ECUADOR: Foreign investors keep watch as Ecuadoreans choose between Chavez-style radical Rafael Correa, centre-left Leon Roldos and billionaire banana mogul Alvaro Noboa

With just days before Ecuadoreans go to the polls to choose a new leader, all eyes are on the world's number one banana exporter, and speculation is rife over how the new president will affect the economic prospects of this beleaguered South American nation. With radical left-wing candidate Rafael Correa proposing to renegotiate Ecuador's $10 billion foreign debt, some foreign investors are already spooked, and have sold Ecuadorean bonds to minimize exposure to what many believe is the risk of another debt crisis after Ecuador's 1999 default. But for many, among them Gonzalo Correa, President of the Ecuadorean Exporters Federation, the key to a thriving economy is increasing foreign trade. "In the United States, Europe, and to a lesser extent Japan, it is important that Ecuador find trade agreements that allow us to grow in these markets. As we see in Latin America, trade agreements are linked neither with the left nor the right, they are linked to a sense of economic rationality," he argued, as investors worried about the fight for leadership coming down to two left-wing candidates. But the main concern for many investors is the oil industry, and talk from Correa of nationalizing it in the style of Bolivia's Evo Morales. As one of South America's top oil producers, Ecuador's choice of leader will be of key international interest. According to lawyer Fernando Santos, Correa's election could have drastic consequences for foreign investors, who would favour banana mogul Alvaro Noboa. The centre-left candidate Leon Roldos, he claimed, would have little impact one way or another. "I am pessimistic in the case of Mr Correa. He is the enemy of foreign investment, especially in oil: I think that Mr Noboa would attract foreign investment, and Mr Roldos I think would spend the four years thinking about whether investment is good or bad, and nothing would happen," said Roldos. Ecuador has been on an economic roller coaster in recent years, having dollarized the economy in 2000, a move which, according to economist Luis Maldonado Lince, has had a disastrous affect on exports. "The future of Ecuadorean exports since dollarisation has been a real disaster for private export. Private exports have been falling systematically because of price increases and the loss of competition outside the country," he said. Correa said if elected he plans to keep the dollarization of the economy despite criticizing the measure as a huge mistake that had worsened unemployment and caused other economic hardships. But investors are hoping that Noboa, a 55-year-old trained lawyer who is considered Ecuador's richest man, can improve on his current poll position in third place and snatch a victory from his leftist rivals. He has promised to pass laws that will kickstart the faltering economy and attract foreign investment. "Laws are going to be passed to reactivate the economy, to attract foreign investment and national investment, to reduce income tax, make fairer courts or centres of trade arbitration," he said. But Noboa will have a tough time knocking out the challenge from centre-leftist Roldos, currently lying in second place in the polls. Analysts believe a second round vote could favor Roldos, considered a moderate alternative to Correa's hardline leftist leanings. Speaking on the campaign trail, Roldos said he believed that banana producers should be reaping the rewards of price increases, rather than just earning enough to live. "The banana producer always earns at least enough to keep himself, but may he also participate in price increases," he said. But Roldos faces a serious challenge from Correa, whose anti-establishment message has appealed to many Ecuadoreans disenchanted with poverty and political instability. An ally of Venezuelan President Hugo Chavez, Correa has promised to break the grip of Ecuador's political elite if elected in the October 15 vote. A win by Correa would follow the rise of other Andean leaders who like Chavez advocate a strong stance against Washington and the tightening of state control over the economy and natural resources, especially energy reserves. Correa says he will not imitate U.S. foe Chavez, but parallels between the two leaders are clear. Like the Venezuelan leader, he calls for a rewriting of the constitution, limits to free-market policies and more state funds for poor. He has also promised to wrestle back control of Ecuador's oil reserves. "We are going to get our oil back. Have faith in ourselves, companions!" he told supporters at a campaign rally. Polls show Correa near to securing a first round victory on Oct. 15, but many voters are still undecided. Roldos and Noboa are tussling for second place to force a run-off in late November. If no candidate wins more than 50 percent of the vote, or at least 40 percent with a 10 percentage point advantage over his nearest rival, then a run-off between the two top candidates will be held on Nov. 26. Whatever the outcome, most Ecuadoreans are hoping to put behind recent political turmoil. Three presidents have been ousted in the last decade by civil unrest, Indian blockades and an unruly Congress. But foreign investors will be keeping a close eye on the outcome of Sunday's vote to see whether Ecuador will be following the example of Latin American neighbours like Venezuela and Bolivia, or keeping to a more moderate approach along the lines of Chile and Brazil.

ITN Source | October 11, 2006

Tags:. .chavez. .minimize. .leanings. .companions. .tightening