Ishvalans before the Civil War.
Ishval (Ishbal in the 2003 series and the Viz manga) is a region of Southeastern Amestris on the border of the Eastern Desert. Presumably, once its own nation, owing to the vastly different cultural practices of Ishval's people and the general populace of greater Amestris as a whole, Ishval was likely absorbed as a part of the country's expansionist policies. However, the region remained a point of contention and was ultimately razed as a result of the Ishval Civil War.
Existing in Amestris' relatively barren frontier and just shy of the Great Desert separating the western and eastern nations of the continent, Ishval has been described as a rather harsh land made of little more than rocks and sand; it has no significant natural resources and very little farmable land, which likely accounts for the strict codes of conduct and sense of resilience adopted by its inhabitants. Despite this, Ishval was a relatively popular crossing point for Xingese traders and smugglers heading into the west. Ishval itself is divided into multiple distinct districts - Gunja, Kanda, and Daliha being the only ones named during the series. It is suggested that Ishvalans were previously spread out over a wider area, but that the smaller region of Ishval was created by the Amestrian government to pen them in after conflicts between the Central Government and Ishvalan people began to arise. Since the war - in which a majority of its indigenous population was exterminated - Ishval has become a desolate land with blood and nightmarish memories soaking deep into the sand; surviving Ishvalans have since been scattered across the nation, hiding from persecution in the ghettos. Some have taken refuge in the Eastern Desert within the ruins of Xerxes.
Though much of the tension between Ishval and greater Amestris can be blamed on sharp cultural differences, it is apparent that the most significant sparks that led to the civil war and the region's destruction were purposely orchestrated by certain members of Central Command and the Homunculi as part of their scheme to fashion a massive Philosopher's Stone using the people's lives and sorrow. In the manga and 2009 anime storyline, Ishval is a point on the Nationwide Transmutation Circle and its greatest sorrows were fabricated in an attempt to carve a "Crest of Blood" into the land there. In the 2003 anime's divergent storyline, the Ishval Civil War was an attempt by the Homunculi to force any alchemists in the area into a state of despair so deep that they would attempt the dangerous taboo of creating a Philosopher's Stone with the Grand Arcanum.
At the end of the manga and both animes, Ishval is reinstated as a Holy Land and its people allowed to return, with the central government helping them to rebuild. In the manga and 2009 anime exclusively, the central government oversees the planting and harvesting of wheat, cotton and other crops in Ishval as an attempt to rebuild its economy and revitalize the land, as well as making Ishval a major official trading point along the new cross-desert rail system joining Amestris and the eastern nation of Xing.