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    Public spending fuels Ecuador leader's popularity

    QUITO, Ecuador (AP) — Amparo Martinez's universe is two small, tidy rooms in a poor Quito neighborhood that she shares with her 83-year-old mother and a severely handicapped daughter.

    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.

    Martinez adores Correa.

    "I hope he's re-elected many times," she says.

    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 which, like the initiative for the disabled, have improved their lives.

    An array of state-funded programs implemented or broadened since 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 Correa adheres to a formula that has also 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 (OGJ), Ecuador held proven oil reserves of 6.51 billion barrels in January 2011 the third largest reserves in South America after Venezuela and Brazil. Ecuador is the fifth-largest producer of oil in South America, producing 486,000 bbl/d of oil in 2010 (almost all of which was crude oil), down from a 2006 peak of 536,000 bbl/d. Data from the first half of 2011 show a rebound in production, which averaged 501,000 bbl/d through June.

    Straying from Latin American custom, Correa has also 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 radically boost the state's share of windfall profits. Some multinationals left, others stayed.

    The government is now on the verge of reaping more raw material royalties. It is set to shortly sign contracts designed to yield the state $3 billion annually from the mining of gold, copper and other metals.

    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 Correa's approval rating dipped below 50 percent. It currently stands around 70 percent.

    Critics accuse 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."

    Ordenana says the government realizes the private sector must also grow or it risks 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 personally benefited in some measure from government largesse, researchers at the FLACSO graduate school calculate. Under 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 (5,500 kilometers) 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 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," 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 nine percentage points from when 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 FLACSO political scientist.

    Correa has also plowed millions into education, giving free uniforms to a million students, texts 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 as a construction material sales company.

    His children got free uniforms and texts as well as English and computing classes free of charge.

    Correa is far from Ecuador's first populist leader. Yet he has been hounded by none of the accusations of corruption that drove previous presidents from office.

    His popularity is anything but universal, however.

    In striving for what he and Chavez call "21st-century socialism," Correa has alienated bankers, industrialists, the Roman Catholic Church and even indigenous groups. Initially backing him, the latter now object to his insistence that the state can extract minerals from their traditional lands without their consent.

    Many business leaders are angry with Correa over his chumminess with Iran, fearing that he is distancing Ecuador from Washington, still the country's top trading partner.

    On no adversary has Correa unleashed such bile as on the opposition news media, which he claims "oligarchs" have used to seek to discredit him.

    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 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."

    ___

    Associated Press Writer Frank Bajak contributed to this report from Lima, Peru.

     

    6 comments

    • garcalej  •  Elmhurst, Illinois  •  4 mths ago
      They say that pride comes before the fall.

      "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."

      Why does that sound familiar? Wasn't there a government owned bank in this country that was handing out down-payments to low-income earners who later on couldn't make their monthly mortgage payments? Maybe I'm experiencing deja vu here, but something here smells dicey.
      • Terry 3 mths ago
        Yes! How dare he! Give money collected in taxes from corporations back to the poor and middle classes. Everyone knows that all money needs to go to the rich who are the "job creators".

        Well, Ecuador and much of the rest of the world have found out that the conservative line in the USA does not work. Doesn't work in the US and doesn't work abroad.
    • Richard  •  4 mths ago
      Gee, looky here, goverment spending for 9 % increase in jobs an a stable economy.
      Maybe we can learn something from them, oh our president is trying, whats holding the rest of our future up. could it be selfserving nah don't even want to think that !
      Let me sleep on it !
      • JR1 4 mths ago
        Wait until the bill becomes due, always nice to spend money without productivity to show for it you are just saddling future generations. Try reading some history and learning why countries like Cuba still look like they're living in the 1950's.
    • Tim  •  4 mths ago
      This article was well written. Dont believe the news media, every time they write an article about Correa they always have to include Chavez as his buddy. Correa is not buddies with Chavez, instead Correa puts up with Chavez just like he does with any other neighbor, the same as USA puts up with Mexico at times. With that set aside, i visit Ecuador all the time, the people are happy, the roads are great,the tourism is up, and my hundreds of in laws most maintain their middle class, they work hard just like us, and the economy effects them the same as us in the USA. And to think 6 presidents in 10 years, and Correa has been there 5 of those years tells you something. Oh and one of the press I know for sure that was jailed, was completely slanderous, he got what he deserved. Also for the record, I am right wing conservatists, and tired of the news media taking sides they should not be taking.
    • elbarto  •  4 mths ago
      Guess it is a small world, Correa is buying votes just like Obama.
      • Tim 4 mths ago
        Dont even compare Correa to Obama, Correa is loved by his people, and building houses, and making sure every kid goes to school is not buying a vote. Having navy seals make a daring rescue on the night of your state of the union addressis buying votes.
    • Kwitchurbellieakin  •  Popayán, Colombia  •  4 mths ago
      "Straying from Latin American custom, Correa has also 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."

      Like the "Iron Lady" said, "Socialism works fine until you run out of other peoples money"
      • Tim 4 mths ago
        Ecuador is not a socialist country Kwitch, they have an elected president, one that the people love. You shoudl also know Ecuador is a good neighbor to Colombia, Colombia bombs inside their terriroty and they work things out, Ecuador also has over 800,000 Colombia refugies in border towns, San Lorenzo, Tulcan, and Ibarra to name a few. PS: I miss Popayan and the agua thermal at coconunco.
      • JR1 4 mths ago
        Tim - then why is Ecuador a safe have for the FARC groups attacking Columbia.
      • Tim 4 mths ago
        JR, 99 % of FARC is in Colombia, where as 1.8 % of Colombia's citizens live in Ecuador. I think the trade off shows Ecuador is a very tolorable neighbor. Second, how do you expect Ecuador with a tiny military and no roads to the northern amazon region to police the FARC, when all their trops are south with peru over border desputes and especially when in the 1990's Colombia gave FARC their own "country" bordering Ecuador to do as they please. That was a great idea, invite the FARC to the border region, let them multiply to 20,000 strong, then blame Ecuador when they cross the border unchecked. Get your head out of your #$%$ JR! PS: If you are going to defend Colombia, at least learn how to spell the countries name, i even spelled it for you.
    • marcelllllll  •  Pleasanton, California  •  4 mths ago
      correa is another castro...like another obama...you don't have to work to live...u only have somebody else to pay for it.,..... your neighbor.
      • Terry 3 mths ago
        Saying Correa is "another Castro" doesn't make it so. Why don't you share some of your knowledge and experiences with us? What you say does not jibe with mine.
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