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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.
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1. Debt repayment can be done with funding from other sources, rather than the price of energy. What is the problem with that?
2. The curious thing is that over the years the famous Itaipu debt seems to increase rather than decrease over "adjustment factor".
Pablo Acuña, Asunción, Paraguay
And how Paraguay pay the international loans? Brazil made a loan to Paraguay. How would Paraguay pay back Brazil? By CHARGING CUST PRICE for the Itaipu extra energy sold to Brazil. If Paraguay charges more than the PRICE OF CUST, Paraguay wont be paying the brazilian loans!
SIMPLE!
Aces, Novo Hamburgo, Brazil
Andreas Bochum, can you prove Paraguay paid HALF the cost of Itaipu? As far as we all know, thats FAR from acurate. Brazil paid almost its entirety, and THATS the reason Brazil pays cust price for the energy. The lower price compensates Brazil for the construction costs.
Aces, Novo Hamburgo, Brazil
Allow me to inform you that since YEARS Brazil has a protectionist policy.
As long as there are barriers to trade with Paraguay (its ally MERCOSUR), and while not stop thinking that Brazil is like an empire in South America for his size ... I doubt that a lot of help from the government of Brazil
Pablo Acuña, Asunción, Paraguay
3. The Treaty is not in force till the year 2023, only one part of the Treaty, the so called "Anexo C". The main part of the Treaty could be negociated any time.
Andreas, Bochum, Germany
2. Brazil sells energy from Itaipu ilegally to Argentina in spite of the Treaty forbidding it, for ten times more the money they pay to Paraguay. 3. The main creditor of Itaipu is Electrobras, the debt was arranged by the brazilian administrators of Itaipu, this is a strategy to control Itaipu.
Andreas, Bochum, Germany
Please check your sources next time... would you like to read about how Churchill sign the Munich agreement and Chamberlain won the war?
Andreas, Bochum, Germany
It was Mr Santos from Nagoya, not Mr Nagoya i was refering to.
Andreas, Bochum, Germany
Also, Mr Nagoya from Japan says that Paraguay did not put any dime for the construction of Itaipu, so Paraguay should not receive anything in return. This is a fallacy, because: 1. Paraguay pays for half of the debt of Itaipu in spite of only getting 5% of the energy.
Andreas, Bochum, Germany
The price Brazil pays for the energy generated in Itaipu is US$ 45. However Itaipu was not a gift from heaven, it was built by men and it cost money. US$ 42 are directed to pay the debt and interest BRAZIL took in the 1970's to build the plant, and cover the operational costs of the company...
Diogo Santos, Nagoya, Japan
...The debt is being paid by the bi national company created to administer Itaipu, but it was taken by the Brazilian Government with bonds issued by Banco do Brasil in the 1970s. Paraguay did not give a dime to build the pant, all Paraguay had to do was to sit and wait till the debt is paid...
Diogo Santos, Nagoya, Japan
...to start receiving full price for the energy generated by a plant that is the result of investments fully made by Brazil. Paraguay is not selling energy too cheap to Brazil, it is paying its half of the huge debt taken to build an asset to which it is partner.
Diogo Santos, Nagoya, Japan
Itaipu is a signed contract negotiated by governments and international beneficiarion to nucleos power Brazilians and paraguayos.Brasil should reconsider its renegotiation if you want to keep the peace in South America. Lula and the Brazilian congress will be responsible for this peace.
Ernesto Paoletti, Asuncion, Paraguay
I agree with Hector Ferreira, in the point that UK had financied the war againt Paraguay. As a matter of fact Brazil should accept a renegociation of the Itaipu treaty, because the price they pay for the energy is low.
Victor Romero Mendiola, Asuncion, Paraguay
Sorry about my poor english vocabulary. I`m brazilian and have some reasons to desagree with your opinion about the alternatives that our comrade Lugo should choose. In first place, I have to remember you that who pay the bill of Paraguay War was UK. In second place, the economic policies of Lula represents the continuism of Fernando Henrique. Including the president of our Central Bank, Henrique Meireles, is a member of his party, PSDB and ex-president of Bank Boston here... We could not acept that elected presidents keep lying for the poor people, who had elected them. And if Lugo have made a promisse for his people, like land reform and a renegociaton of the Itaipu treaty, he will break with this "subcolonialism" - what caracterizes Paraguay today - and will make the left line governments get more stronger on latin america.
Hector Ferreira, Fortaleza, Brazil
Lugo is not an admirer of Chavez... you have a wrong information..
Giampaolo Ficorilli, Asuncion, Paraguay
'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.'
On the contrary, Lula is the mistake, his plans are only token left wing. His popularity has dimished because he still serves the very agend that has troubled latin america.
Lugo is an admirer of Chavez and should rightly emulate his example.
brian, canberra, australia