http://www.economist.com/agenda/displayStory.cfm?story_id=8166082&fsrc=RSS
Noboa set for victory in Ecuador
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Nov 15th 2006 [/SIZE][/FONT]
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From The Economist Intelligence Unit ViewsWire[/FONT][/SIZE]
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A billionaire businessman looks set to be president[/SIZE][/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]With less than two weeks to go before Ecuador’s runoff presidential election on November 26th, billionaire businessman Alvaro Noboa appears poised to clinch an easy victory. His lead over his rival, radical leftist economist Rafael Correa, seems insurmountable. But even if his win is assumed, his ability to survive Ecuador’s tumultuous politics is uncertain.[/SIZE][/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]November 6th was the last day before the runoff when voter opinion polls could legally be published in Ecuador. These showed Mr Noboa, Ecuador’s richest man, ahead by 15-19 percentage points, depending on the pollster. Mr Noboa, of the Partido Renovador Institucional Acción Nacional (PRIAN), had trailed behind Mr Correa, of Alianza País (AP), before the first round vote of October 15th, but surged ahead in the final days, taking 27% of the vote against Mr Correa’s 23%. Though the Correa camp cried foul, international election observers confirmed the process as generally free and fair.[/SIZE][/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]Mr Noboa has carried that momentum, and then some, forward to the runoff. Certainly having money to spend on his campaign—and to pay for handouts of computers, wheel chairs, medicine and even cash—has helped. So too have his populist promises to use his wealth and influence to spur investment and create three million jobs. He also intends to maintain close relations with the US and try to negotiate a trade pact with that country. He embraces market-oriented capitalism and has criticised the leftist solutions espoused by his rival.[/SIZE][/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]Mr Correa, for his part, apparently lost his frontrunner status with radical suggestions that he would seek to renegotiate Ecuador’s foreign debt and distance Ecuador from the US. He has also pledged to place Ecuador’s natural-resources industries under greater state control, dissolve Congress and reform the constitution. His opponents’ efforts to portray him as a carbon copy of Venezuela’s president, Hugo Chávez, seem to have worked to some extent. But Mr Correa may have been his own worst enemy, flaunting his friendship with Mr Chávez and adopting similar bombastic language. He has since moderated his tone and positions, but the damage seems to have been done.[/SIZE][/FONT]
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Shaky outlook[/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]Though the two men present two different visions for the country, regardless of who wins there will be a host of reasons to be worried about Ecuador’s future political stability. The political system is highly fragmented along ideological and regional lines, and no party wields majority control in Congress. The final tally of votes from the October 15th congressional elections, held concurrently with the first-round presidential poll, shows that Mr Noboa’s party, PRIAN, will hold the most seats, with 28 of 100. PRIAN is likely to try to build a coalition with two others parties, Partido Sociedad Patriótica (PSP), which got 24 seats, and Partido Social Cristiano (PSP), which got 13. Such an alliance could form the basis of a working legislative majority, but could prove extremely fragile.[/SIZE][/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]Further, the public is highly disillusioned with Ecuador’s traditional politicians and political parties. There have been nine presidents in the last 10 years, with several having been ousted amid popular unrest (the last being Lucio Gutiérrez of the PSP, who was removed by Congress in April 2005). Among the most dissatisfied is Ecuador’s indigenous-based social movement, represented by the political group Pachakútik, which opted to back its own presidential candidate in October rather than any of the other leading contenders. In this context, the threat of popular mobilisation will compound the governance challenge for the next president and make political de-stabilisation an ever-present risk.[/SIZE][/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]Ecuador is clearly in need of reforms in order to start to mend the chronically unstable political system. The current president, Alfredo Palacio (who succeeded Mr Gutiérrez), has failed several times in his efforts to push through wide-ranging reforms designed to strengthen Ecuador’s weak institutions and address the fractured nature of the Congress. Both Mr Correa and Mr Noboa would encounter similar problems, with obstinate lawmakers unlikely to support measures that would involve ceding any influence. These and other reforms would depend on the ability of the new president to sustain a coalition able to push through legislation.[/SIZE][/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]The direction of economic policy will also be a subject of concern. With Ecuador enjoying a windfall in oil export revenues thanks to high world prices, there will be substantial pressure on the next government to spend more on social projects, healthcare and education. Mr Correa’s track record at the finance ministry (he served as minister for several months in 2005), where he oversaw dismantling of a special oil-stabilisation fund—designed to be used to manage and channel excess oil revenues to debt repayment—suggests that he would loosen the purse strings. This would generate risks to the country’s hard-win fiscal stability.[/SIZE][/FONT]
[FONT=verdana,geneva,arial,sans serif][SIZE=-1]Mr Noboa, too, has made promises that would entail greater public spending and therefore pressure on fiscal accounts. Further, with no public-sector experience and a political party created as a vehicle for his presidential ambitions (Mr Noboa ran twice before), he lacks associates thought capable of managing the government, critics say. In any case, deep-seated politicisation of the country's institutions will continue to impede coherent policymaking.[/SIZE][/FONT]