Unrest rocks Ecuador as troops take airport

QUITO (Reuters) - Unrest erupted in Ecuador on Thursday with soldiers taking control of the main airport, police protesting in the streets and looting in the capital while President Rafael Correa looked at dissolving a deadlocked Congress.

In confused and chaotic scenes in Quito, scores of soldiers swarmed over the landing strip of the international airport, which was closed to flights. Witnesses said there was looting in Quito and in the city of Guayaquil, and that many workers and school students were being sent home.

Elsewhere in Quito, uniformed police burnt tires in protest at a proposal to cut their bonuses.

The OPEC-member country of 14 million people has a long history of political instability. Street protests toppled three presidents during economic turmoil in the decade before Correa took power.

Members of Correa's own left-wing party are blocking legislative proposals aimed at cutting state costs, prompting him to mull disbanding Congress, a move that would let him rule by decree until new elections, one of his ministers said.

Armed forces' head Ernesto Gonzalez said troops remained loyal to Correa. "We are in a state of law. We are loyal to the maximum authority, which is the president," he told reporters.

Foreign Minister Ricardo Patino played down the severity of the protests. "This is not a popular mobilization, it is not a popular uprising, it is an uprising by the police who are ill-informed," he told TV network Telesur.

Central bank chief Diego Borja called for calm and urged Ecuadoreans not to withdraw money from banks.

Ecuador's two-year-old constitution allows the president to declare a political impasse that could dissolve Congress until a new presidential and parliamentary elections can be held.

The measure would, however, have to be approved by the Constitutional Court to take effect.

"This a scenario that nobody would want, but it is a possibility when the conditions for change do not exist," Policy Minister Doris Solis said after meeting Correa and other senior officials late on Wednesday.

"A decision still has not been made," she told reporters. "Lawmakers in our coalition have the obligation to be coherent with our project for change."

POLITICAL IN-FIGHTING

More than half the 124-member Congress is officially allied with Correa, but the president has blasted lawmakers from his own Country Alliance party for not going along with his proposals for shrinking the country's bureaucracy.

Police in the cities of Quito and Guayaquil protested at their headquarters. Officers in Guayaquil blocked some roads leading to the coastal city, Ecuador's most populous.

"Respect our rights," uniformed officers shouted.

Correa, a U.S.-trained economist, was first elected in 2006 promising a "citizens' revolution" aimed at increasing state control of Ecuador's natural resources and fighting what he calls the country's corrupt elite.

His government alienated international capital markets when it defaulted on $3.2 billion (2 billion pounds) in global bonds two years ago.

Correa, an ally of Venezuela's socialist President Hugo Chavez, declared the debt "illegitimate."

Cash has been tight since then as the country relies on multilateral loans and bilateral lending to meet its international financing needs.

Once in power, Correa backed the rewriting of the constitution to tilt the balance of power towards the executive. He easily won re-election under the new constitution in 2009, and he is allowed to stand again in 2013.

(Additional reporting by Jose Llangari, Alexandra Valencia and Santiago Silva in Quito; Mario Naranjo in Santiago; Eyanir Chinea in Caracas; editing by Kieran Murray)