Ecuador's Vote Promises Reform

NEITHER of two center-right candidates running neck and neck in Ecuador's presidential race is likely to emerge with the majority of votes required for victory in this month's first round of balloting, making a July runoff vote likely. But the country is bound to undergo profound economic change no matter which candidate wins.

Both Sixto Duran of the Republican Unity party and Jaime Nebot of the Social Christian Party have pledged to move rapidly to join the ranks of Latin American leaders opening their countries' protected economies.

The two leading candidates pledge to encourage foreign investment by reducing trade barriers and state subsidies while seeking to expand exports. The changes will be directed by a modernized state trimmed of excess bureaucracy, according to the candidates' economic plans.

"There will undoubtedly be an economic opening under the next administration," says Santiago Jervis, editor of Weekly Opinion, a Quito political magazine .

These economic plans, while similar to those installed years ago in other Latin American nations, represent radical departures from the static and some say stagnating policies of current President Rodrigo Borja Cevallos.

President Borja, a member of the Democratic Left party, has adamantly defended a significant state role in managing the economy. Last month, for instance, he called the wave of privatization sweeping Latin America a misbegotten, passing fad. He pointed to Ecuador's state phone company, saying its privatization would lead to poorer rural service. Four precious years lost

Some analysts blame the president's unwillingness to rethink his positions for the economy's inability to keep up with population growth of about 2.6 percent.

"Borja considers himself a liberal, but he is conservative in the sense that he has not promoted change," Jervis says. "We've lost four precious years under him."

Jervis and others note that while the petroleum sector accounts for more than 40 percent of Ecuador's gross national product, foreign investment has fallen. At least six companies recently decided to pull out, an exodus blamed by many analysts on the state oil company, Petroecuador. Foreign firms no longer receive concessions but work under contract from Petroecuador. The problem is that contracts are hard to come by.

"This government has not signed one new exploration contract with a foreign oil company," says Rene Ortiz, a petroleum consultant and former secretary-general of the Organization of Oil Exporting Countries. He notes that while Ecuador's production of 100 million barrels a year has remained stable, new discoveries have been too minor to guarantee Ecuador's future as a petroleum exporter.

A report from the government's national development council predicts that reserves will fall from nearly 1.5 billion barrels to 294 million by the year 2010, and that Ecuador will have to import gasoline after the year 2000.

Francisco Santos, a petroleum industry lawyer, says this will improve as foreign companies return under the next president: "Both of the leading candidates are committed to reviving petroleum exploration and drilling."

That prospect, however, has environmentalists concerned about the Amazon.

"An unrestrained free market in this country would be very threatening to the Amazon region," says Lilyan Benitez, the Amazonian projects director for Fundacion Natura, a private conservation organization. She explains that unrestrained economic activity, including oil exploitation, agriculture, and tree harvesting, would accelerate destruction of the rain forest. Polls show dead heat

Neither Duran nor Nebot have discussed the rain forest much, preferring instead to spend their time attacking each other and other rivals. Recent polls show the two candidates in a dead heat with about 30 percent of the vote, followed by Abdala Bucarem with about 15 percent of the vote.

The populist Mr. Bucarem is one of the most controversial and colorful political figures in Ecuador. In 1986, he was forced to flee to Panama to avoid corruption charges, and during the campaign he has admitted having flown on airplanes belonging to accused drug traffickers.

Bucarem has high negative ratings, but observers acknowledge that polls here are notoriously unreliable.

"Bucarem may surprise us, but I doubt it," Jervis says. "People want change but not that kind of change."