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In South America, Bush Has Nowhere to Turn: Bush’s Paraguayan Fiasco

April 22, 2008

Tags: Alfredo Stroessner, Fernando Lugo, Hugo Chavez, Evo Morales, Itaipu Dam, Liberation Theology, Paraguay, U.S. foreign policy in Latin America


The tiny, land locked nation of Paraguay has not been blessed with political good fortune. For decades, anti-Communist General Alfredo Stroessner, who “disappeared” and tortured thousands of dissidents, ruled over this country of some 7 million people. Stroessner was dislodged by his military subordinates in 1989 and later died in exile in Brazil at the age of 93.

However, the Colorado Party, which backed Stroessner during his 35-year dictatorship, maintained a tight lock on political power while enriching itself and the wealthy at the expense of ordinary Paraguayans. Under Colarado rule, Paraguay became renowned as a haven for fugitive Nazis, smugglers and drug traffickers.

For years, the U.S. backed repressive military rule in Paraguay in an effort to keep a lid on progressive social change. For Washington, Stroessner, a strong anti-communist, could do no wrong. A willing U.S. ally during the Cold War, Stroessner supported Lyndon Johnson’s invasion of the Dominican Republic in 1965 and even offered to help send troops to Vietnam.

Even in Paraguay’s darkest hours, while Stroessner harbored Nazi war criminals, crushed non communist peaceful opposition and persecuted the indigenous population (including forcibly assimilating the Ache population, a policy which ended in bloodshed, sexual slavery and servitude), the U.S. continued to back the General. It wasn’t until the late 1970s, with the arrival of Jimmy Carter in the White House, that the U.S. withdrew its support.

From Dictatorship to Kleptocracy

Despite the passing of Stroessner, most Paraguayans are even worse off today than under the dictatorship. Encouraged by Washington, Paraguay instituted a program of neo-liberal economic reform and privatization which thrust tens of thousands out of work. Paraguayan exiles once fled their country for political reasons. But today, it’s economic misery which has driven many Paraguayans to travel abroad. Currently some two million people live abroad in Argentina, Spain, and the United States.

The legacy of corrupt Colorado rule is evident for all to see. Currently, almost 50 percent of the country’s population lives on less than $2 a day and 38 percent of the citizenry is either unemployed or under-employed. In 2007, GDP per capita stood at roughly $4,000 while 32% of the population lived below the poverty line.

Land ownership is concentrated in the hands of a few large companies which are resorting to more and more soya farming. Amidst the concentration in land ownership, hundreds of thousands of landless farmers have been pushed to the cities by hunger.

The Power of Liberation Theology

On the other hand, today’s presidential election, which has brought Fernando Lugo to power, stands to shake up Paraguay’s politics and could even exert an impact upon the course of wider hemispheric integration. In light of the fact that Lugo has never held any elective office, his ouster of the Colorado Party is truly remarkable. When you consider that kleptocratic Colorado had managed to hold on to power for more than sixty years, Lugo’s accomplishment is even more striking.

Like his counterpart Rafael Correa in Ecuador, who once taught math to poor Indians while working with the Catholic Salesian Order, Lugo also comes from a religious background. Born into a middle-class family of political activists, his three brothers and uncle were forced into exile under the Stroessner dictatorship. In 1977 he was ordained a priest and enjoyed stints as a schoolteacher and missionary.

The following year Lugo left for Ecuador where he lived with indigenous communities and peasants. The young priest became a believer in so-called Liberation Theology, a school of thought which took shape in Latin America in the 1960s. Recognizing the pressing need for social justice, Liberation Theology challenged the Church to defend the oppressed and the poor.

Falling Afoul of Stroessner

Returning to Paraguay in the early 1980s, Lugo became a rural bishop known for both his political activism and conciliatory skills. It wasn’t long before he ran afoul of Stroessner’s military intelligence. Concerned for his own well being, he departed for Rome to study social science.

Five years later however he was back in Paraguay. This time he was chosen bishop of San Pedro, a diocese which lay in the poorest area of the country. The bishop learned Guaraní, an indigenous language spoken by peasants and urban poor who make up the majority of the Paraguayan population.

Working amongst the flock in San Pedro, Lugo began to take up the cause of landless peasants and earned a reputation as “the bishop of the poor.” Lugo’s advocacy, however, landed him in trouble with local landowners who accused him of protecting guerrilla fighters and supporting kidnappers.

The Road to the Presidency

In 2004, incensed by the social injustice that he witnessed all around him, Lugo resigned his position in the Church to pursue his political ambitions. Shortly afterwards he was the main speaker at a huge anti-Colorado demonstration in Asunción. Unionized workers, as well as leftist and indigenous organizations, began to rally behind Lugo. The ex-Bishop helped to form the Patriotic Front for Change, a grouping of some 20 Indian, farm peasant and union organizations.

Lugo is the first former Bishop to be elected president of a country (the Vatican refused to accept his resignation as Bishop, but experts believe that the church will grudgingly accept a Lugo Presidency rather than break off diplomatic relations with Paraguay) and frequently invoked the Bible while on the campaign trail. During one rally outside Asunción, he told 2,000 Indian peasants that he felt like a "Paraguayan David fighting the monstrous Goliath." The disenfranchised majority in Paraguay views Lugo as “The Bishop of the Poor.”

The former Bishop, heavyset, bespectacled and sporting a salt-and-pepper beard and priestly sandals, focused on social inequality during his campaign, questioning why “there are so many differences between the 500 families who live with a first-world standard of living while the great majority live in a poverty that borders on misery.” Lugo, who says that he has some affinity with socialism, wants to institute land reform and to re-establish Paraguay’s energy sovereignty.

As a politician and orator, Lugo would seem to differ somewhat from firebrand Hugo Chávez or Rafael Correa of Ecuador. The former Bishop stresses cooperation and dialogue rather than confrontation and a cult of personality. He reportedly has an uncanny ability to bring people together who don’t trust one another.

Lugo and Chávez

During a recent trip to Washington, Lugo assured the State Department that he was not like Hugo Chávez because he, unlike the Venezuelan leader, was a religious man. The future Paraguayan President remarked, “I am not of the left, nor of the right. I’m in the middle as a candidate sought by my people.”

The Paraguayan moreover criticized Chávez’s decision not to renew the broadcast license of Radio Caracas Television, a station which served as a hotbed of the Venezuelan opposition. In an interview, Lugo remarked that in Venezuela, there were “elements conspiring to attack the strengthening of public freedoms.” Under Chávez, Lugo added, Venezuela had pursued a political model which was “dangerous for a real democracy,” and “totally at the service of one person.”

On the campaign trail, Lugo was dogged by relentless accusations that he was receiving money from Chávez, a charge he has vehemently denied. "It’s part of a dirty campaign against me. None of this is true", he insisted.

Despite his close affinity with Paraguay’s Guaraní Indians, Lugo has likewise sought to distance himself from Bolivia’s indigenous President Evo Morales. “Individual leaders,” he has said, “can cause polarization, as I believe is happening in Bolivia. I don’t believe in creating a polarized society.” “I will not be a Paraguayan Morales,” he adds. “Paraguay will have to pursue its own political destiny.”

On the other hand, some of Lugo’s other comments may have raised eyebrows in Washington. He has praised the Venezuelan “experiment” for its positive social accomplishments, as well as “the better distribution of wealth for the benefit of the poor majority.” Furthermore, Lugo supports Chávez’s land reform program and calls the Venezuelan leader’s 21st-century socialism “interesting,” and “very stimulating.”

Lugo believes the U.S. should keep its distance from the political transformation now sweeping through South America. "I don’t think the United States has any choice but to accept these changes," he has said.

Lugo’s Paraguay: What Impact on South American Integration?

Hoping to undercut Chávez and his appeal, the U.S. has sought to cut free trade deals with individual South American countries. Unfortunately for Washington, Lugo has already stated that he has no intention of signing on to such an agreement as President. Historically, Paraguay has not played a very significant role in regional affairs. In the midst of South America’s Pink Tide and shift towards the left however, the country has taken on new geopolitical importance.

In an era of reduced U.S. influence, it’s now Brazil and Venezuela that are vying for the allegiance of smaller countries like Paraguay. Traditionally, Paraguay has formed part of Brazil’s geopolitical orbit but the relationship has recently come under strain.

Some of the friction has to do with Mercosur, a South American trade bloc. Paraguay has been a long time member of the group, while Brazil constitutues the most important economic hub. However, Paraguayans have been chafing under Brazilian influence. They charge that Brazil has bullied them by slapping crippling export restrictions upon Paraguay. As a result, Paraguay’s trade deficit has skyrocketed.

Lugo has said that he would keep Paraguay within Mercosur, but he sees the bloc as “inadequate” because it lacks a firm commitment to social and economic equity. Mercosur is unfair, he adds, because Brazil has registered greater economic growth than smaller countries.

Though the debate may sound Byzantine or obscure, it strikes at the heart of dramatic geopolitical currents shaping South America today. At stake is nothing less than the contours of future hemispheric integration and the social and economic future for millions of the region’s poor.

Venezuela’s Chávez says that Mercosur is a backward and ossified model for economic development. However, he has sought to bring Venezuela into Mercosur and hopes to subvert the bloc from within, presumably by shifting the entity’s focus from free trade to more equitable, reciprocal trade. However, Venezuela’s bid to join Mercosur has still not been ratified by Brazil, a country which has a more market-based vision of the future than the avowedly socialist Chávez.

Paraguay too has failed up until now to ratify Venezuela’s bid. Lugo has been coy about his intentions towards the issue, but he could play a key role now in helping Venezuela join the trade bloc. With a left of center government in power in Asunción, the center of political gravity within Mercosur could tilt a little towards Chávez.

The Politics of Hydro-Power

In other key respects, a Lugo presidency could shift geopolitical momentum away from Brazil and towards Venezuela. One issue which has rankled relations between tiny Paraguay and Brazil has been hydropower. To the chagrin of Brasilia, Lugo seems determined to follow in the footsteps of Hugo Chávez by pursuing a policy of resource nationalism.

Under Stroessner, Paraguay built the largest hydroelectric power plant in the world located in Itaipu. Though Itaipu, as well as the subsequently built Yacyretá Dam displaced tens of thousands of Paraguayans from their homes without any restitution, it greatly increased economic growth.

Itaipu, which is operated jointly with Brazil, is now at the center of a political firestorm in Paraguay. The dam is hugely important within the region, providing a full 20% of Brazil’s electrical power. But Lugo has declared that the contract agreed to between his country and Brazil is unfair. Currently, Paraguay is obliged to sell Brazil its surplus electricity from Itaipu at prices far below those set by the market. Lugo wants Brazil to pay more.

The Paraguayan President also wants a greater energy surplus from the dam. Currently Paraguay uses much less than half the energy from the dam while Brazil takes the rest. Paraguay would like to trade more energy so as to generate much needed income. To the dismay of President Lula in Brasilia, Lugo has said that he would like to alter the current energy accord. Such a move however would surely result in a great shortage of energy distribution to the Brazilian south and southeast.

When he talks about hydropower, Lugo strikes a nationalist chord: under his leadership, the President elect has said, Paraguay won’t “fall into submission to any other bigger country.” Lugo says that he is even prepared to take Brazil to the World Court in The Hague if necessary.

Paraguay, which historically has not had much of a political voice on the South American stage, now has a unique opportunity to tip the geopolitical scale towards Venezuela. Up until recently the international media ignored Paraguay. That could change now however with the rise of the country’s new Bishop President.