Correa was hit by a tear-gas canister and held hostage in a Quito hospital by police personnel protesting a new austerity law that had been passed by the National Assembly hours earlier Thursday. Correa branded the police action an attempt to unseat him, which appeared plausible before the army arrived to his rescue.

Left-wing Latin American campaigners say the revolt was instigated by right-wing vested interests opposed to Correa's populist policies. Bolivian President Evo Morales said the United States was to blame and called it the fourth recent U.S. effort to unseat populist leaders in South America.

With last week's police protests over pay increasingly politicized and embellished in popular left-wing media, Correa appeared to moderate his reaction to the unrest.

After he was rescued and reinstalled as president by the army, Correa vowed stiff punitive measures against the rioting police and threatened to dissolve the National Assembly and rule by decree but then appeared to change his mind.

After a weekend of widespread unrest and reports of at least 10 deaths in Thursday's exchange of gunfire, Correa appeared in public broadcasts in a more conciliatory mood, promising instead to revisit draconian cuts in government spending.

The government still needs to apply widespread austerity, officials said, but there are no immediate plans to reduce military spending.

Since last year Ecuador has been spending more on defense and has faced accusations that the country, alongside Venezuela, has been arming left-wing rebels that are at loggerheads with Colombia, a close U.S. ally and partner in an international effort to stem the flow of cocaine and other drugs into North America.

In September 2009 Correa received a "gift" of six Mirage 50 jets from Venezuela as part of the two countries' preparedness for "war" in the face of Colombian-U.S. military cooperation.

The conflict didn't materialize but both Ecuador and Venezuela kept the political temperature up amid charges Colombia was readying for regional combat.

Correa hinted at the possible purchase of 12 combat jets from South Africa and 24 Super Tucano fighters from Brazil, as well as radar systems and helicopters.

Colombia in turn faced charges that its intelligence agents infiltrated Correa's administration to eavesdrop on the president.

A $2.2 billion Venezuelan arms deal with Russia reached last year is cited amid reports of increased military cooperation between Quito and Caracas. Analysts said the army's rescue of the president opened the way for Ecuador's military to win approval for purchase of a large number of items on its arms shopping list.

The army's role in Correa's rescue divided opinion on the future role of the Ecuadorian military and police in security arrangements around the president. Correa ordered a toughening of security after the incident and an investigation to determine the role of every suspect caught on camera during street protests and hospital holdup.

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