Sunday, 25 October 2015

Ecuadorian President Rafael Correa Discusses Oil Prices, Julian Assange, Brad Pitt And Chevron


Ecuadorian President Rafael Correa Discusses Oil Prices, Julian Assange, Brad Pitt And Chevron












MICHAEL NOER, FORBES:
Let’s start by talking about poverty in your country. You’ve been very effective at reducing the number of people in poverty, whether it’s through new roads or higher minimum wages, or even direct cash transfers. Which would you say has been the most effective measure?
RAFAEL CORREA:
Income distribution.
FORBES:
Just, literally giving cash to poor people?

CORREA:
And new opportunities. For instance, health care. Now it’s free. Always it was free. But just formally free. Because we didn’t have enough hospitals, health centers, et cetera. So collecting taxes, according to the law, but before nobody paid taxes. We have increased three times our tax collection. With that we can finance with, and pay for services for the poorest people. For instance, health care. And that is a very important saving for the poorest people.
FORBES:
Most of these things, including health care and roads, have been paid for by oil revenues. And obviously oil prices, as you’re well aware, have collapsed. What does the future of oil production look like in Ecuador if oil prices remain low? Because I understand that currently they’re below the cost of production.
CORREA:
Yes. This is a very important problem. Been a tough year, economic year because of the fall in oil prices. But [oil] income is just one fifth of the public budget.
FORBES:
But most of exports.
CORREA:
Yes. The main problem is in the [energy] sector, because its 52% of our total exports. So we have to be very careful handling this problem. And we are. We are careful. And we are adjusting our next year public budget for much lower oil prices. For instance, around $55, $40 per barrel.
FORBES:
What if it goes lower?
CORREA:
If it is lower?
FORBES:
Yeah.
CORREA:
Well, we are prepared for that. But it will be more difficult, of course. How are we prepared? There is…decreasing what is called public spending. Why I say [as an] economist what is called public spending, because in public accounting, you do not, I don’t know why, differentiate between spending itself, and investment. Most part of our public spending is investment. So you cannot reduce salaries, wages. But you can reduce investment. So this is our adjustment variable.
FORBES:
What about economic diversification away from oil? What is the future?
CORREA:
We are trying to do that. All this time we were trying to do so. But it’s not so easy. These are [difficult] changes. That take decades. You know, not just few years. But, for instance, we have been investing in the knowledge sector, preparing our human talent with a lot of scholarships. We have the most important scholarship program perhaps in the world. At least in the region. I think we are behind one European country, but one of the most important scholarship programs in the world. And diversifying the agricultural sector, the fishing sector, the mining sector, et cetera. Energy sector — In this sector we have a lot of improvement. For instance, next year we will have ready eight new hydroelectics. That means in order to increase two times our actual energy power. Electrical energy power. But this is energy from our river. It’s renewable energy. Very friendly to the environment, et cetera. We will have the most efficient, perhaps the most efficient, or one of the most efficient [electrical] energy metrics in the world.
FORBES:
The Dollar is the currency in Ecuador. Obviously there’s some downsides to having no control over your own currency, but are there upsides to having the Dollar as the currency?
CORREA:
Yes, yes.
FORBES:
Inflation obviously.
CORREA:
The disadvantages are bigger than advantages. Because, for instance, for this problem, for this tough economic year, for the whole region, with such strong extra shock, a very strong fall in oil prices, you need to handle your own currency, and usually you have to depreciate your currency. Well, we don’t have national currency anymore, and we are using the American Dollar. And the American Dollar is appreciating, so that–
FORBES:
Makes it twice as hard, yes–
CORREA:
–smashes the economy. So it’s a very difficult situation, but we are doing very well. We have been very creative, and we have made several things [unintelligible] safeguards, tax relief. We have got subsidies, some subsidies, inefficient subsidies, et cetera. But there are advantages. For instance, for investors. For investors. For American investors.
FORBES:
Very much so, yes–
CORREA:
Because with a national currency, they can have capital losses. With the dollar, this risk doesn’t exist anymore. So the advantage [is] more certainty for investors. More stability. Low inflation, et cetera. So we are doing an economic policy emphasizing the advantages of dollarization and trying to minimize the disadvantages of this system.
FORBES:
You’re sticking with the dollar?
CORREA:
Of course. Of course. It’s not possible to go out from dollarization. At least in the short term.
FORBES:
Julian Assange. It’s interesting. I mean, he’s still there. [The WikiLeaks editor-in-chief was granted asylum in the Ecuadorean embassy in London in 2012.]
CORREA:
For American people it’s very interesting. For us it’s kind of boring already–
FORBES:
He’s been a long term house guest.
CORREA:
Three years.
FORBES:
Three years. So what do you foresee happening there?
CORREA:
Well, the solution is in the hands of Europe. England…Sweden. They can solve the problem tomorrow. For instance, [if the] Swedish justice, the Swedish prosecutor, want to go to our own embassy in London in order to interview Mr. Assange, for the reason they are looking for Mr. Assange.
FORBES:
Let’s talk about Chevron for a minute. For people who don’t know, Chevron was involved in an environmental disaster in Ecuador and there was a case brought against Chevron by Ecuador and [they] won billions of dollars, and then a judge in New York threw it out.
CORREA:
May I say something?
FORBES:
Sure.
CORREA:
[It was] from [the] private sector for Ecuador, because the lawsuit against Chevron–
FORBES:
It wasn’t the government?
CORREA:
Not from the government.
FORBES:
Oh interesting, okay.
CORREA:
[It was] from the Amazon communities. Indigenous communities.
FORBES:
Do you think that Chevron has been punished adequately for the damage they’ve done?
CORREA:
Well, that was a judicial decision. So I suppose they estimate in the right way, correctly defined the amount of money to be paid by Chevron. But it was a private lawsuit. Chevron, during a decade, during almost ten years, was fighting in order to avoid to be judged here in New York. They wanted to be judged in Ecuador. But because they lost the lawsuit in Ecuador, now they have a war campaign, telling that our judicial system is corrupt, that the government’s corrupt, that everybody’s corrupt. At the end of the day you have, clearly, an ecological disaster left by Chevron, but this company doesn’t want to pay.
FORBES:
There’s a movie coming out [about this] with Brad Pitt. And I saw you have a social media campaign to say, “Do the right thing Brad.” Do you know about this?
CORREA:
I don’t know if the project is going on.
FORBES:
Oh, you think it’s over?
CORREA:
I think. I don’t know. I’m not quite sure. I haven’t [heard] anymore about this. And Brad was in the forest. He could see the pollution left by Chevron.
FORBES:
What is the role of Ecuador in the Andean region? Do you see yourself as a leader of the group of countries? I mean, smaller, right? Obviously. But how do you see yourself regionally?
CORREA:
Sorry, but we don’t care about being leaders regionally. There’s leadership, et cetera. We try to do the best for our people and for the Andean people, not just for Ecuadorian people or Colombian people or Peruvian people, Bolivian people, et cetera. But for humanity too. So what about we are interested is, perhaps, to be leaders in ideas. We have several proposals, we have several ideas, for instance, in order to fight climate change for the next conference in Paris. So I think Ecuador has a leadership in this domain, in this sector. Telling new things, important things, in order to have an effective struggle against climate change.
FORBES:
What do you see as the role of the free press in Ecuador?
CORREA:
Very important.
FORBES:
I mean, there’s been some criticism.
CORREA:
Yes, but because you don’t understand what kind of press we have.
FORBES:
So explain.
CORREA:
A good press is vital for a democracy. But a corrupted press is lethal for the same democracy. We have a lot of corruption in our media. In Ecuador, like in the rest of Latin America, usually the mass media has been property of a few families. Very powerful families dominating everything. You know, controlling our countries. And there is no differentiation, like in modern capitalism, between property and managing. So the owners, and the son of the owner, is the general director of the paper. So they are not giving information to people, they are defending their interest. Family interest. Business interest, et cetera. So there is a lot of corruption, you have to understand this.
FORBES:
I think we only have time for one more question or maybe two. 2017? Are you running [for president]?
CORREA:
No.
FORBES:
No? Definitely not?
CORREA:
Until now, no. Because unless there is extremely changes in the political situation that I don’t think will happen, I won’t run. There is no need to run. Because [the] opposition is so fragmented, without any leadership, that I think another candidate from our party could win the election. Will be able to win the election.
FORBES:
There is no candidate yet?
CORREA:
We have several candidates. The problem is, what candidate could confront no democratic opposition. The media. Our opponents are not the political parties. Other political parties. Our opponents [are] some media. Of the extreme right, of some families, of some business groups that are against the government.
FORBES:
This is my last question. If you had anything to say to investors in America about Ecuador, what would that be?
CORREA:
That Ecuador is a wonderful place to invest, with a lot of opportunities for investors. And we have the dollar. It’s a huge disadvantage in [terms of handling] the economy. Especially the macroeconomics. But it’s a good thing, a huge advantage at the same time for investors, especially American investors. To deal in the same money is very important.
FORBES:
Thank you, Mr. President.

CORREA: