Paraguay: A Seven Year Decline Turns Into a Bust By Ronald J. Morgan ASUNCION, Paraguay -- On most days the capital is like a scene from a 1950s postcard. Birds are often heard chirping along its tree-lined streets and its elegant new and old mansions are perfectly gardened. The favorite car is a Mercedes Benz and the torrid heat is often alleviated with a drink of herbal tea from a horned-shaped cup called a womba. Thirteen years ago Paraguay abandoned its police state practices and shunted off South America's longest ruling dictator, Afredo Stroessner,(1954-1989) to retirement in Brazil. But despite the return of basic liberties, it is in many ways still trapped in the shadow of his 35-year-old rule. The democratic transition has been racked by coup attempts, assassination of a vice-president and constant protests. For the second time in four years the Paraguayan congress is impeaching the president. Nostalgia for a strong man is increasingly evident and Stroessner bumper stickers feature the slogan ¨I was happy but I didn´t know it.¨ Just turned ninety, Stroessner will not be returning to power, but a former general many feel is cut from the same clothe is gaining political clout and at times threatening to overthrow the government like an old fashioned Latin American caudillo. The political uncertainty is being accompanied by increasing economic woes. Hopes of creating a prosperous free-trade zone by re-exporting goods into Argentina and Brazil have faded. A financial sector collapse in 1995, started a nearly seven-year economic downturn that's being made worse by the economic collapse in Argentina. The economy is projected to have declined by more than 4% in 2002 and unemployment has risen as high as 15% by some estimates. "We can easily reach 20%. The perspective is not good at least in the short term," said Marcos Robles, an economist with the United Nations Paraguay office. High population growth, and a decline in schooling is exacerbating the crisis. "There are more drop outs, there's more child and youth employment. If there isn't an important change in policy we can expect more problems," he said. Tensions have been mounting since protests and lack of congressional support forced President Luis Gonzalez Macchi to abandon a planned privatization of the telephone company earlier this year. The resulting revenue shortfall of about $500 million forced the goverment to attempt to impose a series of unpopular tax increases and benefit cuts aimed at winning approval of an emergency $200 million International Monetary Fund loan. But a divided anti-Macchi congress was unable to pass the legislation and the funds are not expected to be available any time soon. The standoff lead to the resignation of the Presidential economic team of Paraguayan Central Bank President, Raul Vera, Finance Minister James Spalding and Tax Collector Luis Manuel Aguirre the week of Nov. 18. Macchi dipped into income generated from Paraguay's share of the Itaipu binational dam to try to meet salaries and Christmas bonuses through the end of the year. But without the IMF accord Paraguay is expected to have trouble making scheduled international and domestic debt payments. Paraguay's fractured economy has become famous for pirated goods such as fake Barbie dolls, music cds,and wharehouses full of counterfeit cigarettes. Stolen cars are everywhere and aircraft are regularly seized or crash with loads of guns, cocaine and marijuana headed for Brazil's urban slums. The newspapers delight in publishing pictures of the mansions belonging to low-paid customs officials. It was hardly a surprise when in August, Paraguay topped Latin America's list of corrupt countries and was ranked third in the world after Nigeria and Bangladesh by Berlin-based Transparency International. Growing public outrage prompted a group of Paraguayan businessmen to sponsor the Day of Shame during September. People wore black and black flags were draped from businesses in protest against corruption. Jose A. Bergues, a member of the Paraguay office of Transparency International, says the problem is deeply rooted in Paraguay´s institutions. ¨In 1999 the World Bank did a survey in Paraguay. They interviewed over 5,400 people and they found the custom houses, judiciary, and public contracting were the most dangerous forms of corruption.¨ The same year a mixed private and government National Council for Integrity was established. But Bergues said its efforts have resulted in ¨a very small improvement¨ because of the overwhelming nature of the problem. And he puts the blame squarely on Paraguay´s recent presidents. ¨It´s difficult to work because unfortunately this president and the previous two presidents were really a shame. They really set us back¨ President Juan Carlos Wasmosy (1993-1998) and Raul Cubas Grau (1998-1999) have faced prosecution for corruption and political violence charges, respectively. President Macchi, is under impeachement proceedings for using a stolen Mercedes as one of his official vehicles, fraud involving $16 million allegedly siphoned from a local bank liquididation and a $500,000 payment to a notary involved in preparing the telephone company Privatization. The Paraguayan military is not faring much better with accusations that it carried 3,100 fictitious soldiers on its payroll and established fake businesses that siphoned off military disbursments. While one general, Pablino Gonzalez, is being prosecuted in military courts more than twenty soldiers and civilians allegedly involved in the vast corruption network have been overlooked. Orlando Castillo a member of the Organization, Justice and Peace, which monitors Paraguayan military activity, said that as things slip in Paraguay the armed forces are once again becoming too corrupt and too involved in domestic affairs. ¨Theses days what the military does is commit acts of corruption and the government assures them impunity in return for repressing social ogranizations. They're playing an ever bigger role in internal affairs to prevent protest." A September decision by President Gonzalez Macchi to increase the number of generals from 31 to 42 is also being seen as backtracking on earlier efforts to reduce military brass. The United States has preferred to see Paraguay through the prism of counter-terrorism and narcotics control. Since the 9/11 attacks, Green Berets and other experts have passed through with training to combat possible activity by suspected Moslem terrorists and drug traffickers thought to operating in the Paraguayan border with Brazil and Argentina. U.S. officials visiting Paraguay have repeatedly praised the Gonzalez Macchi administration for its cooperation. But given the instability, human rights activists are worried that the intelligence and military training may be used against the public. "There's fear in the human rights community. There are sectors of the government who tend to violate the law and constitution," said Aldo Pelli, the Amnesty International representative in Paraguay. In the wake of such concerns and street protests this summer, the Paraguayan congress shelved a U.S. sponsored anti-terrorism bill. Recently, the United Nations contracted a study to examine Paraguay's institutions. The report, released in September, concluded "The transition (to democracy) has not been an easy and successful process due in good part to the fact that the political and military elite that supported Stroessner continue to occupy power." Known as the Men of Ruins, the executive branch and congress contain many Stroessner-linked names. But more important than individuals, the report said, are the patronage politics and corruption that underpinned Stroessner's rule. Much of his machine functioned through the official Colorado Party and it has clinged to power. ¨After the coup (that ousted Stroessner) the Colorado Party didn´t withdrawal,¨ said Luis Vallovera an electoral specialist who has worked on projects aimed at strengthening Paraguay´s political parties during the democratic transition. ¨It kept controling the state apparatus and giving out favors. And it kept a political clientele.¨ But while still powerful, it is sharply divided and given to fighting with even presidents from its own party. ¨The Colorado Party is very divided by internally sectors. Within the party you have the management of the state and also within it forces that act as opposition. Often the opposition within is stronger than that of the oppostion parties, Vallovero said. On December, 22, The party elected as its Presidential Candidate Nicanor Duarte, a former Education Minister and journalist, with ties to Paraguay´s traditional business sector. The April 27 elections will see the long reigning Colorados facing its strongest challenge from a coalition made up of followers of a fugitve general, Lino Oviedo, and the country's largest oppostion party the Authentic Liberal Revolutionary Party. Liberal Party Presidential Candidate, former Vicepresident Julio Cesar Franco, would become the first non Colorado Party member to become president since 1947 if he won. Oviedo supported Franco's efforts to win election as vice president in 2000. And in September, Franco, while still vicepresident backed the general's call for ousting President Macchi through street protests. Many see Oviedo as a threat to democracy, a want-to-be Stroessner who would seek to be the power behind any presidency he brought to victory. Oviedo rose rapidly from coronel to chief of the armed forces after the Feb 9, 1989 coup by General Andres Rodriguez, who was elected transitional president (1989-1993). He seemed destined for the presidency despite a cloud of drug and smuggling charges. (A Brazilian Senate investigation into organized crime cites Oviedo as having an unexplained fortune of about $1 billion.) But a dispute with President Wasmosy lead to his firing and subsequent revolt against the government in April, 1996. After backing down under international pressure and a promise he would be made defense minister, he was instead, prosecuted and sentenced to ten years in prison. Oviedo was released from prison and seemed headed toward an amnesty which would put him back in politics under President Cubas Grau. But a decision by the supreme court enforced the 10-year sentence, touching off a second power struggle in 1999, known as the Paraguayan March. Vice President Luis Argana, an Oviedo opponent in line to become president if Cubas was impeached over the Oviedo release was assassinated. Oviedo was alleged to have been the intellectual author of the plot. Security forces also fired on protesters demanding the impeachment of the president and at least eight persons were killed. Cubas, after fleeing to Brazil, returned this year to face charges for the violence. Oviedo fled first to Argentina under the protection of President Carlos Menem and later Brazil where extradition efforts failed in Dec. 2001. Operating from outside the country, Oviedo has formed a political party, called the Ethical Colorado National Union known by the Spanish Acronym UNACE. Citing corruption and charging that Gonzalez Macchi, the head of the senate under Cubas, should not have been allowed to assume the presidency for rest of his term, he has massed protests aimed at ousting him. Protests in July left two dead and Gonzalez Macchi declared a five-day state of emergency. Later protests in September left thirty injured. "He's followed a program of destabilization or shocks," said Castillo. "He has a messianic message that he's the chosen one." The United States questioned Oviedo's commitment to democracy during a visit, Nov. 14, by Assistent Undersecretary for Latin American affairs Curtis Struble. "We haven't changed our concern. A person who attempted a coup in 1996, who has an attitude like that toward democracy is worrisome." Stuble told the Paraguayan daily Ultimo Hora. Struble said whether Oviedo would be allowed to participate in the April 27 elections would be a matter for the Paraguayan laws, courts and political institutions to decide. Oviedo's supporters are found among Colorado's, as well as Liberals and break-away Unace members. But dispite his ability to gain support within many political parties he has fallen short of the votes necessary to obtain an amnesty that would allow him to run for president himself. And if the ten-year sentence for the 1996 coup were annulled charges could still flow over the Argana assassination. "UNACE if they do a good job is going to obtain congressional seats, Vallovero predicted. Oviedo will arrive (in power) through his resentatives but he can´t run himself.¨ Facing a choice between the corruption perpertrating Colorado machine and the supporters of would-be caudillo Oviedo, Paraguayan voters can do little but hope for a successful muddling through as the worst crisis in 20 years envelops the nation. Some are taking the long view. Tranparency International is publishing a weekly cartoon that promotes better values and organizes Harvard seminars on leadership for young Paraguayans. They monitor lists of government contract bids and they're circulating a code of ethical conduct for business. "People are always expecting some kind of messiah who will solve every situation. That never exists. I prefer this kind of problem. Not returning to the old days," said Bergues. "You would be starting over from scratch again." ### |