February 22, 2013 4:59 pm

Ecuador’s president glows from poll win

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Ecuador's President Rafael Correa reacts after hearing the election results at Carondelet Palace in Quito February 17, 2013. Correa claimed a re-election victory on Sunday that would allow him to strengthen state control over the OPEC nation's economy and gives a timely boost to Latin America's alliance of socialist leaders.©Reuters

When Rafael Correa, Ecuador’s president, last spoke to the Financial Times in October 2010, he was limping and angry after an incident he described as a “failed coup”. This week, in the same wood-panelled presidential office, the US-trained economist was glowing, having won a third term in a landslide election.

In today’s Ecuador “citizens rule, not the elites like in the past”, enthused the president who called bondholders “monsters” in 2008 after the country defaulted on $3.2bn in foreign debt.

“Human beings rule, not big capital. Society will rule, not the markets. We are not after making [international] financial markets happy, but after making our people happy.”

From the early 1980s, the Andean country has staggered from one political and financial crisis to another. However, despite the “attempted coup”, Ecuador has enjoyed economic stability since the leftwing Mr Correa, a charismatic, good-looking leader, took office in 2007. He won a landslide victory in the country’s presidential election on February 17.

“In 10 years we had seven presidents. Previous governments were toppled not because this country was ungovernable, because we have shown it is governable,” Mr Correa says. “They ran away at the first [coup] attempt.”

And unlike his closest ally, Venezuela’s ailing leader Hugo Chávez, he made it clear this was his last term, so his foes “can sleep in peace”.

During his six years in power, Mr Correa, 49, has led a self-styled “citizen’s revolution” with a redistributive agenda thanks to widening the tax base, rewriting contracts with oil companies to squeeze more revenue, and pushing through a new constitution that gave him more power. He now says he is focused on deepening his socialist blueprint.

“The essence of the citizen’s revolution is to change the power relations, so that citizens rule not elites; so that human beings rule, not markets,” he says, sitting in a gold-leaf rococo chair. “We have made huge strides but it is not irreversible yet.”

To make it irreversible, after also winning a majority in congress, he said there will be a “legislative steamroller” to serve Ecuadoreans’ interests. His party is hurriedly preparing legislation to tighten restrictions on the media, regulating the content of newspapers and television stations.

“The Ecuadorean press is not the serious press of Hong Kong, New York or London. Well, maybe it is similar to that kind of press in London managed by Rupert Murdoch,” he says.

Foes call Mr Correa an authoritarian leader who is quelling free speech, turning the local press into his whipping boy. The president has expropriated media outlets from allegedly corrupt bankers, verbally attacked journalists and pursued criminal libel cases against some critics. He insists this is justified: “The press here is the property of families who defend particular interests, without ethics, without scruples, who manipulate, misinform.”

So, to counterbalance, in recent years aside from the president’s Saturday broadcasts, the Ecuadorean government has built something of a media empire running radio stations, television channels, newspapers and magazines.

Speaking of the media, he also believes the British government should be accountable for the life of Julian Assange, founder of WikiLeaks, who was been holed up in the Ecuadorean embassy in London since June.

“We have done everything we had to do; we don’t have to ask for permission nor ask for forgiveness to anybody,” Mr Correa says, “it is all in the hands of Great Britain now.”

Some fear his firebrand rhetoric will keep deterring foreign investment. “I am not going to seduce anybody to come and invest here,” he says. “The rules of the game are clear.”

Yet he says he welcomes foreign investors in a country with a “very clear political economy with macroeconomic stability” and is already diversifying away from a dependence on oil exports into mining, hydroelectricity and heavy manufacturing. His government also offers unlimited scholarships for bright students to specialise abroad.

Ecuador’s dollarised economy has been chalking up impressive growth rates of more than 7 per cent in recent years, although the 2012 figure is expected to be about two percentage points below this.

Nonetheless, some of Mr Correa’s critics view his economic and social policies as being based on oil-fuelled populism, like those of Mr Chávez, saying he had spent his way through his latest term via heavy investment in infrastructure, health and education.*

But the president, a former finance minister, says he inherited a 60 per cent debt to gross domestic product ratio and he has managed to reduce that to 24 per cent, which is “perfectly sustainable”.

Still, the economy of the smallest Opec nation suffers limited financing sources. An avid cyclist who runs a blog called “Economics on a bike”, Mr Correa has relied heavily on financing from China – Ecuador’s $76bn economy has an outstanding debt of $3.1bn, to be repaid from oil output.

“This is funny, when we had bonds at a 12 per cent interest rate no one ever complained. Now that we are getting indebted at 7 per cent, people say it is very expensive,” he says.

Mr Correa said he could consider issuing debt for the first time since the 2008 default. “We are a modern left, we cannot abstract ourselves from the market,” he says. “Ask the readers of the Financial Times, if someone wants to lend us at lower rates. That way, I’d be delighted to get indebted.”

* This sentence has been amended from the original to remove a further reference to the Ecuadorean budget deficit as the biggest in South America after Venezuela. This is incorrect.

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