillars of the new nation, without discounting the possibility of maneuvers by right-wing Assembly members or those self-titled ones of the center left, who represent the old politics that have to be abolished. Sociedad Patriótica, of former President Lucio Gutiérrez, will have taken 7.17% of the vote and the Renovación Institutional (PRIAN) Party of banana magnate Alvaro Noboa, 6.7%.

Thus, the next step could be defining the rules for the labors of the Constituent Assembly to approve each one of the modifications, while it is being reiterated that 50% plus one is sufficient to approve each change. The Assembly itself will decide that.

In any event, the definitive thrust is underway, as Correa acknowledged on commenting on the results of the polls: “The people have won in the mother of all battles.”

One sign of his confidence in the people, but also of his transparency, is that he submitted his own leadership to the Constituent Assembly which, in possession of all its faculties, has the power to revoke it. But its probable most immediate step will be to suspend a Congress whose validity alongside the Assembly is considered by many to be inadmissible from the constitutional point of view and whose prestige, moreover, is in tatters.

Representative of the traditional parties and embezzlers who converted Ecuadorian politics into a reflection of the unjust economic power to date, the Ecuadorian legislative not only boycotted the actions of other presidents who wanted to follow a good course but its efforts to immobilize everything turned the convening of the Assembly into a veritable Odyssey and even forced the people into the streets at the beginning of this year in order to win the popular referendum that endorsed the Constituent Assembly in April.

The Assembly’s principal directions are for the state to take back many of the prerogatives handed over to transnational capital with privatizations; the right to education and health; a breaking with the international financial agencies; and regional integration. The people have already approved them. Within one month, the Constituent Assembly will begin to lay the legitimate bases that will sustain that majority wish.

ANALYSIS-Ecuador oil grab tracks Chavez leftist moves

By Alonso Soto

QUITO, Oct 5 (Reuters) - Ecuador's president has copied his ally Venezuelan President Hugo Chavez in grabbing oil company windfall revenues in a sign he will use a strong mandate from an election win this week to drive hard-line leftist policies.

Late on Thursday, President Rafael Correa issued a shock decree ordering foreign oil companies to hand over almost all of their "extraordinary" income from record high prices.

"Unquestionably, this represents a major deterioration of the business and investment environment in the country and shows how aggressive the government is prepared to be in dealing with the private sector and in pursuing its nationalist inward-looking strategy," Alberto Ramos, a senior economist at Goldman Sachs, wrote in a research note from New York.

"The sectors that in our view are now most at risk are: wireless telephone companies, banks, media groups, and the mining sector," he said.

The oil move will cost companies about $830 million in lost revenue, according to the government, hitting the profits of some of Ecuador's largest foreign investors such as Brazil's state-owned Petrobras and Spain's Repsol.

The decree raised the government's share of revenues to 99 percent from 50 percent above a set benchmark price, which the oil minister said was around $23 per barrel.

Correa's measure comes against a backdrop of worldwide resource nationalism, where governments from Kazakhstan to Russia to Bolivia, want to squeeze oil companies' profits as crude prices have soared to above $80 a barrel.

The decree also reflects a sharp turn to the left away from free-market economics in some Latin American countries.

Chavez has nationalized swathes of his OPEC nation's economy this year, including multibillion-dollar oil projects, and Bolivian President Evo Morales last year shocked investors by suddenly taking over the natural gas industry.

Correa, a U.S. trained economist, has spooked Wall Street with threats he will halt some foreign debt payments and he has repeatedly warned he could redraw the contracts of private companies in South America's fifth-largest oil producer.

WALKING THE WALK

But with his decree, Correa moved from rhetoric to action in by far his toughest concrete measure against the private sector since he took office in January.

Correa, who says he is promoting 21st century socialism, announced the decision only hours after official results showed his party won in a landslide Sunday's vote for a new assembly that will rewrite the constitution.

It was his third big win at the ballot box in a year.

He vowed to use the mandate to disband a Congress, which has slowed his moves this year to increase the state's role in the economy.

Correa repeatedly denies opposition charges he is a Chavez wannabe seeking to consolidate power around the presidency.

But in both substance and style, Thursday's move was an echo of Chavez -- a man Correa praises as his "revolutionary brother."

After an overwhelming re-election, Chavez this year wrong-footed the opposition and private sector by announcing he would use his fresh mandate to deepen his drive toward a socialist state with a decree ordering oil nationalizations.

Correa is also rushing through the creation of a new assembly that he wants to emasculate traditional political elites -- a move similar to one the Venezuelan used soon after he first took power in 1999.

Correa may be on a winning streak for now. But political analysts and economists say pallid economic growth and slumping oil production could stir discontent in a country where popular revolts have ousted three presidents in the last decade.

And while Correa is emboldened by his political success, his country of only 12 million people may not have the economic weight to face down big foreign companies the way Venezuela with the Western hemisphere's largest oil reserves can.

"Everybody is looking at Chavez right now and certainly the high oil prices make current oil contracts look silly, but Ecuador doesn't have the market power to force a renegotiation," David Mares, a political science professor at the University of California in San Diego, said by telephone.

"Ecuador is not Venezuela," he said.

Correa: Ecuador Oil Profits for People

Quito October 5 (Prensa Latina) Ecuadorian President Rafael Correa's decision to change the distribution of additional income obtained from the high price of oil on the world market makes Ecuadorians smile Friday.

According to a decree signed by Correa, 99 percent of extra oil income will go the State, and the remaining 1 percent will be for foreign private firms.

Local press highlighted Correa's decision fully changes the rules of the game in the hydrocarbon sector, in defense of the natural heritage to guarantee sustainable economic growth.

A presidential note revealed the ruling was adopted after considering that the current fifty-fifty allocation of additional oil income is insufficient..

This decision has ignited rejection among private companies, but joy among the population, which demands higher participation of the State in the hydrocarbon sector and a policy that truly benefits the people.

Repsol plays down effect of Ecuador tax changes

By Joe Ortiz

MADRID, Oct 5 (Reuters) - Spanish oil company Repsol YPF on Friday played down the possible effect on its revenue of news that Ecuador will take a larger share of revenues generated by oil companies due to high market prices.

Ecuador said it will take 99 percent instead of 50 percent of "extraordinary revenues" produced by companies above a set, contractual benchmark price.

"The effect on Repsol will be relatively minor," a spokesman said, adding that Repsol's production in Ecuador represents about 1 percent of its total output which was 1.08 million barrels of oil equivalent per day in the first half of 2007.

The government expects to receive around $830 million per year from the hike, which will affect the country's largest investors, Brazil's Petrobras and Repsol, as well as France's Perenco, China's Andes Petroleum and U.S.-owned City Oriente.

On Friday, Eucudorean oil minister Galo Chiriboga said he wants to negotiate with oil companies to ensure they remain in the country under terms favorable to the government.

Scenes from the class struggle in Ecuador

By Jon Lange

The Brandeis Hoot, 5 October 2007

Most of what we hear about the left in Latin America takes one of two forms: either American leaders denouncing Hugo Chavez, Venezuela’s socialist president whose Bolivarian Revolution has been the centerpiece of Latin America’s recent leftist renaissance, or a general denunciation of Fidel Castro’s seemingly incomprehensible will to live. This can distract from the fact that all over Latin America, from Chiapas to Bolivia, people are struggling to build new, more equitable societies in which they can recover their independence, the control of their resources, and, most of all, their dignity. One of these revolutions is happening in Ecuador and has recently achieved two important victories, neither of which are well known to readers in the US.

The first, perhaps more superficial, of these is the election of a new constituent assembly to rewrite the Ecuadorian constitution. Historically and with a few notable exceptions, Ecuador’s government has been a corrupt and ineffective organ which showed little respect for human rights, especially those of Ecuador’s poor indigenous population. Since the discovery of oil in the 1970s, the government allowed Ecuador’s resources to enrich a few local elites and Western corporations. Rafael Correa, Ecuador’s leftist president, is trying to change this and to reinvigorate the country’s political culture in ways which will allow the indigenous, the peasants, and the working class to share in the nation’s wealth and power. Whether or not he will succeed is unclear, but Correa’s actions so far have shown him to be a sincere and effective leader. He has challenged Ecuador’s neo-colonial status and nationalized Occidental Petroleum’s holdings in the country.

In one of its most important acts, Correa’s government suspended Ascendant Cooper’s controversial Junin project last week. The Canadian mining company was developing an open pit copper mine in Ecuador’s tropical Andes, one of the most ecologically diverse areas of the world. The mines would not only force residents of Ecuador Intag region to leave their homes, but also cause colossal deforestation, exacerbate climate change, poison water supplies, and threaten rare and endangered species. The project is detested by the residents of the region. In keeping with their commitment to social responsibility, Ascendant responded to this popular aversion by hiring right wing paramilitaries to attack grassroots activists who are working to prevent the creation of these dangerous mines. With the closing of the Junin project, Ascendant’s days exploiting the people, the environment, and the resources of Ecuador may well be numbered.

But throwing Ascendant out of Ecuador is no small matter. Carlos Zorrilla, an anti-mining activist whose home was stormed by 20 Ascendant paramilitaries, highlights the risks involved, “it's a fine political balancing act it [is] an attempt to close down Ascendant's operations in Intag while at the same time trying hard not provoke the powers that be in the international financing institutional world.”

And there’s the rub, getting rid of a violent and exploitative corporation may seem like common sense, but there are a variety financial structures ready to retaliate, not to mention powerful Western governments who don’t like seeing the people of Latin America rise up against their economic interests. But in Ecuador the vast majority refuses to be cowed by Western imperialism any longer. In our county where the gap between rich and poor widens every year and cities are decimated by ecological catastrophe we have much to learn from a small, poor country which is trying to rebuild its society along the lines of social equality and environmental sustainability. That is why these scenes from the class struggle in Ecuador cannot be ignored.

Friday October 5, 2007

Ecuador issues foreign oil decree

By Daniel Schweimler
South America correspondent, BBC News, 5 October, 2007

Ecuadorean President Rafael Correa has signed a decree giving the state a greater share of profits from foreign oil companies working in his country.

He said the 50% of windfall oil profits stipulated in a law passed last year was not enough, and the state should now receive 99%.

It is one of the radical reforms promised by Mr Correa to spread Ecuador's wealth to the country's poor.

But the size and timing of this latest move took many by surprise.

It will worry foreign investors and oil companies which operate in Ecuador.

Windfall profits are made whenever prices on international oil markets exceed prices established in existing contracts.

Venezuelan model?

The foreign oil companies complained in 2006 when it was agreed that all such profits should be split 50-50 with the state.

But now Mr Correa says the state is not getting enough and will now take 99%.

His decree said revenues should be distributed in a more just way.

Critics have accused the Ecuadorean government of copying radical measures introduced in Venezuela by President Hugo Chavez.

But Ecuador's Oil Minister, Galo Chiriboga, said the government was not nationalising anything.

Among the foreign companies operating in Ecuador are Brazil's Petrobras, Perenco of France and the Spanish-Argentine company Repsol YPF.

They help to produce more than 500,000 barrels of crude oil a day - a major contribution to Ecuador's economy.

Ecuador's Ongoing Confrontation with the Forces of Neo-Liberalism

by Shawn Hattingh
Monthly Review, 4 October, 2007

On Sunday, the 30th of September, yet another blow was struck against the advocates and beneficiaries of neo-liberalism in Ecuador and Latin America when Rafael Correa's coalition won the majority of seats in the Constituent Assembly. With this, Correa and his allies have secured the driving seat in the process of rewriting Ecuador's constitution, which is set to begin in November. Needless to say, Correa and his allies' victory has sent shudders through the US administration and its corporate backers. The reason for this is that Correa has vowed to break the back of neo-liberalism in Ecuador through embarking on a path to create "socialism in the twenty-first century." Rewriting Ecuador's constitution is a major stepping stone towards this goal.

The events that have taken place over the last year in Ecuador have demonstrated that Correa's promises, and talk of socialism in the twenty-first century, are not just hollow words. Indeed, if the past actions of Correa's government are anything to go by, Ecuador's new constitution will include a number of very radical clauses. Under Correa's leadership, Ecuador has taken decisive steps to regain control over its natural resources including its oil. Earlier this year, Ecuador revoked a long-standing contract that it had with the US oil giant Occidental Petroleum. In doing so, the Ecuadorian state took direct control over Occidental Petroleum's assets in the country. With this, the Ecuadorian state gained direct control over more than half the country's oil production. Added to this, Ecuador has also annulled the mining rights of the Canadian company, Ascendant, for violating the country's mining laws. At an international level, Ecuador has expelled the World Bank's representatives from its soil. It is also one of the driving forces behind the creation of the Bank of the South, which is aimed at breaking the neo-liberal hold that the IMF and World Bank had over Latin America. Indeed, Ecuador along with Venezuela and Bolivia has formed an axis of countries that are taking steps to break with neo-liberalism and US domination.

With their latest victory around the Constituent Assembly, Correa and his allies seem set to include some radical elements in Ecuador's new constitution. Correa and his allies have already indicated that the new constitution would be aimed at dismantling neo-liberalism in Ecuador. They aim to create a new constitution that would enable Ecuador to change its economy in order to foster greater equality and to meet people's needs rather than make profits. To do so, they have proposed that the new constitution permit the state to create new social and economic institutions to improve the lives of the people. In addition, Correa and his allies will be pushing for clauses that promote participatory democracy.

A number of other concrete proposals that may become part of the new constitution have already been made public. It has already been reported that Correa and his allies have proposed that the right to work be included in the new constitution. There have also been murmurings that progressives within the government are pushing for a clause to be included in the new constitution that will enable Ecuador to review the international debts, which were incurred by past Ecuadorian governments, to determine whether they were illegitimate. Such a clause would set the basis for Ecuador to refuse to pay past debts that were, and are, odious. Another possible clause in the new constitution could enable the state to expropriate the mining interests of transnational companies in Ecuador. In fact, a number of social movements recently blockaded highways throughout Ecuador as part of a campaign calling on the state to take direct control of transnational companies' mining interests. This campaign is set to intensify in the run up to the Constituent Assembly. On the 22 of October, a day of action will take place to call on the Constituent Assembly to nationalize foreign-owned mining interests. Through this, social movements may actually get their wish.

It is important that the social movements in Ecuador continue to mobilize around the writing of the new constitution. This is for two reasons. If they are mobilized and their actions are effective, it is more likely that radical clauses, aimed at dismantling neo-liberalism, will be included in the new constitution. Secondly, the new constitution, once it has been drafted, has to be accepted by a two-thirds majority in a referendum before it can come into effect. If the social movements are mobilized and active, the chances of achieving the two-thirds majority are more likely. Even before the referendum, however, what is already clear is that the US and their transnational corporate allies are no longer going to have an easy ride in Ecuador. More and more people are mobilizing against neo-liberalism, and their demands are becoming more and more radical. Another world not only seems possible, it now looks like it might even be around the corner in Ecuador.

---

Shawn Hattingh is a research and education officer at the International Labour Research and Information Group (ILRIG) in Cape Town

Facing dissolution, Ecuador congress seeks help

By Alonso Soto

QUITO, Oct 4 (Reuters) - Ecuadorean lawmakers on Thursday appealed to the international community for help blocking what they called an unconstitutional plan by President Rafael Correa to disband congress through his majority in a new assembly.

Correa's party scored a crushing win in Sunday's vote for a 130-member assembly the leftist president says should dissolve an unpopular congress, call for early elections and curtail the powers of political elites by rewriting the constitution.

Analysts said the move illustrated how a fragmented opposition with few assembly seats will struggle to block Correa pushing through proposals in the poor Andean country, where instability has ousted three presidents in a decade.

"Our objective here is to prevent a violation of Ecuador's constitution," said Congress President Jorge Cevallos after lawmakers met behind closed doors to discuss strategy.

He said lawmakers would seek support from Washington-based Organization of American States and the European Union.

Correa has the opposition fretting over his proposed anti-establishment reforms that have made him popular among Ecuadoreans who blame traditional political parties for widespread poverty and political instability.

The former economy minister and ally of Venezuelan President Hugo Chavez has also worried Wall Street with his pledges to tighten state control over the economy.

"The opposition is agonizing," said Patricia de la Torre, a political analyst at Quito's Catholic University. "They are so weak now that its very unlikely they can stand up to Correa and the popular support he has amassed."

Lawmakers insist congress cannot be dissolved because any constitutional reforms approved by the new assembly during a six-month debate must be ratified in a referendum.

Opposition leader and toppled president Lucio Gutierrez, who accuses Correa of seeking dictatorial powers through the assembly, acknowledged his party can do little even if it has the second largest number of assembly posts.

Official tallies are still to be completed. But Correa's Alianza Pais party says it may have secured as many as 80 seats -- far more than the 66 controlling majority -- whereas Gutierrez said his PSP party had around 17 assembly posts.

"There is not much we can do, even if we scream, stomp our feet or stand on our heads, they only have to raise their hands to get the 70 votes needed to approve constitutional changes," Gutierrez told Reuters. "We will just try as much as we can."

Ecuador's Correa outflanks foes in popular assembly

By Patrick Markey

QUITO, Oct 4 (Reuters) - Ecuadorean President Rafael Correa talks revolution and berates capitalists, and his big election victory this week has foes fretting about how far he will follow the socialist ways of his ally Venezuela's Hugo Chavez.

Correa's party won by a wide majority in Sunday's election for an assembly he says must dissolve Congress, call early elections and rewrite the constitution to curtail the power of the unstable Andean country's political old guard.

At Chavez's urging, Venezuela held a similar assembly in 1999 to draft a constitution that outflanked Congress, bolstered presidential powers, allowed his early re-election and set Venezuela on its current socialist track.

But while Correa has also drawn on his mandate by attacking elites, his mettle has yet to be tested by reactions to his proposed reforms and his popularity could dwindle if he does not tackle Ecuador's pallid economy, analysts said.

"The people who went along with Correa, went along with him because it was a referendum on the political class. That is the easy one, it is much harder when you get to specific policies," said Michael Shifter at Inter-American Dialogue think tank.

The Andean region is a caldron of left-wing sentiment with Chavez, Bolivia's Evo Morales and now Correa using popular mandates to challenge career politicians, shore up state control of energy resources and roll back free-market policies.

Correa's proposed dissolution of the Congress already has opponents playing on fears of the worst, but they have little room to challenge his assembly majority at the moment.

"It seems the president has the same policies as President Chavez," toppled president and opposition leader Lucio Gutierrez told Reuters. "This is a classic totalitarian government, one with an authoritarian tint."

NO CHAVEZ COPY-CAT

Correa often says he wants to usher in a "21st Century" Socialism, but brushes off charges that he wants to follow the Venezuelan in nationalizing energy resources and taking a more radical anti-free market stance.

The U.S.-trained economist has so far proven less hard-line in his financial policies than some have feared. But with only eight months in government, Correa has more control than Chavez had when he came to office in Venezuela, a major oil producer.

"He is certainly on the road to victory the way Hugo was after his initial shock win," said Riordan Roett at Johns Hopkins University. "The opposition is totally demoralized."

Then a young, ex-soldier fresh from imprisonment for leading a bloody coup, Chavez made a popular assembly the centerpiece of his presidential campaign against career lawmakers he portrayed as a "political gangrene" -- with himself as the cure.

He later won 90 percent of the assembly seats. The 1999 referendum on reforms allowed him to shore up his authority by extending the presidential mandate from five years to six years and allowing his immediate reelection.

Still, his foes held enough sway in the military and the state oil company to launch a coup and an oil strike before Chavez consolidated control in 2004 with a referendum win.

Bolstered by high world oil prices, Chavez has since moved to take over foreign oil assets and kept up his popularity with huge state spending on social programs for the poor majority.

For Correa, negotiating Ecuador's highly fragmented political scene means keeping his own Alianza Pais alliance intact in the assembly, which will start debating the new constitution this year. But lacking Venezuela's huge oil resources, his main challenge is managing the fragile economy and flagging petroleum output.

"Correa faces much heavier economic restrictions," said Patrick Esteruelas at Eurasia Group. "He can only spend so much more without running into financing constraints."