U.S. Department of State
Background Notes: Ecuador, November 1998
Released by the Bureau of Inter-American Affairs.
OFFICIAL NAME: Republic of Ecuador
Area: 283,560 sq. km.; about the size of Colorado.
Cities: Capital--Quito (pop. 1.5 million). Other cities--Guayaquil (2.0
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.
Nationality: Noun and adjective--Ecuadoran(s).
Population (July 1997 est.): 12.1 million.
Annual growth rate: 3.4%.
Ethnic groups: Indigenous 25%, mestizo (mixed indigenous--Caucasian)
65%, Caucasian and others 7%, African 3%.
Religion: Predominantly Roman Catholic, but religious freedom
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%.
Independence: May 24, 1822 (from Spain).
Branches: Executive--president and 14 cabinet ministers. Legislative--
121-member unicameral Congress. Judicial--Supreme Court, Provincial
Courts, and ordinary civil and criminal judges.
Administrative subdivisions: 22 provinces.
Political parties: 11 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.
GDP: $20.0 billion.
Real annual growth rate: 1994, 4.3%; 1995, 2.3%; 1996, 2.0%; 1997, 3.4%.
Per capita GDP: $1,675.
Natural resources: petroleum, fish, shrimp, timber, gold, limestone.
Agriculture (12% of GDP): bananas, seafood, coffee, cacao, sugar, rice,
corn, and livestock.
Industry (41% of GDP--non-oil manufacturing 21%): petroleum extraction,
food processing, wood products, textiles, chemicals and pharmaceuticals.
Trade: Exports--$5.3 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. 31%, EU 19%, and Asia 11%.
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
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. 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.
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 protection
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 was 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 had been President of Congress and head of the small
Radical Alfarist Front party. Alarcon's interim presidency was endorsed
by a May 1997 popular referendum.
Congressional and first-round presidential elections were held on May
31, 1998. No presidential candidate obtained a majority, so a run-off
election between the top two candidates, Quito Mayor Jamil Mahuad of the
Popular Democracy party and Alvaro Noboa, was held on July 12, 1998.
Mahuad won by a narrow margin. He took office on August 10, 1998. On the
same day, Ecuador's new constitution came into effect.
The constitution provides for concurrent 4-year terms of office for the
president, vice president, and members of congress. Presidents may be
re-elected after an intervening term, while legislators may be re-
The executive branch includes 17 ministries and several cabinet-level
secretariats headed by presidential appointees. The president also
appoints Ecuador's provincial governors, who represent the central
government at the local level. Provincial prefects and councilors, like
municipal mayors and aldermen, are directly elected.
Each 2 years legislators elect from among themselves a president and
vice president of Congress. Congress meets for 2 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 6-year terms. The Supreme Court names the members of the
superior (provincial) courts, who, in turn, choose ordinary civil and
Principal Government Officials
Chief of State
President--Jamil MAHUAD Witt (since August 10, 1998)
Head of Government
President--Jamil MAHUAD Witt (since August 10, 1998)
Vice President--Gustavo Noboa
Minister of Foreign Affairs--Jose AYALA Lasso
Charge D'Affaires, Embassy of Ecuador in Washington--Fernando Flores
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
Unicameral National Congress or Congreso Nacional (121 seats; 20 members
popularly elected at large nationally, 101 members popularly elected by
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. 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. Opposition forces
in Congress are loosely organized, but historically they often unite to
block the administration's initiatives and to remove cabinet ministers.
Constitutional changes enacted by a specially elected National
Constitutional Assembly in 1998 took effect on August 10, 1998. The new
constitution strengthens the executive branch by eliminating mid-term
congressional elections and by circumscribing Congress' power to
challenge cabinet ministers. Party discipline is traditionally weak, and
routinely many deputies switch allegiance during each Congress. However,
after the new Constitution took effect, the Congress passed a code of
ethics which imposes penalties on members who defy their party
leadership on key votes.
Beginning with the 1996 election, the indigenous population abandoned
its traditional policy of shunning the official political system and
participated actively. The indigenous population has established itself
as a significant force in Ecuadoran politics, as shown by the selection
of indigenous representative Nina Pacari, who leads the indigenous
political party, Pachakutik, as second vice president of the 1998
congress. The next presidential and Congressional elections are
currently scheduled for 2002.
Ecuador's gross domestic product (GDP) reached $20.0 billion in 1997.
This represents growth of 3.4% over 1996. The economy depends heavily 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
contributes 12% 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 41% of GDP, and is becoming increasingly oriented to the
export market. Ecuador's merchandise exports for 1997 were $5.3 billion
and its imports $4.6 billion. Lower trade barriers in the region,
including free-trade agreements with Colombia, Venezuela, and Bolivia
are helping manufacturers 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 passed comprehensive legislation setting forth
protections for intellectual property rights in May 1998.
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. In 1998, the
sucre was devalued twice, and interest rates were raised to as high as
The Mahuad administration took office facing an unsustainable fiscal
deficit, at a time when, partly due to global economic problems,
investors were unwilling to loan money to Ecuador. The structural
reforms required to improve prospects for investment and growth have
been difficult to achieve.
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, two auctions of the telephone
company scheduled for late 1997 and early 1998 had to be canceled for
lack of bidders. There is substantial political opposition to
Efforts to reform the social security system in early 1998 failed after
opponents organized massive demonstrations. 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
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.
In September 1998, President Mahuad announced the cancellation of
subsidies on electricity, cooking gas, and fuel. At the same time, the
government initiated a new system of cash assistance to poor mothers and
the elderly. The net effect of these changes was to reduce the
government's fiscal deficit. Mahuad's economic cabinet has entered
discussions with the IMF concerning a possible standby agreement, which
would open the door to possible rescheduling of debt payments.
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
Ecuador's border dispute with Peru, festering since the independence
era, has been the nation's principal foreign policy issue. For more than
50 years, Ecuador maintained that the 1942 Rio Protocol of Peace,
Friendship and Boundaries left several issues unresolved. For example,
it asserted that geographic features in the area of the Cenepa River
Valley did not match the topographical descriptions in the Protocol,
thus making demarcation of the boundary there "inexecutable."
This long-running border dispute 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 were successful. 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. The commissions were 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 commissions began work in February, with the intention of
reaching a definitive agreement by May 30, 1998. The commissions on
border integration and mutual confidence measures successfully concluded
their work, and the commission working on a treaty of commerce and
navigation produced a draft treaty text, but the commission on border
demarcation failed to produce agreement by May 30. A flare-up in
military tensions in the disputed region in August 1998 led to the
creation of a temporary second MOMEP-patrolled demilitarized zone just
south of the first demilitarized zone. Presidents Mahuad and Fujimori
established direct communication by meetings and phone calls in an
effort to overcome the two countries' remaining differences. In October
1998, after asking for and receiving a boundary determination from the
guarantors, the two Presidents reached agreement. On October 26, 1998,
at a ceremony in Brasilia, Presidents Fujimori and Mahuad and their
Foreign Ministers signed a comprehensive settlement.
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
Deputy Chief of Mission--James Curtis Struble
Political and Labor--Stuart Symington
Consular--Joyce De Shazo
Public Affairs Advisor--Mark Krischik
Regional Security Officer--Lanny Bernier
Defense Attache--Col. Phillip Stewart, USA
MilGroup--Col. James Willey, USA
Peace Corps--Marcy Kelley
Agriculture--Daryl Brehm (resident in Lima)
Narcotics Assistance Staff--James F. Greene
Consul General--Timothy Dunn
Chief, Consular Section--Steven Hardesty
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
Ecuadorian-American Chamber of Commerce - Quito
Edificio Multicentro, 4 Piso
La Nina y Avenida 6 de Diciembre
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
Tel: (5934) 566-481 or 565-761
Fax: (5934) 563-259
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