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Paraguay Argentina and Brazil
Paraguay had traditionally been aligned with Argentina, as the
port of Buenos Aires provided the only access to external markets,
thus determining the direction of Paraguayan trade. Paraguay
depended heavily on Argentina for trade throughout the twentieth
century, although many Paraguayans chafed at their dependence. Even
before taking power in 1954, Stroessner criticized Argentine
hegemony. Soon after becoming president, Stroessner joined with
sectors in the Colorado Party and the armed forces to explore ways
to limit the influence of Buenos Aires in Paraguayan affairs.
Stroessner's interests coincided with those of Brazil, which
desired to increase its influence at the expense of Argentina and
to establish transportation linkages with countries to the west. In
the 1950s, Brazil funded the construction of new buildings for the
National University in Asunción, granted Paraguay free-port
privileges on the Brazilian coast at Paranagua, and built the
Friendship Bridge over the Río Paraná, thereby linking Paranagua to
Asunción. The signing of the Treaty of Itaipú in April 1973
symbolized that Paraguay's relationship with Brazil had become more
important than its ties with Argentina.
The Stroessner regime benefited politically and economically
from its relationship with Brazil, and the diplomatic and moral
support given to Stroessner enhanced his prestige. Because of the
tremendous infusion of money and jobs associated with Itaipí, the
Paraguayan economy grew very rapidly in the 1970s. Brazilians moved
in massive numbers into the eastern border region of Paraguay,
where they helped change the nature of export crops to emphasize
soybeans and cotton. Observers reported that 60 percent of
Paraguayan economic activities derived from agriculture, industry,
commerce, and services were in the hands of Brazilians, working as
partners with Paraguayans. Brazilian tourism and purchases of
contraband and other goods at Puerto Presidente Stroessner also
brought in substantial revenue. Military equipment and training in
the 1980s also were provided overwhelmingly by Brazil. In addition,
Brazilian banks financed a growing share of Paraguay's external
debt in the 1980s
(see Balance of Payments and Debt
, ch. 3).
The intimacy of Paraguayan-Brazilian relations generated a
variety of problems. First, Paraguayan opposition groups charged
that Brazil had become Paraguay's colonial warder. For example,
PLRA leader Laíno wrote a book denouncing Brazil's designs on
Paraguay. The opposition pointed to Paraguay's mounting debt
problem in the late 1980s and attributed much of it to unnecessary
and inefficient Brazilian construction projects. Some US$300
million of this debt resulted from the controversial Paraguayan
Steel (Aceros Paraguayos--Acepar) mill that the Brazilians financed
and built. Acepar was completed after the demand from Itaipú had
passed, its steel could not be consumed by Paraguay, it imported
raw materials from Brazil, and its product was too expensive to be
sold abroad. The Itaipú project itself also represented a source of
embarrassment for the Stroessner regime. ABC Color, among
others, pointed out that the Treaty of Itaipú authorized Paraguayan
sales of excess electricity to Brazil at a price highly
advantageous to Brazil. Opposition pressure forced a renegotiation
of the rate in 1986
(see Electricity
, ch. 3).
For its part, Brazil also objected to several actions of the
Stroessner government. In the late 1980s, a number of public and
private Paraguayan institutions failed to pay their debts to
Brazilian creditors. As a result, Itaipú electricity payments were
withheld, and several Paraguayan accounts were frozen in Brazil.
Brazil also contended that Paraguayan officials were involved in
smuggling a wide array of products into or out of Brazil. In 1987
analysts estimated that US$1 billion of electronics equipment was
smuggled into Brazil, primarily through Puerto Presidente
Stroessner. In the same year, Brazilian farmers reportedly smuggled
over US$1 billion of agricultural products into Paraguay for
reexport, thereby avoiding payments of Brazilian taxes. Analysts
also estimated that up to half of all automobiles in Paraguay were
stolen from Brazilian motorists. Brazilian teamsters threatened to
block the Friendship Bridge between Brazil and Paraguay to protest
the alleged murders of truckers whose vehicles were taken to
Paraguay.
Despite Brazil's transition to a civilian government in 1985 and
the appointment in 1987 of its first nonmilitary ambassador to
Asunción in twenty years, Paraguayan-Brazilian relations remained
good. Given its substantial investments in Paraguay, Brazil valued
the political stability offered by the Stroessner regime. Brazilian
officials refrained from criticizing Stroessner publicly and
generally avoided specific pressures for a political transition in
Paraguay. In 1986, however, the president of Brazil met with his
counterpart from Argentina to discuss increasing commercial and
industrial cooperation in the Río de la Plata region. The
presidents made it clear that only democratic countries were
eligible to join this new regional economic integration program.
Thus Bolivia, democratic but distant from the Plata, could
participate, whereas Paraguay was excluded. Although participation
in this program could help the Paraguayan economy, Stroessner was
not prepared to change the nature of his regime in order to gain
membership. Indeed, Stroessner did not hesitate to challenge Brazil
if he believed that Paraguayan internal stability was at stake. In
1987, for example, police attacked several visiting Brazilian
congressmen who were meeting in Asunción with National Accord
leaders.
Diplomatic relations between Paraguay and Argentina were
somewhat strained in the late 1980s. During the 1983 Argentine
presidential elections, PLRA leader Laíno actively campaigned among
the thousands of Argentine citizens of Paraguayan descent for the
Radical Civic Union (Unión Cívica Radical--UCR) ticket headed by
Raúl Alfonsín Foulkes. With the election of Alfonsín, Laíno's party
was accorded considerable prestige by the Argentine government.
Although Alfonsín refrained from public criticism of Stroessner, he
did send letters of support to opposition politicians, including
the imprisoned Hermes Rafael Saguier of the PLRA. In addition,
Alfonsín allowed Laíno to stage anti-Stroessner rallies in
Argentina. A PLRA demonstration in 1984 in the Argentine border
town of Formosa resulted in the Paraguayan government's decision to
close that border crossing for three days.
In the late 1980s, Paraguay refused to respond to Argentina's
requests for extradition of former Argentine officers accused of
human rights abuses during the so-called Dirty War of the late
1970s. Paraguay also ignored queries regarding the illegal adoption
of children of disappeared Argentines. As a result, the Argentine
ambassador was recalled for three months. Argentine congressmen
also visited opposition politicians in Paraguay to demonstrate
their support.
Paraguayan opposition leaders expressed dismay at the selection
of Carlos Menem as the Peronist candidate for the May 1989
Argentine presidential elections. During the campaign for his
party's nomination, Menem met with Stroessner and reminded voters
that the Paraguayan president had given asylum to Perón after the
1955 military coup in Argentina. In late 1988, Menem held a wide
lead in the polls over his UCR opponent.
Data as of December 1988
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