Ecuador’s Correa until 2017?

As many polls had predicted, President Rafael Correa was re-elected for a second term in the Ecuadorian general elections, which were held last Sunday, April 26 2009. He was running against banana magnate, Alvaro Noboa and former president Lucio Gutierrez. Ecuador has had a turbulent political past, having elected ten Presidents since 1997, three of which were ousted by revolt. “Onward with the socialist revolution!” Correa told his supporters after exit polls showed he’d won by a wide margin.

Ecuador is of strategic importance to the United States since it is home to the only U.S. air base in South America, called Manta. In addition, Ecuador is the smallest member of OPEC. The country is the largest banana exporter in the world and is the biggest economy outside of the United States that uses the dollar as its currency.

Politically, things seem to be settling in for the left leaning, Correa who appears to have played his cards well, so far. Although he had little support when he was first elected, he quickly put together a plan to rewrite the constitution. Correa won the Referendum on September 2008, which allowed him to seek re-election this year and again in four years. The Constitution also gave the state greater control over the economy. Since coming to office, Correa has tripled government spending, focusing on the poor classes, his main support base. The administration has built schools, invested in health care for the lower classes, increased pensions, hiked the minimum wage and doubled a monthly payment for single mothers. These measures have won him the support of many poor and marginalized individuals.

Theoretically, Sunday’s victory has given Correa the chance to be president until 2017 but the opposition fears that he could extend his time in office and become president for life, just like his close ally Hugo Chavez in Venezuela. Even though these worries were modulated by the inclusion of a clause that allows Congress to censure and impeach the president, the new constitution gives more power to Correa while weakening Congress at the same time, thus making it harder for Ecuadorians to oust him.

Since becoming President in January 2007, Rafael Correa, who holds a Ph.D. in economics from the University of Illinois Urbana-Champaign, has remained popular because he has relied on high commodity prices to finance his populist measures. However, with falling oil prices, less money coming in from remittances and declining bananas prices, it remains to be seen whether he will be able to keep the people’s support.

Correa’s Policies

Correa appears to be following in Hugo Chavez’s footsteps and has publicly declared that he wants to carry out ‘socialist revolution’ in his country. Correa is considered to be a member of a ‘leftist coalition’ led by Venezuelan President, Hugo Chávez, which also includes, Daniel Ortega of Nicaragua, Fidel and Raul Castro of Cuba, Evo Morales of Bolivia, and newly elected Mauricio Funes of El Salvador.

Many critics consider Correa’s position as unique among the left-leaning South American nations.  The new constitution has many socialist principals such as increased governmental control over monetary policy, over oil policy, (significant, since 45% of Ecuador’s annual budget comes from oil revenues), as well as reduced power of the legislative and judicial branches. However, contrary to the nationalization strategies being pursued by Chávez and Evo Morales, Correa has not moved to take over the telecommunications or electricity industry. Despite having attempted to renegotiate mining contracts, the mining industry has not been nationalized. It is true that there are clauses to tighten control of vital industries to reduce monopolies and to declare some foreign loans illegitimate as well as to allow the government to designate idle farmland for expropriation and redistribution. So far none of these measures have been enacted yet. Now that Correa has won re-election, he may well decide to take action and speed up his socialist agenda, as he has been promising all along.

Many analysts in fact, see some differences between Correa and Hugo Chavez especially when in June 2008, Ecuador announced that it would not join the Bolivarian Alternative for the Americas (ALBA), a “socially-oriented” regional trade bloc promoted by the Venezuelan leader. Correa, instead, accepted a credit of $150 million from the Inter-American Development Bank (IDB), signaling that he would continue to depend on U.S. funding. To this day, Correa maintains that Ecuador will become a member of ALBA only after Venezuela rejoins the Andean Community of Nations (CAN). [1]

Correa appears to be operating on two levels: on the one-hand, he pledges to kill free trade agreements with the United States while saying he will further ties with Venezuela, but then decides not to join ALBA. During his political campaign, he threatened to stop using the dollar as official currency but until now that policy remains unchanged. At the same time, Correa, like Chavez, has been openly critical of the United States and has even expelled U.S. diplomats for allegedly “interfering” in Ecuadorian affairs.[2] His administration has defaulted on billions of dollars of foreign debt, which the President referred to as “illegal”. Correa’s foreign policy mimics the same anti- American bias as that of Chavez. In line with Chavez he has developed a close relationship with Iranian President Mahmoud Ahmadinejad. Correa has refused to allow the U.S. to renew its military lease at Manta, which is due to expire this May.  There is concern about his ties not only with Chavez but also with the FARC.[3]

The Manta Air Base

Since his presidential campaign of 2006, President Correa has vowed to terminate the lease on the Manta Air Base (also referred to as “Eloy Alfaro”). In 1999, a deal was signed between the Ecuadorian government and the Clinton administration to grant permission to the United States to use Manta, a port city on Ecuador’s coast as a base to patrol the transport of narcotics in the region; especially along Colombia’s Pacific Coast. Manta is considered a key strategic outpost for SOUTHCOM (US Southern Command) in its successful efforts to combat drug trafficking in Latin America. The base houses 250-300 U.S. Air Force Personnel. (To learn more about Manta, please see ‘The Americas Report’, May 4, 2008 titled: ‘China to Displace the U.S. at Ecuador’s Manta Base,’ by Nicole M. Ferrand). Citing sovereignty issues, Correa said “Ecuador would extend the treaty only if the United States allows us to put a base in Miami.”

In November 2007, Correa announced his intention to grant the Chinese access to Manta in efforts to strengthen Sino-Ecuadorian relations at a time when China was looking to satisfy its growing demand for natural resources while Correa was looking to finance his increased social spending. For some time, China has been trying to increase its presence in the United States’ sphere of influence and has increased trade and military ties with many countries in the region. In regard to the Chinese presence, the Ecuadorian government has stated: “it is not only Ecuador which will benefit. Brazil will likewise profit since Ecuador and Brazil signed an agreement building the Manta-Manaus link by rail. Aside from Terminales, other Chinese firms are interested in investing in the rail project. Ecuador also wants to connect highways with neighbors Colombia, Peru and Brazil.”[4]

The negotiations were at an advanced stage and ‘Hutchinson Port Holdings’ (HPH), the port business of Hong-Kong based Hutchinson-Whampoa (who also controls both entrances to the Panama Canal) was to invest US$578 million over the course of 30 years to transform Manta into one of South America’s largest ports and China’s gateway to the Americas. There was even talk of using the landing strip for a direct flight between Quito and Beijing.[5]

Negotiations hit a bump in January 2009 and Correa threatened to expel HPH if they did not fulfill their part of the agreement by investing the promised amount of money. With the global economic slowdown, China seemed less prepared to engage in such a venture and appeared to be reconsidering their investments. They were also skeptical about considering a long-term deal after Ecuador expelled Brazilian multinational, Odebrecht, when the company had been building a dam in Ecuador. But things seem to be back on track and in February 2009, the Chinese Vice-Prime Minister, Hui Liangyu visited Ecuador to deepen bi-lateral relations and to discuss the Manta Base venture.

According to reports, the U.S. government is in talks to move the air base from Ecuador to Colombia.  American Ambassador to Colombia, William Brownfield, made no secret that his country was considering this option to continue the successful programs to fight against drugs and narco-terrorism. The air base will be under Colombia’s control and jurisdiction, just as Manta was under direct control of the Ecuadorian government. The Colombian Defense Minister, Juan Manuel Santos has also declared that his country is open to such a deal. It is possible that Washington will ratify the Free Trade Agreement with Bogotá if the air base deal is agreed on. This is good news since the U.S. has been able to curb drug production and shipment and such efforts need to be continued.

It is apparent that President Correa is ideologically tied to Chavez though he has gone at somewhat a slower pace in consolidating his power. In terms of regional relations, he has given sanctuary to the FARC while snubbing the president of Colombia, Alvaro Uribe. He has managed to maintain fairly good relations with the United States in spite of his hostility towards free trade with Washington and his refusal to renew our lease at Manta. Washington may want to rethink how much aid we give to the Correa government as it extends its hand ever more firmly to the Iranians while assisting the Chinese government to increase its influence in the region.

Whether Rafael Correa will be able to maintain his popularity internally will depend on the economic situation and the patience of the Ecuadorian people. Since the new Correa-backed constitution has weakened the institutions of government and placed greater control and power in the hands of the executive, it remains to be seen what steps Correa will take in the future.

Nicole M. Ferrand is a research analyst and editor of “The Americas Report” of the Menges Hemispheric Security Project. She is a graduate of Columbia University in Economics and Political Science with a background in Law from Peruvian University, UNIFE and in Corporate Finance from Georgetown University.

NOTES

[1] Chávez refused to have Venezuela remain a CAN member, which he meant as a snub to Washington for the Bush administration’s anti-Venezuela policies and its free trade agreements (FTA’s) brokered with both Peru and Colombia.

[2] In February 2009, Ecuador expelled two US diplomats, accusing them of meddling in the country’s internal affairs – charges Washington rejected.

[3] On March 7, 2008 in the Dominican Republic, the XX Rio Group Summit of Latin American leaders was held and tensions were at an all time high after the death of terrorist leader Raul Reyes by the Colombian military. His laptops had been seized and, during the meeting, President Alvaro Uribe said that there was “no doubt that the governments of Ecuador and Venezuela were negotiating with narco-terrorists (FARC).” He then handed the information to the attendees. The computers also included information about Correa receiving campaign contributions from the FARC during his 2006 presidential campaign.

[4] Ecuador Offers Concession Of Manta Air Base To China. Declines To Renew Contract With U.S. November 26, 2007. AHN News.

[5] Ecuador ofrece a China el aeropuerto de Manta. NOVEMBER 30, 2007. El Comercio, Ecuador.