Another opinion, this one by Gord Zelko, Mineralstox.com...
"...And Ecuador, well…Ecuador went from Hero to Zero in a hurry, with the election of a leftist government in late 2006. The truth is somewhere in between.
Newly elected President Correa’s big plan is to rewrite the constitution to create an equitable political system which is now controlled by the political elite and ruling elite (80 families who control 90% of Ecuador’s wealth).
His problem is it has to be passed in congress but being a neophyte he has no support in congress. In January he formed a loose coalition with the far right party led by former president Gutierrez who was thrown out two years ago and ran away to Brazil in exile - now he is one of the big power brokers in congress. Politics in Ecuador is strange.
Anyway the only way to get the referendum/constituent assembly bill passed in congress will be with the help of a few votes he has bought in congress but mostly by the force of the people. Thus he has been playing the “populist” card saying he will screw with the US (default on loans, etc) join hands with Venezuela’s Chavez and Bolivia’s Morales, the two leaders with the most visible “populist’ agenda.
The reality I hear from people in the country is that Correa is a pragmatist and he will do what he can to get this bill passed. With regard to the oil industry Ecuador only produces 250,000 bpd, a mere fraction of Venezuela’s or what the gas Bolivia generates so he won’t be able to say screw the world because they don’t have vast revenues from oil and gas like Chavez (Venezuela produces 3 million bpd).
Correa is an economist and he realizes that people want change but they want jobs and an improved way of live. Morales in Bolivia in that regard is on a short time lease. He nationalized the oil and gas industry to later recant as Bolivia has no expertise nor the financial capability to develop it on its own nor can he secure FDI because of the risk. In short he made a populist move but in the end it won’t translate to the people who now see their poor country getting poorer as foreign companies pull out and jobs dry up. Morales’ popularity is already dropped from 80% to 20%.
Ecuador’s Correa is fully aware of the potential of the mining industry as he looks south to Peru. Ecuador has similar geology. New recent discoveries in Ecuador support the possibility of a very important industry with significant benefit to Ecuador’s GDP. The industry also creates jobs in rural parts of the country. As an economist he is too smart to do something to impede the development before it happens.
If you look regionally, say at Brazil, Lula da Silva got in on a populist mandate, where he embraced Chavez, and he made everyone nervous. In his second term he is clearly just center of left not far left as he appeared after his first election win. Or Kirchner in Argentina who first got in after their currency was devalued and the country was in upheaval. He was also a populist and now is as quiet as a mouse. So this too will blow over – and provides a window of opportunity for patient investors.
Gord Zelko Publisher, Mineralstox.com"
safeharbour |
