Background Notes For Ecuador
U.S. Department of State
Background Notes: Ecuador, March 1998
Released by the Bureau of Inter-American Affairs.
OFFICIAL NAME: Republic of Ecuador
PROFILE
Geography
Area: 283,560 sq. km.; about the size of Colorado.
Cities: Capital--Quito (pop. 1.5 million). Other cities--Guayaquil
(2.0 million).
Terrain: Jungle east of the Andes, a rich agricultural coastal
plain west of the Andes, and high-elevation valleys through the
mountainous center of the country.
Climate: Varied, mild year-round in the mountain valleys; hot
and humid in coastal and Amazonian jungle lowlands.
People
Nationality: Noun and adjective--Ecuadoran(s).
Population (July 1997 est.): 12.1 million.
Annual growth rate: 1.93%.
Ethnic groups: Indigenous 25%, mestizo (mixed indigenous--Caucasian)
65%, Caucasian and others 7%, African 3%.
Religion: Predominantly Roman Catholic, but religious freedom
recognized.
Languages: Spanish (official), indigenous languages, especially
Quichua, the Ecuadoran dialect of Quechua.
Education: Years compulsory--ages 6-14, but enforcement
varies. Attendance (through 6th grade)--76% urban, 33%
rural. Literacy--90%.
Health: Infant mortality rate--33.4/1,000. Life expectancy--71.4
yrs.
Work force (4.8 million): Agriculture--42%. Commerce--20%.
Services--19%. Manufacturing--11%. Other--8%.
Government
Type: Republic.
Constitution: 1979.
Independence: May 24, 1822 (from Spain).
Branches: Executive--president and 14 cabinet ministers.
Legislative--82-member unicameral Congress. Judicial--Supreme
Court, Provincial Courts, and ordinary civil and criminal judges.
Administrative subdivisions: 22 provinces.
Political parties: 13 legal political parties; none predominates.
Suffrage: Obligatory for literate citizens 18-65 yrs. of age;
optional for other eligible voters; active duty military personnel
may not vote.
Economy (1996)
GDP: $18.0 billion.
Real annual growth rate: 1994, 4.3%; 1995, 2.3%; 1996, 2.0%.
Per capita GDP: $1,534.
Natural resources: petroleum, fish, shrimp, timber, gold, limestone.
Agriculture (13% of GDP): bananas, seafood, coffee, cacao, sugar,
rice, corn, and livestock.
Industry (38% of GDP): petroleum extraction, food processing,
wood products, textiles, chemicals and pharmaceuticals.
Trade: Exports--$4.9 billion: petroleum and petroleum products,
bananas, shrimp, coffee, flowers, cocoa. Major markets--U.S.
39%, Latin America 25%, European Union (EU) 22%, and Asia 12%.
Imports--$3.5 billion: agricultural and industrial machinery,
industrial raw materials, agricultural commodities, chemical products,
transportation and communication equipment, petroleum products.
Major suppliers--Latin America 35%, U.S. 32%, EU 19%, and
Asia 11%.
PEOPLE
Ecuador's population is ethnically mixed. The largest ethnic groups
are indigenous and mestizo (mixed Indian-Caucasian). Although
Ecuadorans were heavily concentrated in the mountainous central
highland region a few decades ago, today's population is divided
about equally between that area and the coastal lowlands. Migration
toward cities--particularly larger cities--in all regions has
increased the urban population to about 55%. The tropical forest
region to the east of the mountains remains sparsely populated
and contains only about 3% of the population.
The public education system is tuition-free, and attendance is
mandatory from ages 6 to 14. In practice, however, many children
drop out before age 15, and, in rural areas only about one-third
complete sixth grade. The government is striving to create better
programs for the rural and urban poor, especially in technical
and occupational training. In recent years, it has also been successful
in reducing illiteracy. Enrollment in primary schools has been
increasing at an annual rate of 4.4%--faster than the population
growth rate--and, during the 1980s, the number of university students
increased about 18% per year. According to the 1979 constitution,
the central government must allocate at least 30% of its revenue
to education; in practice, however, it allots a much smaller percentage.
Public universities have an open admissions policy. In recent
years, however, large increases in the student population, budget
difficulties, and extreme politicization of the university system
have led to a decline in academic standards.
HISTORY
Advanced indigenous cultures flourished in Ecuador long before
the area was conquered by the Inca empire in the 15th century.
In 1534, the Spanish arrived and defeated the Inca armies, and
Spanish colonists became the new elite. The indigenous population
was decimated by disease in the first decades of Spanish rule--a
time when the natives were also forced into the "encomienda"
labor system for Spanish landlords. In 1563, Quito became the
seat of a royal audiencia (administrative district) of Spain.
After independence forces defeated the royalist army in 1822,
Ecuador joined Simon Bolivar's Republic of Gran Colombia, only
to become a separate republic in 1830. The 19th century was marked
by instability, with a rapid succession of rulers. The conservative
Gabriel Garcia Moreno unified the country in the 1860s with the
support of the Catholic Church. In the late 1800s, world demand
for cocoa tied the economy to commodity exports and led to migrations
from the highlands to the agricultural frontier on the coast.
A coastal-based liberal revolution in 1895 under Eloy Alfaro reduced
the power of the clergy and opened the way for capitalist development.
The end of the cocoa boom produced renewed political instability
and a military coup in 1925. The 1930s and 1940s were marked by
populist politicians such as five-time president Jose Velasco
Ibarra. In January 1942, Ecuador signed the Rio Protocol to end
a brief war with Peru the year before; Ecuador agreed to a border
that conceded to Peru much territory Ecuador previously had claimed
in the Amazon. After World War II, a recovery in the market for
agricultural commodities and the growth of the banana industry
helped restore prosperity and political peace. From 1948-60, three
presidents--beginning with Galo Plaza--were freely elected and
completed their terms.
Recession and popular unrest led to a return to populist politics
and domestic military interventions in the 1960s, while foreign
companies developed oil resources in the Ecuadoran Amazon. In
1972, a nationalist military regime seized power and used the
new oil wealth and foreign borrowing to pay for a program of industrialization,
land reform, and subsidies for urban consumers. With the oil boom
fading, Ecuador returned to democracy in 1979, but by 1982 the
government faced a chronic economic crisis, including inflation,
budget deficits, a falling currency, mounting debt service, and
uncompetitive industries.
The 1984 presidential elections were narrowly won by Leon Febres-Cordero
of the Social Christian Party (PSC). During the first years of
his administration, Febres-Cordero introduced free-market economic
policies, took strong stands against drug trafficking and terrorism,
and pursued close relations with the United States. His tenure
was marred by bitter wrangling with other branches of government
and his own brief kidnaping by elements of the military. A devastating
earthquake in March 1987 interrupted oil exports and worsened
the country's economic problems.
Rodrigo Borja of the Democratic Left (ID) party won the presidency
in 1988. His government was committed to improving human rights
and carried out some reforms, notably an opening of Ecuador to
foreign trade. The Borja government concluded an accord leading
to the disbanding of the small terrorist group, "Alfaro Lives."
However, continuing economic problems undermined the popularity
of the ID, and opposition parties gained control of Congress in
1990.
In 1992, Sixto Duran-Ballen won in his third run for the presidency.
His government's popularity suffered from tough macroeconomic
adjustment measures, but it succeeded in pushing a limited number
of modernization initiatives through Congress. Duran-Ballen's
vice president, Alberto Dahik, was the architect of the administration's
economic policies, but in 1995 Dahik fled the country to avoid
prosecution on corruption charges following a heated political
battle with the opposition. A war with Peru erupted in January-February
1995 in a small, remote region where the boundary prescribed by
the 1942 Rio Protocol is in dispute.
Abdala Bucaram, from the Guayaquil-based Ecuadorian Roldosista
Party (PRE), won the presidency in 1996 on a platform that promised
populist economic and social reforms and the breaking of what
Bucaram termed as the power of the nation's oligarchy. During
his short term of office, Bucaram's administration drew criticism
for corruption. Bucaram was deposed by the Congress in February
1997 on grounds of alleged mental incompetence. In his place,
Congress named Interim President Fabian Alarcon, who was President
of Congress and head of the small Radical Alfarist Front party.
Alarcon's interim presidency was endorsed by a May 1997 popular
referendum. New presidential elections are scheduled for May 31,
1998. The elected president is to take office August 10, 1998.
GOVERNMENT
The 1979 constitution provides for concurrent four-year terms
of office for the president, vice president, and the 12 members
of congress (of a total of 82) who are elected as "national"
(at large) legislators. The remaining 70 legislators, representing
the country's 22 provinces, serve for 2 years. Presidents may
be reelected after an intervening term, while legislators may
be re-elected immediately.
Each year legislators elect from among themselves a president
and vice president of Congress. Congress meets for two months
a year. For the remainder of the year--unless an extraordinary
plenary session is called--all legislative business is transacted
by the 35 members of the Congress who serve on five permanent
committees.
Ecuador has a three-tiered court system. Justices of the Supreme
Court are appointed by the Congress for six-year terms. The Supreme
Court names the members of the superior (provincial) courts, who,
in turn, choose ordinary civil and penal judges.
The executive branch includes 17 ministries and several cabinet-level
secretariats headed by presidential appointees. The president
also appoints Ecuador's 21 provincial governors, who represent
the central government at the local level. Provincial prefects
and councilors, like municipal mayors and aldermen, are directly
elected.
Principal Government Officials
Executive Branch
Chief of State
President Fabian Alarcon Rivera (since 11 February 1997)
Head of Government
President Fabian Alarcon Rivera (since 11 February 1997)
Elections
In February 1997, Congress removed President Abdala Bucaram Ortiz
and replaced him with Fabian Alarcon Rivera. New elections are
scheduled for May 1998.
Legislative Branch
Unicameral National Congress or Congreso Nacional (82 seats;
12 members popularly elected at large nationally for four-year
terms, 70 members popularly elected by province for two-year terms.)
Vice President--Rosalia Arteaga
Minister of Foreign Affairs--Jose AYALA Lasso
Ambassador to the U.S.--Alberto Maspons
Ambassador to the UN--Luis Valencia
Ambassador to the OAS--Julio Prado
Ecuador maintains an embassy in the United States at 2535 - 15th
Street, NW, Washington, DC 20009 (tel. 202-234-7200) and consulates
in Chicago, Dallas, Houston, Los Angeles, Miami, New Orleans,
New York, and San Francisco.
POLITICAL CONDITIONS
Ecuador's political parties have historically been small, loose
organizations that depended more on populist, often charismatic,
leaders to retain support than on programs or ideology. Frequent
internal splits have produced extreme factionalism. However, a
pattern has emerged in which administrations from the center-left
alternate with those from the center-right as the electorate searches
for leaders who will bring about necessary economic reforms at
minimal social cost. Although Ecuador's political elite is highly
factionalized along regional, ideological, and personal lines,
a strong desire for consensus on major issues often leads to compromise.
Structural reforms are difficult to legislate and implement, but
widespread recognition of the need for change has enabled Ecuador
to enjoy a relatively high degree of social stability.
The center-left of the political spectrum represents a large segment
of the body politic, but it is divided among several parties and
this often has prevented it from winning the presidency. In the
1996 elections, Abdala Bucaram was able to capitalize on these
divisions to emerge from the first round as the alternative to
the right-of-center PSC candidate, and he then went on to consolidate
the support of the center-left to win handily in the runoff. Bucaram's
PRE only won 19 of 82 seats in Congress, however, with the remaining
deputies spread among nearly a dozen parties as well as independents.
Alarcon's FRA controls only three seats, so his administration
depends on the legislative cooperation of larger parties. Opposition
forces in Congress are loosely organized, but historically they
often unite to block the administration's initiatives and to remove
cabinet ministers. Party discipline is weak, and routinely many
deputies switch allegiance during each Congress.
In the 1996 election, the indigenous population abandoned its
traditional policy of shunning the official political system and
participated actively in support of the Pachakutik/New Country
movement. This coalition obtained eight deputies, and although
some disaffiliated themselves early in the new Congressional session,
the indigenous population established itself as a significant
force in Ecuadoran politics.
Mid-term Congressional elections are currently scheduled for 1998.
ECONOMY
Ecuador's gross domestic product (GDP) reached $18.0 billion in
1996. This represents growth of 2% over 1995. The economy is based
on petroleum production, along with exports of agricultural commodities
and seafood. The state oil industry makes up 10% of GDP, generates
37% of total exports, and provides about 30% of government revenue.
Agriculture and fishing contribute 13% of GDP. Ecuador is a major
world producer of bananas and shrimp. Cocoa, coffee, and tuna
are also exported. Non-traditional agricultural products, such
as flowers and winter vegetables, are becoming more important.
Industry accounts for 38% of GDP, and is becoming increasingly
oriented to the export market.
Ecuador's merchandise exports for 1996 were $4.9 billion for 1996
and its imports $3.5 billion. Lower trade barriers in the region,
including free-trade agreements with Colombia, Venezuela, and
Bolivia are helping manufacturers of vehicles and other products
become more export oriented. Ecuador has reduced most tariffs
to 5-20% and in January 1995 instituted a common external tariff
with Colombia and Venezuela. Ecuador acceded to the World Trade
Organization (WTO) in 1995. The government has committed to address
remaining obstacles to trade, including agricultural price bands,
minimum import prices, and sanitary registrations. Ecuador signed
an intellectual property rights agreement with the United States
in 1993 but has not yet implemented it. Ecuador has a unified,
free market in foreign exchange.
During the oil boom of the 1970s, the government borrowed heavily
from abroad, increased subsidies, and expanded the state's economic
role. Such policies became unsustainable, leading to chronic macroeconomic
instability in the 1980s. President Duran-Ballen took office in
1992 promising to stabilize the economy, modernize the state,
and expand the free market. A sizable devaluation of the sucre
in 1992, large public-sector price hikes, market pricing of fuel,
and spending reductions--together with monetary, budget, and tax
reforms--reduced the public deficit. Inflation also fell from
60% to about 25%, but increased again to 30% in 1997.
The structural reforms required to improve prospects for investment
and growth have proven more difficult to achieve. Government staffing
has been cut and many unnecessary regulations have been eliminated.
Banks and capital markets are modernizing under new financial
laws. Shares held by the state in private companies are being
sold. The government has suggested plans to partially privatize
some of the major state enterprises, and has obtained legal authority
to privatize 35% of the telephone service. However, an auction
of the telephone company scheduled for November 1997 had to be
canceled when only one bidder participated. The government also
hopes to reform the social security system. However, there is
substantial political opposition to privatization proposals.
Liberalized investment regulations afford foreign investors national
treatment--including equal tax rates--and do not require prior
authorization for investment in most industries. A bilateral investment
treaty with the United States approved in 1994 and ratified in
May 1997 provides for transfers of capital and profits and a binding
arbitration dispute settlement procedure. The 1994 agrarian development
law has improved the security of agricultural land tenure. The
1993 hydrocarbons law made investment in petroleum exploration
more attractive, and U.S. firms initiated and expanded projects.
However, U.S. firms doing business in Ecuador have complained
of being pressured into contract renegotiations by the government.
Several U.S. firms have had large judgments entered against them
in Ecuadoran courts under a law which permitted the firms' local
partners to disregard the terms of their contracts. This law,
the Dealer's Act, was repealed in 1997 but remains in effect with
regard to contracts entered into prior to the repeal.
FOREIGN RELATIONS
A small country, Ecuador always has placed great emphasis on multilateral
approaches to international problems. Ecuador is a member of the
United Nations (and most of its specialized agencies) and the
Organization of American States. Ecuador is also a member of many
regional groups, including the Rio Group, the Latin American Economic
System, the Latin American Energy Organization, the Latin American
Integration Association, and the Andean Pact.
Ecuador's border dispute with Peru, festering since the independence
era, is the nation's principal foreign policy issue. Ecuador maintains
that the 1942 Rio Protocol of Peace, Friendship and Boundaries
left several issues unresolved. For example, it asserts that geographic
features in the area of the Cenepa River Valley do not match the
topographical descriptions in the Protocol, thus making demarcation
of the boundary there "inexecutable."
This long-running border dispute has occasionally erupted into
armed hostility along the undemarcated sections. The most serious
conflict since the 1941 war occurred in January-February 1995,
when thousands of soldiers from both sides fought an intense but
localized war in the disputed territory in the upper Cenepa valley.
A peace agreement brokered by the four Guarantors of the Rio Protocol
(Argentina, Brazil, Chile, and the United States) in February
1995 led to the cessation of hostilities and the establishment
of the Military
Observers Mission to Ecuador-Peru (MOMEP) to monitor the zone.
In 1996, Ecuador and Peru began a series of meetings intended
to set the stage for substantive negotiations to resolve the dispute.
Those talks have shown significant progress. In January 1998,
Ecuador and Peru initialed an historic agreement in Rio de Janeiro,
Brazil, which provided a framework to resolve the major outstanding
issues between the two countries through four commissions. Specifically,
the commissions are to prepare a Treaty of Commerce and Navigation
and a Comprehensive Agreement on Border Integration; to fix on
the ground the common land boundary; and to establish a Binational
Commission on Mutual Confidence Measures and Security. The four
commissions began work in February, with the intention of reaching
a definitive agreement by May 30, 1998.
U.S.-ECUADORAN RELATIONS
The United States and Ecuador have maintained close ties based
on mutual interests in maintaining democratic institutions; combating
narcotrafficking; building trade, investment and financial ties;
cooperating in fostering Ecuador's economic development; and participating
in inter-American organizations. Ties are further strengthened
by the presence of an estimated 150,000-200,000 Ecuadorans living
in the United States and by 24,000 U.S. citizens visiting Ecuador
annually and by approximately 15,000 U.S. citizens residing in
Ecuador. The United States assists Ecuador's economic development
directly through the Agency for International Development (USAID)
program in Ecuador and through multilateral organizations such
as the Inter-American Development Bank and the World Bank. In
addition, the U.S. Peace Corps operates a sizable program in Ecuador.
Over 100 U.S. companies are doing business in Ecuador.
Both nations are signatories of the Rio Treaty of 1947, the Western
Hemisphere's regional mutual security treaty. Ecuador shares U.S.
concern over increasing narcotrafficking and international terrorism
and has energetically condemned terrorist actions, whether directed
against government officials or private citizens. The government
has maintained Ecuador virtually free of coca production since
the mid-1980s and is working to combat money laundering and the
transshipment of drugs and chemicals essential to the processing
of cocaine.
The United States claims jurisdiction for the management of coastal
fisheries up to 320 kilometers (200 mi.) from its coast, but excludes
highly migratory species. Ecuador, on the other hand, claims a
320-kilometer-wide (200-mi.) territorial sea, and imposes license
fees and fines on foreign fishing vessels in the area, making
no exceptions for catches of migratory species. In the early 1970s,
Ecuador seized about 100 foreign-flag vessels (many of them U.S.)
and collected fees and fines of more than $6 million. After a
drop-off in such seizures for some years, several U.S. tuna boats
were again detained and seized in 1980 and 1981. The U.S. Magnuson
Fishery Conservation and Management Act then triggered an automatic
prohibition of U.S. imports of tuna products from Ecuador. The
prohibition was lifted in 1983, and although fundamental differences
between U.S. and Ecuadoran legislation still exist, there is no
current conflict. During the period that has elapsed since seizures
which triggered the tuna import ban, successive Ecuadoran governments
have declared their willingness to explore possible solutions
to this problem with mutual respect for long-standing positions
and principles of both sides.
Principal U.S. Embassy Officials
Ambassador--Leslie Alexander
Deputy Chief of Mission--James Curtis Struble
Political and Labor--David Lindwall
Economic--Michael Glover
Commercial--Janice Corbett
Consular--Joyce De Shazo
Administrative--Charles B. Angulo
Public Affairs Advisor--Mark Krischick
Regional Security Officer--Dennis Ravenscroft
USAID--Thomas Geiger
Defense Attache--Col. Ovidio E. Perez, USA
MilGroup--Col. Michael Merz, USA
Defense Mapping Agency--James P. Hutching
Peace Corps--Jean Seigle
Agriculture--Daryl Brehm (resident in Lima)
FAA--Victor H. Echevarria (resident in Miami)
Narcotics Assistance Staff--James F. Greene
IRS--Frederick Dulas (resident in Santiago)
Guayaquil
Consul General--Timothy Dunn
Chief, Consular Section--Norman Alexander
The U.S. Embassy in Ecuador is located at Avenida Patria 120,
Quito (tel. (593)(2) 562-890/561-634).
Embassy Internet Home Page: <http://www.usis.org.ec>.
The Consulate General is at 9 de Octubre and Garcia Moreno, Guayaquil
(tel. (593)(4) 323-570).
Other Contact Information:
U.S. Department of Commerce
International Trade Administration
Trade Information Center
14th and Constitution Avenue, N.W.
Washington, D.C. 20230
Tel: 1-800-USA-TRADE
Internet: http://www.ita.doc.gov
Ecuadorian-American Chamber of Commerce - Quito
Edificio Multicentro, 4 Piso
La Nina y Avenida 6 de Diciembre
Quito, Ecuador
Tel: (5932) 507-450
Fax: (5932) 504-571
E-Mail: CCEA1@ACCEA.ORG.EC
or CCEA2@ACCEA.ORG.EC
(Branches: Ambato, Cuenca & Manta)
Ecuadorian-American Chamber of Commerce - Guayaquil
G. Cordova 812, Piso 3, Oficina 1
Edificio Torres de la Merced
Guayaquil, Ecuador
Tel: (5934) 566-481 or 565-761
Fax: (5934) 563-259
E-Mail: caecam1@caecam.org.ec
(Branch: Manchala)
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