Paraguayans celebrated the fall of the only ruling party most of the country’s six million inhabitants have ever known amid wild scenes of euphoria in the capital, Asunción.

Fernando Lugo, a softly spoken 56-year-old former Catholic bishop who comes across more as a priest than a politician, became the first opposition leader to win power peacefully in Paraguay’s history and brought to a close almost 62 years of Colorado party rule. He took more than 40 per cent of the vote, against 31 per cent for Blanca Ovelar, a former education minister bidding to become the country’s first female president.

The central pledge of Mr Lugo, who was backed by his 20-party Patriotic Alliance for Change, was to bring change to a country where most inhabitants feel humiliated by the blatant corruption and cronyism of the Colorados. Many people remain stuck in poverty or have been forced to emigrate in search of work.

“Things are going to change, and for the better,” Mr Lugo told supporters in front of the country’s Pantheon, which holds the tombs of national heroes. “We will build a Paraguay that will not be known for its corruption and poverty, but for its honesty.”

The challenges facing Mr Lugo are huge. His sprawling coalition formed around his candidacy as the best means of ejecting the Colorados. The coalition has agreed a programme but the deep ideological differences within it will be tested by government.

One of the main pledges of the Alliance is to implement land reform. Paraguay has one of the world’s most unequal distributions of ownership and Mr Lugo has promised plots for all the country’s landless peasants.

This is likely to be opposed by the agribusiness sector, one of the few parts of the economy that is legal and dynamic thanks to booming soya beans, beef and cotton exports. To add to the sensitivity of the issue, many of the biggest farmers are Brazilian immigrants.

Another major challenge for Mr Lugo will be overcoming the legacy of six decades of Colorado rule. He will inherit a state apparatus that is dominated at every level by the Colorado party, which has long treated public coffers as little more than a kitty for personal enrichment and illegal party financing.

Since no single party is likely to win a majority in Congress, Mr Lugo will be forced to cut deals with opponents. “We don’t know how much Lugo is going to change the government, or how much he can,” said Mark Weisbrot, of the Centre for Economic and Policy Research, a US think-tank.

“It will depend on what their response is. Are they going to play by the rules of democracy?”

There is huge pressure in Paraguay not only for a purge of the state apparatus, but also for investigations into the illegally amassed fortunes of many Colorado leaders. Asked by The Times if and when such investigations would start, one leading Lugo adviser replied: “Immediately.” Any such moves will require a reform of the judicial system because the Supreme Court is also dominated by Colorado supporters.

The two men that many Paraguayans want to see investigated are the outgoing President, Nicanor Duarte Frutos, and the Colorado leader in the Senate, Juan Carlos Galaverna.

Mr Duarte Frutos violated the Constitution in his failed efforts to extend his mandate and is accused of stealing tens of millions of dollars of state funds during his five years in power. Opposition figures and diplomats in Asunción say he and Mr Galaverna allowed drug traffickers and smugglers to operate in return for a percentage of their profits. Years of official patronage have given rise to what one diplomat called a “marijuana aristocracy” in Paraguay that has grown rich and powerful by supplying the drug to Brazil. Much of Brazil’s and Europe’s cocaine passes through Paraguay from Peru and Bolivia.

Crime country

— The country is in 138th place in Transparency International's benchmark Corruption Perception Index, below Iran and Libya, and 4th in its list of the most corrupt countries in the Americas

— A third of its six million people live in poverty

— Intellectual property fraud, trademark fraud, money laundering and smuggling in the city of Ciudad del Este generate an estimated £6 billion a year

— Millions of counterfeit products from Paraguay flood into Brazil and Argentina each day

— US officials claim that Middle East terror groups such as Islamic Jihad and Hezbollah are profiting from the region's illegal activities

Sources: Web.worldbank.org; Transparency International; Times archives

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