The land-locked country of Paraguay, neatly tucked between Argentina, Brazil and Bolivia is seldom given much notice. However, there are elements of the country that are worth taking a look at. Last April Paraguay elected a new president, Horacio Cartes.

Cartes is a member of the Colorado party, a party that held Paraguay’s presidency for 60 years. Thirty five of those years were ones of dictatorship. Cartes, however, joined the Colorado Party only four years ago.

Cartes’s election took place ten months after former President Fernando Lugo (2008-2012) was impeached and deposed by the Paraguayan congress. That move by the Paraguayan legislature was seen by many countries in the region as a coup and as a result of that Paraguay was suspended from the South American Free Trade zone (Mercosur) as well as from the Union of South American Nations (UNASUR) and faced regional isolation.

The election took place against the background of several corruption scandals including a Senator that used his influence to secure lucrative jobs for his children’s nanny. As the investigation unfolded, Congress voted against stripping the Senator from immunity from criminal investigation. This created public outrage and ensuing protests that led to the overrruling of the Senator’s immunity so as to allow prosecution. Likewise, public outrage and presssure played a role in forcing the Supreme Court to grant a radio host the right (previously denied) to investigate the salaries of municipal workers.

As soon as he came to power, Cartes approved the investigation of the corruption scandals. In Paraguay, the Congress is seen as being rather corrupt in that the old traditional parties dominate and protect each other and clean up each other’s mess, as we have seen in the case of the nanny scandal. Paradoxically, this explains why Cartes has seen the executive power as a counterbalance to Congressional impunity. Cartes established a new rule where government bids do not have to undergo Congressional approval. Likewise, he appointed technocrats rather than political insiders to his cabinet in order to manage the state like a business. This is a model of executive power similar to the one General Pinochet established in Chile. The difference is that the latter was a dictatorship while Paraguay is a formal and under-developed democracy (but a democracy, nonetheless).

Yet, in the long run if the problem of congressional trust and transparency does not get resolved = the democratic system cannot rely on the executive power alone. In that case, the president will end up being as unaccountable as a monarch in the 18^th century and transparency will depend solely on the moral character of the president, an unreliable resort. Modern constitutions exist precisely because the assumption is that government will not do the right thing without a proper system of checks and balances.

Still, it is important to point out that Cartes’s actions reflect public contempt for a Congress whose elected officials follow personal agendas rather than the public welfare and where constituencies do not see its members as true representatives of their interests and concerns.

Paraguay, despite substantial economic growth (mostly due to the high price of its commodities in the world market), has 33% of its population living in poverty. Likewise, large landownership remains a contentious issue in Paraguay that triggered former President Lugo to pursue land reform, although unsuccessfully due to conservative resistance in Congress. If the Paraguayan president fails to respond to the population’s needs, a crisis of legitimacy in the political class is likely to take place. Such a crisis might also bring about an unpredictable populist regime.

A report by the Konrad Adenauer Foundation places Paraguay among the countries in the region that has suffered setbacks and reversals in its democracy. Along with Guatemala and Venezuela, Paraguay is considered under the category of “minimal democratic development”. Likewise, the U.S. Congressional Research Service reported in 2010 that Paraguayan corruption is a major obstacle in consolidating democratic institutions in the country.

Paraguay, besides having problems of corruption and transparency, is also known for being a country friendly to smugglers and traffickers. Paraguay is the largest producer of cannabis in South America, which is mostly smuggled to Brazil. In fact, the recent legalization of marijuana in Uruguay, according to the Uruguayan government, was to avoid the Paraguayan model where drug trafficking and drug growing have increased criminal activities. Cartes, himself, was suspected by the U.S Drug Enforcement Administration (DEA) of having been involved in drug trafficking and money laundering. He has been scrutinized by U.S law enforcement for a number of years over illicit activities. Cartes is a multi-millionaire who owns a multiplicity of big businesses. He was previously incarcerated for 60 days over currency fraud.

Cartes promised to fight poverty and improve the quality of government services, particularly health services. He also set up the goal of improving education by making free education more accessible and adapting it to the needs of the labor market and economic development.

Cartes seems to understand the need for reforms in order to improve the social and economic problems affecting the nation. He also supports free markets and foreign investment and believes that this is the only way to make the nation more productive.

Paraguay’s External Relations

As a result of the Lugo impeachment, Paraguay was suspended from Mercosur. Until then, Paraguay was the only country that objected to Venezuela’s inclusion in the group, because the Paraguayan legislature refused their entry. After Paraguay’s suspension, Mercosur took advantage of the move to approve Venezuela’s membership. It remains a fact that Paraguay stood alone against Venezuela when the rest of the countries were flattering and flirting with the Venezuelan populist tyranny.

After Cartes became president, Paraguay was readmitted to Mercosur. This fits the Cartes agenda as his domestic economic policy is tied to foreign trade. The president declared that he is not looking for fights. This means that he is not likely to continue to resist the advance of Venezuela’s leverage in the region. In fact, early in December, Cartes traveled to Bolivia and met with President Evo Morales, an ally of Venezuela, to renew trade relations.

However, one major dilemma for Cartes could be the increasing activities of the insurgent group, the Paraguayan People’s Army (EPP).)

Last August the EPP, a Marxist-Leninist group, carried out a terrorist attack by abducting security guards at a ranch. The insurgents then freed a supervisor, who rushed to inform the authorities of what had happened, and then the EPP ambushed the police officers when they arrived. Five people were killed.

According to a New York Times Report the EPP “is evolving from a ghostlike irritant for the authorities in Asunción, the capital, into a broader security threat in a backcountry that is already a hub for traffickers of marijuana, defiantly cultivated here on sprawling plantations, and Andean cocaine smuggled into Brazil and Argentina”.

The group has intensified its operations, terrorizing the population, and killing peasants accused of collaborating with the authorities. In 2013 alone, the group perpetrated 22 attacks. Likewise, the EPP has increased its control over more and more territory in Paraguay itself (particularly in the northern part of the country in the border with Brazil) and has managed to elude the Paraguayan government’s efforts to hunt them.

Shortly after taking office, Cartes managed to pass an amendment in Congress to the law of national defense that enabled the military to take part in internal security. Thus, Cartes immediately dispatched military troops to the north.

The EPP keeps a strong relation with the FARC and its methods are often similar to the Colombian guerilla group.

As the FARC and the Bolivarian revolution have strong ties and as the FARC is involved in negotiations with Colombia, tensions between Venezuela and Paraguay are expected.

As we have mentioned, Paraguay suffers from corruption, smuggling and drug trafficking. By developing better relations with Paraguay the U.S should work with the country in strengthening democracy and legality and help Paraguay to stop being the bastion of drug trafficking it now is.

In a changing continent such as Latin America where traditional alliances are no more, Paraguay could be an important asset to the United States.