Latin American Program in the News: Correa Poised for Re-Election in Ecuador on Oil-Backed Spending

Bloomberg

Mar 04, 2013
By

Rafael Correa, Ecuador’s first elected president since 1996 to finish his term, is poised to win re-election Feb. 17 as voters reward him for using the OPEC nation’s oil wealth to boost spending on social welfare.

The former economics professor was running ahead of the opposition with 62 percent of those surveyed saying they planned to re-elect him, according to a Feb. 5 poll, after pledging to“radicalize” his “citizens’ revolution” with free education and health care.

As the head of a nation where about one in three of its 15.4 million citizens live in poverty, Correa defaulted on $3.2 billion of bonds in 2008 and pushed through laws nationalizing the country’s oil reserves during his first two terms in office. While the moves provided short-term gains, the 49-year-old Correa, an ally of Venezuela’s Hugo Chavez, is now paying the cost with stagnant crude output and declines in private investment needed to boost slumping growth.

Correa’s “weakness will be trying to keep promises in a time of less funding,” former Finance Minister Fausto Ortiz, who worked with Correa in 2007-2008, said in a phone interview from Quito. Whoever wins “will need to approach the private sector and foreign investors to be able to substitute financing that’s no longer available from oil.”

“What’s at stake is whether this kind of personalistic, populist leadership will dominate Ecuadorean politics for the foreseeable future,” Cynthia Arnson, director of the Latin American program at the Woodrow Wilson International Center for Scholars, said in a telephone interview.

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