Power games

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South America » Paraguay
February 15th 2013
Published: February 15th 2013
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My rating: 5/10

Daily budget (travel, food and accommodation): USD $60 = 39 pounds

When: 24 January - 27 January 2013

Base: Asuncion

Main sights: Independence House, Cultural Centre of the Republic - Town Hall, Railway Museum, Pantheon of the Heroes

Random facts:

• Paraguay was the 1st country in South America to declare independence.
• Former dictator Dr Francia was so convinced everyone wanted to kill him that he slept in a different bed each night. He also rebuilt Asuncion in a grid system, destroying countless historic buildings along the way, to remove hiding places for would-be assassins.
• Ciudad del Este is known as the Supermarket of South America. This crazy border town is where Brazilians and Argentinians go to buy fake goods, gadgets and drugs on the cheap.


Two centuries of power games have left Paraguay in a sorry state.

In the early 19th century, Paraguay was the dominant force in South America. The continent´s first independent nation controlled vast swathes of fertile land, domestic industries were thriving and illiteracy was practically unknown. Everyone else could only look on enviously.

However, a combination of foreign interference and bad decisions have dramatically changed the balance of power in the region.

Foreign interference was at the heart of the 1865-1870 War of the Triple Alliance - aka the Paraguayan War - which is the worst war you´ve never heard of. Basically, a convoluted set of international power games left Paraguay fighting it out with Brazil, Argentina and Uruguay at the same time. Despite the obvious mismatch, the conflict dragged on for 5 years and became the bloodiest in modern history, claiming the lives of a greater proportion of its combatants than any war since.

Paraguay alone lost between 60%!a(MISSING)nd 90%!o(MISSING)f its entire population. By the end, children were arming themselves with farm implements, painting sticks to resemble guns and wearing fake beards to look more threatening from a distance. Ridiculous.

Not only that, Paraguay ended up surrendering almost half its territory to Brazil and Argentina (which very nearly took the rest as well). And it had to pay crippling war reparations for the next century, pushing a once-prosperous nation into a hopeless debt spiral.

It´s hard to work out precisely what triggered the war - to this day, both sides still claim the other started it. But the outcome was clear enough. Paraguay was ruined, and Brazil and Argentina would go on to dominate South America.

Paraguay has also been the architect of its own downfall, with successive military dictatorships making increasingly questionable decisions.

Take Itaipu Binacional.

Straddling the border between Paraguay and Brazil, Itaipu is the world´s biggest hydroelectric power plant (apparently, China´s new Three Gorges Dam can theoretically generate more electricity, but seasonal variations mean it actually produces less). It´s a 50/50 venture between Paraguay and Brazil, and both countries are at pains to emphasise how everything is shared equally. In the control room, for example, exactly half the staff come from each country while the chief supervisor role changes hands between a Paraguayan and a Brazilian every 6 hours on the dot.

However, there´s one part of Itaipu that isn´t shared equally - the electricity. Modern-day Paraguay is a small, underdeveloped country with 6.5 million inhabitants; it only uses between 5% and 10% of the electricity from Itaipu, yet that´s enough to supply virtually all its energy needs. By contrast, Brazil has 200 million citizens, an economy that´s roughly 100 times as large and a seemingly limitless appetite for energy.

I can totally see the business case for Brazil, but does Paraguay really need the world´s biggest hydroelectric power plant?

Or more to the point, did Paraguay really need the world´s biggest hydroelectric power plant when it agreed to build the thing way back in 1973? According to the New York Times, it was only drawing 2% of the energy produced by the plant in the early days. That´s not much considering Itaipu ranks among the most expensive construction projects in history - USD $19.6 billion (12.6 billion pounds). Surely Paraguay could have found better things to spend its half of the money on?

Of course, all that excess electricity doesn´t go to waste. Paraguay´s entitled to 50 per cent of the output from Itaipu and anything it doesn´t use can be sold on. But the original terms of this arrangement were shocking - Paraguay could only sell the electricity well below market price and only to Brazil (Brazil was paying USD $3 per megawatt, according to Bloomberg, even though Chile was reportedly offering USD $60 per megawatt). Oh, and the terms were non-negotiable for 50 years.

Paraguay´s president during the negotiations was Alfredo Stroessner, South America´s longest-serving dictator (35 years!). The corruption of his regime was legendary so perhaps it´s no surprise that the deal was less than ideal for Paraguay.

In the interests of fairness, I should point out that Paraguay did finally manage to renegotiate those terms in 2009. The new deal means Paraguay gets a high-voltage line to Asuncion courtesy of Brazil (unbelievably, Paraguay still suffers blackouts despite being awash with electricity) and receives 3 times as much for the electricity it sells. Brazil´s also promised to consider selling electricity to other countries in the future.

That agreement was hailed as a watershed moment for Paraguay. But it turns out that the president who struck it, Fernando Lugo, was forced from office as recently as last year. Lugo was impeached, given just 2 hours to prepare his legal defence then ousted in a whirlwind 24 hours that provoked condemnation from all of Paraguay´s neighbours. At least they´ve not slipped back into military rule - Lugo was succeeded by vice president Frederico Franco who leads another party in the same coalition (Nick Clegg for PM anyone?).

Still, it doesn´t exactly sound like everything´s going smoothly in Paraguay these days. It doesn´t feel like it either.

Walking round the streets of Asuncion is a strange experience. Roads are shared by shiny new BMWs and decrepit old buses salvaged from the States. Grand civic buildings share the centre with crumbling tower blocks and shanty towns. And everywhere shares the same sense of anything-goes edginess at night.

It has to be said that Paraguay as a whole isn´t a great place to be a tourist. We covered all of Asuncion´s main sights in half a day and were left scratching our heads over what to do next. Outside the capital, meanwhile, there´s a smattering of attractions but you´re probably best off doing them in neighbouring countries anyway - Brazil for the Pantanal and Itaipu tours, Argentina for the Jesuit missions and Bolivia for the colourful mountain landscapes.

Today, Paraguay is the 2nd poorest country on the continent (2nd only to Bolivia). It´s a tragedy to see how far this nation has fallen. And while there´s not much to do here, visiting is a stark reminder that South America still has problems.

PS. No 'Top 3 experiences' again - as with Uruguay, we only spent 3 nights in Paraguay so there wasn't enough time to fully get to grips with the country. Normal service will be resumed in Brazil.

Next stop: Brazil


15th February 2013

Glad to see you are still on the road. This was a very informative blog. I hope when you are back home you will have a chance to add some pictures of your trip. Enjoy Brazil!
16th February 2013

Cheers for the feedback Brendan, glad you enjoyed it. Good luck with your trip round Peru-not long to go now!

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