Paraguay (country)

D

Reconstruction

Paraguayan history after the war was largely an effort to reconstruct the country. Immigration was encouraged, and Paraguay established subsidized agricultural colonies. The unsettling effects of the war, however, were apparent for many decades, particularly from 1870 to 1912, when no president was able to serve out a full term. Subsequently, periods of political stability alternated with periods of ferment and revolt. The administration (1912-1916) of Eduardo Schaerer was relatively enlightened. The country remained neutral and prosperous during World War I (1914-1918), and the administrations of Manuel Gondra (1920-1921), Eusebio Ayala (1921-1923), and Eligio Ayala (1923-1928) were on the whole periods of peace and progress.

The border with Bolivia in the Chaco Boreal, which had never been formally drawn, was the scene of numerous incidents between 1929 and 1932. Both countries put down isolated settlements in the Chaco, which was believed to contain oil deposits, but no boundary lines could be agreed upon. Both countries also wished to recover prestige after military defeats in the previous century. In 1932 year a full-scale war broke out. Paraguay was successful militarily and eventually received verification of its claims to most of the region, after driving the Bolivians back to the Andes. An armistice was declared in 1935, and a peace treaty was signed in Buenos Aires, Argentina, in 1938. The agreement was facilitated by the exhaustion of both combatants and by the intervention of several neutral countries. In the final settlement Paraguay received about three-fourths of the disputed area. The Chaco War is regarded by many Paraguayans as a necessary and glorious episode in the development of their country. Once again, however, war paved the way for authoritarian government and political uncertainty.

After the war, the government was reorganized to permit widespread economic and social reforms. By a new constitution adopted in 1940, the state was given the power to regulate economic activities and the government was highly centralized. Paraguay declared war on Germany and Japan on February 7, 1945, shortly before the end of World War II. The country subsequently became a charter member of the United Nations.

E

Morínigo and Chávez

In 1940 General Higinio Morínigo had made himself president and ruled as a dictator for the next eight years. A coup d’état deposed him in 1948. In 1949, Federico Chávez, an army-backed leader of a faction of the dominant Colorado Party, was elected president without opposition. He imposed a dictatorship much like that of Morínigo. In 1951 the Chávez regime devalued the currency in an attempt to check inflation and the loss of gold reserves. The economic crisis was aggravated in 1952, when Argentina, itself the victim of depressed economic conditions, abrogated a barter agreement with Paraguay. During the year legislation granted various benefits to workers. In general elections held in 1953, President Chávez was reelected, again without opposition. He imposed wage and price controls later that year to check inflation. In May 1954 his government was overthrown by an army-police junta.

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F

The Stroessner Regime

The electorate in July 1954 endorsed General Alfredo Stroessner, commander in chief of the army and head of the Colorado Party. He was the only candidate. Attempts by leftist forces to seize power were put down in 1956 and 1957. A plebiscite in 1958 confirmed President Stroessner for another five-year term. Stroessner imposed a highly dictatorial regime, exiling leaders of opposition political parties and banning newspapers critical of the government.

In elections for a new congress in 1960, all 60 seats were won by the president’s supporters in the Colorado Party. Diplomatic relations with Cuba were severed in December. Paraguay was among the states that favored collective action by the Organization of American States against the Cuban regime, but such measures were not approved by the two-thirds majority required. In 1963 Stroessner was reelected president, running against the first opposition candidate in a Paraguayan presidential election in 30 years. He enjoyed some popularity in the mid-1960s, partly because of continued economic progress, but many Paraguayans had also fled into exile from his dictatorship. Stroessner continued in power in 1968 after having had the constitution altered the previous year to permit his reelection. He was again reelected in 1973, 1978, and 1983.

A significant step was taken by the Stroessner regime in the late 1960s with the establishment of close economic relations with neighboring countries. In May 1968 the La Plata Basin Pact was signed by the foreign ministers of Argentina, Bolivia, Brazil, Paraguay, and Uruguay. This agreement, calling for joint development of the La Plata River Basin, was expected to stimulate the economy of the entire region and would be of special importance to Paraguay, the least-developed nation in the area. The relationship between Paraguay and Brazil became closer after Brazil came under a military regime in 1964.

In the 1970s and early 1980s Paraguay was relatively calm. Itaipu, the largest hydroelectric dam in the world, was built on the Paraná River in a joint venture with Brazil. Inflation was controlled, but declining markets for Paraguayan exports led to rising unemployment and a worsening of the nation’s trade position. The mid-1980s brought limited political liberalization, including, in 1987, the lifting of the state of siege in Asunción. As Paraguay’s economic difficulties increased, opposition to the regime became more vocal, both among intellectuals and among poor farmers who demanded land reform. The choice of an eventual successor to Stroessner also became a source of tension, leading to bitter disputes with the Colorado Party. Reelected to his eighth term in 1988, Stroessner was ousted in a military coup in February 1989.

G

Recent Developments

General Andrés Rodríguez, one of Stroessner’s closest associates, led the coup that removed Stroessner from office. Rodríguez replaced Stroessner as president and later in 1989 won election to the presidency as head of the Colorado Party. In office, he inaugurated a program of privatizing state-owned enterprises, but the economy remained relatively stagnant, and his party lost some support. The Colorado nominee in the May 1993 presidential elections, Juan Carlos Wasmosy, won the office with only a plurality of the votes cast. Under Wasmosy, Paraguay joined Argentina, Brazil, and Uruguay in creating the Southern Cone Common Market (Spanish acronym MERCOSUR) in 1995. This trade association promised to lower tariffs and increase trade, sparking concerns that lower tariffs and economic integration would harm small Paraguayan businesses.

In 1996 a confrontation between Wasmosy and General Lino Cesar Oviedo, commander of Paraguay’s army, brought the country to the brink of a coup. Although the coup by Oviedo was averted, Oviedo won a presidential primary election in 1997 and emerged as the presidential candidate of the Colorado Party. Wasmosy was constitutionally barred from seeking reelection. Two weeks before the election, however, a military tribunal sentenced Oviedo to ten years in prison for his role in the coup attempt. The Colorado Party then nominated Raúl Cubas Grau, Oviedo’s vice-presidential running mate, to replace Oviedo as the party’s presidential nominee. Cubas won the election in 1998 and pardoned Oviedo soon after taking office. Oviedo’s pardon outraged many people, and the Supreme Court ordered him back to prison. Cubas ignored the court order and allowed Oviedo to remain free.

Amid growing political turmoil, Vice President Luis Maria Argaña, Cubas’s rival in the Colorado Party, was assassinated in March 1999. As speculation mounted that Cubas and Oviedo were responsible for the killing, the Congress began impeachment proceedings against Cubas. Cubas resigned as president, and he and Oviedo fled the country. Later in March Senate leader Luis Gonzalez Macchi was sworn in as president. Accusations of corruption marred his term in office. In 2003 Nicanor Duarte Frutos of the ruling Colorado Party was elected president. During the campaign, he pledged to improve the country's depressed economy and crack down on corruption.

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