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Ecuadorean leader’s largesse
Public spending fuels Correa’s popularity among poor
Question of the Day
Her predicament makes holding a job impossible, so the three depend on a $240-a-month government stipend introduced by President Rafael Correa under a program for the disabled.
“I hope he’s re-elected many times,” she says.
Mr. Correa is regularly assailed by human rights, press freedom and business groups as intemperate, autocratic and intolerant of dissent. Yet he is popular among millions of Ecuadoreans for programs that, like the initiative for the disabled, have improved their lives.
An array of state-funded programs implemented or broadened since Mr. Correa’s 2006 election have brought stability to this traditionally unruly South American nation that previously churned through six presidents in 10 years.
A doubling in public spending under Mr. Correa adheres to a formula that also has aided the political longevity of his leftist allies Presidents Hugo Chavez of Venezuela, Cristina Fernandez of Argentina and Evo Morales of Bolivia.
But Ecuador devotes a greater share of its economy to public investment than any other nation in Latin America and the Caribbean, spending 10 percent of gross domestic product.
The main strategic ally of this tall, pugnacious U.S.- and European-trained economist has been the high price of oil, currently at $99.50 per barrel, which helped fuel 8.9 percent economic growth last year.
Oil accounts for about a third of government revenues in this OPEC member nation, whose proven oil reserves of 6.5 billion barrels are surpassed in South America only by those of Venezuela and Brazil.
According to Oil and Gas Journal, Ecuador held proven oil reserves of 6.51 billion barrels in January 2011, the third-largest reserves in South America.
Ecuador is the fifth-largest producer of oil in South America, producing 486,000 barrels per day in 2010 (almost all of which was crude oil), down from a 2006 peak of 536,000 barrels per day.
Data from the first half of 2011 show a rebound in production, which averaged 501,000 barrel per day through June.
Straying from Latin American custom, Mr. Correa also has engineered a vertiginous rise in income-tax collection, boosting compliance by businesses and professionals. From $4.9 billion in 2007, income-tax receipts rose to $8.4 billion last year.
He has exhibited uncanny resolve in coaxing higher numbers into the revenue columns of the balance sheet in a country that made the U.S. dollar its national currency in 2000.
That included rewriting oil-extraction contracts with multinationals to boost the state’s share of windfall profits. Some multinationals left; others stayed.
The government is now on the verge of reaping more raw-materials royalties. It is set shortly to sign contracts designed to yield the state $3 billion annually from the mining of gold, copper and other metals.
Mr. Correa has been coy on whether he’ll run for re-election in balloting that could come as early as a year from now.
If voting were held today, he’d be difficult to beat. Never in five years in office has Mr. Correa’s approval rating dipped below 50 percent. It currently stands around 70 percent.
Critics accuse Mr. Correa of building castles in the air by creating expectations on the uncertain promise of continued high oil prices. If oil drops below $73 a barrel, they say, his ambitious public spending will need to be curbed.
“It’s not sustainable as an economic model over time,” said Xavier Ordenana, an economist with the Escuela Politecnica del Litoral in Guayaquil. “It can last for some years, but not forever.”
Mr. Ordenana says the government realizes the private sector also must grow or risk insolvency. Heavy industry, export-oriented manufacturing and high-tech work remain scarce in Ecuador.
In all, 5 million of Ecuador’s total population of 14 million have benefited personally in some measure from government largesse, researchers at the Latin American Social Sciences Institute graduate school calculate.
Under Mr. Correa, the state has built homes for 30,000 families, plowed $8.5 billion into education and $5.3 billion into health care. It has rebuilt or improved nearly 3,400 miles of roads, nearly two-thirds of Ecuador’s highway system, spending $4.5 billion.
Other programs have zeroed in on helping individuals and families.
The government says the program for the disabled, a flagship Correa initiative, has benefited 300,000 people. They receive medical attention, welfare payments and equipment including wheelchairs. Some have even been given housing. Public wheelchair access is improving.
Another popular program provides a $35 monthly boost to 1.6 million poor people, chiefly homemakers with no other formal income.
“My husband died many years ago, but now I have the president as a spouse, because he gives me a little money every month,” said Maria Pillajo, a stooped 67-year-old who scrapes by through washing clothes and loading baskets in the market of Quito’s poor southern district of El Camal.
“Until poverty is eliminated, it’s a good measure,” Mr. Correa said of the program when asked about it during a recent meeting with foreign correspondents.
The government says the poverty rate stands at 29 percent, down 9 percentage points from when Mr. Correa took office. Meanwhile, unemployment is officially at 5.1 percent.
It’s not just the poor for whom the government is writing checks.
Some 100,000 middle-class first-time home buyers have received a $5,000 one-time “housing subsidy” grant that enable them to afford down payments.
“The payments have a direct bearing on the president’s image. In political terms, they have the excellent effect of sustaining his political project,” said Simon Pachano, a political scientist at the Latin American Social Sciences Institute.
Mr. Correa also has plowed millions into education, giving free uniforms to a million students, textbooks to 3 million and regularly feeding 1.6 million breakfast.
“It’s a great relief because sometimes we just don’t have the money,” said Francisco Carvajal, a 28-year-old father of three who said he earns $750 a month from his job at a construction-materials sales company.
His children got free uniforms and texts as well as English and computing classes free of charge.
His popularity is anything but universal, however.
Initially backing him, the indigenous groups now object to his insistence that the state can extract minerals from their traditional lands without their consent.
On no adversary has Mr. Correa unleashed such bile as on the opposition news media, which he claims “oligarchs” have used to seek to discredit him.
Mr. Correa has had a columnist and three directors of the opposition newspaper El Universo successfully prosecuted for criminal defamation. They have been sentenced to three years in prison each and a collective total of $40 million in fines, though the sentence is on appeal.
Human Rights Watch has decried how Mr. Correa used a May referendum to obtain a popular mandate for reforms that could “constrain media and influence the appointment and dismissal of judges.”
It also complained that people involved in protests where violence occurs “may be prosecuted on inflated and inappropriate terrorism charges.”
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