Economics

In Paraguay, President Abdo Benitez Seems to be Ahead

Paraguay’s present president, Mario Abdo Benitez, was elected in April 2018. When he was sworn into workplace in August that yr, it represented a second consecutive five-year time period in energy for the conservative Colorado Get together, following the right-wing presidency of Horacio Cartes. At 48, Abdo Benitez is without doubt one of the youngest heads of state in Latin America together with Nayid Bukele in El Salvador, Luis Lacalle Pou in Uruguay and Ivan Duque in Colombia. Earlier than changing into president, Abdo Benitez, who can also be identified for his entrepreneurship within the development and infrastructure trade, served 5 years as senator, one in every of them because the physique’s president.

All through the final century, Paraguay has struggled with a navy dictatorship and extremely right-wing political actions. Between 1954 and 1989, the nation was dominated by the navy dictator Alfredo Stroessner, who was a Nazi sympathizer of German descent. Stroessner’s 35-year reign got here to an finish with a coup led by Normal Andres Rodriguez, who subsequently acted as president from 1989 to 1993. Stroessner was exiled in Brazil, the place he lived till his loss of life in 2006, by no means acknowledging the quite a few crimes dedicated throughout his regime.

Each Stroessner and Rodriguez have been formally affiliated with the Colorado Get together, which formally dominated Paraguay between 1948 and 2008. In 2008, the Colorado’s right-wing hegemony was pierced by the election of a former Catholic bishop-turned-leftist politician, Fernando Lugo. Nevertheless, President Lugo’s time period in workplace was marked by quite a lot of resistance from the nation’s institution and ended abruptly in June of 2012 with a legislative impeachment course of that some within the nation and the area denounced as a parliamentary coup.

Paraguay’s Haunted Historical past

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Lugo’s mandate was accomplished by Vice President Federico Franco as interim president. Since then, the Colorado Get together has regained energy in Paraguay. Nonetheless, Fernando Lugo has served as senator in Paraguay since 2013 and remains to be a preferred determine amongst the nation’s progressive bases.

Extra just lately, in 2017, President Horacio Cartes tried to modify the post-Stroessner structure to permit his personal reelection, however this transfer sparked a wave of protests that compelled the proposal’s withdrawal. Constitutionally barred from in search of reelection, President Cartes handed the get together’s management and nomination to Mario Abdo Benitez, himself a descendant of the standard Colorado lineage from the times of the dictatorship.

Home and Regional Agenda

Each Cartes and Abdo Benitez have targeted on making Paraguay a fiscally enticing and economically secure vacation spot for overseas funding. Efforts to attain this have been so profitable, that earlier this yr Paraguay positioned $1 billion in a dollar-denominated 10-year (weighted common life) authorities bond issuance to assist the nation’s restoration from COVID-19. Paraguay’s sturdy fiscal and macroeconomic fundamentals led to an oversubscribed providing and a positive web curiosity price for the landlocked South American nation.

Nonetheless, low tax charges and lax fiscal controls have additionally created complications for Paraguay’s nationwide treasury, compliance and different monetary establishments as they search to curb cash laundering and the financing of unlawful actors. Along with smuggling and contraband, Abdo Benitez’s authorities has confronted the mounting problem of addressing the presence of unlawful teams resembling Hezbollah and the Paraguayan Individuals’s Military (EPP), a leftist guerilla based in 2008 with an estimated power of 100-200 members.

On the diplomatic entrance, President Abdo Benitez has been an energetic chief inside Latin America’s Lima Group and was one of many first heads of state within the area to acknowledge Juan Guaido’s proclamation as interim president in Venezuela, breaking ties with the Maduro regime. In 2019, President Abdo Benitez additionally introduced Paraguay’s withdrawal from UNASUR, an more and more moribund multilateral establishment that was created by the continent’s leftist “pink tide” leaders between 2008 and 2011 as South America’s different to the Group of American States, which they understand as too influenced by Washington.

In the meantime, Paraguay has maintained secure relations with its neighbors, notably as they search better regional integration and coverage coordination. Nonetheless, porous borders, notably on the tri-border area with Argentina and Brazil, stay a problem when it comes to tax evasion, drug and human trafficking, and cash laundering.

World Projection

Paraguay is presently one of many few remaining international locations in Latin America — and the final one in South America — to diplomatically acknowledge Taiwan because the reputable consultant of the Republic of China. To this finish, Asuncion hosts one in every of Taipei’s final embassies in Latin America after Panama and the Dominican Republic switched their diplomatic recognition to Beijing lately, pushed largely by the promise of commerce and funding advantages.

Nonetheless, President Abdo Benitez can also be exploring the potential for following the trail that US President Nixon opened up for Latin America again in 1972 by recognizing Beijing at Taipei’s expense. Intentions by the area’s Mercosur commerce bloc, which incorporates Paraguay, Argentina, Brazil and Uruguay, to signal a commerce settlement with Beijing are additionally placing strain on Asuncion to modify its diplomatic recognition.

A comparatively small capital metropolis for the Southern Cone area, Asuncion doesn’t host many diplomatic missions from international locations exterior of the Western Hemisphere as a result of many European and Asian governments fold illustration to Paraguay into their embassies in bigger capitals resembling Buenos Aires or Brasilia. Nevertheless, in December 2018, Turkey’s President Recep Tayyip Erdogan visited Asuncion for the primary time, following the opening of a brand new Turkish Embassy there, and introduced plans by each international locations to extend commerce and business exchanges.

A part of a diplomatic waltz, Turkey’s authorities inaugurated its new embassy following Abdo Benitez’s reversal of his predecessor’s choice to relocate the Paraguayan Embassy in Israel from Tel Aviv to Jerusalem on the heels of the Trump administration’s controversial transfer.

COVID-19 and the Itaipu Dam

Like most international locations around the globe, Paraguay has taken measures to stop the unfold of COVID-19. For instance, Abdo Benitez’s authorities has suspended in-person lessons nationwide till at the very least December. In latest weeks, given the low an infection numbers, the nationwide authorities started a staged reopening of the Paraguayan economic system after months of quarantine. Whereas in search of assist from the Worldwide Financial Fund, along with the debt emission, President Abdo Benitez has allowed the reactivation of small and mid-sized companies in particular sectors all through Paraguay.

Though Paraguay’s Structure solely permits heads of state to serve a single time period, the Colorado Get together’s maintain on energy and President Abdo Benitez’s legacy can be tied to 2 key points: the dealing with of the COVID-19 disaster and the renegotiation of an accord with Brazil that governs the joint Itaipu Dam. A central coverage difficulty in Paraguay since its inception in 1973, Itaipu is Latin America’s largest hydropower generator. Positioned on the Parana River, this mega-dam was constructed collectively with the Brazilian authorities and, on the time, the Stroessner regime didn’t negotiate as favorable of a deal because it may have on the partition of the electrical energy generated, which represents over 90% of Paraguay’s power consumption and about 20% of Brazil’s power combine.

Below the present treaty, which is about to run out in 2023, Paraguay sells its extra Itaipu electrical energy to Brazil on phrases which might be very beneficiant to Brazil whereas short-changing the Paraguayan folks and its economic system. Thus, for many years, Paraguayans have regarded the unfavorable phrases of the Itaipu Treaty as a supply of nationwide disgrace and as one of many dictatorship’s lasting failures. Paraguay negotiated the phrases of the Treaty in 1973 from a place of weak point vis-à-vis Brazil, and it’s nonetheless unclear whether or not President Abdo Benitez will have the ability to negotiate from a stronger place than the Stroessner regime. No matter occurs throughout the desk from Brazil’s Jair Bolsonaro, this closing yr in workplace will form the Paraguayan president’s legacy, giving him a singular alternative at historic redemption of the Abdo Benitez surname in Paraguay.

The views expressed on this article are the writer’s personal and don’t essentially mirror Honest Observer’s editorial coverage.

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