Paraguay's economic and political deterioration deserve a closer look -

30 November, Tuesday

Paraguay's economic and political deterioration deserve a closer look

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Writing in The Daily Signal, Anthony Kim of the Heritage Foundation recently called for a recognition of ‘Paraguay’s Economic and Political Transformation’, as a South American country positioned for economic and political development.  In his article, Kim states: “[Paraguay] was long one of the poorest and most undemocratic. Yet gradually but surely, Paraguay has accomplished notable political and economic reforms, a transformation that is earning a second look from its allies and potential investors.”
While it is impossible to include every single fact about Paraguay’s socio-economic situation, growing inflation, and ongoing political turmoil, it is essential to note the following:
1. The National Senate Palace in Asuncion was burned down on the night of March 31, 2017, by violent protesters encouraged by leaders of the Authentic Radical Liberal Party (a major opposition party). Over one year later, the building is still closed while only half of the Congressional Palace is operational although its roof is seriously affected by rain and excessive humidity;
2. Extreme Poverty and surprising lack of liquidity among Paraguayans is alarming. Only thirty meters away from the Vice President's office, on August 30, I ran into four homeless indigenous Paraguayans sleeping on the sidewalk, who could easily be observed from the Vice President’s office;
3. The country’s judicial branch and penitential system are saturated by corrupt Supreme Court judges and dangerous Brazilian common criminals that have swamped Paraguay and continue to be operational even while incarcerated;
4. Paraguay’s immediate former Attorney General Javier Diaz Veron is currently in jail, and his wife is under house arrest. Both are under investigation for money laundering, participation in criminal organization, and influence peddling;
5. Over the last two weeks former congressman Jose Maria Ibanez and former senator Oscar Gonzalez Daher were expelled from the National Congress after massive peaceful public protests. They are being investigated by the justice system for money laundering, criminal association, and for financial damages to the national treasury. And this is just the tip of the iceberg.
Such a grim image of Paraguay should generate insecurity upon every credible investor that is willing to invest his capital at the heart of South America.
Let’s continue to take a closer look to Kim’s analysis: “the last presidential election took place in April [2018] and resulted in the democratic transition of power to a new, single five – year term presidency.  New President Mario Abdo Benitez, who had run his presidential campaign on a platform of strengthening democratic institutions and continued economic reform, was sworn in on August 16.”
President Mario Abdo Benitez was sworn in on the morning of August 15 (not August 16) and in the first 15 days in office he failed to nominate the new Minister of Culture and nor did he nominate the new Commander of Paraguay’s Marine Force, which patrols the Parana and Paraguay rivers other interior riverine shores crisscrossing the country.  As president elect, Abdo Benitez visited Moscow before visiting Washington or La Paz.
The president has failed to articulate a vision towards radically energizing and reforming Paraguay’s diplomatic service, while increasing domestic security and broadcasting Paraguay’s presence abroad. And expectations for Paraguay’s Minister of Foreign Affairs, Luis Alberto Castiglioni, are fading. Castiglioni, like his predecessor, barely speaks English.
Minister of Interior Juan Ernesto Villamayor, born in Uruguay, was named to his post in violation of the Paraguayan constitution. Furthermore, he has been indicted fourteen times by Paraguayan courts over the last two decades. Villamayor has been tied to communist groups in Asuncion.
Unfortunately, Abdo Benitez has not even been able to nominate a new commander of the National Police, let alone appoint an honest individual at the helm of this important government function.
Moreover, Kim states: “Paraguay has recorded notable progress in achieving reforms and a strong macroeconomic environment, particularly under former President Horacio Cartes, whose economic team pushed for the modernization of the economy and greater transparency of the system.  He focused on tighter fiscal responsibility and a campaign against public-sector corruption and inefficiency.”
Indeed, all Paraguayans are aware that during his time in office, Cartes doubled his personal wealth while his presidency was marked by bloodshed and rampant corruption that were deeply rooted to members of organized crime and key government ministers and members of the Supreme Court.
As a regular visitor of Paraguay since 2007, I must say that during the government of Horacio Cartes there was only one single business, which was operated by then-president Cartes’ nephew, of all the businesses that provided a variety of goods and services to Paraguayan government institutions and key ministries. The list included a variety of items ranging from pencils to airplanes.
Over the last five years: “tighter fiscal responsibility” meant a ‘tighter’ cooperation between regional drug traffickers and Supreme Court Justices; ‘tighter’ coordination between tobacco smugglers to Brazil and Colombia and Paraguayan Customs, ‘tighter’ cooperation between terrorist groups and banking sector in Paraguay engaged in money laundering to the benefit of terrorist groups in the Middle East that are fighting Israel and democratic forces in the region.  Under the Cartes administration, public-private alliances tragically failed, and government services became as useless as ever before. In observing the streets of Asuncion, a sad feeling engulfs your soul, while looking at young boys and girls ranging from 3-10 year old, running through the traffic light intersections. Few try to clean the windshields of cars stopping at a traffic light and others sell bananas or simply beg for money. The sad part of this panorama is that their number has grown over the last five years.
In conclusion, Kim emphasizes: “The US and Paraguay signed a trade and investment framework agreement in January 2017.  That’s a good start, but more can be accomplished. A bilateral investment treaty might be the next logical step, with the long – term goal of negotiating a free trade agreement between the two countries.”  This is a genuine recommendation that I wholeheartedly support.
Paraguay must immediately extradite Nicolás Leoz Almirón, the former President of the South American Football Confederation (CONMEBOL), who is accused of corruption in Switzerland and accused by the US Department of Justice on charges of criminal association and money laundering.
Today is rather more difficult than fifteen years ago, to establish a close commercial partnership between Asuncion and Washington, knowing that Paraguay’s key trade partners for its beef products and agricultural commodities are Russia and Iran, both of which are facing stiff sanctions from the U.S.
It would have been tremendously helpful for Kim to visit Asuncion and other regions of Paraguay before writing this quite inaccurate piece. More importantly, Asuncion, must commit itself to strengthening its public education system, bolster its democratic institutions, immediately fire its supreme court justices and fight organized crime.
Spero News commentator Peter Tase is a former Peace Corps volunteer who is a consultant on international affairs and business. He frequently visits Paraguay on business.
This article was originally published at Speronews Journal in the United States, with Mr. Martin M. Barillas, Editor in Chief and a former United States Diplomat. 


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