The official motto of Paraguay is “peace and justice”. The country itself, however, has not had enough of either. It still suffers from the legacy of the War of the Triple Alliance (1865-70) when it found itself in conflict with Argentina, Brazil and Uruguay simultaneously, with the result that it lost much of its territory and an astonishing two thirds of its adult males. Some land was restored via the Chaco War (1932-35) against the easier target of Bolivia, but a brief yet bloody civil war in 1947 hardly helped matters. The legacy of this struggle was the rise of the Colorado party, which has held authority ever since. For most of that time it was the vehicle for the dictatorship of Alfredo Stroessner, whose human rights record was appalling and who allowed Paraguay to be a haven for drug traffickers as well as a notorious refuge for those who had served Nazi Germany.

The triumph of Fernando Lugo, a former bishop in the Roman Catholic Church, in the presidential election held on Sunday is, therefore, an extraordinary, even revolutionary, event. Despite fears that the poll would be rigged or that the ruling elites would refuse to accept the result, he has been declared the victor and the outgoing administration asserts that it will not stand in his way. Mr Lugo campaigned against a corruption that is less systemic than institutionalised and pledged to alleviate the immense poverty that has been compounded by a sharp rise in unemployment. His version of a national “get-rich-quick” scheme is the promise to renegotiate the 1973 Itaipu treaty by which Paraguay sells a vast amount of hydroelectric power to Brazil but at prices that have been pegged at low levels. Legally, though, this treaty is in force until 2023.

Mr Lugo would be wise to move cautiously. The Colorado party lost office more because of an internal split over the nomination of Blanca Ovelar, a protégée of the current President, who sought to be the first woman to hold the post, than a dramatic slump in popularity. It remains a formidable political machine and it has control over the Senate, so limiting Mr Lugo's options. His own coalition is something of a ragbag containing both centrist and radical elements. With the exception of his position on the Itaipu treaty, his was a distinctly vague manifesto. Ending corruption in a place where it has deep roots is easier said than done, as is reducing poverty in a subsistence agricultural economy where much of the population is illiterate and landless and seeks to make a living from exporting soya beans.

Mr Lugo needs to work with his Brazilian counterpart, Luiz Inácio Lula da Silva. While Mr Lula has insisted that the renegotiation of the Itaipu treaty is out of the question, he has had the honesty to admit that existing arrangements are harsh on Paraguay and that Brazil should increase the assistance it awards its neighbour. A bargain of this sort could allow Mr Lugo to make economic and social progress and buy him time for reform.

Mr Lula, who has proved an astute social democrat and who is modernising his country, would be a fine model for the new President of Paraguay. He also provides a sharp contrast to the other obvious South American example of leadership, Hugo Chávez in Venezuela. In 2005, Bolivia, the poorest nation in South America, elected a new president, Evo Morales, who looked to Mr Chávez for his inspiration. Paraguay, the second poorest state there, must not repeat that mistake.