Category Archives: Paraguay

Pointed analysis of Mercosur from former Uruguayan President Sanguinetti

Former Uruguayan president Julio Maria Sanguinetti (1985-1990, 1995-2000) has published a very insightful article about the state of Mercosur on the Infolatam.com site.

Sanguinetti starts with a quick review of the bloc, noting that the first eight years from 1991 to 1998 were marked by numerous successes, but when Brazil devalued the real in 1999, the institutional fragility of the bloc became clear. Dispute resolving systems were barely in place and didn’t work. Argentina then shifted to a highly protectionist trade policy within a common market. What little institutional and legal strength Mercosur retained took a serious blow with the opportunistic suspension of Paraguay earlier this year.

The Treaty of Ushuaia was implemented to vouchsafe the democratic nature of member-states after a nearly successful attempted 1996 coup in Paraguay. This is the mechanism that was used by Argentina and Brazil to suspend Paraguay and let Venezuela into the bloc. But, as Sanguinetti points out, the Treaty requires that extensive consultations with the questioned country take place before it is suspended. His problem with the procedures followed in Mendoza is that these consultations did not take place and that massive political pressure was used to silence Uruguayan objections to a clear violation of the Mercosur treaties by Argentina and Brazil.

As intrinsically distasteful as Lugo’s impeachment may have been, Sanguinetti reminds us that it took place through the constitutionally appropriate mechanisms in what amounted to a political trial. It should not have mattered that Lugo was seen as something of a friend by Dilma and Cristina.

A quick Google Translate rendition of Sanguinetti’s last paragraph is worth including for the non-Spanish reading:

“What happened in Mendoza is a setback in the process of regional integration and the international validity of the statutes and the recognition of their underlying principles. In the name of democracy, [Argentina and Brazil] have ignored all the values ​​that underpin it. There are no laws or principles. In the name of solidarity or political enmities, [they are] acting without the constraints of law. Neither has the principle of nonintervention been left standing. From now on, anything goes.”

What Sanguinetti is getting at is a much deeper systemic problem with inter-American affairs and a central remaining challenge to total democratic consolidation in the region. Elections are an important part of democracy, but their significance is limited when you have an attitude in the political class that because they are in charge they can do whatever they want.

The operating concept here is what Guillermo O’Donnell called ‘horizontal accountability‘, the idea that there are rules, procedures and institutions that restrain the arbitrary actions of the state in a clear and predictable manner. There are clear signs from Argentina and Brazil, let alone Paraguay, that elected leaders at all levels have not quite internalized the idea that in a fully consolidated democracy there is a system of checks and balances that restrain executive caprice. Indeed, the big story right now in Brazil is about the mensalão corruption scandal, which charges that political advisers around Lula were running a ‘cash retainer’ system to buy votes in congress to get the get governmental legislation through.

The short-shrift given to regulatory and legal restraints by some political actors is amplified when we turn to the international arena. The open secret in inter-American affairs is that most issues are settled through presidential diplomacy, hence the large number of regional summit meetings. Legal and institutional structures are not put in place to effectively govern bilateral and multilateral relations (for example, what is the institutional and juridical strength of CELAC and Unasur?), and when they are in place, they are either ignored or marginalized. This latter case is exactly what we see happening in Mercosur. We don’t have the bandwith to list all of the unresolved intra-Mercosur trade spats that have blithely ignored the bloc’s internal dispute resolution and juridical mechanisms. Suffice it to say that member-countries have had to either threaten or go to the WTO dispute body to get satisfaction. Sanguinetti’s point, which is particularly problematic for a small country like Uruguay, is that the legal frameworks for important groupings such as Mercosur have become just so much window dressing in the face of presidential want and desire in big countries such as Brazil.

There is also an important foreign policy point in Sanguinetti’s comments. Brazilian diplomats are very clear that the international sovereignty norm is sacrosanct — one state may not intervene in the internal affairs of another state. Yet, this is precisely what has happened in the Paraguayan case. Indeed, the deeper irony is that while the historical case was that the political right pushed hardest for regime change, the tide has now shifted and it is the left that has the most pronouncements and interventions for its neighbours. This has been particularly evident in the Brazilian case where the willingness of Brazilian presidents and presidential advisors to make direct intervention in the internal political developments of other regional countries has been rising since 2003.

Taken its totality, the critique leveled by Sanguinetti goes a long way to explaining why the increasingly technocratic and regulatory sound states of Chile, Peru, Colombia and Mexico have bound together to for the Pacific Alliance rather than tying themselves more tightly to the ever-more politicized groupings such as Mercosur and even the now predominantly political Unasur. Why to the expense and pain of negotiating and signing onto rules and norms when they are unlikely to have any impact?

–Sean Burges

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Filed under Analysis, Argentina, Brazil, Democracy, Foreign Policy / Diplomacy, MERCOSUR, Paraguay, Uruguay

Paraguay rejects Venezuela’s membership in Mercosur

The Paraguayan senate must be feeling a bit like the caged lions and tigers currently stuck in customs limbo on the border with Argentina. It was holding the power of entry or exclusion over Venezuela’s membership application to Mercosur, but lost it after a remarkably opportunistic impeachment of president Fernando Lugo earlier this year. Now, like a big cat trapped in a cage, it is roaring through the bars of its political confinement, finally voting on and rejecting Venezuela’s application to join Mercosur.

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Franco reportedly governing Paraguay well; election set for April 2013

Irrespective of your personal take on what happened in Paraguay to oust Fernando Lugo from the Palacio de López, it does appear that his successor Federico Franco is taking the job of president very seriously. Boston.com is reporting that Franco has succeeded in pushing through a number of key policy items that have alluded previous presidents.

  • Paraguayans earning more than US$4,000 a month are now going to have to pay income tax, which is a major change for a country that previously had no personal income tax in place.
  • Vague suggestions of progress on land reform and security provision in the north are mentioned.
  • Franco is also pushing talks with Rio Tinto/Alcan to build an aluminum smelter.

While Yves Engler has deplored the aluminum project as an example of something akin to Canadian imperialism, these sort of reactionary ideological readings fail to account for Paraguay’s abject failure to use its hydroelectric potential for national development. The $3.5 billion project represents the first serious attempt to use Paraguay’s massive electricity surplus from the Itaipu dam as a boon to national development rather than as a de facto gift to Brazil. Fox News (yes… a right wing ideological network as a counter to Engler is possibly not good form, but look at the data points in the link, not the invective, or try UPI for something similar) is reminding us that under the Itaipu treaty Paraguay has to sell from the dam that it does not use to Brazil at the very low rate of $25/MWh. Paraguay gets 50% of the binational project’s output, but only uses a scant 14%. Although Engler is right that the price being floated to Rio Tinto / Alcan is still low, but at $43/MWh is nearly twice what Paraguay is earning now. More to the point, the smelter project offers a possibility of industrial development and economic expansion that has simply failed to appear after two decades in the trade bloc Mercosur. This is the same bloc which suspended Paraguay’s political rights after Lugo’s impeachment, but left trade (and presumably energy trade) rights in place.

What Franco is doing is an important step for Paraguay. The aluminum project is a Major deal for Paraguay and a significant headache for Brazil, which relies on cheap Itaipu surplus electricity to keep the lights on in São Paulo. Even so, Brasília will likely happily deal with this headache if it will help bring further stability to Paraguay.

The stability and democratic consolidation question remains the big one in Paraguay. A presidential election date of 21 April 2013 has now been announced. More importantly, Franco has been crystal clear that he will honour the constitution, which precludes a president from ever running for reelection. So far there are no indications that Franco will follow some other regional leaders and look for favourable readings of the constitution or new magna cartas to allow a reelection bid. This leaves the question of whether or not Franco will use his position to ensure that the 2013 vote takes place without any of the explicit and implicit spending sprees and manipulations that have formed the backdrop to ballots since Andrés Rodriguez was quickly elected in 1989. We will be watching.

–Sean Burges

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Filed under Analysis, Brazil, Democracy, Development, Foreign investment, MERCOSUR, News brief, Paraguay

More excellent analysis of events in Paraguay

University of Bath senior lecturer Peter Lambert, one of the leading international experts on Paraguay, has an excellent article with e-IR contextualizing Lugo’s impeachment and pointing to the potential implications for the country. Definitely worth a read if you are interested in the issue.

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Venezuela into Mercosur: devil in the details and hints of a Paraguayan push-back

Although Venezuela appears to be quickly on its way into Mercosur thanks to the suspension of dissenting Paraguay’s political rights in the bloc, things may move more slowly than desired. A report from Brazilian business daily Valor Econômico points to the devil in the details. Political declarations need to be translated into bureaucrateeze, which in this case means that Venezuela has to sort out how to translate its trade coding terminology into the Common Mercosur Nomenclature. Brazil is apparently looking for five days of negotiations a month until the end of the year to ensure progress. Such an aggressive approach is perhaps necessary to keep focus if we look back to the problems of the Lula/Chavez-brokered PDVSA-Petrobras refinery and the collapse of the anel energetico South American gas pipeline ring.

Paraguay’s congress also appears to be pushing back on its Mercosur castigators, threatening to finally vote on Venezuela’s petition to join Mercosur. They reputed promise is to deny the petition. So far the vote has not taken place, which is perhaps a judicious decision given the increased presence of Brazilian anti-contrabanding and drug interdiction forces in the tri-border region as part of a likely strategy to pressure Paraguay’s illicit elites, which may well be leaning on the nation’s political representatives.

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Filed under Brazil, Foreign Policy / Diplomacy, MERCOSUR, Paraguay, Venezuela

More Brazilian pressure on Paraguay?

Brazilian defence minister Celso Amorim has just launched Operation Ágata 5, sending 9,000 military personal into the tri-border area between Brazil, Paraguay and Argentina. The operation is designed to combat organized crime and drug trafficking in the region, which is a serious issue.

Unreported is the extent to which this move will put pressure on the illicit elites in Paraguay who pull the strings of power. Brazil has a long history of selectively enforcing stiff borders in the tri-border region as a mechanism for disciplining Paraguay’s various criminal consortia. That Ángara 5 is being launched so soon after Lugo’s impeachment and the political suspension of Paraguay from Mercosur does create the appearance that serious pressure is being exerted on key sectors of Paraguay to not reverse the democratic gains of the last decade. Keep in mind that Celso Amorim was Lula’s foreign minister for eight years and is thus very familiar with the strategies and tactics used to control the Guarani republic.

–Sean Burges

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Prizes and prices for Venezuela’s entry into Mercosur

As expected, Venezuela was formally admitted to the South American trade bloc Mercosur yesterday despite concerns from Paraguay, which is politically suspended from the bloc on charges of being anti-democratic. Indeed, Paraguay is thinking challenging Venezuela’s entry through a judicial review of the decision using the Mercosur institutional frameworks and may (being very optimistic here) get the newest member kicked out. Don’t hold your breath.

It does look like Chávez is moving quickly to settle his debts with Dilma over his admission to Mercosur. He arrived (fashionably late) in Brasíila for the summit meeting with signed contracts in hand. What was the initial payment on his account? Six Embraer 190 aircraft priced at US$271.2 million, with an option to buy 14 more for a total cost of US$904 million. One of the interesting sidelines to this deal will be the US reaction, who may be able to block the purchase through its control of licensing on key parts of the aircraft systems such as navigation aids. This is precisely what the US did when it blocked the sale to Venezuela of 24 Super Tucano prop fighters in 2006.

More to the point, Brazil is getting set to move quickly to take advantage of this new market. Buried at the end of a story on Brazil’s industrial policy is the strong hint from Minister for Development, Industry and Foreign Trade Fernando Pimentel that an August mission to Venezuela is in the works to explore the new opportunities opened by Mercosur’s enlargement.

Speaking of enlargement, the Brazilian foreign ministry Itamaraty noted that Venezuela’s entry might prompt other observer countries to think about becoming full members, which would fulfill ambitions from as far back as the 1980s to create some kind of a viable South American trade bloc centered on Brazil. In all likelihood Itamaraty planners were thinking of Bolivia and Ecuador as the next entrants, but it is interesting to note that the other observer members are Chile, Colombia, Mexico and, the surprise, apparently New Zealand.

Finally, the prize for neatly working a trenchant editorial line into upstanding newspaper journalism goes to O Estado de São Paulo. A major story on Venezuela’s joining of Mercosur started with the line: “Quatro presidentes anunciaram nesta terça-feira, 31, em Brasília que o Mercosul agora tem cinco integrantes,” which translates to “This Wednesday the 31st in Brasília four presidents will announce that Mercosur now has five members.” Never has Paraguay had such a loud voice in Mercosur deliberations.

–Sean Burges

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Filed under Analysis, Brazil, Ecuador, Foreign Policy / Diplomacy, MERCOSUR, News brief, Paraguay, Trade

Guides to understanding events in Paraguay

Thanks to Bill Smith at the University of Miami for flagging this piece on events in Paraguay by the University of Birmingham’s Andrew Nickson. As Nickson points out in “Paraguay’s presidential coup: the inside story ” (probably the best short piece available on Paraguay), the only way to get a handle on Lugo’s ouster is to understand the intimate details of internal Paraguayan politics. This includes understanding how the national elite have manipulated land reform laws and captured virtually the entirety of the state and political system to advance their own individual interests. Nickson succinctly maps out the family connections that form the underpinning of the perversions of constitutional structures in Paraguay. This is probably the one piece you should read on Paraguay.

If you are looking for a more detailed mapping of the background to political and economic affairs, the University of Bath’s Peter Lambert wrote a superb overview of the country for Freedom House entitled “Countries at the Crossroads 2011: Paraguay“. Lambert is another leading scholar on Paraguay and co-editor with Andrew Nickson of the definitive collection on Paraguay’s first decade of democracy, The Transition to Democracy in Paraguay (MacMillan, 1997), which unfortunately now appears to be out of print. The pair have a new book with Duke University Press coming out later this year entitled, The Paraguay Reader: History, Culture, Politics.

Other recent academic articles of interest on Paraguay include

Robert Andrew Nickson. “The general election in Paraguay, April 2008” Journal of Electoral Studies 28.1 (2009): 145-149.

Robert Andrew Nickson. “Political economy of policymaking in Paraguay” Losing ground in the employment challenge: The case of Paraguay. Ed. Albert Berry. New Brunswick (USA) and London (UK): Transaction Publishers, 2010. 265-294.

Brian Turner, “Paraguay 2009: Many Differences and Little Change,” Revista de Ciencia Política 30 (2) (2010).

 

If you are looking for book length reading, Hugh O’Shaughnessy’s The Priest of Paraguay: Fernando Lugo and the Making of a Nation is a bit thin on its treatment of Lugo, but provides a great deal of insight into the underlying political and social conditions in Paraguay as viewed through the role of the Catholic Church in that country. It is worth a read.

A far more irreverent approach that focus on the entertaining and titillating, but nevertheless gives the reader a good sense of the extent to which Paraguay stands as a unique case in South America is the travel memoir At the Tomb of the Inflatable Pig by John Gimlette.

As a British Ambassador to Asuncion once noted (I forget which one), be careful when turning your attention to Paraguay. The country is strangely captivating and tends to breed obsessive interest that never quite goes away.

–Sean Burges

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Good OpEd from Canada on events in Paraguay

Michael Harvey, president of the Canadian Council for the Americas and one of the top minds on Latin America in Canada, has just published an OpEd on events in Paraguay in Embassy Magazine, a weekly publication focusing on Canadian foreign policy and the diplomatic community in Ottawa. An earlier version of Michael’s OpEd is below.

Paraguay: Worse than a Coup d’état, a Blunder
Michael Harvey, President, Canadian Council for the Americas

In Paraguay on June 22, 39 Senators of 43 voted in favour of impeaching President Fernando Lugo. The day before, 76 Representatives of 77 did the same. With such a clear vote, strictly complying with Paraguay’s constitutional requirements for impeachment, why are countries like Venezuela, Argentina and Brazil claiming there has been a coup d’état?

The root of the current crisis was a confusing incident between police and peasants who had occupied land. 11 peasants and 6 police officers died, with accusations about who fired first not leading to much clarity. However, this bloody incident was simply an excuse that allowed Congress to remove the President under Paraguay’s rather vague constitutional grounds of “poor performance of his functions.”

The Congress took only 30 hours between beginning to deliberate and declaring Lugo “guilty” of being a bad President. Worse, they gave him only 2 hours to prepare his defence. What some refer to as a “kangaroo impeachment” was imprudent and far from serious, but was it “illegal” or a “coup d’état,” meriting the invoking of democracy clauses that call for the suspension of non-democratic countries from bodies such as the Organization of American States (OAS)?

I would argue that it was not illegal, much less a coup. There was no violence. The military was not involved. Former President Lugo is not in jail, nor being expelled from the country. The Vice-President took over. The Supreme Court said the proceedings respected the constitution, which was expressly drafted to give Congress greater control over Presidential actions (not surprising as the country was coming out of the bloody Stroessner dictatorship).

Impeachment is not criminal law. It is political. Richard Nixon was impeached, and Bill Clinton was not, in hearings that did not exactly meet the standards of serious criminal law.

In the end, the legality of the issue hardly matters when it comes to international response. The Paraguayan Congressmen should have remembered the legendary reaction of Talleyrand when he learned of the murder of the Duc d’Enghien by Napoleon I. “It was WORSE than a crime, it was a blunder!”

The Paraguayan Congress has created a major crisis with its country’s neighbours. Brazil and Argentina are by far the most important external actors in Paraguay and are leading the charge to exclude new President Federico Franco from participating in the meetings of the South American Common Market (Mercosur) and the South American Community of Nations (Unasur). They are being egged on by others, especially Venezuela, Bolivia and Uruguay. These countries have argued that Lugo’s right to due process was violated, making this a “legislative coup d’état.”

The hypocrisy of this position is quite impressive. Mercosur’s Presidents have invited Venezuela to join the organization, despite the fact that Venezuelan “democracy” features a judiciary that takes orders from the President, and a National Assembly whose powers are regularly transferred to the President as well, behind a very thin constitutional facade.

What role should Canada play in this sad affair? Rather limited. Has the Paraguayan Senate overstepped the limits of the acceptable? Yes. Has Mercosur overreacted, with considerable hypocrisy? Yes. Nonetheless, the other members of Mercosur are Paraguay’s peers, and most important partners. Canada does not even have an embassy in Paraguay.

Ironically, the OAS, whose Secretary General Insulza has flown to Paraguay to investigate the situation, has been handed a bit of an opportunity thanks to Paraguay’s neighbours’ overreaction. Insulza should report back to member states that Paraguay’s Congress went too far to avoid criticism but constitutionality is not at issue. He could usefully point out that democracy entails a balance between the executive, legislative and judicial powers and that Paraguay is not the only country in the Americas grappling with these issues. Canada could take advantage to draw attention to the glass houses inhabited by some of the most eager stone throwers.

Unfortunately, no quick solution is in sight. Unless Paraguay’s neighbours go so far as to invoke sanctions, which is unlikely as it would cause real pain to themselves, Paraguay’s new President Franco should be able to wait out the storm and run the country normally until elections take place next year. In the end, not being invited to the profusion of Latin American summits may turn out to be more of a relief than a punishment.

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Filed under Analysis, Democracy, Foreign Policy / Diplomacy, MERCOSUR, Paraguay, Uncategorized

Lugo’s ouster in Paraguay — the Mercosul implications viewed from Uruguay and Brazil

More details are starting to come out with respect to last week’s Mercosur summit meeting and the decision to suspend Paraguay’s political rights. The online newspaper Mercopress has a series of fascinating reports on Uruguay’s reaction to the whole process, which can be summarized as follows:

Story #1 — Uruguay agreed to Venezuela’s July 31 entry into Mercosur as part of a negotiation to prevent Argentina and Brazil from imposing economic sanctions on Paraguay. Why? The political class staged the disruption so why punish the people, mused Uruguay.

Story #2 — There was not a unanimous agreement between the three remaining Mercosur presidents (Dilma, Kirchner, Mujica) that Venezuela should join the bloc, although Argentina and Brazil contest this.

Story #3 — Brazil and Argentina will benefit most from Venezuela’s accession to Mercosur. Brazil has a large trade surplus with Venezuela (and its firms get paid with regularity).

Story #4 — Uruguay vice president Astori is calling the outcome of the last Mercosur meeting a major blow against the already fragile institutional framework of the bloc.

Story #5 — Uruguay is claiming that it was Brazil that pushed so hard to bring Venezuela into the bloc. (This fits with much of the sustained pressure from various presidential advisors in Brasília.)

Story #6 — Former Mercosur cheerleaders and ex-Brazilian diplomat, Rubens Barbosa is now publicly worrying that Argentina is going to kill the trade bloc. Barbosa is currently head of the foreign trade council of the São Paulo Federation of Industrial Entreprises (FIESP), one of Brazil’s most important business groups.

Story #7 — The opposition in Brazil’s congress is complaining that the Dilma government is reducing Mercosur to little more than a political plaything. The bloc was once a critical part of Brazil’s foreign economic engagement strategy.

 

Rapid Analysis: Mercosur is not really in any more trouble than it has been for the last several years. The difference with this latest instance is that the internal discord and contradictions are now becoming very public. Ultimately, it will take a political decision from Brazil that trade deals with other countries are critical for things to move in Mercosur. Argentina matters and Paraguay and Uruguay have demonstrated they can exercise a veto, but none of these countries, or Venezuela for that matter, will be willing to block a major shift in Mercosur policy direction if it is something that Brazil really wants.

–Sean Burges

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