Paraguay is a landlocked country in the center of South America. It is located along the Paraguay River and has two different regions: the eastern terrain consists of grassy plains and wooded hills, while the west consists of low, marshy plains. In the east they do agriculture and forestry; in the west they do cattle ranching. For centuries Paraguay has been an isolated country, experimenting with various political forms of dictatorship. In the nineteenth and twentieth centuries Paraguay went to war with neighboring countries, winning and losing territory depending upon the particular war.
History Of Paraguay’s Territory
In the twenty-first century Paraguay has taken on a new approach to territory. In previous centuries Paraguay’s military was an arm of a dictatorship, whichever dictator that may have been from its first dictator, Jose Gaspar Rodriguez de Francia to its last dictator, Alfredo Stroessner. All these dictators used the military to grab land from Brazil, Argentina or Bolivia. The wars that ensued were successful or unsuccessful depending upon how well Paraguay managed to keep the three neighboring countries from working together.
In Paraguay the few wealthiest farmers and ranchers control most of the land. Ten percent of the population controls two-thirds of the land. Paraguay has a population of approximately six and a half million people and in 1989 when the last dictator, Alfredo Stroessner was run out of office, there were almost twenty thousand rural families squatting on land held by Stroessner. The concentration of land ownership holds back economic development. Landholders made money from farming and ranching; everyone else works for the landholders. About thirty percent of the rural population are completely landless; over fifty percent of the population is poor and nineteen percent live in extreme poverty.
In the years following Alfredo Stroessner’s overthrow (1990s) the military took over and began political, legal and economic reform. The military coup that overthrew Stroessner was lead by General Andres Rodriguez who became president of Paraguay. During this interim period when a military non-elected official guided the country, the rural poor began to co-opt land held by Stroessner. There was a profound hunger for land reform. President Rodriguez was forced from office in 1992 and democratic elections were arranged. In 1993 the conservative Colorado Party’s candidate won election as the first non-military president in almost forty years.
In 2008 a Liberal Party candidate and liberation theology Catholic Bishop, Fernando Lugo, won the presidency. The trend towards land reform had moved farther towards liberal policy than the traditional landholders could accept and Lugo was impeached from office. The internal political struggle in Paraguay continues to be a struggle between rich and poor over access to territory. It is also an ethnic struggle between poor indigenous Guarani Indians and mixed-race Mestizos with Spanish roots.
As Paraguay’s internal politics revolve around territory so do external politics. Fortunately, the move towards reform that began in 1989, when Stroessner was driven out of office, replaced the protectionist and isolationist international policies of previous governments. In 1994 Paraguay joined Argentina, Uruguay and Brazil to found Mercosur, a regional economic trade collaborative. The wars of the last two centuries, which were always about expanding territory at neighboring countries’ expense are now far less likely. For the first time in the history of the country, neighboring countries are a supportive asset.
A Look At The Numbers
Paraguay is the sixth largest soy producer in the world. Like neighboring Argentina, soy exports are important along with beef and other agricultural export commodities. Political uncertainty, corruption, along with limited progress on structural reform and deficient infrastructure are Paraguay’s obstacles to long-term economic growth. However, now that neighboring countries are not targets for territorial expansion and war, Paraguay can focus on needed reforms.
In 2013 Paraguay had a positive net balance of exports over imports of over two billion dollars. Because of the Mercosur regional trade treaty, Paraguay’s biggest trade partners are Brazil, Uruguay and Argentina. Paraguay exports soybeans, feed, cotton, edible oils, wood and leather. Paraguay imports road vehicles, consumer goods, tobacco, petroleum products, electrical machinery, tractors, chemicals and vehicle parts. With the advantage of a regional trade agreement Paraguay has gained access to a broader international trade community. Beyond neighboring countries, Paraguay exports to Russia and imports from China and the United States.
The challenge for Paraguay is to continue liberalizing land distribution at home while developing a more sophisticated economy. Most of Paraguay’s population lives in eastern Paraguay, but land distribution is important in both the eastern and western parts of the country. As the country’s territorial boundaries are now stable, social and economic growth are the primary focus of government, however corruption, weak anti-money-laundering laws and illegal drug activities undermine official economic growth. There is a large informal economy featuring reexport of cocain and cannabis. Paraguay’s borders are unruly, especially at the convergence region of Argentina, Brazil and Paraguay. This region is the locus of money laundering, smuggling, arms and illegal narcotics trafficking, and fund raising for extremist groups.
Paraguay’s territorial cycle is changing. Previously a wealthy few controlled the entire country and substantially withheld opportunity for material well being from the larger population. That is now changing due to more liberal politics, but the combination of traditional social control by the wealthy and a substantial black market for narcotics continue to drag on Paraguay’s growth.