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Diplomacy in Action

Paraguay (03/15/12)

March 15, 2012


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Area: 406,752 sq. km. (157,047 sq. mi.); about the size of California.
Cities: Capital--Asuncion (pop. 518,945). Other cities--Ciudad del Este, Concepcion, Encarnacion, Pedro Juan Caballero, Coronel Oviedo.
Terrain: East of the Paraguay River there are grassy plains, wooded hills, tropical forests; west of the Paraguay River (Chaco region) is low, flat, marshy plain.
Climate: Temperate east of the Paraguay River, semiarid to the west.

Nationality: Noun and adjective--Paraguayan(s).
Population (July 2011 est., CIA World Factbook): 6,459,058.
Annual population growth rate (2011 est., CIA World Factbook): 1.284%.
Ethnic groups: Mixed Spanish and Indian descent (mestizo) 95%.
Religions: Roman Catholic 89.6%; Mennonite and other Protestant denominations.
Languages: Spanish (language of business and government), Guarani (spoken and understood by 90% of the population).
Education: Years compulsory--9. Attendance--87%. Literacy--94.7%. (Paraguayan Directorate of Statistics, Surveys, and Censuses)
Health: Infant mortality rate--23/1,000. Life expectancy--74 years male; 79 years female. (CIA World Factbook)
Work force (2011 est., 3.05 million): Agriculture--22.3%; manufacturing and construction--20.4%; services and commerce--57.3%. (CIA World Factbook)

Type: Constitutional Republic.
Independence: May 1811.
Constitution: June 1992.
Branches: Executive--President. Legislative--Senate and Chamber of Deputies. Judicial--Supreme Court of Justice.
Administrative subdivisions: 17 departments, 1 capital city.
Political parties: National Republican Association/Colorado Party (ANR), Authentic Radical Liberal Party (PLRA), Beloved Fatherland (PPQ), National Union of Ethical Citizens (UNACE), National Encounter Party (PEN), The Country in Solidarity Party (PPS), Progressive Democratic Party (PDP), Tekojoja Movement, and numerous small parties not represented in Congress.
Suffrage: 18 years of age; universal and compulsory by law up to age 75.

Economy (sources: Central Bank of Paraguay and the International Monetary Fund)
GDP (2011 est., International Monetary Fund): $22.3 billion.
Annual growth rate (2011 est., International Monetary Fund): 6.4%.
Per capita GDP (2011 est., International Monetary Fund): $3,230.
Unemployment (2011 est., International Monetary Fund): 5.8%
Natural resources: Hydropower, timber, iron ore, manganese, limestone.
Agriculture (20% of GDP): Products--soybeans, cotton, beef, pork, cereals, sugarcane, cassava, fruits, vegetables. Arable land--9 million hectares, of which 35% is in production.
Manufacturing and construction (16% of GDP): Types--sugar, cement, textiles, beverages, wood products.
Trade (2010): Exports--$4.534 billion: soybeans and soy-related products, cereals, beef, wood, leather, cotton, sugar, apparel, edible oils, electricity, tobacco. Major markets--Brazil (15%), Uruguay (22%), Chile (12%), Argentina (12%), and the United States in 11th place with 2%. Imports--$9.4 billion: machinery and mechanical appliances; electrical machinery, equipment, and materials; mineral fuels and lubricants; motor vehicles, tractors, parts and accessories; plastics and articles thereof; fertilizers; beverages and tobacco; toys, games, and sporting equipment; chemical products; rubber and articles thereof; paper, paperboard and articles thereof. Major suppliers--China (32%), Brazil (24%), Argentina (16%), Japan (5%), and U.S. (5%).

Paraguay's population is distributed unevenly throughout the country. The vast majority of the people live in the eastern region, most within 160 kilometers (100 mi.) of Asuncion, the capital and largest city. The Chaco, which accounts for about 60% of the territory, is home to less than 2% of the population. Ethnically, culturally, and socially, Paraguay has one of the most homogeneous populations in South America. About 95% of the people are of mixed Spanish and Guarani Indian descent. Little trace is left of the original Guarani culture except the language, which is understood by 95% of the population. About 90% of all Paraguayans speak Spanish. Guarani and Spanish are official languages. Brazilians, Argentines, Germans, Arabs, Koreans, Chinese, and Japanese are among those who have settled in Paraguay with Brazilians representing the largest number.

Pre-Columbian civilization in the fertile, wooded region that is now Paraguay consisted of numerous semi-nomadic, Guarani-speaking tribes, who were recognized for their fierce warrior traditions. They practiced a myth-based polytheistic religion, which later blended with Christianity. Spanish explorer Juan de Salazar founded Asuncion on the Feast Day of the Assumption, August 15, 1537. The city eventually became the center of a Spanish colonial province. Paraguay declared its independence by overthrowing the local Spanish authorities in May 1811.

The country's formative years saw three strong leaders who established the tradition of personal rule that lasted until 1989: Jose Gaspar Rodriguez de Francia, Carlos Antonio Lopez, and his son, Francisco Solano Lopez. The younger Lopez waged a war against Argentina, Uruguay, and Brazil (War of the Triple Alliance, 1864-70) in which Paraguay lost half its population; afterward, Brazilian troops occupied the country until 1874. A succession of presidents governed Paraguay under the banner of the Colorado Party from 1880 until 1904, when the Liberal party seized control, ruling with only a brief interruption until 1940.

In the 1930s and 1940s, Paraguayan politics were defined by the Chaco war against Bolivia, a civil war, dictatorships, and periods of extreme political instability. Gen. Alfredo Stroessner took power in May 1954. Elected to complete the unexpired term of his predecessor, he was re-elected president seven times, ruling almost continuously under the state-of-siege provision of the constitution with support from the military and the Colorado Party. During Stroessner's 35-year reign, political freedoms were severely limited, and opponents of the regime were systematically harassed and persecuted in the name of national security and anticommunism. Though a 1967 constitution gave dubious legitimacy to Stroessner's control, Paraguay became progressively isolated from the world community.

On February 3, 1989, Stroessner was overthrown in a military coup headed by Gen. Andres Rodriguez. Rodriguez, as the Colorado Party candidate, easily won the presidency in elections held that May, and the Colorado Party dominated the Congress. In 1991 municipal elections, however, opposition candidates won several major urban centers, including Asuncion. As president, Rodriguez instituted political, legal, and economic reforms and initiated a rapprochement with the international community.

The June 1992 constitution established a democratic system of government and dramatically improved protection of fundamental rights. In May 1993, Colorado Party candidate Juan Carlos Wasmosy was elected as Paraguay's first civilian president in almost 40 years in what international observers deemed fair and free elections. The newly elected majority-opposition Congress quickly demonstrated its independence from the executive by rescinding legislation passed by the previous Colorado-dominated Congress. With support from the United States, the Organization of American States, and other countries in the region, the Paraguayan people rejected an April 1996 attempt by then-Army Chief Gen. Lino Oviedo to oust President Wasmosy, taking an important step to strengthen democracy.

Oviedo became the Colorado candidate for president in the 1998 election, but when the Supreme Court upheld in April his conviction on charges related to the 1996 coup attempt, he was not allowed to run and remained in confinement. His running mate, Raul Cubas Grau, became the Colorado Party's candidate and was elected in May. The assassination of Vice-President Luis Maria Argana and the killing of eight student anti-government demonstrators, allegedly carried out by Oviedo supporters, led to Cubas' resignation in March 1999. The President of the Senate, Luis Gonzalez Macchi, assumed the presidency and completed Cubas' term. Gonzalez Macchi offered cabinet positions in his government to senior representatives of all three political parties in an attempt to create a coalition government that proved short-lived. Gonzalez Macchi's government suffered many allegations of corruption, and Gonzalez himself was found not guilty in a Senate impeachment trial involving corruption and mismanagement charges in February 2003.

In April 2003, Colorado candidate Nicanor Duarte Frutos was elected president. Duarte's administration established a mixed record on attacking corruption and improving the quality of management. Duarte worked constructively with an opposition-controlled Congress, removing six Supreme Court justices suspected of corruption from office and enacting major tax reforms. Macroeconomic performance improved significantly under the Duarte administration, with inflation falling significantly, and the government clearing its arrears with international creditors. In June 2004, Oviedo returned to Paraguay from exile in Brazil and was imprisoned for his 1996 coup-plotting conviction. In November 2007, Oviedo's criminal charges were overturned by the Supreme Court, and he was allowed to participate in the April 2008 presidential elections.

On April 20, 2008, former Roman Catholic bishop Fernando Lugo (representing a coalition of opposition parties) was elected President. According to the National Election Tribunal (TSJE), Lugo won 40.8% of the vote. Colorado candidate Blanca Ovelar came in second with 30.6% of the vote, and UNACE's Lino Oviedo came in third with 21.9% of the vote. President Lugo assumed office on August 15, 2008. Lugo has identified reduction of corruption and economic inequality as two of his priorities.

Paraguay's highly centralized government was fundamentally changed by the 1992 constitution, which provides for a division of powers. The president, popularly elected for a 5-year term, appoints a cabinet. The bicameral Congress consists of an 80-member Chamber of Deputies and a 45-member Senate, elected concurrently with the president through a proportional representation system. Deputies are elected by department and senators are elected nationwide. Paraguay's highest judicial body is the Supreme Court. A popularly elected governor heads each of Paraguay's 17 departments.

Principal Government Officials
President--Fernando Armindo Lugo Mendez
Vice President--Luis Federico Franco Gomez
Minister of Foreign Affairs--Jorge Lara Castro
Ambassador to the U.S.--Rigoberto Gauto-Vielman
Ambassador to the OAS--Bernardino Hugo Saguier Caballero
Ambassador to the UN--Jose Antonio Dos Santos

Paraguay maintains an embassy in the United States at 2400 Massachusetts Avenue, NW, Washington, DC 20008 (tel. 202-483-6960). Consulates are in Miami, New York, and Los Angeles.

Paraguay has a predominantly agricultural economy, with a struggling commercial sector. There is a large subsistence sector, including sizable urban unemployment and underemployment, and a large underground re-export sector. The country has vast hydroelectric resources, including the world's second-largest hydroelectric generation facility built and operated jointly with Brazil (Itaipu Dam). Paraguay is the world's largest net exporter of electricity. However, it lacks significant mineral or petroleum resources. The government welcomes foreign investment in principle and accords national treatment to foreign investors. The economy is dependent on exports of soybeans (as the world’s fourth-largest exporter and seventh-largest producer), cotton, grains, cattle, timber, and sugar; electricity generation; and to a lesser extent on re-exporting to Brazil and Argentina products made elsewhere. It is, therefore, vulnerable to the vagaries of weather and to the fortunes of the Argentine and Brazilian economies. Given the importance of the informal sector, accurate economic measures are difficult to obtain.

In 2010, Paraguay experienced its fastest economic growth of the past 30 years. Globally, only Qatar and Singapore had a greater increase in GDP. Fueled by a significant rebound in the agricultural sector, which had contracted sharply in 2009 due to a severe drought, Paraguay’s economy grew 14.5% during 2010. Economic growth for 2011 was much more modest, with a rate of 6.4%. Paraguay’s 2011 GDP was estimated at $22.3 billion.

The account deficit increased from -0.22% of GDP in 2009, to -1.49% of GDP in 2010, to -7.5% of GDP in 2011. Official foreign exchange reserves were $4.17 billion for 2010 and $4.93 billion for 2011. Inflation was 7.2% for 2010 and 4.9% for 2011. Standard & Poor's has upgraded Paraguay’s long-term debt rating from B to B+.

Agriculture and Commerce
Agricultural activities, most of which are for export, represent about 20% of GDP and employ about one-quarter of the work force. More than 250,000 families depend on subsistence farming activities and maintain marginal ties to the larger productive sector of the economy. In addition to the commercial sector with retail, banking, and professional services, there is significant activity involving the import of goods from Asia and the United States for re-export to neighboring countries. The underground economy, which is not included in the national accounts, may be almost twice the size of the formal economy in size, although greater enforcement efforts by the tax administration and customs are having an impact on the informal sector.

According to the Central Bank of Paraguay, Paraguay’s exports were $1.66 billion by April 2011. That was an 8.7% increase over exports as of April 2010. Imports as of April 2011 were $3.39 billion, a 26.9% increase over April 2010. In 2011 exports totaled $10.539 billion, while imports were $12.212 billion.

The constitution designates the president as commander in chief of the armed forces. Military service is compulsory, and all 18-year-old males--and 17-year-olds in the year of their 18th birthday--are eligible to serve for 1 year on active duty. However, the 1992 constitution allows for conscientious objection.

Paraguay’s military (army, navy, and air force) has just over 8,600 uniformed personnel, including 2,300 officers, 5,000 non-commissioned officers, and 1,500 junior conscripts. Of the three services, the army has the majority of personnel, resources, and influence. With about 5,400 personnel, it is organized into three corps, with six infantry divisions and three cavalry divisions. The military has two primary functions: national defense (including internal order) and engaging in civic action programs as directed by the president. The navy consists of approximately 2,170 personnel and in addition to its fleet, has an aviation section, a prefecture (river police), and a contingent of marines (naval infantry). The air force, the smallest of the services, has approximately 1,060 personnel.

In 2001, Paraguay created the Center for Peacekeeper Operations Training (“CECOPAZ”) for the purpose of training UN peacekeepers, war correspondents, UN police officers, and multinational logistics teams. Currently, over 200 Paraguayan troops serve in UN missions in Haiti, Cyprus, the Democratic Republic of the Congo, Western Sahara, Liberia, South Sudan, and Cote d’Ivoire.

Paraguay is a member of the United Nations and several of its specialized agencies. It also belongs to the Organization of American States, the Latin American Integration Association (ALADI), the Rio Group, the Community of Latin American and Caribbean States (CELAC), the three-nation URUPABOL, INTERPOL, and MERCOSUR (the Southern Cone Common Market). Paraguay is closely aligned with its MERCOSUR partners on many political, economic, and social issues. It is the only country in South America that recognizes Taiwan and not the People's Republic of China.


U.S. Interests in Paraguay
The United States and Paraguay have an extensive relationship at the government, business, and personal level. Paraguay is a partner in hemispheric initiatives to improve counternarcotics cooperation, combat money laundering, trafficking in persons, and other illicit cross-border activities, and adequately protect intellectual property rights. The United States looks to Paraguay, which has tropical forest and riverine resources, to engage in hemispheric efforts to ensure sustainable development. The United States and Paraguay also cooperate in a variety of international organizations.

Paraguay has taken significant steps to combat illegal activity in the tri-border area it shares with Argentina and Brazil. It participates in antiterrorism programs and fora with its neighbors and the United States.

The United States strongly supports consolidation of Paraguay's democracy and continued economic reform, the cornerstones of cooperation among countries in the hemisphere. The United States has played important roles in defending Paraguay's democratic institutions, in helping resolve the April 1996 crisis, and in ensuring that the March 1999 change of government took place without further bloodshed.

Total two-way trade between the United States and Paraguay increased by about 7% in 2011 over 2010. Imports from Paraguay in 2011 were $110 million, up from $62.1 million in 2010. U.S. exports to Paraguay in 2011 were $1.97 billion, up from $1.81 billion in 2010, according to U.S. Census data. More than a dozen U.S. multinational firms have subsidiaries in Paraguay. These include firms in the computer, agro-industrial, telecom, banking, and other service industries. Some 75 U.S. businesses have agents or representatives in Paraguay, and more than 3,000 U.S. citizens reside in the country.

U.S. Assistance
The U.S. Government has assisted Paraguayan development since 1942. Building on the successes of the $34.9 million 2006-2008 Millennium Challenge Corporation's (MCC) Threshold Country Program (TCP) with the U.S., Paraguay signed a second 2-year MCC TCP for $30.3 million in 2009. Its objective is to reduce corruption and strengthen the rule of law. This second Threshold program involves key ministries and agencies of the Government of Paraguay, including the Economic Crimes and Corruption Unit of the Public Ministry, the Administrative Case Tribunal of the Supreme Court, the Controller General of the Ministry of Finance, the Ministry of Health, the customs authorities, the Ministry of Industry and Commerce, the Ministry of the Interior, and the National Police Academy. Since March 2010, the U.S. also works closely with the Paraguayan Ministries of Agriculture, Finance, Industry and Commerce, and Interior as well as with local authorities on the Northern Zone Initiative. With Section 1207 funding of $6.5 million, this program aims to build the capacities of the National Police and to strengthen public management and respond to citizen priorities through service provision and job creation in historically underserved municipalities in the country’s northern zone.

Separately, the U.S. Agency for International Development (USAID) provides technical assistance in the areas of democracy and governance, economic growth, health, and the environment. USAID supports democracy and good governance by working closely with the judicial branch and civil society organizations to strengthen the mechanisms that detect and prevent corruption. USAID provides support for small and medium-sized enterprises in Paraguay to increase sales and reduce poverty through job creation with emphasis on rural producers. USAID’s health program supports the Government of Paraguay’s commitment to improving the health system, reducing corruption, and improving access to basic health services for all citizens. This program has been reduced in recent years and is expected to be phased out in 2012. In response to a growing number of environmental challenges, including massive deforestation and threats to freshwater resources and biodiversity, USAID works with diverse stakeholders to form alliances and mobilize additional resources to support the sustainable management of key and specific vulnerable areas in Paraguay. The total amount of the program was $11.287 million in fiscal year 2010 and $5.5 million in 2011.

The U.S. Department of State, the Drug Enforcement Administration, the Department of Justice, and the Department of Treasury provide technical assistance, equipment, and training to strengthen counternarcotics enforcement, combat trafficking in persons, promote respect for intellectual property rights, and to assist in the development and implementation of money laundering legislation and counterterrorism legislation.

In 2009, U.S. and Paraguayan officials renewed a 2003 memorandum of understanding (MOU) to strengthen the legal protection and enforcement of intellectual property rights in Paraguay. The United States and Paraguay discussed ongoing work under that MOU during an October 2010 United States-Paraguay Joint Commission on Trade and Investment meeting in Asuncion. The current MOU will remain in effect through April 2012. Negotiations to renew the MOU are currently underway. The countries also discussed joint work in creating opportunities for small and medium-sized enterprises in the United States and Paraguay.

The U.S. Department of Defense (DOD) and the Massachusetts National Guard provide technical assistance and training to help modernize and professionalize the military, including by promoting respect for human rights and obedience to democratically elected civilian authorities. Putting the training into practice, Paraguay sent its first UN peacekeepers--a company of engineers--to Haiti in December 2010. For 1 year, they helped rebuild Haiti’s earthquake-ravaged infrastructure. A larger engineering company replaced them in December 2011 to continue that work. A third company of engineers is training to replace them in December 2012.

The Peace Corps opened its program in Paraguay in 1967; since that time nearly 3,500 Volunteers have served in Paraguay. To help address Paraguay’s critical needs, approximately 230 Volunteers are assigned to projects in the areas of agriculture, community economic development, education and youth development, environment, and health and HIV/AIDS. The Office of Public Diplomacy also is active in Paraguay, funding Fulbright and other scholarships to the United States, U.S. scholars to Paraguay, other short- and long-term exchanges, English scholarship programs, donations of books and equipment, and a cultural preservation project to restore Paraguay's National Library.

Principal U.S. Officials
Ambassador--James H. Thessin
Deputy Chief of Mission--William H. Duncan
Political/Economic Chief--Kenneth M. Roy
Consul--David P. Schensted
Management Officer--Andrew K. Sherr
USAID Director--Rose Rakas
Public Affairs Officer--Christopher G. Istrati
Defense Attache--Lt. Col. Will Armstrong
Office of Defense Cooperation/Senior Defense Official--Col. Michael Flynn

The U.S. Embassy in Paraguay is located at 1776 Avenida Mariscal Lopez, Asuncion (tel. (595) (21) 213-715, fax (595) (21) 213-728). The embassy's home page address on the Internet is:

Other Contact Information
U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th and Constitution Ave., NW
Washington, DC 20230
Tel: (202) 482-0621, 800-USA-TRADE
Fax: (202) 482-0464

Paraguayan-American Chamber of Commerce
Asuncion, Paraguay
Telefax: (595) (21) 222-160
Branch Office in Ciudad del Este
Telefax: (061) 512-308/512-287
Ciudad del Este, Paraguay

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