Paraguay’s Lugo: A Genuine South American Hero and a Worthy Challenge to Brazil

As many Latin American policy analysts have suggested, the election of moderate-left Fernando Lugo and his Alianza Patriotica para el Cambio coalition is yet another manifestation of a South American referendum in favor of a socialist-tinged democracy. Undoubtedly, Lugo’s inauguration marked a transformative moment in the government’s position towards Paraguay’s longstanding agribusiness-export model. This is an issue dominated by socioeconomic political tensions, which are likely to break out between the country’s Brazilian landowners and irredentist Paraguayans. Meanwhile, watchful government officials in Brasilia are carefully monitoring the developments next door.

Lugo’s presidential campaign for social change had drawn intense support from Paraguay’s campesinos in a country where 1 percent of the population owns 77 percent of the land. On April 9, ten days before his election, Lugo, a former bishop, staged a “‘march for hope’” in the capital city of Asunción, with 5,000 supporters in attendance. Feeding the hopes of the crowd, Lugo referred to the brasiguayos, or longstanding Brazilian land-owning elite residents of Paraguay, as a “mafia” and held a moment of silence for two campesinos recently killed in land struggles in Tekojoja. Assuring his supporters that “’the mafia’s reign [was] coming to an end,’” Lugo’s triumphant early victory speech did not fully indicate the complex reality of the issue.

Now that the excitement surrounding Lugo’s impressive April 20 election has begun to fade, he is struggling to discover a viable approach towards taxing soya exports in a down market in order to provide funds for an extensive domestic social program the country so desperately needs. To do this, he will have to bring both sides to the table to avoid sparking a full-blown conflict between large-scale Brazilian agribusinesses in Paraguay and community farmers, who have been relegated to tiny plots of land spread throughout the country. Complicating matters is his stated intent to renegotiate the Itaipu Dam treaty with Brazil, which would provide a higher level of compensation for Paraguayan energy sales to Brazilian entities. As brasiguayos face increasing pressure from resident militant campesino resistance groups, Brasilia is bound to be less responsive towards Asunción’s urgent supplications.

Brazilian Agribusinesses in Paraguay
The ubiquitous presence of foreign agribusinesses in Paraguay is a long-standing fact of life. Following its humiliating defeat in the War of the Triple Alliance in 1870, Paraguay, out of desperation, sold large tracts of government-owned land to help pay off its huge war debt. “Political cronies” of the government often received “the most fertile parcels,” which they then resold to the brasiguayos, making a handsome profit from the transaction . During his 35-year rule, Colorado Party dictator Alfredo Stroessner stalwartly represented agricultural institutions that favored the wealthy foreign-linked landowners, through the creation of the Paraguayan Institute for Rural Reform, whose mission was to legitimize the incursion of agribusiness into campesino communities. The Paraguayan National Security Doctrine, a curious piece of legislation, set up a cooperative system of elite-run surveillance and monitoring enterprises, which could effectively stifle the possibility of an organized peasant revolt.

According to the report titled “The Refugees of the Agroexport Model” by the Asunción-based research group, BASE-IS, the “Round–up Ready” soya boom that began in 1999 initiated the widespread use of powerful agrochemicals like Round-up, which, because of their arguably adverse health effects, severely affected the livelihood of peasant communities. The prevalent use of these agrotoxins by large Paraguay-based soya agribusinesses, has presented a host of problems to campesino populations utilizing the traditional small-scale farming model. Among the negative consequences of unregulated spraying have been the pollution of local water sources and the poisoning of farm animals which represent an all-important source of physical capital for small farmers. In his first speech to the UN General Assembly, Lugo expressed his disgust with the negative practices of Brazilian-related agribusiness, which he referred to as “the terrorism that affects the children in my country who die as a result of agricultural toxins.” Now that a champion of the traditionally marginalized campesino community has been elected chief of state, rural groups throughout Paraguay are intensifying their efforts to petition for an equitable redistribution of the land. On October 3, a protester was killed in a confrontation between police and 150 peasants attempting to occupy a brasiguayo’s estate in Alto Parana. Shortly after in Asunción, Lugo established a temporary agreement between several campesino organizations to halt land invasions, which could prompt dangerous confrontations with Brazil, in exchange for a promise to speed up plans for agrarian reform.

Brazilian Negotiations
On October 27, the fruits of that promise began to show. While meeting at the White House with President George W. Bush, Lugo announced his government’s purchase of 22,000 hectares of land from 11 Brazilian soya producers based in San Pedro. A consensus had been achieved during a meeting with campesino land reform groups and brasiguayos at the presidential palace. This represented a significant achievement for Lugo, but did not diminish the fact that Brazilian authorities will continue to seek complete protection for the large number of Brazilians living throughout Paraguay. In late October, the Brazilian military temporarily occupied the “Friendship Bridge” in Itaipu as a warning to Paraguay that should Asuncion fail to take measures to guarantee the safety of wealthy foreign agriculturalists currently stationed within the country, this could be a dangerous consequence. A senior Brazilian official has claimed that the occupation was part of a series of “periodic exercises” to eradicate illegal commerce in the area.

The issue has become increasingly complicated as Lugo also seeks to renegotiate the bilateral Itaipu dam treaty. While Brazil currently pays $ 200 million for 95 percent of the power produced by the jointly-owned dam, Lugo seeks to increase this to $ 1.5 billion, which he and his aides believe to be the fair market price for the energy produced at the facility. Brazilian President Luiz Inacio Lula da Silva repeatedly has stated that the current price will have to remain in place. Nevertheless, Lula’s consent to such a deal could be used as a powerful bargaining chip in exchange for increased protection for his countrymen and their corporate farms in Paraguay. Lugo would be wise to keep this in mind if he wishes for land reform to be a welcomed centerpiece of his mandate for change in Paraguay.