Correa says foes seek coup as unrest rocks Ecuador

QUITO (Reuters) - Police protesters attacked Ecuadorean President Rafael Caldera in an eruption of political unrest over austerity measures on Thursday, leaving the leftist leader holed up in a hospital with demonstrators outside.

Correa told local media by phone that police protesters were hunting for him in the building and would be responsible if he was hurt. Some of the president's supporters then descended on the hospital and hurled stones at police outside.

Foreign Minister Ricardo Patino had called on supporters to march with him to save their trapped leader.

"President Correa has said that there are people trying to get in from the roof and attack him," Patino told a large crowd outside the presidential palace. "I want to invite the brave people here below to go with us to rescue the president."

Ecuador, an OPEC member of 14 million people, has a history of political instability. Street protests toppled three presidents during economic turmoil in the decade before Correa took power.

Correa, a socialist ally of Venezuelan President Hugo Chavez, said his rivals were plotting a coup against him, and that he and his wife were stunned by an exploding tear gas canister as he tried to speak to demonstrators.

Visibly furious, he earlier confronted police demonstrating at the planned budget cuts and challenged them: "Kill me if you want to. Kill me if you have the courage."

As the chaotic scenes unfolded, scores of soldiers took over the main international airport, which was closed to flights, while uniformed police burnt tires and blocked some roads in protest at a proposal to cut their bonuses.

Witnesses said there was looting in Quito and in Guayaquil city, and many workers and school students were sent home.

State oil company Petroecuador said operations were unaffected and troops had boosted security at its oil fields.

Messages of support for Correa flowed in from abroad, with the Organisation of American States and the governments of Venezuela, Chile, Argentina and others backing his government.

Venezuela's government said Correa spoke to Chavez by telephone from the Quito hospital and that Correa had confirmed that the unrest was a coup attempt against him.

Correa is looking at the option of dissolving Congress, where members of his own left-wing party are blocking legislative proposals aimed at cutting state costs.

Ecuador's two-year-old constitution allows the president to declare a political impasse, dissolve Congress and rule by decree until a new presidential and parliamentary election can be held. The measure would, however, have to be approved by the Constitutional Court to take effect.

Police apparently led the protests on Thursday but some soldiers joined in solidarity.

"We are demanding that the president revoke the military service law," one soldier at the airport told Reuters, asking not to be named. If he doesn't, protests will continue."

POLICE BLOCK ROADS

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

"Respect our rights," the uniformed officers shouted.

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.

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

Peru closed its border with neighbouring Ecuador.

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.

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 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.

"The (government) finally realizes that maybe their current spending could not continue but they don't really have a Plan B, nothing to cover shortfalls given the lack of investor friendly policies," said Roberto Sanchez-Dahl, portfolio manager at Federated Investors in Pittsburgh.

Correa is renegotiating contracts with oil companies in a bid to increase state revenues. But the talks have gone slowly while the government threatens to take over the operations of companies that do not sign the new pacts. Private firms working in Ecuador include Spain's Repsol, Brazil's Petrobras and Italy's Eni.

After taking 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 and Santiago Silva in Quito; Mario Naranjo in Santiago; Eyanir Chinea, Andrew Cawthorne, Daniel Wallis in Caracas; Writing by Daniel Wallis and Andrew Cawthorne; editing by Kieran Murray)

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