UPDATE:Ecuador President Hopeful Correa Seeks Regional Currency
Easy Bourse (Communiqués de presse), France - Sep 25, 2006
... from Correa.) QUITO -(Dow Jones)- Left-leaning presidential candidate Rafael Correa said Monday that ... The candidate also said he wants to review mining and oil ...
UPDATE:Ecuador President Hopeful Correa Seeks Regional Currency
Tuesday September 26th, 2006 / 0h38
(Adds further comments from Correa.) QUITO -(Dow Jones)- Left-leaning presidential candidate Rafael Correa said Monday that he would be in favor of Ecuador using an Andean or South American currency in the medium to long term, as opposed to the U.S. dollar, which has been Ecuador's currency since 2000.
Correa, according to the most recent polls, is in first place ahead of Oct. 15 elections. He is 2 to 7 percentage points ahead of center-left candidate Leon Roldos, according to the three leading polls.
"It was foolish to begin the dollarization, and it would be foolish to leave it in the current conditions," Correa said in a meeting with foreign media. "The dollarization is bankrupting us. It is part of the problem and not the solution."
According to Correa, the nation's constitution maintains the sucre as the national currency.
The presidential candidate reiterated that if elected, he plans to convene a constituent assembly with absolute powers to draft a new constitution. He added that body would decide on the national currency. He said he would be totally opposed to establishing the dollar as the currency in the constitution.
"Dollarization has always been unconstitutional," he said. "To think of a national currency will be difficult, and it would be difficult for a national currency in small countries like ours to survive in the midst of globalization, which is where important alternatives come in, like regional currencies at an Andean and South American level," he said.
Citing Argentina as an example, Correa said he would seek to renegotiate Ecuador's foreign debt to reflect the country's ability to pay, lowering the level of debt to around 3% of gross domestic product from the current 7%.
He said that if creditors - both multilateral and commercial - don't agree to renegotiate foreign debt or if service payments go beyond what the country can pay,he doesn't "exclude a unilateral moratorium."
"For us, lives and national commitments come before the pockets of creditors," Correa said.
The candidate also said he would renegotiate contracts with private oil companies so that the state's share in production will be eight out of every 10 barrels and the firms will have to commit to minimum investments. Correa added the state is currently getting just one of every five barrels.
The candidate also said he wants to review mining and oil contracts in protected zones, such as those where local communities have lodged protests against private companies' operations.
"The Constitution guarantees groups' ancestral and collective rights, and as a consequence, if a nationality or indigenous ethnic group doesn't want an attack on its land, their rights have to be respected," Correa said.
Brazilian state-owned oil company Petroleo Brasileiro (PBR) would fall under this review, as it has recently submitted a new environmental plan to the government for Block 31, of which 70% is located inside the Yasuni national park. Argentine oil concern Compania General de Combustibles could also be affected, since it has signed a contract with the state, but hasn't launched operations because of protests by indigenous communities in the Amazon region of Sarayacu.
Correa dismissed the idea that his policies could scare away investment in the oil sector. If private companies leave the company, state-owned Petroecuador can assume the oil fields, he said. Correa said he would ensure Petroecuador's financial, administrative and operating autonomy by pushing through reforms to the Hydrocarbons Law and Budget Law. He also wants Petroecuador to gain a corporate designation that would free it from government control over finances and tender processes for services.
Meanwhile, the candidate said his administration won't seek financing from multilateral agencies because he can tap the country's approximately $2.5 billion in foreign-currency reserves. Correa said he'd also put limits on private banks' investments abroad, which he calculated at $3 billion. Combined with $2 billion normally used for foreign debt payments, "there's $7.5 billion that the country has in savings to be able to make the economy more dynamic," Correa said.
He also spoke of putting more limits on the press and overhauling the current system that governs the way private companies share profits with their workers.
The candidate continued to be confident that he will defeat Leon Roldos, currently in second place in the polls, in the first round of the voting. Correa said his base of support will be in the so-called family committees, or neighborhood groups, that were formed during his campaign.
"The family committees are a campaign strategy, but they're also part of the government's action strategy," Correa said. "We believe in grounding ourselves in the power of the citizen...we know that the powers in this country - such as the financial and oil sectors, economic groups and the political parties - can only be defeated with a militant and organized citzenry."
- By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@dowjones.com
Tuesday September 26th, 2006 / 0h38
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