THE BLOG

Ecuador's Populist President Looks Set for Another Four Years

Less than one month before Ecuadoreans are due to go to the polls for presidential and legislative elections, the outcome of the vote is looking increasingly predictable. The president, Rafael Correa, in office since 2007, remains well ahead in the polls, with the latest survey indicating that he has stretched his lead over his rivals since the end of 2012.

This marks a change from the transfers of power Ecuador grew accustomed to before Correa took office. Elections were unpredictable and characterized by a high number of candidates, with the likely winner often not emerging until weeks before the polling date (as was the case with Correa in the 2006 election). Furthermore, presidents were frequently forced out of office before the end of their terms, often by popular protests, as was the case with Lucio Gutiérrez (2005), Jamil Mahuad (2000), Rosalía Arteaga (1997) and Abdalá Bucaram (1997).

However, since 2007 Correa has managed (at least temporarily) to bring an end to this political instability. Apart from a police mutiny in September 2010, which forced him to declare a state of emergency, he has faced few challenges to his authority. He remains popular among large swathes of the public -- rare for any politician who has been in office for over five years -- and looks set to win another four-year term in the February 17th election, possibly in the first round of voting.

An opinion poll carried out between January 7th and January 10th put Correa on 49 percent in terms of voting intentions. His nearest rival, Guillermo Lasso, a former banker, lags 31 points behind him. The poll indicates that Correa has stretched his lead since late 2012, while his rivals have remained more or less static. Were people to vote along these lines in February, Correa would win in the first round.

So, how has he managed to stay so popular? Under his administration, Ecuador has seen record levels of public spending and investment. Fiscal spending as a percentage of GDP has averaged 40.1 percent since 2007, compared with 23.8 percent in 2000-06. Supported by high oil prices -- on which the government depends for around 40 percent of revenue -- he has splurged cash on much-needed infrastructure upgrades, such as roads, housing and schools. He has also introduced a number of mandatory rises to the minimum wage and recently increased the amount paid in a cash transfer scheme (known as the human development voucher) through taxing banking-sector profits. This led to an economic boom in 2011 as the economy expanded by 8 percent. High public spending filtered through into rising incomes as private consumption, much of which was demand for newly accessible consumer goods, expanded by 6.3 percent. However, the government's expansionary fiscal policy -- and its dependence on oil revenue to finance it -- has entrenched the pro-cyclical nature of Ecuador's public finances, leaving them highly exposed to a fall in oil prices.

Lavish spending has been accompanied by the president's populist style and constant media appearances. His style of government is to exist in an almost perpetual state of campaigning, making weekly television addresses and other public and media appearances. This has led his opponents to complain about government resources being used for electoral ends. Be that as it may, one only has to observe the many billboards dotted around the country and the slick television and internet advertisements promoting the new schools, roads and other infrastructure that the government's investment program has produced to appreciate the advantages that incumbency can bring.

The lack of a strong opponent and the high number of opposition candidates running against him also give Correa a massive boost. Seven opposition candidates will run in February. As was the case in the 2009 election, the opposition -- which in Ecuador's fractured political scene encompasses a large number of ideologically diverse parties -- has failed to rally around a single candidate. As a result, the opposition vote will be diluted. This has been reflected in the latest poll, which shows that 27 percent of the vote will be split between six candidates (with a former president, Lucio Gutiérrez, polling the highest of these on 12 percent). Lasso is on 18 percent.

In an otherwise positive outlook for the president, two things will play on his mind. First, the results of a referendum held in May 2011. Although Correa managed to obtain the simple majority required to get the ten questions approved, voting was far closer than he anticipated. This highlighted that his support, particularly among indigenous groups and voters in rural areas, had weakened. A lack of progress on a long-delayed water rights bill, land reform and the government's support for further developing extractive industries will impede a revival of support from these groups, making support in urban centers such as Guayaquil and the capital, Quito, more important. Second, although Correa remains popular and has ushered in a period of political stability, political loyalties can still change rapidly as has been demonstrated in the past. However, such a shift is highly unlikely to take place over the next month.

For Ecuador a Correa victory essentially means more of the same. Fiscal policy will remain expansionary, public investment high and the state will remain the principle driver of economic growth. Correa's relationship with the private media and the financial sector will remain confrontational. Speculation will inevitably mount over whether Correa will attempt to change the constitution to allow him to run for a third term (he has so far served one term under the 2008 constitution, with his time in office prior to changing the constitution not counted as a presidential term), although there has been no evidence so far to suggest that he might attempt this.

Given his high polling numbers and sustained popularity, a Correa victory remains the most likely outcome in February. Ecuador looks set for four more years.

William Lee is Deputy Editor/Economist Latin America for The Economist Intelligence Unit (EIU).

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