* Incumbent Correa clear favorite to win Feb. 17 election
* Millions won over with healthcare, education and roads
* New term may mean continued conflicts with investors
By Eduardo Garcia
ZUMBAHUA, Ecuador, Jan 25 (Reuters) – Once a forgotten
cluster of mud houses amid windswept peaks, the Ecuadorean
village of Zumbahua today boasts a state-of-the-art schoolhouse
with large projection touch screens, Internet access in every
classroom and lessons in three languages.
Indigenous Kichwa Indians who once stuffed savings under
their mattresses now have a bank in town and a free Internet
cafe – all paid for by the state.
The treacherous muddy road to the village is being widened
and paved, and residents are particularly proud of their local
school.
“Education has improved dramatically … The students know
how to work with computers better than kids from the city,”
headmaster Vicente Caiza said.
Zumbahua is one example of how Ecuadoreans from the Andes
mountains to the Amazon jungle have benefited from heavy
government spending that will almost certainly win socialist
President Rafael Correa a new term in next month’s presidential
election.
Buoyed by strong oil revenue, record tax collection and
steady economic growth, Correa has won broad popular support by
expanding access to healthcare, doubling state spending on
education and turning rough dirt paths into proper paved roads.
Polls show the U.S.-trained economist turned leftist
stalwart is the clear favorite to win the Feb. 17 election.
Polls show he has the support of about 50 percent of voters, in
spite of opposition criticism that he is an autocrat who has
amassed power and persecuted rivals.
A Correa victory would be a boost to the alliance of
left-wing Latin American presidents at a time when Venezuela’s
Hugo Chavez, the bloc’s figurehead, is battling to recover from
cancer surgery in Cuba.
It could also mean an extension of his fight with foreign
investors.
In 2008, Ecuador defaulted on $3.2 billion in bonds despite
having funds to make payments. It has also squeezed revenue out
of oil companies by forcing them to sign new contracts, and
bullied Spain’s Telefonica and Mexico’s America Movil
into paying more for telecoms licenses.
But Correa’s anti-capitalist rhetoric belies a pragmatic
streak that has allowed him to negotiate with foreign investors
when necessary.
His government has offered concessions to Canadian gold
miner Kinross as part of negotiations to kick-start
Ecuador’s nascent mining industry, and it recently called a
bidding round for oil blocks to help boost stagnant production.
Though companies are startled by Correa’s heavy-handed
approach to negotiations, the 49-year-old will need to be more
measured in his next term to ensure that Ecuador – locked out of
international credit markets – receives the financing it needs.
“We have to make use of our natural resources … oil and
mines to fight poverty, especially among the indigenous people,”
Correa said at a campaign rally in Zumbahua, as hundreds of
supporters wearing wool ponchos and fedora hats shouted “We
already have a president, we have Rafael!”
Many people in rural areas support Correa, but want more.
“He has to continue, because we want the hospital that he
promised us, and a fire station, and a football pitch,” said
Luzmilla Cuchiparte, a 24-year-old mother of one who works at
Zumbahua’s Internet cafe.
DIVISIVE LEADER
Correa lived in Zumbahua for a year in the 1980s when he
volunteered with a Roman Catholic organization. He worked at the
local barley mill and provided occasional religious instruction.
Most residents then lived hand-to-mouth, but the town is
more affluent now and the school shows how much the area has
changed. The some 1,000 students from Zumbahua and surrounding
villages receive free books and uniforms, and teachers have been
trained to use the Internet and computers to teach in Spanish,
English and the local Kichwa language.
“We can’t turn a blind eye to reality … They need to learn
to use the technology because if they don’t they will never be
able to travel,” said teacher Jakeline Chicaiza.
Correa’s government says it has revamped about 5,000 schools
and built 18 hospitals and 250 health centers across the nation.
“You will find people throughout Ecuador saying that Correa
built that road, or that a school was not there before, or that
they now receive cash handouts … Who can compete against
that?” said Paulina Recalde, head of local pollster Perfiles de
Opinion.
Such support has helped Correa stay in power for six years,
making him the longest-running Ecuadorean president for at least
four decades. He backed a constitution re-write in 2008 that
allows presidents to serve two consecutive terms. That means
that after this poll he cannot run again in 2017.
Rival politicians accuse Correa of undermining judicial
independence and of circumventing a hostile legislature by
calling a referendum on policy changes in 2011 rather than
negotiating with opposition lawmakers.
The father of three is also in a self-avowed “battle” with
Ecuadorean media groups, alleging that they are in the pockets
of a capitalist elite.
“He’s become authoritarian, domineering, arrogant. Even if
we were to assume he’s done everything well, to protect the
(democratic) process he needs to be replaced,” opposition
candidate and former Correa ally Alberto Acosta told Reuters.
While Correa has broad support, many in this OPEC-member
country of 15 million complain that he has raised taxes and
failed to fight crime, while corruption cases involving
relatives are denting some support.
Companies linked to the president’s brother Fabricio Correa
were awarded public contracts in violation of anti-nepotism
rules, prompting the president himself to annul the deals. A
cousin resigned as head of the central bank last month after
admitting he had lied about having a university degree in
economics.
The opposition, though, is unlikely to cash in on any
discontent with Correa because it has failed to unite behind one
candidate. Seven opposition candidates are fighting Correa and
polls show that his closest rival, former banker Guillermo
Lasso, is 31 points behind with 22 percent support.
SOCIALISM VS PRAGMATISM
In recent years, foreign investment has been low compared to
neighboring Colombia and Peru, which have market-friendly
governments and huge oil and mining deposits.
Colombia brought in some $13 billion in foreign investment
in 2011, and Peru about $7.7 billion, against only about $650
million for Ecuador.
Ecuador failed to save money when oil prices were high, and
has been relying on bilateral deals from China for funding.
The London-based research company Capital Economics said in a
recent report that funding from China could dry up, leaving
Ecuador vulnerable.
“Ecuador will need to either boost oil revenues or increase
borrowing in order to sustain the current state-led model of
development,” it said. “A chronic lack of investment has caused
(oil) production to stagnate in recent years.”
A return to global capital markets would prove very
expensive, as Ecuador is considered default-prone.
The country is therefore actively trying to lure more
investors. Correa launched an oil-block auction in late 2012 to
open up unexplored Amazon areas and also aims to attract miners
for untapped metal deposits.
Correa signed Ecuador’s first large-scale mining contract
with Chinese-owned Ecuacorriente last year, and is in talks with
Canadian-based mining firm Kinross over a large gold deposit.
Negotiations with Kinross have been plagued by delays, in
part because Ecuador was wants to reap high benefits from the
project, but the two sides have said they are closer to a deal
after the government agreed to reform the mining law.
Despite his frequent anti-capitalist outbursts, Correa may
have no choice but to soften his stance toward investors.
“Correa received a doctorate in the United States, he
obtained a masters in economy in Belgium and he studied at a
private university. He lives in a dichotomy. He’s a
revolutionary, but also a pragmatist,” said Michel Levi, a
foreign affairs professor at Quito’s Andina University.
“His pragmatism usually rules.”
