Ecuador's Rafael Correa
Tightening his grip



Apr 19th 2007 | BAÑOS AND QUITO
From The Economist print editionAfter
Presidents Chávez in Venezuela and Morales in Bolivia, another
president in the Andes seeks sweeping powers to remake his country's
politics

Reuters



THE whole town, it seems, has turned out to watch Rafael Correa and
his “itinerant cabinet” follow a donkey around. The donkey, named
Alonso and festooned with slogans, leads a long motorcade in a U-shaped
path around the centre of Baños, an Ecuadorian mountain resort of some
20,000 people. Three months into his term as Ecuador's president, Mr
Correa has taken to travelling around the country, every three weeks or
so, dragging a good portion of his cabinet secretaries along with him,
in an attempt to bring government closer to the people.

This is just one of the populist measures the former finance
minister has adopted since coming to power. Cash transfers to 1.3m of
the country's poorest people (out of a total population of 13.4m) have
been doubled to $30 a month. A further $100m has been allotted to
housing subsidies for the poor. Grants of $350, which are described by
the government as “microcredit”, are dished out with abandon. Some $3
billion a year goes on public subsidies for domestic gas, petrol and
electricity. Education and health spending have been increased
substantially. And, in a move of dubious legality, more than half of
Congress has been sacked by the Supreme Electoral Tribunal (TSE), a body that supports Mr Correa.










The
president was visiting Baños a few days before April 15th's referendum
on his plan to set up a “constituent assembly” to write a new
constitution. He did not give any speeches to the waiting crowds. He
didn't need to. Here, as in the rest of the country, the people already
adore their young and handsome president. The day before the vote, the
news came out that his father had spent three years in prison for
drug-smuggling when Mr Correa was a child. But this appears to have had
little effect on the referendum, which required a majority of the vote
cast for the measure to pass, but attracted a yes vote of over 80%.
Only 12% voted against, while a further 6% submitted null or blank
ballots (compared with the usual 20-30%).

Mr Correa has clearly struck a chord among the masses in Ecuador.
When he says that “happiness, hope and faith” are returning to the
country, he is not wholly wrong. But is that hope well-placed? It is
hard to find an independent political observer who thinks so. Simón
Pachano, a professor at Flacso University in Quito, agrees that changes
are necessary but that a constituent assembly is the worst possible way
to achieve it. The 134 members of the new assembly, to be chosen in a
nationwide vote, are under orders to transform the state's
“institutional framework” and write a new constitution within 180 days
(extendable by a further 60 days). This will then be put to another
nationwide referendum.

The assembly has been endowed with “full powers”, suggesting that it
can do pretty much what it likes. Fernando Santos, a former cabinet
minister, notes wryly that it could get rid of Congress and crown the
president “Rafael the First of the House of Correa”. As the normal
checks and balances, such as they are, will not apply to the new
assembly, much will depend on its composition. Mr Correa's supporters
cannot be guaranteed a majority: several former presidents, such as
Lucio Guttiérez and Osvaldo Hurtado, are already positioning their
factions. But if Mr Correa does gain sway over the new assembly, he
will have complete control over Ecuador.

Foreign investors and the moneyed classes are worried. Capital
flight has increased substantially in the last few months. Last year's
expropriation of Occidental Petroleum, previously Ecuador's largest
foreign investor, has added to their concerns. This was carried out by
the former president, but Mr Correa defends the action. Occidental has
appealed to the International Centre for the Settlement of Investment
Disputes, an international arbitration body. It is expected to rule in
favour of the American oil giant early next month, and to order Ecuador
to pay damages of $1 billion-$2 billion. That is a large chunk for a
small country whose tax revenues totalled just $4.5 billion last year,
with a similar amount coming from oil. Mr Correa might refuse to pay,
but this could provoke sanctions.

On arriving in office, Mr Correa railed against paying Ecuador's
foreign debt, driving down the market for sovereign bonds. But in
February he made a sudden payment of $135m, leading to suspicions that
speculators linked to Venezuela had benefited from the government's
indecision. Despite his friendship with Venezuela's president, Hugo
Chávez, however, Mr Correa has not hesitated to make moves that could
discomfort his oil-laden neighbour. Earlier this month, he signed a
deal with Brazil to co-operate in the production of ethanol. Meanwhile,
Petroecuador, the Ecuadorian state oil company, has signed a memorandum
of understanding with Petrobras, Brazil's state oil company, to exploit
ITT, an oilfield representing around a quarter of Ecuador's total oil reserves.

But more than his public spending and other populist policies, it is
the growing strength of the president's grip on power that is giving
cause for alarm. Last month's ousting, with his blessing, of 57
opposition members of Congress, for seeking to sack the TSE's
president in an attempt to block the referendum, is particularly
ominous. Though the congressmen were replaced by alternates they
themselves had picked, the new deputies have shown themselves loyal to
Mr Correa rather than to their own political parties.

This can be explained in part by the president's undeniable
charisma. In the town of Pingue, shortly before reaching Baños, Mr
Correa attended a gathering of refugees made homeless by the eruption
of the Tungurahua volcano a year ago. A big man with the build of a
rugby player, Mr Correa sat on the ground to watch schoolchildren
perform a play. He then picked up a little girl in his arms and danced
with her. She looked delighted. The next day, in Baños, he announced,
to rapturous applause, the end of the country's “long dark night of
neoliberalism”. All very thrilling—depending on what arrives with the
dawn.



Apr 19th 2007 | BAÑOS AND QUITO
From The Economist print editionAfter
Presidents Chávez in Venezuela and Morales in Bolivia, another
president in the Andes seeks sweeping powers to remake his country's
politics

Reuters



THE whole town, it seems, has turned out to watch Rafael Correa and
his “itinerant cabinet” follow a donkey around. The donkey, named
Alonso and festooned with slogans, leads a long motorcade in a U-shaped
path around the centre of Baños, an Ecuadorian mountain resort of some
20,000 people. Three months into his term as Ecuador's president, Mr
Correa has taken to travelling around the country, every three weeks or
so, dragging a good portion of his cabinet secretaries along with him,
in an attempt to bring government closer to the people.

This is just one of the populist measures the former finance
minister has adopted since coming to power. Cash transfers to 1.3m of
the country's poorest people (out of a total population of 13.4m) have
been doubled to $30 a month. A further $100m has been allotted to
housing subsidies for the poor. Grants of $350, which are described by
the government as “microcredit”, are dished out with abandon. Some $3
billion a year goes on public subsidies for domestic gas, petrol and
electricity. Education and health spending have been increased
substantially. And, in a move of dubious legality, more than half of
Congress has been sacked by the Supreme Electoral Tribunal (TSE), a body that supports Mr Correa.










The
president was visiting Baños a few days before April 15th's referendum
on his plan to set up a “constituent assembly” to write a new
constitution. He did not give any speeches to the waiting crowds. He
didn't need to. Here, as in the rest of the country, the people already
adore their young and handsome president. The day before the vote, the
news came out that his father had spent three years in prison for
drug-smuggling when Mr Correa was a child. But this appears to have had
little effect on the referendum, which required a majority of the vote
cast for the measure to pass, but attracted a yes vote of over 80%.
Only 12% voted against, while a further 6% submitted null or blank
ballots (compared with the usual 20-30%).

Mr Correa has clearly struck a chord among the masses in Ecuador.
When he says that “happiness, hope and faith” are returning to the
country, he is not wholly wrong. But is that hope well-placed? It is
hard to find an independent political observer who thinks so. Simón
Pachano, a professor at Flacso University in Quito, agrees that changes
are necessary but that a constituent assembly is the worst possible way
to achieve it. The 134 members of the new assembly, to be chosen in a
nationwide vote, are under orders to transform the state's
“institutional framework” and write a new constitution within 180 days
(extendable by a further 60 days). This will then be put to another
nationwide referendum.

The assembly has been endowed with “full powers”, suggesting that it
can do pretty much what it likes. Fernando Santos, a former cabinet
minister, notes wryly that it could get rid of Congress and crown the
president “Rafael the First of the House of Correa”. As the normal
checks and balances, such as they are, will not apply to the new
assembly, much will depend on its composition. Mr Correa's supporters
cannot be guaranteed a majority: several former presidents, such as
Lucio Guttiérez and Osvaldo Hurtado, are already positioning their
factions. But if Mr Correa does gain sway over the new assembly, he
will have complete control over Ecuador.

Foreign investors and the moneyed classes are worried. Capital
flight has increased substantially in the last few months. Last year's
expropriation of Occidental Petroleum, previously Ecuador's largest
foreign investor, has added to their concerns. This was carried out by
the former president, but Mr Correa defends the action. Occidental has
appealed to the International Centre for the Settlement of Investment
Disputes, an international arbitration body. It is expected to rule in
favour of the American oil giant early next month, and to order Ecuador
to pay damages of $1 billion-$2 billion. That is a large chunk for a
small country whose tax revenues totalled just $4.5 billion last year,
with a similar amount coming from oil. Mr Correa might refuse to pay,
but this could provoke sanctions.

On arriving in office, Mr Correa railed against paying Ecuador's
foreign debt, driving down the market for sovereign bonds. But in
February he made a sudden payment of $135m, leading to suspicions that
speculators linked to Venezuela had benefited from the government's
indecision. Despite his friendship with Venezuela's president, Hugo
Chávez, however, Mr Correa has not hesitated to make moves that could
discomfort his oil-laden neighbour. Earlier this month, he signed a
deal with Brazil to co-operate in the production of ethanol. Meanwhile,
Petroecuador, the Ecuadorian state oil company, has signed a memorandum
of understanding with Petrobras, Brazil's state oil company, to exploit
ITT, an oilfield representing around a quarter of Ecuador's total oil reserves.

But more than his public spending and other populist policies, it is
the growing strength of the president's grip on power that is giving
cause for alarm. Last month's ousting, with his blessing, of 57
opposition members of Congress, for seeking to sack the TSE's
president in an attempt to block the referendum, is particularly
ominous. Though the congressmen were replaced by alternates they
themselves had picked, the new deputies have shown themselves loyal to
Mr Correa rather than to their own political parties.

This can be explained in part by the president's undeniable
charisma. In the town of Pingue, shortly before reaching Baños, Mr
Correa attended a gathering of refugees made homeless by the eruption
of the Tungurahua volcano a year ago. A big man with the build of a
rugby player, Mr Correa sat on the ground to watch schoolchildren
perform a play. He then picked up a little girl in his arms and danced
with her. She looked delighted. The next day, in Baños, he announced,
to rapturous applause, the end of the country's “long dark night of
neoliberalism”. All very thrilling—depending on what arrives with the
dawn.



Source: The Economist