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Quito, Ecuador

By Jenny Mero, Fortune

(Fortune Magazine) -- When Rafael Correa (above, with his wife on election night) began campaigning for President, he seemed unlikely to win. Close links with a fellow leftist, Venezuelan President Hugo Chávez, were costing him popularity, so he reassessed his strategy for late November's runoff election and tempered his views. Voters picked the 43-year-old U.S.-trained economist and former Ecuadorian Finance Minister over billionaire Álvaro Noboa by 14 percentage points. It hasn't taken long for him to rejoin the left-leaning Latin American leaders' bandwagon: The President-elect declared that one of the first things he planned to do was phone Chávez to arrange a sweetheart deal for refining Ecuador's oil. (Ecuador currently refines its excess oil in the U.S.) Other items in his platform include refusing free-trade pacts with the U.S., reevaluating contracts with foreign oil companies such as Occidental Petroleum, and renegotiating - and possibly defaulting on - Ecuador's estimated $18 billion external debt. Correa also wants Ecuador to rejoin OPEC after a 14-year absence. The country has the third-largest proven reserves in South America, at 4.6 billion barrels, and pumps 538,000 barrels a day, accounting for more than a quarter of its $32 billion economy. Ecuador has enjoyed relative stability since dollarizing in 2001, sparing the poor from a repeat of the crises of the late 1990s when the sucre, then the national currency, was devalued by 65% and inflation soared. Correa, when he is inaugurated in mid-January as the country's eighth leader in ten years, will inherit moderately low inflation (2%) and an economy growing at 4%. But he'll find himself facing an opposition Congress that may make it difficult for him to get his programs through. Deadlock in the making? Correa has already proved that he can change minds.  Top of page