Ecuador in 2009

Ecuador in 2009

Area: 272,045 sq km (105,037 sq mi), including the 8,010-sq-km (3,093-sq-mi) Galapagos Islands
Population (2009 est.): 14,005,000 (Galapagos Islands, about 22,000)
Capital: Quito
Chief of state and head of government: President Rafael Correa Delgado

Ecuadoran Pres. Rafael Correa was reelected handily in April 2009, winning 52% of the vote; former president Lucio Gutiérrez garnered 28%, and banana tycoon Alvaro Noboa received 11%. Vowing to push ahead with his vision of “21st century socialism,” Correa expanded programs aimed at improving life for the poor and challenged foreign resource companies and investors to accept new terms of engagement with Ecuador.

A new mining law that imposed minimum royalty rates and limited the scope of exploration concessions was generally welcomed by foreign companies, but some Indian groups opposed it. A clash in late September between Shuar Indians and police seeking to break up an antimining road blockade left at least one Indian dead. In the petroleum sector, the government seized the assets of the French firm Perenco in a dispute over taxes and pressed foreign firms to exchange joint production-sharing agreements for service contracts with state-owned Petroecuador. As a result, some firms put investment plans on hold, and the output of crude oil, Ecuador’s chief export, declined. Meanwhile, the judge hearing a $27 billion oil-pollution lawsuit against the U.S. multinational corporation Chevron was forced to step aside after the company produced evidence that he had discussed the eventual verdict with government officials.

Ecuador expected economic growth to slow to 2% in 2009, mainly because of weaker oil prices and a decline in remittances from Ecuadorans living abroad. To compensate, the government imposed new tariffs and import restrictions, said that it would double the tax on capital outflows, and negotiated advance payments from China for crude oil. It also repurchased, at 35 cents on the dollar, nearly $3 billion in defaulted bonds that it said had been illegally issued under a former administration.

Relations with the United States and neighbouring Colombia continued to be strained. Colombia maintained that Ecuador provided tacit support to guerrillas of the Revolutionary Armed Forces of Colombia (FARC). In July Colombian authorities released a video in which a senior FARC commander said that Correa’s reelection campaign had received funds from the rebel army. FARC leaders denied the allegation. In September the last U.S. personnel left the military base at Manta on the Pacific coast after Ecuador declined to renew a lease allowing them to conduct antidrug operations; these were then shifted to Colombian bases. Two U.S. diplomats were expelled in February after the government said that they had threatened to suspend U.S. aid in an attempt to influence local police appointments. Despite these irritants, the U.S. renewed a long-standing package of duty exemptions and other trade benefits for Ecuador.

Paul Knox