PUESTO CAHUIDE, Peru-Ecuador border (Reuters) -- Leaders of Peru
                  and Ecuador formally ended on Thursday Latin America's last territorial
                  dispute, meeting at a remote jungle boundary point to seal a peace treaty
                  and settle a 50-year-old conflict.

                  Presidents Alberto Fujimori of Peru and Jamil Mahuad of Ecuador flew into
                  the muddy military post of Puesto Cahuide to inaugurate a knee-high,
                  orange-painted boundary stone -- the last to be laid on a disputed stretch of
                  Amazon jungle since the leaders reached a settlement in October 1998.

                  The setting of the remaining boundary points along the once-contested
                  50-mile (80-km) border strip ends a 50-year-old dispute that sparked
                  periodic skirmishes and conflicts and led in recent years to intense peace
                  negotiations mediated by the region's top diplomatic powers.

                  The treaty won praise from U.S. President Bill Clinton, whose government,
                  along with Chile, Argentina and Brazil brokered the deal as regional
                  diplomacy triumphed in a continent that has struggled this decade to shrug
                  off an image stained by political instability.

                  The settlement has sent a signal around the world that Latin America is
                  worthy of trust at a time when it is seek to overcome a regional financial
                  woes, according to political and economic analysts.

                  "We are beginning a great future. Resources which used to be spent on
                  weapons, the armed forces, will go toward development policies and, above
                  all, there will no longer be a climate of tension," Fujimori told reporters on
                  the border.

                  Scores of journalists, soldiers and government ministers from Peru and
                  Ecuador attended the signing ceremony at the hot, muddy military post as
                  Mahuad and Fujimori maintained their strategy of staging meetings for the
                  media to promote their popular images as the statesmen who achieved
                  peace.

                  Only four years earlier, dozens of soldiers were killed on this same frontier
                  as the neighbors fought a month-long, undeclared war, costing the
                  economies of the poor nations -- who share a common language and
                  Andean culture -- hundreds of millions of dollars.

                  In mid-1998, Lima accused Ecuadoran soldiers of entering Peruvian
                  territory as troops from both nations faced each other just yards (meters)
                  apart. Fujimori claimed the worst standoff since the 1995 conflict almost
                  sparked a fresh war.

                  Tortuous negotiations followed last year's near-clash and Fujimori, lying at
                  lows in the polls, put a peace deal on the top of his political agenda in the
                  run-up to a possible 2000 reelection bid.

                  After Mahuad became president in August 1998, the two leaders held a
                  series of tough face-to-face talks that propelled negotiations to their final
                  settlement with diplomatic help from the United States, Argentina, Chile and
                  Brazil. Thursday's boundary-setting was the formal mechanism to put that
                  deal into effect.

                  Peruvian and Ecuadoran voters largely approve of the peace deal even
                  though initially there were a few violent street demonstrations against the
                  treaty and some rumblings of discontent from within the two countries'
                  militaries.

                  Ecuador has sought access to the Amazon River basin and the Atlantic
                  Ocean beyond ever since the country was created in 1830. The accord gave
                  Ecuador navigation rights on Peruvian rivers and two sites in Peru to operate
                  port services.

                     Copyright 1999 Reuters.