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U.S. Department of State, July 1999 Bureau of Western Hemisphere Affairs  Background Notes: Paraguay PROFILE Geography
Area: 406,752 sq. km. (157,047 sq. mi.); about the size of California. People
Nationality: Noun and adjective--Paraguayan(s). Government
Type: Constitutional republic. Economy (1998 est.)
GDP: $10 billion. 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 miles) 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 Guaran’ Indian descent. Little trace is left of the original Guaran’ culture except the language, which is understood by 90% of the population. About 75% of all Paraguayans speak Spanish. Guarani and Spanish are official languages. Germans, Japanese, Koreans, ethnic Chinese, Arabs, Brazilians, and Argentines are among those who have settled in Paraguay. Pre-Columbian civilization in the fertile, wooded region that is now Paraguay consisted of numerous semi-nomadic, Guarani-speaking tribes of Indians, who were recognized for their fierce warrior traditions. They practiced a mythical 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; afterwards, 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. General 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 34-year reign, political freedoms were severely limited and opponents of the regime were systematically harassed and persecuted in the name of national security and anti-communism. 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 General 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. Wasmosy worked to consolidate Paraguay's democratic transition, reform the economy and the state, and improve respect for human rights. His major accomplishments were exerting civilian control over the armed forces and undertaking fundamental reform of the judicial and electoral systems. 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 General 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 former running mate, Raul Cubas Grau, became the Colorado Party's candidate and was elected in May in elections deemed by international observers to be free and fair. Cubas included among his priorities reducing the growing budget deficit and fighting corruption and narcotics trafficking. However, his brief presidency was dominated by conflict over the status of Oviedo, who had significant influence over the Cubas government. One of Cubas' first acts after taking office in August was to commute Oviedo's sentence and release him from confinement. In December 1998, Paraguay's Supreme Court declared these actions unconstitutional. After delaying for two months, Cubas openly defied the Supreme Court in February 1999, refusing to return Oviedo to jail. In this tense atmosphere, the murder of Vice President and longtime Oviedo rival Luis Mar’a Argana on March 23, 1999, led the Chamber of Deputies to impeach Cubas the next day. The March 26 murder of eight student anti-government demonstrators, widely believed to have been carried out by Oviedo supporters, made it clear that the Senate would vote to remove Cubas on March 29, and Cubas resigned on March 28. Despite fears that the military would not allow the change of government, Senate President Luis Gonzalez Macchi, a Cubas opponent, was peacefully sworn in as president the same day. Oviedo fled the same day to Argentina, where he was granted political asylum. Cubas left for Brazil the next day and has since received asylum. Gonzalez Macchi presides over Paraguay's first coalition government in several decades, as his government includes members of the Liberal and Encuentro Nacional parties as well as the anti-Oviedo factions of the Colorado party. Gonzalez has made addressing Paraguay's economic stagnation a priority, and the legislative support his government enjoys suggests that he may receive greater cooperation from the Congress than Cubas did. The government and its legislative allies have announced an ambitious economic and institutional reform program that has yet to be implemented. GOVERNMENT AND POLITICAL CONDITIONS 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 next presidential elections are scheduled for 2003. An election to replace the late Vice President Argana is scheduled for February of 2000. 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 nationwide. Paraguay's highest court is the Supreme Court. The Senate and the president select its nine members on the basis of recommendations from a constitutionally created Magistrates Council. Each of Paraguay's 17 departments is headed by a popularly elected governor. Principal Government Officials
President--Lu’s GONZALEZ Macchi 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 Kansas City, Kansas. Paraguay has a predominantly agricultural economy, with a thriving commercial sector. There is a large subsistence sector (including sizable urban underemployment) and a large underground re-export sector. The country has vast hydroelectric resources including the world's largest hydroelectric generation facility at the Itaipu Dam, but it lacks significant mineral or petroleum resources. The government welcomes foreign investment and provides national treatment to foreign investors and businesses. The economy is dependent on exports of soybeans, cotton, cattle, and timber; on electricity generation; and to a decreasing degree on re-exporting products made elsewhere. It is therefore vulnerable to the vagaries of weather and to the fortunes of the Argentine and Brazilian economies. According to Paraguayan government statistics, Paraguay's GDP of $10 billion in 1998 represented a real decline of 0.5% from 1997. However, given the importance of the informal sector, accurate economic measures are difficult to obtain. Paraguay generally maintains a small balance-of-payments surplus. In early 1999, official foreign exchange reserves were below $800 million and foreign official debt remained about $1.3 billion. On a per capita basis, GDP declined by about 3% during 1998 and inflation rose to 14%. Agriculture and Commerce Agricultural activities, most of which are for export, represent about 27% of GDP. More than 200,000 families depend on subsistence farming activities and maintain marginal ties to the larger productive sector of the economy. The commercial sector is primarily engaged in the import of goods from Asia and the United States for re-export to neighboring countries. The recorded activities of this sector have declined significantly in recent years, placing a strain on government finances, which depend heavily on taxes on this trade. In general, Paraguayans prefer imported goods, and local industry relies on imported capital goods. The underground economy, which is not included in the national accounts, may equal the formal economy in size. The bulk of underground activity centers on the unregistered sale of imported goods -- including computers, sound equipment, cameras, liquor, and cigarettes -- to Argentina and Brazil. Post-Stroessner Reforms Since 1989, the government has deregulated the economy, which had been tightly controlled by President Stroessner's authoritarian regime. The Rodriguez and Wasmosy Administrations eliminated foreign exchange controls and implemented a floating exchange rate system, reformed the tax structure and established tax incentives to attract investment, reduced tariff levels, launched a stock market, and began a process of financial reform. Though the short-lived Cubas administration was hampered by political conflicts, it attempted to reduce the rising government deficit by cutting spending, to fight intellectual property piracy in order to attract foreign investment, and to address a financial sector crisis that has simmered since 1995. The Gonzalez Macchi government will need to take action on these fronts as well as address the effects of Brazil's devaluation of the real, which has reduced Paraguay's exports to Brazil and spurred increased imports from Brazil. The total public sector budget represents close to one-third of GDP. Of the $3.75 billion 1997 government budget, 43% was assigned to the central government, with the remaining 57% targeted for the decentralized agencies and state-owned enterprises. The constitution designates the president as commander-in-chief of the armed forces. Military service is compulsory, and all 17-year-old males are liable for one year of active duty. Although the 1992 constitution allows for conscientious objection, no enabling legislation has yet been approved. Of the three services, the army has the majority of personnel, resources, and influence. With about 12,000 personnel, it is organized into three corps, with six infantry divisions and three cavalry divisions. The army has two primary functions: to maintain the national defense (including internal order) and to manage some civic action projects in the countryside. The navy consists of about 2,000 personnel divided into three service branches. The air force, the newest and smallest of the services, has about 1,500 personnel. 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, INTELSAT, INTERPOL, and MERCOSUR (the Southern Cone Common Market). Its foreign policy has followed closely the Rio Group's lead on many issues of wide-ranging political importance. 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 and other illicit cross-border activities, and adequately protect intellectual property rights. The U.S. looks to Paraguay, which has substantial rain forest and riverine resources, to engage in hemispheric efforts to ensure sustainable development. As a member of MERCOSUR, Paraguay supports the move toward a Free Trade Area of the Americas early in the next century. The U.S. and Paraguay also cooperate in a variety of international organizations. The U.S. strongly supports consolidation of Paraguay's democracy and continued economic reform, the cornerstones of cooperation among countries in the hemisphere. The U.S. 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. Although U.S. imports from Paraguay are only about $40 million per year, U.S. exports to Paraguay approach $1 billion per year, according to U.S. Customs data. (Not all of the U.S. exports are reflected in Paraguayan government data.) More than a dozen U.S. multinational firms have subsidiaries in Paraguay. These include firms in the computer, manufacturing, agro-industrial, and banking and other service industries. Some 75 U.S. businesses have agents or representatives in Paraguay, and over 3,000 U.S. citizens reside there. In November 1998, U.S. and Paraguayan officials signed a memorandum of understanding on steps to improve protection of intellectual property rights in Paraguay. U.S. Assistance The U.S. Government has assisted Paraguayan development since 1937. The U.S. Agency for International Development (USAID) currently supports a variety of programs to strengthen Paraguay's democratic institutions, particularly in the legislative and judicial branches, local government, and elections, as well as to protect the environment and stabilize population growth. USAID has provided more than $5 million in assistance in fiscal years 1997 and 1998 and anticipates providing a similar level in fiscal year 1999. The U.S. Department of State and the Drug Enforcement Administration provide technical assistance, equipment, and training to strengthen counternarcotics enforcement and to assist in the development and implementation of money laundering legislation. The U.S. Department of Defense provides technical assistance and training to help modernize, professionalize, and democratize the military. The Peace Corps has about 180 volunteers working throughout Paraguay on projects ranging from agriculture and natural resources to education, rural health, and urban youth development. The U.S. Information Service (USIS) is also active in Paraguay, providing information on the United States to the press and public, as well as helping to arrange educational and citizen exchanges to promote democracy. Principal U.S. Officials
Ambassador--(vacant) 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 World Wide Web is: http://www.usembparaguay.gov.py/
U.S. Department of Commerce
Paraguayan-American Chamber of Commerce TRAVEL AND BUSINESS INFORMATION The U.S. Department of State's Consular Information Program provides Travel Warnings and Consular Information Sheets. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain paraguay. Consular Information Sheets exist for all countries and include information on immigration practices, currency regulations, health conditions, areas of instability, crime and security, political disturbances, and the addresses of the U.S. posts in the paraguay. Public Announcements are issued as a means to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas which pose significant risks to the security of American travelers. Free copies of this information are available by calling the Bureau of Consular Affairs at 202-647-5225 or via the fax-on-demand system: 202-647-3000. Travel Warnings and Consular Information Sheets also are available on the Consular Affairs Internet home page: http://travel.state.gov and the Consular Affairs Bulletin Board (CABB). To access CABB, dial the modem number: 301-946-4400 (it will accommo0799 up to 33,600 bps), set terminal communications program to N-8-1(no parity, 8 bits, 1 stop bit); and terminal emulation to VT100. The login is travel and the password is info. (Note: Lower case is required). The CABB also carries international security information from the Overseas Security Advisory Council and Department's Bureau of Diplomatic Security. Consular Affairs Trips for Travelers publication series, which contain information on obtaining passports and planning a safe trip abroad, can be purchased from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954; telephone: 202-512-1800; fax 202-512-2250. Emergency information concerning Americans traveling abroad may be obtained from the Office of Overseas Citizens Services at (202) 647-5225. For after-hours emergencies, Sundays and holidays, call 202-647-4000. Passport Services information can be obtained by calling the 24-hour, 7-day a week automated system ($.35 per minute) or live operators 8 a.m. to 8 p.m. (EST) Monday-Friday ($1.05 per minute). The number is 1-900-225-5674 (TDD: 1-900-225-7778). Major credit card users (for a flat rate of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648). Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled Health Information for International Travel (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800. Information on travel conditions, visa requirements, currency and customs regulations, legal holidays, and other items of interest to travelers also may be obtained before your departure from a paraguay's embassy and/or consulates in the U.S. (for this paraguay, see "Principal Government Officials" listing in this publication). U.S. citizens who are long-term visitors or traveling in dangerous areas are encouraged to register at the U.S. embassy upon arrival in a paraguay (see "Principal U.S. Embassy Officials" listing in this publication). This may help family members contact you in case of an emergency. Further Electronic Information Department of State Foreign Affairs Network. Available on the Internet, DOSFAN provides timely, global access to official U.S. foreign policy information. Up0799d daily, DOSFAN includes Background Notes; Dispatch, the official magazine of U.S. foreign policy; daily press briefings; paraguay Commercial Guides; directories of key officers of foreign service posts; etc. DOSFAN's World Wide Web site is at http://www.state.gov. U.S. Foreign Affairs on CD-ROM (USFAC). Published on an annual basis by the U.S. Department of State, USFAC archives information on the Department of State Foreign Affairs Network, and includes an array of official foreign policy information from 1990 to the present. Contact the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. To order, call (202) 512-1800 or fax (202) 512-2250. National Trade Data Bank (NTDB). Operated by the U.S. Department of Commerce, the NTDB contains a wealth of trade-related information. It is available on the Internet (www.stat-usa.gov) and on CD-ROM. Call the NTDB Help-Line at (202) 482-1986 for more information. |
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