Date: Fri, 19 May 2000
Unstable Paraguay a haven for smugglers, drugs
By Gilbert Le Gras

BUENOS AIRES, May 19 (Reuters) - Political stability has long eluded Paraguay
which is one of South America's most active smuggling centres and a major
transshipment country for Bolivian cocaine headed for Europe and the United

The landlocked nation of 5.4 million people bordered by Brazil to its north,
Argentina to its south and Bolivia to its west was threatened with a relapse
into military rule for the third time in four years on Friday morning.

Rebel army units loyal to fugitive coup leader Lino Oviedo tried to topple
the government overnight, driving tanks through the capital and blasting a
hole in the Congress building before being persuaded to lay down their arms
and surrender.

Plagued with corruption, smuggling and political instability, Paraguay, about
the size of California or Japan, has become a permanent embarrassment to its
Mercosur trade bloc partners Brazil and Argentina who have been striving to
shed the region's grim heritage of dictatorships and rights abuses.

Oviedo's 1996 coup attempt against then Paraguayan President Juan Carlos
Wasmosy led Mercosur to set a rule that it would expel any member country
that abandoned democracy.

Diplomatic pressure by Mercosur and the United States now and in the past
have pulled Paraguay from the brink of falling back into military

“We are encouraged by the messages of support we have received from our
fellow Mercosur member nations and the European Union, the United States and
the Organisation of American States,” Paraguayan President Luis Gonzalez
Macchi said in a live broadcast address on Friday.

Brazil and Argentina's interest in the democratic rule of law in Paraguay
stems from the border all three nations share at the world famous Iguazu
Falls which is also reputed to be a continental focal point of drug
smuggling, money laundering and a safe passage route for terrorists.

Brazil on Friday sealed its border across from Paraguay's Ciudad del Este, a
border town that also faces Argentina a few miles from the Iguazu Falls.

U.S. and Argentine officials have suspected it was the entry point of
terrorists who bombed a Jewish community centre in Buenos Aires in 1994 that
killed 86 people in what is the bloodiest anti-Semitic attack ever in the

“Paraguay is an illicit producer of cannabis for the international drug
trade and a transshipment country for Bolivian cocaine headed for Europe and
the United States,” a U.S. Central Intelligence Agency report stated, adding
that its economy is “marked by a large informal sector,” or smuggling.

The Colorado Party has run the South American nation either through dictators
or freely elected leaders like a fiefdom for about half a century, making it
the world's second longest continuously ruling political party after Mexico's
Institutional Revolutionary Party (PRI).

Paraguay was rated the second-most corrupt nation in the world by
German-based watchdog Transparency International in 1998. It improved to No.
8 in 1999.

Paraguay, Brazil, Argentina and Bolivia along with Chile and Uruguay agreed
last month to fight drug trafficking by forming a regional body akin to the
U.S. Drug Enforcement Administration.

A study by the United Nations Economic Commission for Latin America in 1998
estimated that 700,000 citizens were living in absolute poverty, almost all
of them in rural areas.

Paraguay's formal economy generates about $19.8 billion in goods and services
and the subtropical nation is one of South America's least industrialised

Paraguay Soldiers End Uprising

c The Associated Press

ASUNCION, Paraguay, May 19 (AP) - For the third time in four years,
Paraguay's fragile democracy was severely tested Friday, this time by
mutinous soldiers and police who fired at the legislative building from
armored personnel carriers before surrendering four hours later.

By Friday morning, the government was back in full control. Soldiers toting
automatic weapons took up checkpoints around the capital and passers-by
stopped to gawk at bullet holes in the colonial-style legislative palace.

President Luis Gonzalo Macchi, who took office last March after another
political crisis, went on national television Friday to assure citizens that
the “antidemocratic ” forces believed to be loyal to a former coup plotter
had been defeated for good.

“Rest easy, countrymen!” he said. “Public order has been restored. The
destabilizing and antidemocratic forces have been disbanded, the crisis
brought under control and the mutineers detained.”

He said his government's response to the coup attempt would be to accelerate
economic and social reforms sought by many in this landlocked South American
nation struggling with high unemployment and discontent.

Three congressmen and 12 police officers had been detained Friday, though it
was unclear what role they had played in the uprising.

Interior Minister Walter Bower said the rebellious soldiers were sympathetic
to former army Gen. Lino Cesar Oviedo, a fugitive wanted in last year's
assassination of Vice President Luis Argana - a killing that brought Gonzalez
Macchi to power. Oviedo was also suspected in a brief mutiny in 1996.

The crisis began when the soldiers barreled through the capital late Thursday
and headed to the palace.

The standoff ended when soldiers surrendered at 2:45 a.m. Friday, Col. Felix
Dario Collante said. He refused to say how many turned themselves in.

Paraguay's still wobbly democracy emerged from the defeat of the 35-year
Stroessner dictatorship in 1989, but has been buffeted by one political
crisis after another in the intervening decade. The latest upheaval was in
March 1999, when Raul Cubas was ousted as president and replaced by Gonzalez

Life appeared to return to normal Friday as shops and schools opened and
people went about their business. Hundreds of police, their rifles slung from
shoulders, guarded the building for hours, but left the scene Friday

Elsewhere, helmeted soldiers with automatic weapons checked identity papers
at roadblocks on major highways leading from the capital and to the
international airport. One soldier stood atop an armored personnel carrier at
a major downtown intersection, another behind a machine-gun mounted on the
back of a jeep.

Blocks away at the legislature, many Paraguayans expressed skepticism that
this would be the end to instability.

“We are all worried. This may be over for now, but anything can still happen 
in Paraguay,” said Mario Isa, 20, who watched as a truckload of soldiers in
camouflage fatigues took posts on the second-story balcony of the legislative

Two schoolgirls giggled as they passed the soldiers. But others said they
were anxious. “The truth is, I was scared,” said Valeria Schussmuller, 21, 
who followed TV reports much of the night. “Here we are in 2000 and this is 
something out of the 1800s.”

Oviedo has yet to complete a 10-year sentence for a brief rebellion in April
1996 against former President Juan Carlos Wasmosy, authorities said.

Oviedo fled Paraguay after Cubas resigned and was granted political asylum in
Argentina, where he stayed before going into hiding days before Argentine
President Fernando de la Rua took office Dec. 10. At last report, he claimed
to be in a remote area of Paraguay, making sporadic telephone calls to news
media and denouncing the government.


Struggles in Paraguay | IMF/ WB Struggles | PGA