Ecuador: Correa wins second presidential term

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Re-elected as President for a further four years on 26 April, Rafael Correa obtained 51% of the vote and a first-round victory, the first in 30 years. Following his first triumph in November 2006, Correa introduced an unprecedented economic and social programme – the Citizens’ Revolution – to start to extract the mass of the population from the miserable conditions imposed by previous pro-imperialist governments. A month after his 2006 landslide victory he said he wouldn’t ‘hesitate’ to default on the country’s debt in order to maintain government spending on the poor.

In less than two and a half years, Correa has achieved five election victories including one which approved the new constitution with 64% of the vote in September 2008. This gave the government much greater power to control key resources. Correa’s priorities are free health and public education services, and investments in social services greater than the service costs of foreign debt which amounted to 40% of the national budget in 2004-2005 under the previous government. 25% of the population consumes only 4% of GDP while the wealthiest 20% take 60% of GDP; 70% live in poverty. Unemployment and underemployment affect 50% of the people. In 2007, as Correa took power, 60% of homes had no drains, and 45% no drinking water.

The challenge is to throw off the country’s dependence on the US and build a country for the mass of its people. Ecuador has been economically trapped since 2000 by the use of the US dollar as its national currency. In just two years Correa has expropriated goods wrongly seized by banks, forced transnational oil companies to change their contracts to benefit the people, suspended payment of foreign debts that were deemed illegitimate, and stripped the Central Bank of its independence. In May, Ecuador agreed to pay just 35 cents on the dollar to holders of $3.2 billion of defaulted bonds, giving creditors a second chance to sell back their securities. Correa is also forcing the US to leave its military base at Manta when its 10 year lease ends in November this year, and has set up an enquiry into allegations of US abuse of human rights in its operations in the country.

In October 2007 Ecuador increased a 50% windfall tax on oil to 99% to obtain a greater share of crude oil revenue. The government said that the French oil company Perenco, which produces 25,000 barrels per day, owed $338m in back taxes, plus interest. In May 2009, in defiance of the International Centre for the Settlement of Investment Disputes, Petroecuador auctioned 1.4 million barrels of oil seized from Perenco. The windfall tax has now been reduced to 70%.

The financial crisis of 1998-99, when GDP collapsed by 5%, sparked a mass emigration. Between then and 2007, over one million Ecuadorians sailed for Guatemala, from where they were smuggled across the Mexican border and into the US. Some headed for Europe; there are 90,000 in Britain. This from a country of 13.4 million. Such movement reflected an economic disaster; it has been compounded in recent years by the arrival of 250,000 destitute refugees fleeing Colombian state terror.

The current global economic crisis now makes Correa’s task more urgent as migrant remittances from the US and Europe fell by 27% from $759m in the first quarter of 2008 to $555m in the first quarter of 2009. Correa is now pressing ahead with his alliances within the Union of South American Nations. This May Venezuela and Ecuador signed new agreements to search for oil, and to create a system of compensation between their countries in the form of a system of trade integration. They also agreed to deepen agricultural cooperation in order to guarantee food sovereignty and security to their peoples. The two presidents discussed the creation of a Latin American Human Rights and Freedom of Expression Commission in the South American Union of Nations (UNASUR) to overcome what Chavez called the ‘manipulation by United States imperialism’ of existing institutions. Both leaders know who is obstructing progress.           

Alvaro Michaels

FRFI 209 June / July 2009