Landmark parliamentary elections in Paraguay

Members of the Paraguayan opposition often compare the ruling Colorado Party to Mexico’s Partido Revolucionario Institucional (PRI), which held power continuously for 71 years from 1929 to 2000.

The right-wing Colorado Party ruled for 61 years, 34 of them during a dictatorship-until a brief interruption from 2008 to 2013, since when the party has always been in power.

Although the PRI and the Colorado Party technically won at the ballot box during their dominance, their power and influence at all levels of government and in the media allowed them to eliminate potential challengers easily.

However, the Colorado party’s dominance could falter in the April 30 general election, marked by anti-corruption, anti-incumbent and pro-China sentiment.

The election campaign will be important for Paraguayan and South American foreign policy.

Under new leadership, Paraguay could switch its diplomatic allegiance from Taiwan to China and will have to renegotiate a key energy treaty with Brazil.

The two leading presidential candidates in Paraguayan polls are Santiago Peña of the Colorado Party, a former finance minister, and Efraín Alegre of the centrist Authentic Radical Liberal Party, a longtime congressman.

In the last presidential election, four pollsters gave the Colorado Party candidate a lead of more than fifteen points over his actual margin.

“Anything can happen in a month and a half. Everything is open,” Paraguayan sociologist Camilo Soares tweeted last week about the April elections.

Alegre has benefited from corruption allegations against senior Colorado Party leaders, including current Vice President Hugo Velázquez and former President Horacio Cartes, who were placed on the US sanctions list last year for “systemic corruption.”

Incumbent President Mario Abdo Benítez is unpopular, which could also benefit Alegre. (Abdo Benítez, who belongs to the Colorado Party, cannot be re-elected due to term limits).

Alegre has received support for his campaign promise to recognize China instead of Taiwan diplomatically.

Allegiance to Taiwan has long been foreign policy orthodoxy in Paraguay-a result of the Colorado Party’s reflexive anti-communism and the influence that position has brought the country in the United States.

Today, Paraguay is the last South American country to maintain full diplomatic relations with Taipei.

However, some believe Paraguay’s pro-Taiwan convictions may be waning.

The cost of maintaining relations with Taiwan became more apparent during the Covid-19 pandemic when China prioritized friendly countries in an international race to supply vaccines.

“Many [Paraguayan] neighboring countries received Chinese vaccines and were much more advanced in their vaccination programs,” said policy analyst Julieta Heduvan.

Taiwan eventually negotiated with India to supply Covaxin vaccines to Paraguay, but the contract was canceled because of quality control problems.

Paraguay also agreed to direct supply contracts with drug manufacturers under the global Covax initiative.

Paraguay’s influential farmers and ranchers have called on authorities in the landlocked South American nation to improve relations with China, saying they are missing out on potential revenue, Heduvan, and Juan Manuel Harán write in ReporteAsia.

Other agricultural exporting countries in Latin America have seen economic boosts from sales to China in recent years.

Just last week, Honduras announced it would switch its diplomatic allegiance from Taiwan to China, mainly for economic reasons.

Paraguay’s next president must make another important foreign policy decision closer to home.

In August, Paraguay and Brazil will renegotiate a treaty governing how the binational Itaipu hydroelectric plant on the border between the two countries will be shared and sold.

The Itaipu Dam is the second-largest hydroelectric dam in the world.

When dam construction began in the 1970s, the two countries agreed to become co-owners of the project if Brazil paid a larger share of the upfront costs and Paraguay paid them back to Brazil over time.

Paraguay would sell the unconsumed electricity to Brazil at a controlled price rather than selling it to other customers at the market price.

The 1973 contract was for fifty years and will expire in August.

Many Paraguayans believe they got a lousy deal and see the planned renegotiation as a chance to set things right.

Paraguay consumes only about eight percent of the electricity generated by Itaipu.

If the country could sell its electricity on the open market rather than at price-controlled rates, it could mean a new windfall of public revenue.

The boosted public coffers could be used for initiatives such as increased social spending and efforts to electrify the country’s economy’s transportation and other emissions-intensive sectors.

Brazilian President Luiz Inácio Lula da Silva, aware of the sensitivity of Paraguayan grievances related to Itaipu – and the fact that Brazil risks losing its favorable energy prices secured by the agreement – traveled to western Paraná last week to attend a ceremony honoring the dam’s new director and said he would support a new deal that “takes into account the respect that Brazil must have for its ally, our dear Paraguay.”

Vuyk is part of a civil society group urging presidential candidates to define their positions on Itaipu better.

“It will be a central issue in the next government, and therefore a debate and then the participation of all citizens will be crucial.” Peña and Alegre want to ensure reasonable electricity prices for Paraguayans but have not provided further details.

When a leftist politician briefly held Paraguay’s presidency in the past, he negotiated an agreement with Brazil that increased the amount Brazil paid for Paraguayan energy.

While the outcome of the Paraguayan election could bring about critical foreign policy changes, the continuity in the country’s history urges caution.

“While the fundamentals of this election should lead to an opposition victory, betting against the Colorado party is never a smart move,” wrote James Bosworth of Latin America Risk Report last week.