Tue, 23 May 2000, 3:52pm EDT
Paraguay Fugitive General Sees Unrest Leading to Coup
By John Lyons

Buenos Aires, May 23 (Bloomberg) — Lino Oviedo, the fugitive Paraguayan general blamed for last week's uprising in Paraguay, said a “civil-military ” coup would bring down the government after a wave of paralyzing mass labor strikes.

“We will come to power when there is total paralysis like there was in Argentina,” Oviedo told Bloomberg News, referring to national strikes that debilitated the government of neighboring Argentina in the 1980s. “The ideal is that a coup d'etat should be civil-military, when the civilians come to ask the military to finish off this dictatorship.”

Paraguay introduced a state of emergency after mutinous army and police officers attacked Congress on Thursday in a short-lived attempt to seize power from the government of Luis Gonzalez Macchi. Officials blamed Oviedo for the rebellion and sought the arrest of several people, including military officers and a journalist, they say are linked to the former army leader.

Oviedo, who is on the run from a 10-year sentence for plotting a 1996 coup and wanted in the killing of Paraguay's vice president last year, denied plotting the uprising, which he blamed on soldiers loyal to a previous government. Instead, he said he's been traveling the countryside seeking to inspire Guarani-speaking farmers and laborers to shut down the economy.

“I go on horseback or by foot,” said Oviedo, who speaks Guarani and promotes himself as a populist leader. “I'm handing out copies of the constitution and educating people.”

Oviedo Seeks Elections

Oviedo spoke with Bloomberg from a wireless phone with a Paraguay prefix. The phone number was provided minutes before the interview by Oviedo representatives in Buenos Aires.

During the interview, Oviedo described the sitting government as “illegal ” and called for a round of national elections that he believes his Unace movement will win.

“We want to govern in a legal and legitimate way, based on the constitution and what the people say at the voting polls.”

He also said that if in power, he would introduce policies that place the “interests of the people over the interests of multinational corporations.”

“I'm in agreement with globalization, with privatizations, but ones that are done in a way that responds to the interests of nations and not to multinational corporations,” he said. “The new concept of colonialism is not like it was. Now you succumb to economic interests of multinationals.”

Rampant corruption and an unstable government make Paraguay a poor candidate for foreign investment, said Diego Barcelo, an economist who studies Paraguay at the Buenos Aires-based FASEL think tank.

Still, Paraguay buys about $2.5 billion in foreign goods each year, including $600 million from Argentina. The legislature is also considering selling some of the country's state-owned companies, which represent about 10 percent of gross domestic product.

Oviedo Resolution Needed

Oviedo left exile in Argentina in December and claims to be hiding in Paraguay, where his supposed presence has sparked concern about the fragile democracy of the land-locked nation.

“Until the matter of Oviedo is resolved the instability will continue,” said Barcelo. “Resolution could come in two scenarios, either there are new elections or Oviedo goes to jail to finish his sentence.”

Paraguay's economy — about half of which is underground --is in a recession that's left 21 percent of its 5.2 million people living below the poverty line. The formal economy is expected to grow about 2 percent this year to $10 billion, though it will still fall on a per-capita basis because the population is growing faster than the economy.

The informal economy consists of the re-export of consumer goods, like cigarettes, imported from neighboring countries as well as street vending and other enterprises. Paraguay is also a transshipment point for cocaine headed for Europe and the U.S., according to the U.S. Central Intelligence Agency world fact book.

Oviedo said labor strikes that involved farmers and state workers in March show that are national work stoppages are in the offing. He did not give a time-line for the national paralysis he predicted, but said Macchi will “have a hard time completing his mandate that ends in 2003.”

“For the first time you had farmers, union members, workers and public servants together,” Oviedo said.

Diplomatic Row

Oviedo fled Paraguay after Vice President Luis Maria Argana was shot to death on his way to work with his bodyguard and driver in March. Officials sought Oviedo's extradition for suspected involvement in the killing.

President Raul Cubas, an Oviedo protege, also fled Paraguay after the shooting, and Macchi, formerly the president of the Senate, took power.

Argentina's refusal to extradite Oviedo unleashed a diplomatic row early last year that threatened to disrupt trade between the two nations and the Mercosur trade pact, which also includes Brazil and Uruguay.

The shooting of Argana, who had led a breakaway faction of the ruling Colorado party, also came to symbolize the conspiratorial tenor of Paraguayan politics. A popular theory that became the center of debate on the streets of the capital Asuncion had that Argana was already dead from cancer when he was fired upon in his car.

Under that scenario, detailed on a Web site set up by Oviedo supporters, the assassination was staged by Oviedo's enemies in order to discredit former general.

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