Editing History of Ecuador (section)

===Economic crisis (1990–2000)===
{{See also|1998-99 Ecuador banking crisis|History of Ecuador (1990–present)}}
In 1992, [[Sixto Durán Ballén]] won his third run for the presidency. His tough [[macroeconomics|macroeconomic]] adjustment measures were unpopular, but he succeeded in pushing a limited number of modernization initiatives through Congress. Durán Ballén's vice president, [[Alberto Dahik]], was the architect of the administration's economic policies, but in 1995, Dahik fled the country to avoid prosecution on [[political corruption|corruption]] charges following a heated political battle with the opposition. A war with Peru (named [[Cenepa War|the Cenepa War]], after a river located in the area) erupted in January–February 1995 in a small, remote region, where the boundary prescribed by the 1942 [[Rio Protocol]] was in dispute. The Durán Ballén administration can be credited with beginning the negotiations that would end in a final settlement of the territorial dispute.

In 1996, [[Abdalá Bucaram]], from the populist Ecuadorian Roldosista Party, won the presidency on a platform that promised populist economic and social reforms. Almost from the start, Bucaram's administration languished amidst widespread allegations of corruption. Empowered by the president's unpopularity with organized labor, business, and professional organizations alike, Congress unseated Bucaram in February 1997 on grounds of mental incompetence.<ref>{{cite news  |title=Lawmakers in Ecuador Vote to Oust President |url=https://www.latimes.com/archives/la-xpm-1997-02-07-mn-26429-story.html |work=Los Angeles Times |date=7 February 1997}}</ref> The Congress replaced Bucaram with Interim President [[Fabián Alarcón]].<ref>{{cite news |title=UPI Focus: Fabian Alarcon named Ecuador's president |url=https://www.upi.com/Archives/1997/02/11/UPI-Focus-Fabian-Alarcon-named-Ecuadors-president/8980855637200/ |work=UPI |language=en}}</ref>

In May 1997, following the demonstrations that led to the ousting of Bucaram and appointment of Alarcón, the people of Ecuador called for a National Assembly to reform the Constitution and the country's political structure. After a little more than a year, the National Assembly produced a new Constitution.

Congressional and first-round presidential elections were held on May 31, 1998. No presidential candidate obtained a majority, so a run-off election between the top two candidates – Quito Mayor [[Jamil Mahuad]] of the DP and Social Christian Álvaro Noboa Pontón – was held on July 12, 1998. Mahuad won by a narrow margin. He took office on August 10, 1998. On the same day, Ecuador's new constitution came into effect.

Mahuad faced a difficult economic situation, linked in particular to the Asian financial crisis. The currency was devalued by 15%, fuel and electricity prices increased fivefold, and public transport prices increased by 40%. The government was preparing to privatize several key sectors of the economy: oil, electricity, telecommunications, ports, airports, railways, and the post office. The repression of a first general strike caused three deaths. The social situation was critical: more than half of the population was unemployed, 60% lived below the extreme poverty line, and public employees had not been paid for three months. A further increase in VAT, combined with the abolition of subsidies for domestic gas, electricity and diesel, triggered a new social movement. In the provinces of Latacunga, the army shot the indigenous people who blocked the [[Pan-American Highway]], injuring 17 people with bullets.

The coup de grâce for Mahuad's administration was Mahuad's decision to make the local currency, the [[Ecuadorian sucre|sucre]] (named after [[Antonio José de Sucre]]), obsolete and replace it with the [[United States dollar|US dollar]] (a policy called [[dollarization]]). This caused massive unrest as the lower classes struggled to convert their now useless sucres to US dollars and lost wealth, while the upper classes (whose members already had their wealth invested in US dollars) gained wealth in turn. Under Mahuad's recession-plagued term, the economy shrank significantly, and inflation reached levels of up to 60 percent.

In addition, corruption scandals were a source of public concern. Former Vice President Alberto Dahik, architect of the neoliberal economic program, fled abroad after being indicted for "questionable use of reserved funds". Former President Fabián Alarcón was arrested on charges of paying salaries for more than a thousand fictitious jobs. President Mahuad was accused of receiving money from drug trafficking during his election campaign. Several major bankers were also cited in cases. Mahuad concluded a well-received peace with [[Peru]] on October 26, 1998.<ref name="ReferenceA"/>