UPDATE OF ECUADOR HANDBOOK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00891A001100120001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 12, 2016
• Document Release Date: February 25, 2002
• Sequence Number: 1
• Publication Date: May 1, 1972
• Content Type: REPORT

Approved For Release 200/tlA-RDP79-00891A0011001 0001-8
iO;)
No. 0562
May 1972
Update of Ecuador Handbook
Please replace the October 1970 edition of the Ecuador Handbook with
the attached. Please retain the cover, dividers and map.
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 2002 (R.-RDP79-00891 A001100120001-8
Location . . . . . . . . . . . . . . . . . . . . . . . . . 1
Area ..........................1
Climate . . . . . . . . . . . . . . . . . . . . . . . . . 1
Topography . . . . . . . . . . . . . . . . . . . . . . . 1
Natural resources . . . . . . . . . . . . . . . . . . . . . 1
Human resources . . . . . . . . . . . . . . . . . . . . . 2
Growth rates and trends . . . . . . . . . . . . . . . . . . 1
Main sectors of the economy . . . . . . . . . . . . . . . . 1
Transportation and telecommunications . . . . . . . . . . . 2
Government economic policy and financial system . . . . . . . 3
Foreign trade and balance of payments . . . . . . . . . . . . 4
Historical background . . . . . . . . . . . . . . . . . . . 1
Structure and functioning of governmental system . . . . . . . 1
Political dynamics . . . . . . . . . . . . . . . . . . . . . 2
Security system . . . . . . . . . . . . . . . . . . . . . . 2
25X1
25X6
Page
Organization and manpower . . . . . . . . . . . . . . . . 1
Logistics . . . . . . . . . . . . . . . . . . . . . . . . . 1
Defense agreements . . . . . . . . . . . . . . . . . . . . 1
Training . . . . . . . . . . . . . . . . . . . . . . . . . 2
May 72
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 200Q/P/p TGJA-RDP79-00891 A001100120001-8
VII. FOREIGN RELATIONS
VIII. US INTERESTS
IX. CHRONOLOGY AND TABULAR DATA
Ecuador ii
May 72
25X1
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 200g1,,M A-RDP79-00891 A001100120001-8
25X1
25X6
On 15 February 1972 the armed forces removed President Jose Maria
Velasco Ibarra and assumed control of the government. It was Velasco's
fourth ouster in five terms as president. Army commander General Guil-
lermo Rodriguez Lara became president with little idea of what policies he
would follow. There was no initial opposition to the coup, but Rodriguez
may have trouble reconciling the demands of reformers with Ecuador's
resources.
Ecuador is one of the poorest and least developed countries in Latin
America. The country has basically an agrarian society, with agriculture
employing about 55% of the labor force and accounting for about one third
of the gross domestic product. Bananas, coffee, and cacao provide 85% of
Ecuador's exports. This situation is about to change, however. Petroleum
fields in northeastern Ecuador are expected to begin producing this year, and
a pipeline is under construction to carry the oil to the coast. Production will
more than meet domestic needs and will become an important source of
foreign exchange. Ecuadorean expectations may have become inflated, how-
ever, and there is certain to be controversy between the government and the
foreign companies producing the oil.
About 43% of the estimated population of 6,412,000 is illiterate, and it
is estimated that as little as 50% of the population participates in the money
economy.
The Ecuadorean armed forces total almost 25,000 men and are un-
trained for sustained combat. Military equipment is generally in fair con-
dition, but obsolete and not standardized.
May 72
25X1
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Releas
Ecuador is situated on the equator on the northwestern coast of South
America between Colombia and Peru and includes the Galapagos Islands 600
miles to the west. The Pacific coastline extends 640 miles and Ecuador
claims territorial jurisdiction and fishing rights out to 200 nautical miles
from its seacoast.
Including the Galapagos Islands, the country has an area of approxi-
mately 106,000 square miles. It is slightly larger than the state of Colorado,
and in South America is the third smallest of the independent countries,
after Uruguay and Guyana.
The climate of Ecuador is as diversified as its topography. Temperatures
are warm to hot on the coastal and interior lowlands, moderate on the lower
slopes of the Andes and on the intermountain basins, and cold at the higher
elevations. Quito, at an elevation of 9,246 feet, has an average temperature
in the sixties throughout the year. In general, Ecuador is cloudy and humid,
with moderate to heavy amounts of precipitation except in some nearly arid
coastal areas. Mean monthly precipitation in Quit-) reaches a high of seven
inches in April and a low in July of less than one inch.
Topography
The mainland consists of three distinct topographic regions: a tropical
lowland in the east, an irregular belt of plains and hills along the coast in the
west, and separating these two areas, a broad band of north-south trending
highlands containing volcano-studded mountain ranges that rise to about
13,000 feet in the south and to over 18,000 feet in the north. The ranges
enclose a series of. elevated basins. The Galapagos Islands are made up of
several large and many small, generally arid, volcanic islands and islets.
Ecuador has only a small amount of arable land, most of it in two
agriculturally rich areas. The more fertile but less effectively used zone is
Ecuador May 72
SECRET
25X1
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Releas 91AO01100120001-8
along the Pacific coast. In its central provinces of Los Rios and Guayas,
where rainfall is adequate, virtually every type of tropical product can thrive.
The other agricultural area is the highlands, where temperate crops and some
high-altitude tropical crops are grown.
Large petroleum reserves have been discovered in the northeast. Some
estimates suggest that Ecuador eventually could replace Venezuela as a
leading oil exporter, although there are conflicting reports about the sulphur
content of the Ecuadorean deposits. The oil fields should begin producing in
1972. Small quantities of gold and silver are produced, and an undetermined
amount of copper reserves has been found in southern Ecuador.
Forestry is relatively undeveloped. There are vast timber reserves, but
these are located primarily in largely unexplored tropical rain forests in the
eastern lowland and northern coastal area, where access is difficult.
Abundant off-shore fish resources, mainly tuna and shrimp, support a
fast-growing industry that is already overtaking some traditional tropical
crops as a foreign exchange earner.
The estimated population in January 1972 was 6,412,000, with an
annual growth rate of about 3.4%. The infant mortality rate is estimated at
99 per 1,000, and life expectancy is estimated at 55 years for men and 58
for women. Ethnically, about 41% of the population is mestizo, 39% Indian,
10% white, 5% black, and 5% oriental and other. The great majority of the
Indians live in the highlands, the whites and mestizos in the provincial
capitals and Quito, and almost all of the blacks, mulattoes, and Asians on the
coast. There has been a marked migration from rural areas, principally to the
provinces of Guayas and Pichincha, where the cities of Guayaquil and Quito
are located. The labor force is estimated at two million; about 12% is
organized. About 57% of the population is estimated to be literate. Spanish
is the official language, but there is a large Quechua-speaking Indian
linguistic minority.
SECRET
May 72
25X1
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Release 200 & 0R-FC -RDP79-00891 A001100120001-8
25X1
of the export crops-corn, wheat, barley, beans, potatoes, and cassava. The
typical farm is five hectares or smaller, adequate at best for subsistence
agriculture. Only 2% of the farms have more than 100 hectares, but these
occupy 60% of the farm land. Although bananas are the principal export,
Ecuador has encountered increasing competition in recent years because of
its remoteness from the main markets, poor production and marketing
techniques, and a late start in changing over to the new Cavendish variety.
These disadvantages, however, are offset by relative freedom from the
Panama disease and hurricanes, which devastate competitive areas from time
to time.
Foreign exchange earnings from Ecuador's other major agricultural
export-coffee--registered a sharp decline in 1971 to $36 million after
reaching $50 million in 1970. Export earnings from cacao, the third most
important export, rose $3 million in 1971 to $25 million.
The country has a small but growing fishing industry. Foreign exchange
earnings from exports of fish products, mainly tuna and shrimp to the US,
rose from $4 million in 1966 to $14.6 million in 1971, overtaking sugar in
importance as an export product.
Manufacturing is the second most important sector, producing about
17% of GDP, and has been one of the fastest growing sectors of the
economy. Food processing, beverages, and textiles are the most important
activities.
Ecuador's newly discovered petroleum resources will not only satisfy
domestic crude oil needs, but also will enable the country to export about
250,000 barrels per day by mid-1973. Petroleum exports should relieve
balance of payments strains, ease chronic budget problems, and help finance
new public investment.
In 1970 the mining of metals and minerals accounted for only about
2% of GDP. Small amounts of gold, silver, copper, lead, and zinc are mined.
Clay, ocher, salt, construction materials, and sulfur are the only non-metallic
minerals produced.
The development of new electric power capacity has lagged behind
consumption growth-an average 10% annually in recent years.
Transportation and telecommunications
The transportation and telecommunications systems are minimal and
generally of low quality. What facilities exist are almost exclusively in the
western half of the country.
May 72
SECRET
25X1
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 20(S1EQj'A-RDP79-00891 A001100120001-8
Highways are by far the most important medium of transport, despite
the general inferiority of the 12,800-mile network. The road pattern consists
essentially of the Pan American Highway, which runs 703 miles from the
northern to the southern border, and a number of east-west roads from
Pacific ports to various centers in the interior.
The state-owned railroad-710 miles of narrow gauge, single track-is
badly managed and in poor condition.
Almost all foreign trade leaves Ecuador by ocean shipping. The Ecua-
dorean-flag merchant fleet, however, carries only about 6-8% of the volume.
The all-diesel-powered fleet is composed of six cargo ships and two tankers.
There are 13 ports, one principal, one secondary, and 11 minor. Exporting
from Guayaquil, which far exceeds that of all other ports, 'totals over one
million tons a year and consists of bananas, rice, sugar, coffee, cacao, balsa,
and Panama hats. The government is planning to set up a shipping company
to handle 50% of the petroleum exports.
A well-developed civil air network crosses the rugged terrain between
the coastal areas and the population centers of the mountains. Ecuador is
linked to most of the major cities of the Americas by regularly scheduled
flights both of foreign air carriers and its own two international airlines.
Maintenance at civilian airfields is inadequate, although military airfields are
generally in good to excellent condition.
The national telecommunication network does not provide adequate
service to the government, commercial activities, or the public, and many
private firms have had to develop their own systems. Although the open wire
network is much more extensive, the growing radio-relay system is assuming
increased importance as the primary means of intercity telecommunications.
Most of Ecuador's international service was furnished by the All American
Cable and Radio Corporation (AACR), a subsidiary of International Tele-
phone and Telegraph. In early 1970, the government nationalized AACR.
Nearly all broadcast stations are commercially operated. In 1971 there were
about 200 AM stations, 15 FM, and 1 1 TV stations licensed to operate with
an estimated 650,000 radios and 70,000 television sets.
Government economic policy and financial system
The Ecuadorean Government exercises a moderate degree of influence
over the economy through public enterprises and various types of controls.
May 72
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Rele - - 0891A001100120001-8
In 1970 there were over 1,000 autonomous and decentralized agencies.
Under the dictatorial powers assumed by President Velasco on 22 June
1970, the government took direct control over some of these agencies in a
sweeping effort to modernize the inefficient fiscal structure. Prior to this the
central government retained only about two thirds of the revenues it col-
lected, the rest being transferred to these agencies.
Economic policy since the early 1950s has been directed toward the
rapid development of the coastal area through public investments in in-
frastructure, notably highways and port facilities. The rapid growth of
banana exports during the 1950s through the mid-1960s raised public sector
revenues and provided the financial means to increase government expendi-
tures. Since that time, however, the government's chronic financial dif-
ficulties have adversely affected public investment in infrastructure facilities.
Shortly after taking office, the finance minister of the Rodriguez govern-
ment announced that the Velasco administration had left the country's
finances in chaos and that another large budget deficit was in prospect unless
spending was reduced.
Economic development has relied heavily on private enterprise. Govern-
ment action has been more direct and effective in stimulating both foreign
and private investment in manufacturing than in agriculture.
The banking system consists of the Central Bank, private commercial
banks (including mortgage banks and branches of foreign banks), and several
specialized banking and credit institutions. Among the specialized institu-
tions are the government-owned National Financial Corporation, the pri-
vately owned Ecuadorean Development Finance Company (COFIEC), the
National Development Bank, and the Ecuadorean Housing Bank. Ecuador's
financial system is rounded out by a group of savings banks, a large number
of credit cooperatives, private finance companies, social security funds, and a
number of licensed insurance companies.
The development of the economy has been impaired by a lack of a
well-developed capital market. Short-term credit is readily available for
established firms from commercial banks. The development of institutions
for medium- and long-term investment financing, however, has lagged behind
the needs of the economy, although some improvement has been made.
Foreign trade and balance of payments
In 1971 Ecuador experienced serious balance-of-payments problems.
Although exports rose an estimated 8%, imports increased 11%, resulting in a
May 72
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Relpase 891 A001100120001-8
$40-million foreign trade deficit and strong pressure on foreign exchange
reserves. Net foreign exchange reserves declined sharply from $56 million at
the end of 1970 to $25 million at the close of 1971, the lowest year-end
reserve position since 1949. Just before Velasco's ouster, his government
successfully concluded negotiations with a consortium of US commercial
banks for a $50-million loan, but the Rodriguez government has been unable
to follow through on the deal.
As Ecuador has faced increasingly stiff competition in selling bananas in
its traditional markets, the government has turned toward European Com-
munist countries. Ecuador's exports of bananas and other tropical products
to the Soviet Union, Bulgaria, East Germany, Hungary, and Romania have
been far greater than its imports from those countries. The result has been a
steadily growing credit balance with them that totaled $9.6 million at the
beginning of 1971.
May 72
SEUKE'l
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Release 200//:REIA-RDP79-00891 A001100120001-8
Ill. POLITICAL SITUATION AND TRENDS
Historical background
Ecuador became independent in 1822 and for eight years joined its two
northern neighbors, Colombia and Venezuela, in the Confederation of Gran
Colombia. Independence brought few changes in the economic and social
structure imposed by Spain, however, and Ecuador continued to be ruled by
a small white minority. Political turmoil has marked Ecuador's republican
period, with regional and personal rivalries, rather than issues, providing
diversity within the ruling elite. The greatest single force in politics has been
the succession of strong leaders, or caudillos, and political movements have
proliferated around their personalities. The armed forces have frequently
been used in the competition for political power. Due in part to this
historical background, Ecuador has failed to develop apolitical and fully
professional armed forces, to build proper regard for legality and con-
stitutionalism, or to establish strong political institutions.
Structure and functioning of governmental system
When the armed forces took power in February 1972, President
Rodriguez announced the reinstitution of the Constitution of 1945. This
document was drawn up under leftist auspices and gives the legislative
branch relatively strong power. Under the present government, a three-
member government council is supposed to exercise legislative power, but
Rodriguez has generally ignored the council. President Rodriguez exercises
executive power with the advice of a cabinet composed primarily of military
men. Government decisions are announced by decree over Rodriguez'
signature.
The Supreme Court supervises the judicial system. At the lower levels
of the judiciary bribery is routine, and at higher levels political influence is
keenly felt. Nevertheless, the legal profession is highly respected, and the
opinions of the higher court judges in most cases carry much weight. In
March 1972 the judicial system was reorganized; other changes are expected
by the end of the year.
Ecuador is administratively divided into provinces, cantons, and
parishes, each headed by a presidential appointee. Municipal councils,
especially in provincial capitals, have been relatively strong institutions, and
their semiautonomous status has been a major factor in orderly government
on the local level.
SECRET
May 72
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 200:gWR: W-RDP79-00891 A001100120001-8
Political dynamics
Political activity remains the preserve of an educated elite consisting of
roughly 10% of the population. Within this political arena, the most im-
portant single factor has been the cult of the leaders' personalities. Most
parties were formed for the express purpose of furthering the political
ambitions of a particular leader. This has led to a multiplicity of parties but a
scarcity of programs for furthering popular aspirations. Regional rivalry
between the coastal and highland areas continues to restrain the develop-
ment of nationally organized parties.
The most striking example of the leader personality during the past 35
years has been Jose Maria Velasco Ibarra, who has been ousted from the
presidency four of the five times he has held the office. Velasco's charismatic
appeal has been able to cut across social, economic, party, and class distinc-
tion,
Political parties-The only non-Communist political parties in Ecuador
not consistently and directly linked to the political ambitions of one man are
the two traditional parties, the Conservative and the Radical Liberal. Both
were founded in the 19th century and tend to represent the highlands and
the coastal areas respectively. Political parties did not oppose the coup of
February 1972.
Ecuador's principal political problem remains the lack of a broad
electorate with enough sophistication to want and to recognize rational
political leadership dedicated to improving the general material well-being.
Although the size of the electorate is growing, the country remains under the
control of a white, elite oligarchy with well over half of the population
functionally disenfranchised by cultural and economic barriers.
Security system
The police have been generally effective in urban areas and capable of
identifying and locating developing insurgent elements and their activities
there. The rural police, however, because of lack of manpower and weak
intelligence operations, could not control any guerrilla activities that might
appear.
President Velasco undertook an expansion and upgrading of the police
force. Even so, corruption continues, and the police force still lacks cohesion
and effectiveness.
May 72
25X6
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 25X1 Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Rele ase " - - 91AO01100120001-8
Political instability has been fostered by social, political, and economic
differences and long-standing rivalries and jealousies between residents of the
coast and those of the capital city of Quito. Economic problems, based on
the failure of Ecuador's many governments to deal with widespread poverty,
illiteracy, and primitive living conditions, add to the instability. Segments of
the largely mestizo middle class, dissatisfied with the slow pace of economic
development and unable to secure employment commensurate with their
education and ambitions, are attracted by the "rapid solutions through
revolution" espoused by some political extremists.
There are numerous leftist subversive groups, but they are small and
divided and lack the leadership that would give them either a substantial
political influence or the capability to overthrow the government by force.
These include the two major Communist parties-the soft-line Communist
Party of Ecuador (PCE), which follows Moscow's direction, and the smaller
hard-line Communist Party of Ecuador Marxist/Leninist (PCE/ML), which
favors violent overthrow of the government. There are also the small Revolu-
tionary Socialist Party of Ecuador (PSRE), which tends to favor a Cuban-
style revolution, the small Socialist Party of Ecuador (PSE), and the Move-
ment of the Revolutionary Left (MI R). Although technically illegal, these
parties have been allowed relative freedom of operation since 1966.
The Communists have had some success in penetrating such target
groups as organized labor and student movements. The Communists have
been able to capture the leadership of such organizations as the Con-
federation of Ecuadorean Workers (CTE), the Federation of Ecuadorean
University Students (FEUE), and the Federation of Ecuadorean Secondary
Students (PESE), but they have usually been unsuccessful in involving these
organizations in situations that lack broad popular support.
Subversion leading to the overthrow of the regime has been an historic
part of Ecuadorean political life. Most political leaders are forced by cir-
cumstances at least to consider subversion as a method for achieving office.
In the process, non-Communist politicians often have formed alliances of
convenience with extremist elements and professional revolutionaries.
Ecuador May 72
25X1
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 25X6 Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
Next 1 Page(s) In Document Exempt
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Release 200Z+,J (0R: K TA-RDP79-00891 A001100120001-8
Organization and manpower
The armed forces of Ecuador consist of an army of about 20,000 men,
a navy of 1,600 men and 6 patrol ships, and an air force of 1,655 men and
23 jet aircraft.
The missions of the armed forces are to maintain internal security,
defend the nation from aggression, and support civic action projects. The
armed forces are capable of maintaining internal security in urban areas.
They are not capable of defending against external attack, waging aggressive
war, or combating guerrillas on a large scale.
There are no paramilitary forces capable of contributing substantially
to army ground combat strength. The National Civil Police, numbering
slightly over 6,000, is subordinate to the minister of government. The police
receive training and equipment from the US.
The military budget for the fiscal year ending 31 December 1971 was
$22.9 million, about 11% of the total budget.
Logistics
The armed forces have a heterogeneous collection of European and US
equipment in fair condition, considering its age. Weapons are well main-
tained. Vehicle maintenance varies from excellent to poor, and vehicles are
too few and too widely dispersed to add significantly to the mobility of
infantry units.
Defense agreements
Ecuador is a member of the Inter-American Defense Board and a
signatory of the Rio Pact, which provides for collective support of American
countries threatened by aggression. An Israeli military assistance team
advises on agrarian training within the military establishment.
Training
The armed forces lack the training for sustained combat. Numerous
Ecuadorean military personnel have attended service schools in the US.
Ecuador May 72
SECRET
25X1
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Release 20021 _7O'LR4'RDP79-00891A001100120001-8
25X1
Army and Navy line officers are products of their respective service
academies, where academic standards are generally high. Air Force officers
often graduate from the Army Academy, the Naval Academy, or the univer-
sities and then attend flying school. Only one out of ten conscripts has
completed the third grade because of limited educational facilities. Selected
officers have been trained in the US and the Panama Canal Zone, as well as
in Brazil, Venezuela, Chile, Argentina, Spain, and West Germany.
Now that the armed forces have seized control of the government, they
are trying to expand their expertise in economic and social sciences. Even
before the coup, several officers had been sent abroad for training in
petroleum matters to enable the military to keep track of petroleum
operations. This trend is expected to continue.
May 72
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release - - 891A001100120001-8
Ecuadorean foreign policy has centered historically on boundary prob-
lems arising from the lack of clearly defined frontiers. The major preoccupa-
tion has been with Peru, largely because of Ecuador's frustrated longing to
realize its claims, based on colonial Spanish territorial divisions, to a portion
of the upper Amazon Basin.
Efforts to find a diplomatic solution foundered on Ecuador's unrealistic
demand for jungle territory that it had never actually controlled and on
Peru's unwillingness to yield anything it had occupied. In July 1941, Peru
invaded El Oro Province on the Gulf of Guayaquil. Aware that its own
armed forces were no match for the Peruvians, Ecuador, in order to secure
the withdrawal of Peruvian forces from occupied provinces and to avert
further encroachments, reluctantly accepted a settlement-the Rio Proto-
col-at Rio de Janeiro on 29 January 1942, to be guaranteed by Argentina,
Brazil, Chile, and the US. Although the Rio Protocol looked to the drawing
of a specific boundary, Ecuador has sought to keep its basic claim open. The
anniversary of the protocol has often been the occasion for demonstrations.
The most intractable problem with the US results from Ecuador's
efforts to claim and enforce a 200-mile limit in its territorial waters.
Ecuador, along with Peru and Chile, considers these waters valuable to its
fishing industry and wants to ensure that this resource is not exploited by
other maritime nations. As a result, sizable numbers of foreign fishing
vessels-mostly US-are seized and fined each year, usually leading to pro-
tests by the US. Ecuadoreans believe that Washington's policy of reimbursing
US fishermen for fines paid to Ecuador for these violations only encourages
further flouting of the law. US legislation requires that foreign military sales
be suspended for one year following such seizures, and this action has
strained relations between the two countries.
President Velasco's government established closer diplomatic relations
with the Soviet Union and several Eastern European countries. During 1969
Velasco re-established or re-activated diplomatic relations with the USSR,
Poland, Czechoslovakia, Romania, and Yugoslavia. Consular relations with
Bulgaria were established in July 1969, and diplomatic relations with Hun-
gary were formalized in January 1970. In most cases, ambassadors have not
yet been exchanged, and the Polish and Romanian ambassadors in Caracas
are accredited to Quito. All these countries already have or, like East
Germany, plan soon to open trade missions or consulates in Quito. In 1972
Ecuador broke diplomatic relations with Nationalist China, but no formal
ties have been established with Peking.
Ecuador May 72
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 200
5JR7ErP1A-RDP79-00891AO01100120001-8
VIII. US INTERESTS
The primary US economic interest in Ecuador is the large private
investment in the petroleum fields in the east. At mid-1972 this investment
totaled about $300 million, mostly by the Texaco-Gulf consortium. Part of
this investment is in a 300-mile pipeline from the oil fields to Esmeraldas,
where a deep-water port and crude oil storage facilities are being con-
structed.
The US provides about one third of Ecuadorean imports, but the
proportion is falling steadily. Japan, Canada, and Western Europe are all
improving their positions in the Ecuadorean market, and are taking an
increased share of direct investment.
Between 1946 and 1970, the US provided Ecuador $287 million in
economic aid-$192 million in loans and $95 million in grants. In the same
period, US military assistance amounted to $54 million.
US military commitments to Ecuador are those covered by the general
inter-American agreements, including the Rio de Janeiro Pact of 1947 and
the Inter-American Treaty of reciprocal military assistance.
Ecuador May 72
sEcRr;-1
25X1
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Release 200 2MCOrR.I -RDP79-00891 A001100120001-8
Chronology of Key Events
1941 (July-August) Ecuador suffers humiliating military defeat by
Peru in border war.
1942 (29 January) Protocol signed at Rio de Janeiro defining the
disputed borders with Peru and providing for their definitive
demarcation under the guarantee of Chile, Argentina, Brazil,
and the United States.
1944 (May) Coup returns Jose Maria Velasco Ibarra to power.
1946 (December) New constitution promulgated.
1947 (August) Velasco ousted by military coup.
(September) Carlos Julio Arosemena declared interim pres-
ident by Congress.
1948 (June) Galo Plaza Lasso, candidate of an ad hoc political
coalition, elected president in one of the country's rare fair
national elections.
1952 (June) Velasco Ibarra, candidate of the National Velasquista
Movement, elected president; first transfer of power by an
elected president to an elected successor in more than three
decades.
1956 (June) Camilo Ponce Enriquez elected president; the first
Conservative elected to the office in 60 years.
1960 (June) Velasco Ibarra elected president for fourth time.
1961 (November) Velasco ousted by popular and military action;
replaced by leftist vice president Carlos Julio Arosemena (son
of previous president with same name).
1963 (July) Arosemena lenient toward Com-
munists-ousted by arme orces; mi i ary junta takes power.
Ecuador May 72
sEcRET
25X1
25X6
25X1
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8
 Approved For Release 200 S8Q;I1 -RDP79-00891 A001100120001-8
1966 (30 March) Junta resigns following widespread agitation by
politicians, students and vested business interests; Clemente
Yerovi Indaburu named interim president.
(15 October) Direct popular elections held for 79-man con-
stituent assembly.
(16 November) Otto Arosemena Gomez elected interim con-
stitutional president by constituent assembly.
1967 New constitution adopted: Arosemena term extended to 1
September 1968; national elections scheduled.
1968 (2 June) Jose Maria Velasco lbarra elected in close three-way
presidential race. Bicameral legislature also elected: nearly
equally divided among Velasquistas, center-left coalition, and
center-right coalition.
(1 September) Jose Maria Velasco Ibarra becomes president
for fifth time in final phase of full return to constitutional
government.
1970 (22 June) President Velasco assumes extra-constitutional
power in face of continuing financial crisis and student
disorders. Congress closed and modified version of 1946
constitution re-imposed.
1972 (15 February) President Velasco again ousted by military
coup; army commander General Guillermo Rodriguez Lara
becomes president.
May 72
25X1
25X1
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 20021 7O R J $RDP79-00891 A001100120001-8
Holidays and Significant Dates
29 January Rio Protocol Day
1 May Labor Day
24 July Birthday of Simon Bolivar
10 August Quito Independence Day
9 October Guayaquil Independence Day
106,000 sq. mi., including Galapagos Islands; 11% cultivated; 8%
meadows and pastures; 55% forested; 26% waste, urban, or other (1961)
Claimed limits of territorial waters: 200 n.m.
Population: 6,412,000 (Jan. 1972 est.) (excluding nomadic Indian
tribes); males 15 to 49, 1,494,000; 955,000 fit for military service; average
number reaching military age (20) annually 63,000
Ethnic divisions: 41% mestizo, 39% Indian, 10% white, 5% Negro, 5%
oriental and other
Religion: 95% Roman Catholic (majority nonpracticing), trace of
Evangelical
Languages: Spanish, Quechua
Literacy: 57%
Labor force: 2 million, of which 55% agriculture, 16% manufacturing,
4% construction, 7% trade, 9% services, 9% other; shortage of skilled labor
Organized labor: 12% of labor force
25X1
Legal name: Republic of Ecuador
Capital: Quito
Political subdivisions: 19 provinces and one territory (Galapagos
Islands)
May 72
25X1
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 2002/7'RDP79-00891 A001100120001-8
Type: unitary republic
Legal system: based on civil law system; modified 1945 constitution
replaced 1946 constitution in February 1972; legal education at four state
and two private universities; has not accepted compulsory ICJ jurisdiction
Branches: President and government council assumed power by coup in
February 1972.
Government leader: President Guillermo Rodriguez Lara
Political parties: National Velasquista Front, Radical Liberal Party,
Social Christian Party, Conservative Party, Concentration of Popular Forces,
National Revolutionary Party, Communist Party
Voting strength: in June 1968 national elections, Velasquistas, a
center-left coalition, and a rightist coalition each got approximately one
third
Communists: 500 in three parties plus 400 in pro-Castro Revolutionary
Socialist Party, 400 youth, 3,000 sympathizers
Member of: UN (ECOSOC, IAEA), OAS, IADB, LAFTA and Andean
Sub-Regional Group (formed in May 1969 within LAFTA)
GNP: $2.8 billion (est. 1970), $460 per capita; 86% consumption, 14%
gross investment (est. 1970); 1971 real growth rate est. 6%
Agriculture: main crops-sugar cane, beans, coffee, cotton, corn,
bananas, cocoa, rice; nearly self-sufficient; caloric intake, 2,100 calories per
day per capita (1964)
Major industries: food processing, textiles, cement, leather and rubber
products, drugs, fishing, petroleum
Electric power: 270,000 kw. capacity (1970 est.); 950 million kw.-hr.
produced (197C)); 160 kw.-hr. per capita
Exports: $235 million (f.o.b., 1971 est.); bananas, coffee, cacao
Imports: $275 million; agricultural and industrial machinery, petroleum
products, chemical products, transportation and communication equipment
Major trade partners: US, 37%; EC, 22%; Japan, 14% (1970)
Aid: Economic-extensions from US (FY46-70), $192 million loans,
$95.2 million grants; from international organizations (FY46-70), $152.4
million; from Communist countries (1954-70), $15.4 million loans
Military-assistance from US (FY49-70), $53.6 million
Monetary conversion rate: 25.25 sucres=US$1 (official selling rate)
Fiscal year: calendar year
COMMUNICATIONS
25X1
Railroads: 710 mi.; 615 mi. 3'6" gauge, 95 mi. 2'51/2" gauge; all single
track; government owned (1965)
May 72
Approved For Release 2002/05/07 : CIA-RDP79-00891A001100120001-8
 Approved For Release 200'1 A-RDP79-00891 A001100120001-8
25X1
Highways: 12,800 mi.; 1,800 mi. paved, 4,000 mi. gravel, 3,800 mi.
improved earth, 3,200 mi. unimproved earth
Inland waterways: 960 mi.
Pipelines: crude oil, 300 mi.; refined products, 50 mi.
Ports: 2 principal, 11 minor
Merchant marine: 8 ships (1,000 GRT or over) totaling 40,100 GRT,
48,600 DWT; includes 6 cargo, 2 tanker
Civil air: 14 major transport aircraft
Airfields: 187 total, 161 usable; 14 with permanent-surface runways; 6
with runways 8,000-11,999 ft.; 16 with runways 4,000-7,999 ft.; 3 seaplane
stations
Telecommunications: expanding radio relay system, facilities adequate
only in Quito and Guayaquil; 95,000 telephones; 650,000 radio and 70,000
TV receivers, 200 AM, 15 FM, and 11 TV stations
Personnel: army about 20,000, navy 3,000 (including 425-450
marines), air force 1,655 (101 pilots)
Major ground units: 6 divisions, 5 separate battalions
Ships: 2 patrol escorts (plus 1 inactive), 7 other patrol ships and craft, 3
amphibious warfare ships, 3 auxiliaries, 10 service craft
Aircraft: 79 (22 jet) in air force, 3 (prop) in navy, 8 (prop) in army
Supply: dependent primarily on US; some major purchases from
Western Europe
Military budget: for fiscal year ending 31 December 1971, $22.9
million (about 11.3% of national budget)
25X1 C
May 72
25X1
I
SECRET
Approved For Release 2002/05/07 : CIA-RDP79-00891AO01100120001-8