Policy Statement Prepared in the Department of State
The primary objectives of the United States with respect to Ecuador are to maintain and to strengthen the cooperation of the Republic of Ecuador towards hemisphere security; to continue Ecuadoran support for United States regional and world policies; to encourage the establishment of more stable, democratic and responsible government in that country; and to further Ecuadoran economic development along lines compatible with United States economic and commercial policies.
Hemisphere Security. In view of Ecuador’s extremely weak military potential, it does not appear that she is in a position to take any direct military action herself toward hemisphere security. It is possible, however, for Ecuador to contribute toward the security of the Western Hemisphere by furnishing military bases for use in the collective defense of the hemisphere2 in the event of an emergency; maintaining a military establishment sufficient to keep internal order and to prevent sabotage; and through participation in regional defense arrangements and organizations to maintain peace and friendly relations with other states.
During World War II the Government of Ecuador permitted the establishment of United States naval and air bases in the Galapagos Islands and on the mainland at Salinas. These bases were important to United States military plans since Ecuador is within five hundred miles of the Panama Canal. The bases were evacuated by the US after the termination of the war and returned to the Ecuadoran Government. The Joint Chiefs of Staff has cited the need for a new agreement with Ecuador which would, in the event of war, afford the US armed forces military rights to occupy and operate a base on the Galapagos Islands. President Plaza has assured our Embassy at Quito that his Government is willing to reach a satisfactory agreement on the military use of these islands and publicly stated, on an official visit to the US in June 1951, that Ecuador would furnish military bases to [Page 1407] the US in the event of a future emergency.3 While it is therefore believed that we can rely upon the friendly cooperation of the Ecuadoran Government in working out renewed base arrangements, opposition to such arrangements based on nationalistic considerations will doubtless arise when negotiations are undertaken. A measure of the popular attitude is reflected by the fact that President Plaza found it necessary to inform the Ecuadoran people that he had made no formal commitment to the United States during his state visit here respecting military bases in the Galapagos Islands.
In order to reduce the possibility of friction, our view is that any agreement which may be concluded should be based upon the mutual obligation of both governments to cooperate in the defense of the hemisphere and provide for concrete contributions on the part of each toward the establishment of military facilities in the Galapagos adequate for common defense needs.
Before undertaking negotiations with Ecuador, the Department is awaiting the views of the Joint Chiefs to Staff as to the conditions which they would want to include in such an agreement.
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Encouragement of Stable Democratic Government. The Republic of Ecuador is one of the most politically unstable countries of South America. It has been traditionally governed under a constitutional system very similar to our own which guarantees the rights of the individual which we consider to be basic. While it is too early to detect a trend, it is encouraging that the present chief executive, Galo Plaza Lasso, was elected President in an unusually free election (June 1948). He was educated in the United States and is considered to be capable and enlightened. A cardinal point of President Plaza’s policy has been scrupulously to follow constitutional procedures in governmental administration and to permit the utmost freedom of discussion and opinion on all public issues. In short, he has been making sincere efforts to guide Ecuador toward more democratic government.
In recognition of President Plaza’s leadership in Ecuador’s progress toward a more democratic and stable political regime, President Plaza was invited by President Truman to make an official visit to the US. The visit, which took place in June 1951, emphasized the importance we attach to the maintenance of representative government and democratic procedures in Latin America. It also stressed the community of interests of the US and Ecuador, and by implication all of Latin America, in the common cause of the free countries of the world in meeting the communist menace. It is believed that the prestige that [Page 1408] President Plaza gained from this state visit increased his popularity in Ecuador and thereby served the cause of democracy in the Americas.
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… We have also proposed an FCED Treaty to Ecuador in order to establish a sound basis for the attraction of private US capital for local economic development. While Ecuador has shown some interest in this treaty, the Ecuadoran Government has as yet been slow to begin definitive negotiations. While we wish to obtain a satisfactory treaty with Ecuador, we have not vigorously pressed for action because we wish to avoid the impression that its advantages would largely accrue to the US and because careful advance exploration of the probable Ecuadoran position on the treaty provisions on expropriation, commercial policy and navigation appear necessary in order to determine whether a suitable basis for negotiation exists. Ecuador’s protectionism in commercial and shipping matters, its special favors to other Gran Colombiana countries and possible unwillingness to accept the principle of just compensation in the event of expropriation raise questions as to whether formal negotiations should be pressed at the present time.
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Our commercial and trade relations with Ecuador are largely governed by the Trade Agreement of August 6, 1938 as modified by an exchange of notes of March 2, 1942.4 Under the exchange of notes, the United States waived its rights under the Trade Agreement to protest projected increases in customs duties by Ecuador on certain products included in Schedule I of the Trade Agreement designed to meet a financial emergency arising from curtailed exports due to the war. While the waiver had no specific time limitation, Ecuador agreed to reduce and finally to eliminate the duty increases as improvement in its fiscal situation might permit.
Since 1947, Ecuador has maintained in effect a system of graduated taxes upon foreign exchange transactions. Since we consider that these taxes constitute a contravention of the Trade Agreement in that they serve to increase import charges upon certain US exports to Ecuador that are covered by the Agreement, we have formally discussed this matter with the Ecuadoran Government. Ecuador, however, takes the position that these exchange taxes cannot be classed as customs duties and that in any case they are permitted by the 1942 exchange of notes which Ecuador considers gave it full liberty to increase duties on items listed in the Trade Agreement.
While we cannot yield to the Ecuadoran position, careful consideration is being given to the problem since it is possible that Ecuador [Page 1409] would prefer to let the Trade Agreement lapse rather than to permit modification of its control over foreign exchange transactions. The problem is complicated by the fact that the exchange taxes form part of an Ecuadoran program to protect foreign exchange reserves and to increase revenues for the purpose of economic development.
c. relations with other states
A long standing boundary dispute with Peru, which resulted in open military conflict in 1941, is in the process of solution under terms of settlement outlined in the Rio Protocol of 1942. The execution of this Protocol, which sets forth the main geographic features of the new boundary, is under the guaranty of Brazil, Argentina, Chile and the United States. Demarcation of the boundary has proceeded slowly but satisfactorily except for differences of opinion respecting two sectors of the border. One involves the Santiago-Zamora area in the southeast and the other the Lagartococha region in the extreme northern part of the boundary. The latter dispute was the subject of an Arbitral Award in 1945 to which Ecuador and Peru give differing interpretations. Various unsuccessful attempts have been made by the guarantors to assist the disputants to resolve this disagreement. While we have proposed that the question of law involved should be submitted to an international judicial body such as the ICJ for adjudication, this suggestion was not adopted by the other guarantors since some believe that the question was not susceptible of adjudication, that the guarantors had no authority to impose their viewpoint (Peru opposed submission of the dispute to the ICJ) and because they believed that the matter should be settled within the inter-American system.
The Santiago-Zamora dispute arose in 1948 because of Ecuador’s insistence that it was impossible to fix the boundary in that area as provided in the Protocol because subsequent investigation disclosed the existence of an extensive river system which created a doubt as to the location of the boundary in that region. Peru maintains that the boundary in the area was fixed by the findings of a Brazilian arbitrator in 1945 and that the river system in question has no bearing on the location of the boundary. This dispute has been complicated by the fact that Ecuador has announced that it cannot accept any final settlement that will not accord her “substantial access to the Maranon (river)” which would provide an outlet to the Amazon. The implication is that, regardless of the Protocol, Ecuador intends to insist upon an outlet to the Amazon in the area in dispute. With like disregard for what a study of the facts and geographical realities in the area might disclose, Peru has publicly stated that it will never agree to granting Ecuador access to the Maranon.[Page 1410]
As the result of tension created by these disagreements, border incidents have occurred from time to time between the armed forces of the two countries further embittering relations.
Following a border incident in August 1951, both countries requested the aid of the guarantors to fix the responsibility for this latest incident and to assist in the solution of the two unresolved boundary questions. The guarantors are currently meeting in Rio de Janeiro to consider means to assist the disputants to reach a definitive settlement of these issues. The Brazilian Foreign Office has been charged by the guarantors to consult with Peru and Ecuador regarding the possibilities of a direct agreement between them or as to recourse to any other method for solution of their difficulties.
Relations have been particularly friendly with Colombia although the unsettled political situation there has caused some anxiety in Ecuadoran Government circles lest Colombian dissidents involve the local government in their internal conflicts. The basically friendly attitude of Colombia toward Ecuador is reflected in open sympathy for Ecuador in its boundary dispute with Peru and in its desire to join with Ecuador in the formal establishment of closer economic and cultural ties as provided in the Quito Charter.
A special relationship exists among the four former Gran Colombiana countries: Ecuador, Colombia, Panama, and Venezuela. This feeling of kinship, which is perhaps stronger in Ecuador than in any of the other three nations, took concrete form in the adoption by these countries of the Quito Charter in 1948. This Charter, as yet unratified by Venezuela and Panama, provides for the creation of closer economic and cultural ties among the signatories. It envisages the establishment of a Gran Colombiana economic council, an eventual customs union, cultural exchanges, and close cooperation in the fields of science, industry, communications and finance. While a provisional economic council was established in Caracas in 1950, no action has as yet been taken along the lines laid down in the Charter, and it is doubtful at this stage whether this embryonic organization will produce any concrete results in the reasonably near future. Nevertheless, there is a strong sentiment in Ecuadoran Government circles that closer economic and cultural relations among these countries would result in accelerated economic progress and place the members of the group in a stronger diplomatic position vis-á-vis their Latin American neighbors, as well as other foreign countries. The creation of the Gran Colombiana Merchant Fleet in 1946 by Ecuador, Colombia and Venezuela was a forerunner of these broader efforts toward economic integration. Its success in competing with well established foreign shipping lines provided a stimulus to economic collaboration among these countries. Our policy is not to oppose closer economic integration [Page 1411] of the Gran Colombiana countries provided that it does not result in commercial discrimination against the US.
Ecuador has no formal diplomatic relations with the USSR or Soviet satellite states except Czechoslovakia and Poland. Trade with these countries has been insignificant and Ecuador readily agreed to the certification required by the Kem Amendment. A small but active Communist party has important influence in the labor movement as well as in Ecuadoran cultural and educational institutions and groups. The local Communist party, which has legal status in Ecuador, maintains intercourse with several local political factions and leaders. There is evidence that this party maintains contact with communist groups in other Latin American countries and with the communist officials in the USSR and satellite countries. There is sufficient communist strength within the relatively weak CTE (Confederation of Workers of Ecuador) to maintain the organization’s affiliation with the communist-dominated CTAL. The CTE is the sole remaining national labor federation, not entirely and clearly dominated by communists, which retains this connection.
The objectives of the local Communist party appear to be to foster anti-US sentiment, create unrest and discontent in Ecuador when opportunity offers, and to be in a position to prevent Ecuador from providing assistance to the US in the event of war with Russia. To combat this communist threat, we continue to expose the true nature of the objectives of world communism with the aid of our information programs and through regular diplomatic channels.
d. policy evaluation
Our policies have in general produced favorable results. There is little doubt that the Ecuadoran Government and people are basically friendly and cooperative. Ecuador supported the cause of the United Nations during the war, providing important military bases to the US and scarce materials for the war economy. More recently Ecuador has consistently supported the US in its fight against communism carried forward in the UN and other international agencies. It is believed that, in the event of the involvement of the US in war, Ecuador would again cooperate in the establishment of any needed military bases, furnish war materials, and render other assistance within the limits of its resources.
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There is some belief within the Government of Ecuador that US commercial policy does not fully recognize the economic problems faced by an underdeveloped country. Ecuador gives lip service to the principle that reduction of tariffs and elimination of other trade barriers is desirable, but evidently believes that the principle should be modified to permit tariff and other protection for local industries, trade preferences [Page 1412] to encourage trade with neighboring states, and freedom to exclude or reduce selected imports both for protective purposes and for reasons of economic development through the regulation of foreign exchange. Moreover, the belief is held that tariff policy should be subordinated to fiscal needs since a considerable portion of governmental revenues are derived from import and export duties and charges.
While we recognize that Ecuadoran fiscal needs must be taken into consideration by Ecuador in the establishment of import duties, we have been reluctant to waive, except in an emergency, our right to Ecuadoran duty concessions exchanged for substantial tariff concessions on our part. We recognize also that Ecuador may require exchange controls for the purpose of protecting its monetary reserves, but believe that such controls should be applied in a non-discriminatory manner against US imports.
Since Ecuador has indicated that it regards any suggestions on our part for the reduction of charges on US exports as interference with its fiscal and financial policies, it will continue to be difficult for the US to obtain full compliance with the existing Trade Agreement and to obtain Ecuadoran conformity with the principles which the US subscribes to in GATT5 and which it is advocating for general adoption by countries not members of GATT.6
- The portions omitted from this policy statement duplicate material in the policy statement for Ecuador for the previous year, which is printed in Foreign Relations, 1950, vol. ii, p. 855.↩
- For documentation concerning United States policy with respect to hemisphere defense and related matters, see pp. 985 ff.↩
- President Galo Plaza’s statement concerning military bases on the Galapagos Islands was part of a toast to President Truman at a state dinner given by President Galo Plaza in honor of President Truman at the Statler Hilton Hotel in Washington, June 22, 1951; for text, see Public Papers of the Presidents of the United States: Harry S. Truman, 1951, pp. 355–356.↩
- For text of the agreement and the exchange of notes, see 53 Stat. (pt. 3) 3) 951.↩
- For text of the General Agreement on Tariffs and Trade (GATT), concluded at Geneva, October 30, 1947, and entered into force for the United States, January 1, 1948, see TIAS No. 1700, or 61 Stat. (pts. 5–6).↩
- Ecuador was not a member of GATT.↩