In the wake of Hugo Chavez's death, Ecuadorean President Rafael Correa has emerged as a leader of the Latin American left and an advocate of social reform. Are his policies viable?
Ecuador's recently re-elected President Rafael Correa is popular. So popular he earned twice the votes in the February election as his closest opponent, who snagged a meager 23 percent. So popular as a steady leader and populist, he's revered by the masses. But he may be most popular as "king of the hill" of Ecuador, a country so rich in natural resources he can swat away multinationals who covet his gold.
How long will his popularity last? That's the question.
Educated at the University of Illinois, the left-leaning Correa is the closest Ecuador has come to a stable leader since the 20th century ended. Before he took office in 2007 after a runoff election, the country had had seven presidents in the prior decade. The Ecuadorean sucre, its currency, had crashed in 1999. Poverty and unemployment rates were rising. And it appeared Ecuador would just stagger so long as its leadership failed to coalesce behind a central figure.
Correa has become that figure — for country and continent. Now that Venezuelan leftist icon Hugo Chavez has died, Correa scratched his way to the front of the pack as one of the most vociferously nationalist leaders in South America:
— He has declared his intention to "radicalize" his "citizens' revolution."
— He has consistently clashed with the United States, expelling its diplomats and refusing to renew leases of American air bases in Ecuador.
— He has tightened restrictions and increased taxes on foreign investments to ensure that as much oil money as possible stays in the nation.
— Most famously, he defaulted on a $3.2 billion sovereign debt, which he claimed was odious and incurred by a former regime that did not have Ecuador's best interests in mind.
Meanwhile, a la Chavez, Correa embarked on a massive social spending program to decrease inequality and banish poverty. He allocated 41.9 percent of the nation's total domestic output to building roads, schools and hospitals, according to the Heritage Foundation. He also doled out $50-a-month cash subsidies to 1.9 million needy Ecuadorans, increased the minimum wage and bolstered state-sponsored mortgage, vacation and social security programs.
As a result, poverty is down almost 10 percent in Ecuador since 2007, according to the World Bank, and nearly 100,000 new jobs have been created there in the past four years.
As a rising tide lifts all boats, the betterment of many Ecuadorans has established Correa as a wildly popular figure and an icon of the nationalist left, whose members hold him up as a champion of the lower classes and an enemy of multinationalism.
But even as Correa's popularity surges and the wealth gap closes, critics are worried that Ecuador's growth is fragile — as is the long-term viability of its leader's policies.
Currently, Ecuador's financial health is tied to international oil prices. According to Bloomberg, around 48 percent of the country's revenue comes from oil sales. When prices are high, which they have been for the past few years, at around $100 a barrel, Ecuador can export fuel en masse and rake in the revenue to bankroll its massive social programs.
In this scenario, Correa can play the leftist and rightly claim he doesn’t need private foreign capital to build the nation's social programs.
But when oil prices dip, critics allege, he overleverages himself to lenders like China, which, in light of Correa's defiant loan default, is one of the only major world powers still willing to lend money to Ecuador.
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According to the CIA, Ecuador owes China almost $9 billion in oil in exchange for past cash loans. The situation has created an ostensible open door for Chinese multinationals in Ecuador.
"For Correa or Chavez or Eva Morales in Latin America, dealing with China is acceptable because you’re doing business with another country," political scientist Patricio Navia told MSN News. "It’s not foreign capital and world capitalism.
"The way you sell it is: We’re doing things with the People’s Republic of China, not the U.S."
Navia, a master teacher in the Liberal Studies Program at New York University, asserts that one of the central tenets of Correa's nationalism is his vocal distaste for the United States.
Correa isn’t against multinational companies investing in Ecuador, he said, as much as he is against American companies regaining a foothold in the nation.
"For the left, [in] populist discourse in Latin America, the only bad guy is the U.S.," Navia said.
In vilifying American corporations, Correa typically cites Chevron, which, through its purchase of Texaco, was convicted by an Ecuadoran court of polluting the country's rainforest by dumping toxic waste there.
Navia thinks it’s a pipe dream to expect anything more of Chinese oil drillers and miners, who are subject to less oversight than American companies that are monitored by a watchdog media and whistleblowing regulators.
"Companies have reputations and going out against Chevron is attractive because Chevron has a history in Ecuador. But if you deal with a Chinese mining company, no one will know about the Chinese mining company until they mess up 10 years down the road," Navia said.
The overarching trouble for Correa, though, is that he's caught in the Catch-22 of extracting Ecuador's resources.
If he doesn't touch any of Ecuador's lush rainforests and extracts nothing from under or around them, then, in his own words, Ecuador is a "beggar sitting atop a sack of gold." If he becomes the environmentalist, the 56 percent of Ecuadoreans who voted for him will have no natural resources to fund the social programs that have helped them weather economic storms and ascend out of poverty.
"The tradeoff is: Do we protect the rainforest or do we help the poor?" Navia said. "It's difficult to make the argument that you need to protect the rainforests when there are malnourished children."
On the other hand, if Correa wants to continue to fund these programs and repay his Chinese loans, he'll eventually need to drill for oil in places like Yasuni National Park, which some biologists say may have the greatest concentration of species on the planet. Or he may need to mine for gold and copper in areas like the Cordillera del Condor, which biologist Alfredo Luna says contains "more diversity of life in one hectare than all of North America combined," according to Salon.
Those large-scale mining projects and courting of multinationals are Correa's next frontier, but only at the right price, according to Carlos Monge, Latin America regional coordinator at the Revenue Watch Institute, a nonpartisan organization that promotes responsible gas, oil and mineral management.
"If he feels he needs to relax conditions on the private sector, he will do so because he has such a strong backing ... he can be flexible without being accused of giving in," Monge told MSN News.
It appears that's exactly what Correa is doing. Just after his February re-election, he announced plans to ease multinationals' entry to Ecuador and allow them to mine. Historically, Correa rankled foreign investors with a slightly anti-capitalist stance that imposed heavy taxes, rents and restrictions. But he has apparently greased the way for Canadian mining firm Kinross, and is finalizing a deal that will bring in $1.2 billion. Another mining contract he secured last year with Chinese firm Ecuacorriente is worth $1.6 billion.
"There's a symbolic nationalist discourse that becomes a symbol of pride for Ecuador: 'You can't come to Ecuador, make a killing and leave us with nothing,'" Monge added.
The long-term dilemma of Correa's extractive policies — both environmentally and economically — is just that: a problem he plans to deal with in the future, Monge said. "It's a long-term problem."
"In the meantime, you address poverty, win elections and deal with social programs."
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