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Monday, 14 December 2009 - Will Ecuador drought dry up Correa's popularity? |
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    Edition: U.S. Article Save Email Print Reprints Most Popular Most Shared Exclusive: IRS hires "hundreds" for new wealth unit 11 Dec 2009 Abu Dhabi throws Dubai $10 billion lifeline | Video 10:11am EST Berlusconi attack prompts Italy soul searching | Video 10:41am EST Obama to take bankers to task over lending, reforms 10:10am EST Citi to raise $17 billion to repay U.S., escape pay curbs 9:39am EST Abu Dhabi throws Dubai $10 billion lifeline | Video 10:11am EST Exclusive: IRS hires "hundreds" for new wealth unit 11 Dec 2009 In Bhutan, a stock trade a day keeps stress away 09 Dec 2009 "Naked access" now 38 percent of U.S. trading: report 12:37am EST Exxon Mobil to buy XTO energy in big U.S. gas bet 10:00am EST Will Ecuador drought dry up Correa's popularity? Hugh Bronstein BOYACA, Ecuador Mon Dec 14, 2009 8:46am EST Factbox Ecuador and its president Rafael Correa 8:46am EST BOYACA, Ecuador (Reuters) - A drought in Ecuador is causing power blackouts throughout the country, slowing the economy's recovery and helping to push Rafael Correa's popularity to the lowest point of his presidency. World The approval rating of the firebrand socialist fell to 42 percent in a recent Cedatos Gallup poll, half of what it was in the early days of his government in 2007. Already frowned upon by some investors for his 2008 bond default and the tough stance he has taken with international oil companies, Correa faces a growing domestic challenge posed by the power outages spreading across this Andean country. "Rolling blackouts are just going to further deteriorate Correa's political standing," said Patrick Esteruelas, analyst at the Eurasia Group consultancy in New York. Water and electricity rationing in Venezuela has caused political problems for President Hugo Chavez, a Correa ally, as well. But with the opposition in disarray in both countries, Correa and Chavez still have a firm grip on power. "The blackouts are affecting Correa's popularity, but there is no sign so far that his government is being destabilized," said Adrian Bonilla, head of the Latin American Faculty of Social Sciences in Quito. "The military is calm and there is no widespread public unrest." Correa does not go before the electorate again until 2013 elections. Eyes are on the drought because Ecuador is known for ousting presidents during hard economic times. Correa's three immediate predecessors were forced from office by protests. The president alienated the markets last year by defaulting on $3.2 billion in bonds. Now he is renegotiating oil contracts to increase state control over the sector. All this has scared off private investment in electricity generation as hydroelectric plants gasp for water. The pain of the resulting power outages is widely shared by factories, business offices and households rich and poor. "No one has money to spend. There was no corn crop this year. The ranchers are hurting too," said Efren Munoz, owner of the corner food store in the western village of Boyaca. Business is also bad at Nidia Arteaga's farm down the road. It has not rained here in Manabi province since March. "Without moisture the grass dies, without grass we don't have milk, without milk there is no cheese, without cheese there is no suero (a byproduct used to feed pigs) and without suero our pigs go hungry," she said. Three of her 40 cows have died of thirst. She fears the rest will perish if the drought lasts another two months. ECONOMIC DOWNTURN Low oil prices brought by the world slowdown have walloped revenues in this OPEC-member country while the president's confrontational style has taken its toll on his image. Correa still has more political leverage than his recent predecessors ever did, but polls show people are tiring of his regular televised harangues of the media, business groups and anyone else who criticizes his "citizen's revolution." Ecuador's gross domestic product expanded 6.5 percent last year. The government says it expects growth to slow to about 1 percent this year before rebounding to 6.8 percent in 2010. Wall Street considers next year's growth estimate optimistic but the government is standing by the target. A positive byproduct of the energy crisis could be closer relations with neighboring Colombia, which normally provides about 10 percent of Ecuador's electricity. Correa severed diplomatic ties with Colombia in March 2008 after President Alvaro Uribe ordered the bombing of a rebel camp on Ecuador's side of the border. The second-in-command of Colombia's biggest guerrilla army was killed in the raid. Relations between Colombia and Venezuela have deteriorated over a military cooperation pact signed in October between Bogota and Washington. Correa also disapproves of the deal but he is repairing ties with Colombia nonetheless. "Part of the reason why Correa is willing to mend fences with Colombia is to secure energy supplies and offset politically costly power blackouts," Esteruelas said. (Additional reporting by Santiago Silva; Editing by Doina Chiacu) World More from Reuters Exxon Mobil to buy XTO energy in big U.S. gas bet NEW YORK (Reuters) - Exxon Mobil Corp will buy XTO Energy Inc in an all-stock transaction valued at about $30 billion, in a bid that thrusts the oil giant to the forefront of North America's fast-growing natural gas industry. Citi to raise $17 billion to repay U.S., escape pay curbs U.S. forces chief warns of Afghanistan fight Toyota to sell plug-in hybrids to consumers in 2 years | Video Nike chairman stands by Tiger Woods: report Lloyds cash call success moves focus to turnaround » More Top News Abu Dhabi foots the bill Abu Dhabi provides its flashy but debt-laden neighbor a surprise bailout to last Dubai's flagship company until the end of April.  Full Article  Verdict: A crucial and essential lifeline Global Markets "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street." President Barack Obama,on the CBS program "60 Minutes" and ahead of his meeting with bankers at 11:10 a.m. EST Executive Compensation © Copyright 2009 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index   Analyst Research Mobile Newsletters RSS Podcasts Widgets Your View Labs Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts.com Buyouts Europe: Buyouts Conferences: Venture Capital Journal ECVJ International Financing Review International Securitisation Report Project Finance International PEhub.com PE Week Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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