Contents | Key Points | Map | Foreword | One | Two | Three | Four | Appendix: The Rio Protocol | Notes | Author

Territorial Disputes and Their Resolution The Case of Ecuador and Peru

Four — Conclusion

In August 1998, Ecuador elected a new president, Jamil Mahuad, who pledged to continue negotiations with his Peruvian counterpart on the findings of the binational commissions. While the two presidents‘ personal relationship encouraged progress in resolving the more nettlesome issues of the border dispute, they soon realized that they were at an impasse. Their frustration at not being able to agree on mutually acceptable solutions was accompanied by apprehension over another outbreak of fighting—just before Ecuador‘s presidential election, both countries had mobilized troops on their respective sides of the border.

     The mounting tension seemed to call for a breakthrough in the approach toward a settlement. On October 8, 1998, Presidents Mahuad and Fujimori sent a letter to Brazilian president Fernando Henrique Cardoso, chairman of the Guarantors‘, requesting the Guarantors‘ legally binding arbitration of all issues in the dispute. After more than a half-century in existence, the Rio Protocol would finally be relied upon to exercise perhaps its most authoritative—and most ambiguous—powers.

     On October 26, 1998, Ecuadoran president Jamil Mahuad and Peruvian president Alberto Fujimori—in the presence of the four Guarantor powers‘ representatives—signed the Brasilia Presidential Act, definitively resolving the remaining impasses to their countries‘ border dispute. That both Ecuador and Peru eventually resorted to the Guarantors‘ binding arbitration for a package settlement of all the issues addressed by the four binational commissions—but particularly the two intractable issues of commerce and navigation and border demarcation—testifies to the crucial role of the Guarantors and the formidability of the 1942 Rio Protocol.

     The Guarantors‘ decision has been described by one informed observer as "one of the most creative if not unusual transmissions of authority by sovereign legislatures to foreign states." ⁷⁴ Under the Guarantors‘ plan, the disputed stretch of border will be demarcated according to the Rio Protocol‘s line of division—a major concession from the Ecuadoran side. In return, Ecuador will be given a square kilometer of private—but not sovereign—property across the Peruvian side of the border, extending to Tiwintza. Both countries will establish an ecological park on either side of the border, where unimpeded transit will be guaranteed and no military forces will be allowed. Regarding the second major impasse in the dispute, the plan gives Ecuador navigation rights—but, again, no sovereign access—to the Amazon and its tributaries in Peru and allows Ecuador to establish two trading centers along the river.

     The most obvious incentives to settle the territorial issue arose from a desire to avoid the kinds of costs incurred in the 1995 war. But aside from the obvious toll in human lives and national resources used to pursue territorial claims, an increased awareness of the indirect opportunity costs of territorial conflict finally persuaded the parties of the need to settle the conflict. For example, while regional trade is growing, the dispute stunted bilateral economic relations significantly: Peru exports more to Bolivia than to Ecuador ($166 million compared with $147 million between 1992 and 1994), despite the fact that Ecuador‘s gross domestic product is almost three times the size of Bolivia‘s. Moreover, Ecuador bought $684 million worth of exports from Colombia between 1992 and 1994, and only $147 million from Peru, even though Peru‘s economy is only slightly smaller than Colombia‘s. ⁷⁵ The territorial dispute between these two states likely contributed to this distorted trade relationship. As a modern and internationally oriented commercial sector develops in both countries, demands for resolving the economically disruptive conflict continued to rise.

     In addition to the four major regional powers‘ commitment to seeing the conflict resolved, there were other regional incentives to settle as well. One incentive dovetailed with the economic aspect mentioned previously: as economic and trade integration in the region proceeded, Ecuador and Peru were increasingly aware of the opportunity costs that their border dispute exacted in denying them the benefits of regional integration. Cooperative trade arrangements with Mercosur (a free-trade area and customs union established by Argentina, Brazil, Paraguay, and Uruguay), for example, were unlikely unless the dispute were on its way toward settlement. ⁷⁶ Furthermore, with Argentina and Chile close to peacefully settling their last remaining dispute in southern Patagonia, leaders in Ecuador and Peru were increasingly aware that theirs would be one of the last active disputes on the continent. Pressure from the international community lent weight to the arguments for settlement.

     Nonetheless, the true obstacles to settlement arose from domestic politics and institutions. Public support for settlement in both countries was fragile and highly sensitive to the terms of any proposed settlement. Much depended on the governments‘ willingness and ability to prepare the public to accept a settlement involving significant concessions. Even more uncertain was the role that the military would play in each country. While they do not dictate policy, it is unrealistic to expect military leaders in each country to accept settlements that they vehemently oppose. In Peru, the National Security Council (which includes the commanders of the three armed forces as well as the powerful chairman of the Joint Chiefs of Staff) has unanimously endorsed the January 1998 agreement, though important military figures in both countries have been reluctant to embrace the accord fully. ⁷⁷ In Ecuador, influential officers in the armed forces, such as General Moncayo, continue to be reluctant to accept any agreement based on the 1942 Rio Protocol. ⁷⁸ Nonetheless, military leaders in both Ecuador and Peru appear to have accepted the Brasilia Presidential Act.

     While the risk that either country will choose to use military force to achieve territorial objectives appears to be significantly reduced, it is far from eliminated. If both countries decide to re-occupy their respective parts of the demilitarized area, military clashes could resume. It is not obvious how the two militaries might respond to perceived border provocations in the future, but the Guarantors have considered the possibility that hostilities could spread beyond the immediate border area. Indeed, informed observers continue to predict that should military clashes resume at the border, Peru would be unlikely to confine its military operations to the disputed area alone. ⁷⁹ Thus, it is important to realize there is still the potential for violent confrontation.

     While every case has its unique characteristics, the dispute between Ecuador and Peru should be understood in the broader Latin American context. Progress appeared slow to contemporary anxious observers, but most disputes in the region have taken decades to resolve—a fact that Brazil seemed to understand well, less so the United States. This case, like a number of other conflicts throughout history, benefited greatly from the involvement of "neutral" regional powers. But while the role played by regional actors in other disputes has been that of mediator or arbitrator, that of "guarantor" is unique. In the case of Ecuador and Peru, the four Guarantor nations took on a legal obligation to facilitate the execution of an international agreement—the Rio Protocol of 1942. This obligation entailed both quasi-military and diplomatic functions, the coordination of which was crucial to the operation‘s success. Like diplomatic mediators, the Guarantors made suggestions and conciliatory recommendations, but it was up to the parties to accept, reject, or amend the Guarantors‘ proposals. However, the Guarantors had no explicit power under the protocol to render a legally binding decision on how the dispute was to be resolved. Nevertheless, both Ecuador and Peru eventually relied on the treaty framework‘s authority to settle "[a]ny doubt or disagreement which may arise in the execution of this protocol . . . with the assistance of the representatives of the [Guarantors]." (Article VII).

     As noted throughout this study, Ecuadoran access to the Amazon and the final territorial division of Ecuador and Peru‘s border were the issues on which each country had been the most intransigent. Relying on the Guarantors to function in the capacity of arbitrators, and actually make a decision—within carefully outlined conditions which the parties specify—regarding the access and territorial issues seemed to be the only way to break the impasses. Latin America‘s experience with arbitration and adjudication is extensive, though it was reasonable to wonder whether the experience of these two countries in particular could bring them to accept a binding decision in this case; the disposition of the abortive 1910 arbitration by the King of Spain and the ultimate rejection of the Brazilian arbitration in 1945 gave cause for skepticism. However, two of the most crucial aspects of any such arbitration would be its perceived legitimacy as well as its power to strengthen the parties‘ ability to make a decision they would like to make in any case, but find it politically difficult to reach agreement on a diplomatic basis alone. In both of these respects, it is important to keep in mind how different 1998 is from 1945. In the earlier case, arbitration took place when one party, Ecuador, accepted an agreement after a military defeat. In the recent agreement, neither party was militarily coerced into settlement. The Guarantors‘ arbitral decision about the border should now carry much greater legitimacy than previous rulings.

     The Guarantors‘ binding arbitration is also supported by a much more conducive climate of public opinion today. In the 1950s, public opinion (most likely informed by government pronouncements and somewhat tendentious histories of the region presented in the countries‘ schools) was rampantly opposed to conciliation on the border issue. Available evidence suggests a softening on the issue in the 1990s. In the case of an ongoing stalemate, one of the advantages of arbitration is to strengthen each government‘s ability to accept a decision that may be in the public interest, but which is very difficult to propose or accede to in a diplomatic context because of powerful political opposition. As long as the terms of the agreement to accept arbitration are carefully established so that each government could envision defending a worst-case outcome to its public, there are reasons to believe that arbitration might be a viable alternative in case of stalemate. The Brasilia Presidential Act is no exception, supported by numerous regional precedents in the 1990s—for example, Chile and Argentina, El Salvador and Honduras—that persuaded domestic critics of committed national governments of the advantages of abiding by a legally binding decision.

     Regarding U.S. policy, what conclusions can be drawn about the guarantor role the United States played in this conflict? Can these lessons be applied to territorial conflicts in other regions of the world? Specifically, can the United States replicate its guarantor role to move the negotiating process along in other territorial conflicts?

     For a number of reasons, prudence cautions against advocating such a role more generally. For one thing, the United States has too little experience with the guarantor function to draw conclusions about its general applicability. This fact alone should caution against its taking on a legal obligation—as opposed to a political role—to assure the implementation of a particular interstate territorial agreement. Consider the special circumstances that gave rise to the U.S. commitment in this case in the first place: During the height of World War II, the United States and the other guarantors placed a high premium on hemispheric peace and thus were willing to underwrite this agreement with an obligation to see it implemented. Today, few border agreements justifiably command such a commitment from the United States. Furthermore, the conditions that serve to maintain the U.S. obligation in the Ecuador-Peru case may be difficult to duplicate in other contexts. The United States has a long tradition of working toward the resolution of territorial and other conflicts in Latin America. Despite (or because of) the Spanish colonial role and extensive European involvement, the United States has contributed more to the negotiation, mediation, and arbitration of border disputes in this region than any other single power. Such a level of involvement is much less true for other regions in the world, and it gives the United States a degree of legitimacy and credibility that may not readily apply to disputes in other regions.

     In such a role, credibility is crucial. The United States must be viewed by the disputing parties as willing to commit the resources (economic, diplomatic, and possibly even military) to ensure the agreement‘s implementation. Where the costs of ensuring the agreement are obviously out of proportion to U.S. foreign policy goals, as would be the case in many regions of the world, taking on the role of guarantor would most likely result in ineffectual responses to violations of the agreement and ultimately damage the reputation of the United States as a global power. Nor should it be forgotten that one of the conditions contributing to the constructive role of the United States in the Ecuador-Peru case is the multilateral character of the third-party arrangement. Would such a role be possible or even desirable in the African or Asian context? It has proven difficult enough to secure regional cooperation among European allies where conflicting territorial demands in the Balkans were at stake.

     Finally, it should be emphasized that the function of a guarantor is to help ensure that an agreement is implemented. The role thus assumes the contending parties can agree on the basic contours of their border area, though not perhaps on every detail. Guarantors cannot create agreement; where the disputing states are far apart, a more appropriate role to assume is that of mediator or provider of good offices. This raises questions about how useful a guarantor role would be in situations of widespread violent conflict.

     Despite these caveats, the role of the United States in the resolution of the Ecuador-Peru border conflict has been productive in general. The United States has had an important stake in the resolution of this incendiary regional issue and will undoubtedly continue to play a significant supporting role, along with the other Guarantor powers, as the agreement is implemented. Allowed to fester and escalate to the level of organized violence, territorial conflict in Latin America poses a threat to broader U.S. goals in the region, which are predicated on an economically vibrant region of open borders that is free from interstate violence. Political consolidation of civilian rule remains precarious as long as peace is not secure along national borders and the region‘s militaries are able to parlay such a situation into special privileges and prodigious budget allocations.

     While settling a border dispute is hardly a panacea for democratic peace and development, it is certainly a step in the right direction. Involvement in the Guarantor process gives the United States an opportunity to participate in the resolution of these conflicts at relatively low cost (Ecuador and Peru have picked up most of the bill for the military observers). Active involvement also gives the United States the opportunity to cooperate with regional efforts to solve the problem without the risk of being perceived as dominating the process or dictating the outcome. Clearly, the U.S. policy of prodding the parties to settle while hinting at withdrawal in the absence of progress made good sense. The United States needs to continue to be sensitive, however, to the pace at which it can expect other such enduring conflicts to be settled.

Contents | Key Points | Map | Foreword | One | Two | Three | Four | Appendix: The Rio Protocol | Notes | Author

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