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United States cancels aid programs to Ecuador -officials

By Alexandra Valencia

QUITO (Reuters) - The United States has canceled aid to Ecuador worth $32 million over the coming years after long-running disputes with the government of socialist President Rafael Correa, according to U.S. officials.

Correa, a U.S.-trained economist, has often been at odds with Washington since winning power in 2007. He accuses the U.S. government of trying to undermine him and this year Ecuador renounced U.S. trade benefits dating from the early 1990s.

According to a U.S. State Department spokesperson, Ecuador recently informed the U.S. Agency for International Development (USAID) it could not undertake new activities or extend existing ones without an accord governing bilateral assistance. This led to the U.S. decision to cancel the aid.

"Our planned $32 million in assistance programs for the coming years would have allowed us to partner with Ecuadoreans to achieve their own development goals in critical areas," said a letter dated December 12 from USAID to Ecuador seen by Reuters.

Ecuadorean government officials had no immediate comment.

The USAID letter said that in 60 years of working together, more than $800 million in development aid had helped hundreds of thousands of Ecuadoreans.

A spokesperson for the U.S. Embassy in Quito said two years of negotiations failed to reach a new agreement.

"USAID had begun incurring significant costs for four recently launched projects (focused on environmental protection and civil society strengthening) which have been unable to proceed," the embassy spokesperson said.

"Their cancellation was the only fiscally prudent option."

Correa, a vocal member of a bloc of left-wing Latin American leaders, won re-election in a landslide early this year after generous state spending on infrastructure and health services.

He has irked investors with his anti-capitalist rhetoric, and this year he passed a controversial law creating a state media watchdog that critics denounced as a blow to free speech. Correa says it enshrines principles of balance.

In 2011, Ecuador expelled the U.S. ambassador to Quito after American diplomatic cables published by WikiLeaks alleged that Correa's government had turned a blind eye to police corruption.

Last year, he threatened to expel USAID from the country, alleging that it was funding local groups that he said sought to undermine the region's "progressive" governments.

In May, Bolivia's socialist President Evo Morales expelled USAID in protest after U.S. Secretary of State John Kerry referred to Latin America as Washington's "backyard."

Ties between Washington and Ecuador were strained again this year after Correa said he would consider offering asylum to the fugitive former U.S. intelligence contractor Edward Snowden.

Last year, Correa granted asylum to WikiLeaks' founder Julian Assange, saying they were both victims of persecution. Assange is holed up in Ecuador's embassy in London.

(Additional reporting by Ezra Fieser in Santo Domingo and David Adams in Miami; Writing by Daniel Wallis; Editing by Kieran Murray and Christopher Wilson)

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