It is often remarked that modern Latin American societies, particularly those with significant indigenous populations like Mexico, Ecuador, Peru, Bolivia and Paraguay, are still dealing with the consequences of the colonial regime which established rigid social and economic hierarchies. This heritage is certainly relevant in Ecuador's turbulent history and the recent emergence of CONAIE, the national federation of indigenous nations, as a force to be reckoned with in national and international policy making. Below is a brief outline of some of the events and processes that have created modern Ecuadorian society, economy and politics.

The Inca State
At 1400, the Inca were a dynasty of rulers that had controlled a very small river valley in Peru for about 200 years. During the reign of the 9th ruler, Yupanqui in 1438-1471, the Inca began to move beyond their borders and conquer neighbouring groups. As they moved north to what became Ecuador, they encountered 2 groups organized loosely under a paramount chief: the Cañari in the south and the Cara in the north. The Cañari were fairly easily subdued in the 1450s but the Cara offered greater resistance. The Inca tried to incorporate slash and burn agriculturalists in the Amazon but were beaten back. They did establish some trade with Amazonian peoples in order to access medicines, jaguar skins, gold, feathers and coca.

By the time of Pizarro's arrival on the coast in 1532, the Inca state stretched from Ecuador to northern Chile and linked once disparate cultures and languages into a unified political, religious and linguistic system. The state was incredibly hierarchical with the Inca rulers at the top, assisted by a bureaucracy of merchants, soldiers and religious leaders, and a series of regional and local Kurakas or local chiefs below. The smallest unit was the ayllu which was a unit formed by patrilineal descent groups. The state exacted tribute both in the form of labour on state lands and in goods like cloth produced for the state.

At the time of Pizarro, the Incas were involved in a dispute over succession to the crown. Huayna Capac left two sons, Atahuallpa in the north and Huascar in the south. Huascar was the legitimate heir, having been born to Huayna Capac's first wife in Cuzco. Atahuallpa was considered illegitimate as the second son, but he had far more support in the newly conquered northern territories because his mother was of local royal lineage. The Inca wars of conquest as well as internecine battles between the two heirs left parts of the empire weak and vulnerable. This vulnerability goes a long way in explaining the ease with which the Spaniards were able to conquer the highlands and establish themselves with their capital in Quito.

Colonial Society and Independence
The conquistadors were given grants of land and indigenous labour called encomiendas. These were grants that lasted the lifetime of the grantee but reverted to the state upon his death. Encomiendas were the Crown's way of preventing the formation of a permanent class of landowners in the new world, beyond the control of Spain. However, very shortly after conquest, the colonial state proved incapable of controlling what went on in the countryside and of providing sufficient goods for the all important mining zones like Potosí. In addition, as tribute (tax in goods and labour) was stepped up on the Indian communities, themselves shrinking and shattering under the weight of the new social/economic regime, land was freed up for Spanish occupation. Through a number of processes, both the church and private individuals began to control land directly and in perpetuity, avoiding reversion to the crown. And thus was born the hacienda system.

In many areas, the haciendas faced a situation of labour shortage and land surplus. In order to force Indians to work for them, they resorted to stealing land from native communities to force people to accept land on the hacienda in return for labour. Hacienda owners weren't only Spaniards, but also kurakas who could abuse their 'Indianness' to convince the Crown that they could occupy lands formerly belonging to Indian communities.

This latifundia or large land-holding system developed gradually throughout the three centuries of colonial rule. The classic profile of latifundia holdings is that they are capital-poor, land-rich and highly labour-dependent. This definition has its roots in the early stages of private land acquisition. Land was not originally the issue since vast depopulation left lots of empty land, even after the Crown took its share. The problem was first how to get Indians to work the land, and later, how to keep them there. Once the hacienda system was in firmly in place, there was no need of capitalization in production processes because labour was nearly free. Rather than invest money to improve production through machinery, for example, hacendados (hacienda owners) continued to use un-competitive labour-intensive farming methods that depended on having both surplus labour and land. The classic absentee landowner system in which the owner lives in a city or town and merely markets the surplus production of his farm began to coalesce just before independence and in the nineteenth century. As Karst notes:

"The classical hacienda is not run for a profit; rather, it is run as a country estate for an owner who is usually absent…. The hacienda is not a business, it is a symbol of wealth and power."

Hacendados were not concerned to rationalize production or maximise it as that would require a reinvestment of profits and these were used to maintain their elite lifestyles in urban centres.

The landowners coalesced into a new class in the new world: criollos. These were elite born in the Americas who increasingly resented their second class status under Spanish born administrators and traders. Throughout Spanish America, agitation for reform of the colonial system resulted in armed insurrections by the early 19th century. Simon Bolivar, the Liberator, organized the resistance in Ecuador, Colombia and Venezuela, briefly becoming the first independent leader of all three countries during the shortlived alliance of Gran Colombia. Regional elites could not agree on a suitable distribution of power and agreed to disband the alliance in 1830.

While independence is still celebrated passionately in Ecuador, it really did not represent a dramatic upheaval in the social structure or economy of the country. Spanish born elites no longer occupied a privileged position vis-à-vis the Criollos, but the status of the bulk of the population, the Mestizos (people of mixed Spanish and indigenous ancestry), the Indigenous and Afro-Ecuadorians remained unchanged. Mestizos tended to occupy the trades and urban industries while highland indigenous remained tied to the haciendas and Afro-Ecuadorians worked largely on the coast in the northeast on plantations.

The 19th century was marred by a series of scuffles between rural based conservatives and urban based liberals. This culminated in Eloy Alfaro's Liberal Revolution at the turn of the century which reduced the power of the Catholic Church by confiscating Church haciendas and extending public education. Still, these reforms affected urban workers and Mestizos to a greater extent than rural indigenous serfs. They would not be included in the national agenda in any real way until the 1964 Agrarian Reform Law.

Whither Agrarian Reform?
After centuries of abuse of rural populations under the hacienda or plantation systems, why was there all of a sudden concern to reform the system in the 20th century? Certainly, it did not spring from a realization by political parties or officials that the rural poor deserved better - in fact, the first real reform law was passed in Ecuador in 1964 under a right-wing military government. Indeed, with a few exceptions, most Latin American countries began the process of reform around the same time in the 1960s and 70s.

There are a number of reasons that reform became imperative at this time:

1. Revolutions: The success of the Cuban Revolution in 1959 and the rapid 'chilling' of relations with the US caused deep concern in the West. As well, the 1953 revolution in Bolivia had also resulted in fairly radical redistribution plans that were carried out at least partially before the revolutionary government was coopted by US and other foreign interests. The US desperately wanted to avoid this style of reform and thus sought to promote reform that wouldn't harm foreign and particularly US landholders and investors.

2. Food Supply: In many latifundista countries, there was a shortage of domestically produced food to supply growing urban centres and industries. Without fairly dramatic investment in agriculture, something the landowning class was unwilling to do, countries were forced to import food.

3. Foreign Development Agencies: The revolutionary fervour of the 1950's and even the successful model of the Mexican Revolution and subsequent reform in the 1930's prompted the West's development experts to support the idea of agrarian reform as basic to improving the lives of rural and urban poor. Early on, analysts realized that the stagnant latifundia/minifundia system was a significant factor in economic underdevelopment and abuse of basic human rights of the rural majority of Latin American populations.

4. Structural Changes in the Economy: In many countries, landowners themselves wished to be free of the feudal relations of production of the hacienda system. In this system, land has no market value because it is rarely sold. The value of the land had been for centuries as a symbol of wealth and as a source for livelihood, but it was not seen as an investment of capital. With the growth of new types of businesses, some landowners realized that they could not get on the new economic bandwagon unless they could free themselves of these feudal obligations and stagnant investments.

5. Political Organization of Peasants and Rural Poor: Partly as a result of the success of Cuba and Mexico, many peasant and urban poor political movements emerged to demand equivalent structural changes in their own countries. The peasants wanted title to the land they had worked for centuries and the urban poor wanted access to land as a means of subsistence.

Starting in 1964, with the threat of reform, landowners in some areas sold off their least productive lands in the highland zones and converted valley production to capitalist farming. They did away with the feudal system and hired peasants as wage workers. Many of them chose dairy farming because it required only moderate modernization and investment, little labour input, and relatively high returns on the product. In volunteering for this transformation they could avoid expropriation of their lands while gaining a more lucrative living from them. This new profit could be used to support new business ventures in the cities. They also began to sell off the hacienda buildings or transform them into money making hosterías for wealthy urbanites to enjoy on the weekends. The reform resulted in a strange reversal of normal farming practice since the cows happily graze in the fertile, irrigated valleys while indigenous peasants struggle to till the land on micro-plots up the dryer and less fertile hillsides.

Proportional Land Distribution by Size of Holding:

	<20 ha	20-100 ha	>100 ha
1954	16.4%	19.2%	64.4%
1985	33.5%	30.3%	36.2%

Effectively, then, smallholders represent about 1/3 of landowners in Ecuador now and medium to large landowners have dropped from being about 85% of the total to 67% or 2/3s. Much of the land that was shifted into the hands of small peasant producers was actually sold to them rather than granted to them under reform. For most smallholders, the land is not sufficient to absorb the labour of their families nor to provide a complete subsistence so that the family relies on some members going off to the cities or coastal plantations to work, sell produce or handicrafts.

Economically, Ecuador has passed the 20th century moving ricocheting through boom and bust cycles caused by fluctuations in commodity prices on the international market. The key export at the turn of the century was cacao, replaced with bananas by mid century and then by oil in the 1970s. Oil was discovered by Texaco in 1967 near what became the city of Lago Agrio or Nueva Loja. Partly in response to the perceived danger of allowing foreign interests to control this precious resource, the military took power in 1972 and nationalized oil production. The oil boom lasted less than a decade, spurred by the high international prices demanded by OPEC in 1973. During this time, the military government borrowed heavily to modernize transportation and infrastructure. As recession in the West began to be felt in the south by the end of the 1970s, the military agreed to turn the government back to civilian management - just in time to face the first of the structural adjustment shocks imposed by the World Bank and IMF throughout the debtor world.

As a result of the oil boom of the 1970s, peasants were able to integrate directly with the market for food and labour - in part because of improvements in transportation - but at the same time became increasingly dependent on this external market. Once they were no longer self-sufficient, they saw their wellbeing improve and worsen with shifts in the value of their produce, construction booms and busts and with changes in the price of key consumable imports and inputs to agricultural production (fertilizers, petrol for transportation, clothes etc.). Since the end of the oil export boom and the return to civilian rule, there has been no real government interest in reopening the possibility of further land reform; they prefer to deal with the problem that still exists by supporting rural assistance programs to poor peasants.

The period of Agrarian Reform produced side effects that are critical for understanding Ecuadorian political economy today. Two organizations emerged during military rule in the 70s that attempted to represent rural landless and land-poor people in the struggle for reform. The first, FENOC (Federación Nacional de Organizaciones Campesinas) was allied to Christian Democratic politics and used agrarian reform as its main platform for uniting peasants and workers. FENOC was more successful and influential on the coast than in the Sierra where the key organization, ECUARUNARI (awakening of Ecuadorian Indians), sprang out of radical social programs sponsored by the Catholic Church. With the end of military rule in 1978 - and the effective closure of the land reform issue due to lack of political will - FENOC lost support because it continued to make land reform its mandate and didn't adapt to the new anti-reform circumstances. ECUARUNARI, on the other hand, grew stronger because it encouraged grassroots traditional community organizations and was able to change its key platform from just land reform to include issues affecting all indigenous peoples such as defence of the Indian language and culture and fighting discrimination. ECUARUNARI also cooperated with CONFENIAE (Confederation of Indigenous Nations of the Ecuadorian Amazon) and in 1986, the two organizations founded CONAIE (Confederation of Ecuadorian Indigenous Nations) as an umbrella organization representing all indigenous groups.

From its founding, CONAIE has focused on issues pertaining to Indian ethnicity and separate cultural concerns. Their first success was that in 1988, the government agreed to support bilingual education and support an indigenous curriculum in Indian schools. As well, CONAIE has always argued for the idea of plurinationality in the face for pressure from the white/mestizo majority for a single Ecuadorian identity. Finally, beginning in 1990, CONAIE has shown a remarkable capacity for organizing and mobilizing indigenous peoples to protest first policies pertaining directly to indigenous peoples and more recently to protest neoliberalism and IMF policies on behalf of all poor Ecuadorians. Regardless of the actual amount of land distributed, land reform prompted the growth of grassroots indigenous political organizations that have come to be counted among the politically significant actors on the modern political scene - an unexpected and positive outcome from a relatively weak and negative reform effort.

The Last Decade
Most of the Latin American and African world, has been faced with a severe debt crisis since the early 80s. A recession at that time resulted in a 5-fold increase in the price of oil and skyrocketing interest rates. High oil prices allowed Ecuador to delay the effects of the debt crisis for a few years but eventually, high debt and lower oil prices caught up to them. When debt-strapped countries appeal to the IMF and WB for help, they receive not aid but structural adjustment programs designed to increase their foreign currency earnings and thus their ability to repay debt in return for emergency financial bailouts. Structural Adjustment has always translated into a few key economic management stratagies:

reduce government spending by cutting social assistance, health and education; much of the savings to be derived from civil service layoffs
reduce or eliminate any subsidy to local producers to encourage competitiveness with international producers and investors
sell off any public assets that aren't nailed down, ostensibly to increase efficiency and produce income
control labour to make your country attractive to multinationals

When a country signs on for an IMF package, they also forfeit some degree of autonomy over economic decisions regardless of what their voters want and compromise human rights in a number of ways. In order to understand what's going on in Ecuador today, this nearly 20 year engagement with the neoliberal wolves of the IMF has to be taken into account.

In recent years, there have been a succession of leaders in Ecuador who have had to walk the razor's edge between satisfying foreign demands for radical and unpopular economic reforms and keeping growing civil discontent within bounds. Since 1996, Ecuador's Indigenous peoples have entered formal politics under the party name Pachakutik. Indigenous people represent about 35% of the population of roughly 12 million. They have become increasingly vocal and organized with regard to social, economic and political issues and have garnered more and more support from particularly the poorest Ecuadorians who feel that they are the only remaining critical voice in government. Ecuadorians are certainly wise to mistrust their leaders since 2 of the last 4 are currently exiled and face charges of abuse of power and/or corruption if they return, and a third sits in jail on corruption charges.

Since 1996
In 1996, Abdala Bucaram was elected on a platform of promising subsidized housing for the poor. Once in office, he handed out government posts like party favours to his friends and family. He also hired Domingo Cavallo, former finance minister of Argentina and author of that country's severe austerity program designed to increase foreign investment. He called himself El Loco, the crazy one, and ironically was finally deposed on grounds of mental incompetence the following year. In the meantime, he devalued Ecuador's currency, the sucre, by a 1000 percent , raised sin taxes and imposed sharp increases for basic services like cooking gas, telephone and electricity. A mere 6 months after taking office, in Feb. 1997, Bucaram was dismissed by Congress following a national strike that had the support of some 2 million people.

Fabian Alarcon, head of Congress succeeded Bucaram. Alarcon faced a power struggle with Vice-President Arteaga throughout his term and was also charged with corruption. Despite popular protest, Alarcon did not call elections until 1998. Jamil Mahuad won the second presidential vote in July of that year and took power in August. Mahuad has also had to run the gauntlet with the IMF and to boot inherited a country devastated by the effects of El Niño in 1997. The climate shift caused mass destruction of coastal crops and roads due to heavy rainfall. In many areas, the damaged roads are still in evidence since the government has had neither the money nor the political will to improve them unless they are critical for export commodities like shrimp and bananas. Under Mahuad, the same song repeated itself. With every new government austerity measure, like cutting civil service wages, or efforts to bolster corrupt industries like private banking, the lives of average Ecuadorians became more difficult and social protest mounted. In 1999 alone, Ecuador faced 200% inflation, 20% unemployment and saw its foreign debt rise to meet the total GNP - about 15 billion US dollars. Some of Mahuad's more unpopular moves included bailing out a corrupt and mismanaged private bank to the tune of $700 million and freezing all savings accounts above $500US. These accounts remain frozen thus cutting people off from their life savings. As well, all major personal debts were converted into dollars meaning that they had to be paid back in US currency. In the same year, the value of the sucre fell from about 7,000 to the dollar in January to 30,000 to one in December.

Mahuad's final act was to announce the dollarization of the economy. This prompted mass protests and a general shutdown of the country. Indigenous protestors formed the backbone of a popular strike that effectively blockaded transport in most areas of the country. At midnight on January 21st, 2000 indigenous backed by a small military unit and the Chief of the Armed Forces, Mendoza, stormed Congress and took over the government to form what they called the "Government of National Reconstruction". International response was swift and decisive. The White House National Security Council Spokesman, Mike Hammer said: "Any regime that emerges from such an unconstitutional process will face political and economic isolation, bringing even greater misery upon the Ecuadorian People." The UN, OAS and a number of Latin American countries quickly joined the chorus demanding that the leaders of the coup step down. Mendoza was the first to back down, resigning from the Armed Forces as he did so. Without the backing of the military, the coup collapsed and after some scuffling with Mahuad, Gustavo Noboa, the elected Vice-President took power.

Noboa is still in command today and has continued to court the US and IMF by following their directives in order to get aid and debt consideration. In September of last year, the sucre was abandoned in favour of the US dollar. March 2001 was the original deadline for people to trade in their sucres and this was later extended to June. The immediate result of dollarization was a dramatic increase in prices for basic consumer goods. The fixed official exchange rate was 25,000 sucres to one US dollar and this meant that things that used to cost a few hundred or even a thousand sucres appeared to have no value in the new currency. Thus, if an item was worth only 3 cents, people rounded up to 10 or 25. That trend was compounded by the fact that there was little in the way of coins available for daily transactions. Ecuador now mints its own coins in the same denominations as US ones to ease this problem but the initial dramatic inflation remains.

Most recently, in the first months of 2001, Ecuador faced another nation-wide protest led by indigenous peoples. This time, they were protesting the proposed 100% increase in the price of cooking gas and a general hike in fuel costs. They marched on Quito once again but instead of being able to camp in the park, the military forced them to take refuge in the Salesiana University, a private religious university who offered their buildings to the 4,000 protestors. After 10 days of tension with the indigenous people corralled inside the University and the military moving men and vehicles into the area, the government and indigenous leaders reached a settlement. Cooking gas increased but only by 40% and all fuel prices are frozen for one year. There were a number of other commitments made to increase development loans to small producers and convene committees to consider the plight of a variety of sectors of the poor. This will do little to change the fact that 70% of Ecuadorians today live in poverty earning far below what basic subsistence costs.

Socially, Ecuador faces a new challenge. Since dollarization, roughly a million Ecuadorians have emigrated to Spain and the US to find work. They can no longer survive on paltry minimum wages or on the meagre living provided by agriculture and have decided to try their hand as farm workers in southern Europe or domestics and sweatshop labourers in the US. Young unmarried children and husbands are the first to migrate, leaving behind single women with small children and the elderly. Some communities around Cuenca in the south have been reduced to ghost towns and the problem of single parent families is growing exponentially. The remittances from migrants are posited as the only buffer between the status quo and social upheaval at the moment. With rising prices at home, some Ecuadorians are cutting their ties and beginning to forge more permanent lives abroad. Should a significant number decide to abandon their families, absolute and relative poverty among those who remain will increase.

Elections are scheduled for the autumn of 2002. Given the current international investment and trade climate, the next president is unlikely to have much leeway in changing Ecuador's situation as a primary product exporter heavily dependent on foreign investment to meet debt repayment schedules. As of 2000 figures, debt totalled 104% of the GDP and 35% of the people were below the national poverty line. The relative political calm that has prevailed despite worsening economic conditions in 2001-2 may evaporate if migrants cease subsidizing their impoverished families. If that happens, CONAIE may emerge as the primary organizing force behind political protest once again.

© Dr. Leslie Jermyn and The Global Aware Cooperative. leslie@globalaware.org
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Dr. Leslie Jermyn is a professor at both the University of Toronto and the University of Trent. She specialises in social issues and Latin American Studies and is frequently published on this issue.

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