Paraguay: reaction entrenched

The constitutional coup that removed President Fernando Lugo from office on 21 June highlights the intense struggle waged by imperialism and its money-crazed servants in Latin America against the impoverished masses. Alvaro Michaels reports.

Lugo’s election promise in 2008 was to redistribute land to some 87,000 landless families, in a country where 80% of land is owned by 2% of the population. He promised to end corruption. It was a popular programme but with the limited political forces at his disposal, unachievable. The powerful landowners, enjoying a massive growth in global demand for agricultural produce, split the President’s coalition with the Authentic Radical Liberal Party (ARLP). They impeached him for ‘poor performance’ and replaced him with ARLP leader and Vice President Federico Franco until the end of Lugo’s term of office in August 2013. Franco had objected entirely to Lugo’s land reform proposals. On 11 July the Paraguayan Supreme Court heard and rejected an ‘unconstitutional appeal’ July against Lugo’s removal. He will now appeal to the Inter-American Human Rights Court.

On the same day as Lugo’s ‘impeachment’, the head of the parliamentary defence committee and opposition member Jose Lopez Chavez met with US military chiefs to discuss both the establishment of a US military base in the Chaco region in the north of the country, and the restoration of ‘humanitarian assistance’ programmes, previously halted by Lugo in 2009. While Lopez Chavez plays up to the US Southern Commands’ targeting of the Venezuelan and Bolivian governments, both fearing the consequences of the development of the use of regional resources for the Latin American masses, he and his cronies also want ‘security’ for their ongoing plunder of the Chaco itself.

The Chaco

FRFI has already pointed to the massive role of US imperialism in the conversion of Paraguay into an agricultural colony for multinational agribusiness.* In the past 10 years, 203 million hectares of land has been sold – 60% of the area of Germany – and at an astonishing pace. Every year 9,000 rural families are evicted for soy production and nearly half a million hectares of land are turned into soy fields. Forest law permits up to 75% of a plot of land to be deforested. Once this has been done with a plot, it can be sold again and a further 75% of the forest cut down, and so on until it is cleared.

This was how most of the forest in eastern Paraguay was destroyed and it is now happening in the Chaco. Land in the Chaco is 10 times cheaper than in neighbouring countries, and is an attractive proposition for Brazilian agribusinesses amongst others. Since 1996, more than 1.2 million hectares of forest have been cut down to grow soy in huge industrial plantations, rather than food and other crops – one million hectares of this since 2007! In December 2011 the Paraguayan Congress voted down a proposal to stop this.

In the past 20 years 100,000 small-scale local farmers have been made landless, forced into city slums or out of the country. The remaining poor peasants suffer from acute water shortage and the effects of chemicals used on the large-scale soy farms. Paraguay is now the world’s fourth-largest exporter of soy and demand is surging, primarily from China and Europe for cattle feed and bio-fuel. So Paraguayan ‘GDP’ grew rapidly in 2010, by 15%, through soy exports worth $1.6bn. As much as 70% of Paraguay’s soy is exported each year, and the imperialist grain giants Cargill, ADM and Bunge account for about 70% of that. Beef is also a massive industry. Meanwhile 11% of the people are undernourished, and 40% live in poverty.

Between 2006 and 2007, soy exports from Paraguay to Argentina almost quadrupled, to be re-exported as fuel. This was during EU discussion of its bio-fuels mandate which came into force in 2009: it requires bio-fuel to be 10% of fuel by 2020. With 87% of Argentinean bio-fuel output going to the EU, the EU bio-fuels mandate has promoted soy plantations in Paraguay and other South American countries. Although the Organization of American States (OAS) hastily approved Lugo’s removal, with the US, Canada and Mexico voting against further analysis of the situation proposed by Argentina, the Mercosur trade bloc voted to suspend Paraguay ‘politically’. However, Mercosur decided not to impose economic sanctions, thus leaving US and EU imperialist agricultural trade interests in Paraguay untouched.

Mercosur and US imperialism

The suspension of Paraguay from Mercosur meant the removal of its long-standing veto of Venezuela’s membership of the trade bloc, a ‘blow back’ that has created disputes within the Paraguayan ruling class. Should they now stay in or leave Mercosur? Venezuela will now formally join the bloc on 31 July. This change is likely to frustrate Paraguay’s independent ambitions to sign trade deals with other countries – the bilateral treaty pattern promoted by the US after the failure of its Free Trade Area of the Americas strategy. The US, the EU and Australia are target markets for the Paraguayan capitalist class. US imperialism, irritated at the consolidation of Latin American governments around a theme of regional growth detached from the immediate interests of the US, has promoted the ‘Pacific Alliance’ – made up of Colombia, Chile, Peru and Mexico – to weaken the influence of Venezuela and its ALBA allies in Latin America. The US is undoubtedly now trying to use Paraguay to fracture Mercosur.

This split will be encouraged by Rio Tinto Alcan which plans to build a $4bn aluminium smelter in Paraguay ‘based on the merits of the opportunity’. However, Paraguay could be badly hit by Venezuela’s decision to halt oil exports in protest at Lugo’s removal. The state-owned oil company Petropar receives a third of its supplies from Venezuela, and it owes Venezuela’s PDVSA $260m. Any fuel shortage could increase the opposition to Franco’s administration that Lugo is now seeking to rally.

* 26 June: Paraguay’s President Lugo removed – June 2012

Fight Racism! Fight Imperialism 228 August/September 2012