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 a 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.
Disputes - international: demarcation of the agreed-upon border with Peru was completed in May 1999
Illicit drugs: significant transit country for cocaine and derivatives of coca originating in Colombia and Peru; importer of precursor chemicals used in production of illicit narcotics; important money-laundering hub; increased activity on frontiers by trafficking groups and Colombian insurgents