Ecuador – including the ancient Kingdom of Quito, established by the Shiris – was populated by several mutually antagonistic tribes at the time of the Inca conquest in the mid-15th century. When the Spanish arrived from Peru in the 1530s, they found that while many of the inhabitants were hostile, others hailed them as liberators from Inca repression. In 1533, Sebastián de Balacázar, governor of San Miguel de Piura (the first Spanish town built in Ecuador), undertook the conquest of the Inca kingdom. A year later, San Francisco de Quito was founded in a region known as
the Sierra, the central part of the country, where Indian slave labor worked large estates created by the Spanish. The other two regions were described as the Costa, the Pacific coastal plain based on the port of Guayaquil, and the Oriente, the inhospitable region between the Andes and the Amazon headwaters, where normally only missionaries ventured. The early years under the Spanish were marked by civil strife between rival families contesting power. In 1739, the viceroyalty of New Grenada was created and Quito fell under its jurisdiction until independence.
In the following century, as the Department of the South, it joined New Grenada and Venezuela to form the Federation of Gran Colombia. Spanish rule lasted until the early 19th century – after suppressing several rebellions, the Spaniards were finally overthrown in 1822, by a force backed by Simon Bolivar, fresh from victory in Colombia. Soon afterwards, in 1828, the country declared war on Peru, whose armies had invaded Gran Colombia. A year later, a peace treaty was signed and Ecuador’s boundaries were permanently established. However, relations between Ecuador and Peru have been tense ever since. In 1830, Ecuador seceded from Gran Colombia and declared independence. Almost immediately, the rivalry between Quito and Guayaquil emerged, initially over trade and then over support for rival political organizations. This rivalry, between secular and religious interests, or between landowners and the merchant/banking classes, inevitably distilled to a conflict between the two cities.
In the early 1920s, the army entered the political fray, claiming that only it could sustain national unity. The period between 1925 and 1948, when the military finally conceded that they did not have a legitimate political role, was one of the most turbulent in the country’s history, with continual changes of government, along with economic and administrative chaos. The inter-city rivalry persisted as before. After 1948, civilian administrations predominated, with power alternating between Liberals (from the Costa) and Conservatives (from the Sierra). The discovery of oil and the sharp increase in world oil prices in the late and mid 70s should have transformed Ecuador’s economic fortunes. However, the windfall was largely squandered and Ecuador has suffered persistent economic difficulties ever since.
Partly as a result of this, the Liberal/Conservative stranglehold on domestic politics was broken in 1988, when the Izquierda Democratica (Democratic Left) party took over as the largest party in a coalition government. The right recovered its control during the early 1990s but, in May 1996, the presidential election was won by the Bucaram Ortiz of the Partido Roldosista Ecuatoriano (PRE). The PRE was little more than a vehicle for Bucaram, who had a reputation as a charismatic though eccentric politician. Unfortunately, he was entirely unsuited to presidential office, and his bizarre personal behavior and irresponsible attitude towards the conduct of government led Congress to impeach him in February 1997. Bucaram promptly fled into exile in Panama, although he has since returned and contested the 2002 presidential election (see below) in which he came fifth, polling a respectable 12 per cent.
The 1998 summer presidential election brought to power the former major of Quito, Jamil Mahaud of the center-right Popular Democracy Party. The party also took control of the National Congress, in a coalition government led by Eduardo Huerta. Mahaud's main achievement was to settle Ecuador’s principal foreign policy problem – the long-running border dispute with Peru, concerning a potentially mineral-rich region of Amazonian jungle, which had flared up into full-scale fighting on several occasions during the 1990s. However, he proved unable to arrest Ecuador’s deteriorating economic situation and after just 18 months in office, in January 2000, Mahaud was forced out under pressure from the military, led by General Gutierrez, with vital support from the influential federation of ethnic Indian organizations, CONAIE. He was replaced by his deputy, Gustavo Noboa Bejarano. Under strong international pressure Noboa introduced a highly unpopular austerity program which, by the time of the most recent presidential poll in October 2002, had undermined his prospects for retaining office. In the event, he lost the second round run-off to Edwin Gutierrez Borbua of the 21 January Patriotic Movement. This was the same Gutierrez who had led the coup against Mahaud in January 2000: his party is named after the date of the action. Simultaneous national assembly elections returned a coalition government led by center-leftist Alfredo Palacio. The rise of Gutierrez has inevitably drawn comparisons with South America’s other left-wing populist leader, Hugo Chavez of Venezuela. But the more cautious Gutierrez is not keen to promote the connection and there are significant differences in the approaches and policies of the two leaders.
Government The constitution was approved by national referendum in 1978, taking effect in 1979. The President, elected for a term of four years, holds executive power. He is assisted by the Vice President and a Cabinet, which includes 12 Ministers and a Secretary General. Legislative power is unicameral and resides in the House of Representatives, with 69 members; there are 12 national representatives and the remainder represent the provinces.
Economy Following economic crisis and poverty, the adoption of the US Dollar (in 2000) has stablised the nation's economy. However, 38% of the population are still below the poverty line (2006). Growth was at 3.4% in 2008, with unemployment at 8.7% and inflation at 8.6%.
Ecuador has substantial petroleum resources, which has earned more than a half of the country's export revenue in recent years. It is the world's largest exporter of bananas and also grows coffee, cocoa, palm oil and sugar in significant quantities.
Fishing is another important sector: seafood exports have expanded rapidly to the point where Ecuador is now the world's second-largest producer of shrimps. The mining sector produces gold, silver, copper and other metals.
Ecuador is a member of the World Trade Organization. In recent years, the country's increasing oil revenues have largely been devoted to paying off the country's substantial foreign debt. Ecuador is a member of the main regional integration bodies: the Andean Union and Asociación Latinoamericana de Integración (ALADI).
