Ecuador Leader Eyes Wealth Distribution

President-elect Rafael Correa, left, and his vice-president, Lenin Moreno, pose at their headquarters during an interview with the Associated Press in Quito, Ecuador, Thursday, Nov. 30, 2006. (AP Photo/Dolores Ochoa R.) (Dolores Ochoa R. - AP)

QUITO, Ecuador -- Ecuador's president-elect joins a wave of Latin American leaders swept into power opposing the free-market economic policies that are preached by Washington but are hugely unpopular among the region's poor.

After two decades of privatization and trade liberalization across the hemisphere, leftist leaders _ most notably Hugo Chavez in Venezuela and Evo Morales in Bolivia _ are exerting more state control over their nations' economies to promote wealth distribution.

Rafael Correa, the U.S-educated economist who will take over the presidency of this small Andean nation in January, says he will apply the same prescription in his country, where three-fourths of its inhabitants live in poverty despite Ecuador being South America's fifth largest oil producer.

Correa, 43, plans to tighten government control over the banking system and expand the state oil company's role in production and commercialization of Ecuador's oil.

He also wants to cut ties to international lending institutions, including the World Bank and the International Monetary Fund, and has threatened a moratorium on foreign debt payments unless foreign bondholders agree to lower Ecuador's debt service by half.

He said Ecuador cannot afford its current $2 billion (euro1.6 billion) annual debt service, representing 7 percent of the country's gross domestic product. "Ecuador cannot pay more than 3 percent," he said.

In his first statements after defeating banana tycoon Alvaro Noboa, Correa criticized the free-market policies that he says have failed to improve the lives of Ecuadoreans and urged them to join him "to overcome 20 years of a long and sad neoliberal night."

Correa laid out his economic vision in his 2001 doctoral thesis at the University of Illinois, in which he blames the "Washington Consensus" _ a set of U.S.-backed free-market policies _ for the region's economic ills and analyzes the potential of a common regional currency as a partial solution.

"He was, like I am, a critic of some of the aspects of the so-called Washington Consensus, which preached orthodoxy but just never talked much about the problems of income distribution," said Werner Baer, a University of Illinois economics professor who sat on the committee that approved Correa's doctorate in 2001.

Correa opposes a trade agreement with the United States because he says it will hurt Ecuador's farmers and is a sharp critic of globalization in general.

In the first reaction to his election, Ecuador's bonds were hammered on Wall Street because of concern over his policies, including his threats to unilaterally lower payments on Ecuador's $16.8 billion (euro12.8 billion) foreign debt to free up money for social programs.

On Tuesday he reiterated that he did not discard a moratorium on debt payments, a step that could cut off Ecuador's access to new foreign credit, something that doesn't seem to worry Correa.