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Paraguay received a downward trend arrow due to increasing lawlessness and street crime.
Despite efforts by the government of Nicanor Duarte Frutos to promote good governance, fight tax evasion, and adopt IMF reports, Paraguay continued to face endemic corruption, widespread poverty, and a growing crime wave in 2004. Former dictator Alfredo Stroessner, living in exile in Brazil, was ordered arrested by a Paraguayan court for his part in the disappearance of Paraguayan activists three decades earlier.
Paraguay, which achieved independence from Spain in 1811, has been wracked by a series of crises since civilian rule was restored in 1989 and the 35-year reign of Stroessner and the right-wing Colorado party was ended. The fragility of the country's democratic institutions has resulted in nearly 15 years of popular uprisings, military mutinies, antigovernment demonstrations, bitter political rivalries, and unbroken rule by the Colorados.
Luis Gonzalez Macchi assumed the presidency in 1999 after his predecessor fled the country amid charges that he had orchestrated the murder of his vice president. International concern about individuals and organizations with ties to Middle Eastern extremist groups operating in Ciudad del Este and along the tri-border area, where Paraguay, Brazil, and Argentina meet, followed the September 11, 2001, terrorist attacks on the World Trade Center and the Pentagon in the United States.
In December 2002, Gonzalez Macchi offered to leave office three months early, just a week after lawmakers voted to start impeachment hearings against him. Accused of buying an armor-plated BMW stolen from Brazil, mishandling millions of dollars in state revenues, and embezzling $16 million from two banks in the process of liquidation, Gonzalez Macchi barely survived an impeachment trial in early 2003. Even his supporters did not defend the president, who allegedly doubled his personal wealth during his four years in power, saying only that it was inadvisable to oust him so late in his term. Gonzalez Macchi and many in the Colorado Party were discredited, too, by their unsuccessful efforts to reverse the country's downward economic spiral.
Favoring populist, anti-globalization rhetoric during the 2003 presidential campaign, former education minister and journalist Duarte, an insurgent Colorado, emerged victorious in national elections held April 27. Duarte had promised to purge the public sector and the judiciary of corruption and inefficiency, create jobs, and return fiscal stability to the country. Although the Colorado Party lost ground in congress in the concurrent legislative elections, it retained a majority of the 17 state governorships. Upon taking office on August 15, Duarte quickly began to inaugurate the good-government agenda that he had promised during the campaign. Skeptics, however, questioned whether the new anticorruption regime would be selectively applied to Duarte's rivals inside and outside the Colorado Party, or whether the elections would truly usher in a new period in Paraguayan politics.
Duarte moved to take control of the tax, ports, and customs authorities to combat tax evasion and smuggling in the country with a highly-dollarized banking system and a tax system in which two-thirds of what should be collected is never paid or is siphoned off, owing to corruption. In October 2003, his law enforcement minister, the commandant of the national police, and the head of customs were forced to resign following revelations about a smuggling and corruption scandal.
In 2004, Duarte's government won international praise for paying foreign debt arrearages and for adopting reforms demanded the previous year by the IMF as part of an agreement for a badly needed stand-by loan. However, it appeared near paralysis in the face of the increase in public insecurity, as well as a long-run economic recession, endemic public corruption, and a poverty rate of more than 60 percent.
Sometimes violent land seizures by armies of homeless people in and around the capital city, Asuncion, contributed to a growing debate about the distribution of wealth in the country. In 2004, the land invaders were occasionally killed by militias in the pay of landowners. One out of every three Paraguayans lives below the poverty line, and emigration to Argentina, the traditional escape of the poor, became unattractive in the aftermath of that country's own economic crisis.
Public opinion surveys showed that after 15 years of turbulent civilian rule and 50 years after he seized power, 62 percent of Paraguayans viewed with favor the once-discredited former dictator Stroessner, now 91 and living in exile in Brazil. The governing council of the ruling Colorado Party in July voted nearly unanimously that he be allowed to return to Paraguay. In September, a Paraguayan court ordered Stroessner and his former armed forces chief of staff to be arrested in connection with the disappearance of three Paraguayan activists in Argentina in the 1970s under a secret regional police action known as Operation Condor.
During the year, the country was shaken by a crime wave whose magnitude was symbolized by the seeming impunity with which criminals abducted the daughter of a former Paraguayan president in a blaze of gunfire. In October, Duarte had to fire his law enforcement minister and a senior police chief, and order 1,000 more police on the streets, after police found the mutilated body of a tobacco magnate's 10-year-old son, who had been kidnapped upon leaving elementary school.
Citizens of Paraguay can change their government democratically. The 2003 national elections were considered to be free and fair. Disillusionment with the entire political system was evidenced by the scant participation in recent elections by young people, who constitute nearly three-fourths of the population. The 1992 constitution provides for a president, a vice president, and a bicameral congress consisting of a 45-member Senate and an 80-member Chamber of Deputies elected for five years. The president is elected by a simple majority vote, and reelection is prohibited. The constitution bans the active military from engaging in politics. The Colorado party has ruled Paraguay for 50 years; the other major political groupings include the Authentic Radical Liberal Party, the Beloved Fatherland Movement, the National Union of Ethical Citizens, and the National Agreement Party.
Corruption cases languish for years in the courts, and most end without resolution. According to the comptroller-general, corruption has cost the Paraguayan treasury $5 billion since the country returned to democracy in 1989. In April 2003, the prosecutor who had almost single-handedly brought then president Luis Gonzalez Macchi to justice himself faced removal from office by a judicial panel just hours after the prosecutor claimed that the head of the panel owned a stolen Mercedes-Benz. Transparency International consistently ranks Paraguay as the most corrupt country in Latin America. In its 2004 Corruption Perceptions Index, Paraguay was ranked 140 of 146 countries surveyed worldwide.
The constitution provides for freedom of expression and the press, and the government generally respects these rights in practice. There are a number of private television and radio stations and independent newspapers, but only one state-owned media outlet, Radio Nacional, which has a limited audience. However, in 2004, the Inter American Press Association noted that "the status of press freedom was marked by several attempts by government officials to interfere with the free practice of journalism, either by resorting directly to force or by using court rulings and legislation." In March, the Paraguayan Journalists Union announced that the newspaper Popular had been censored in order to stop the publication of a series of articles involving President Duarte, in which it was reported that the president had given a car as a birthday gift to the daughter of the then Speaker of the Chamber of Deputies. Journalists investigating corruption or covering strikes and protests are often the victims of intimidation or violent attack by security forces, and even death threats from politicians. On April 21, 2004, radio reporter Samuel Roman was shot dead by two men riding on a motorcycle in a Paraguayan border town.
Free expression is threatened by vague, potentially restrictive laws that mandate "responsible" behavior by journalists and media owners. According to an Inter American Press Association report issued in October 2004, the legislature passed a law that did not include an article guaranteeing access to sworn statements on the assets of public officials. The government does not restrict use of the Internet, nor does it censor Internet content.
The government generally respects freedom of religion. All religious groups are required to register with the Ministry of Education and Culture, but no controls are imposed on these groups, and many informal churches exist. The government generally does not restrict academic freedom.
Although the constitution guarantees freedom of association and assembly, these rights have been undermined by the previous government's tolerance of threats and the use of force, including imprisonment, by its supporters against the opposition. In 2004, the police used force against illegal but non-violent demonstrations, and in several instances, the government mobilized the military to assist the police in maintaining public order in the face of unrest and rural land invasions. There are numerous trade unions and two major union federations, although they are weak and riddled with corruption. The constitution gives public sector workers the right to organize, bargain collectively, and strike, and nearly all these workers belong to the ruling Colorado Party. A new labor code designed to protect workers' rights was adopted in October 1993.
The judiciary, under the influence of the ruling party and the military, is susceptible to the corruption pervading all public and governmental institutions. The constitution permits detention without trial until the accused completes the minimum sentence for the alleged crime. There have been continuing reports of illegal detention by police and torture during incarceration, including of minors, particularly in rural areas. Reportedly corrupt police officials, who are poorly paid, remain in key posts and are in a position to give protection to, or compromise law enforcement actions against, narcotics traffickers. Colombian drug traffickers continue to expand operations in Paraguay, and accusations of high official involvement in drug trafficking date back to the 1980s. Overcrowding, unsanitary living conditions, and mistreatment are serious problems in the country's prisons; more than 95 percent of those held are pending trial, many for months or years after arrest.
The lack of security in border areas, particularly in the tri-border region, has allowed large organized-crime groups to engage in piracy and in the smuggling of weapons, narcotics, and contraband. In the aftermath of the September 11, 2001, attacks, attention focused on the serious lack of governmental control over Paraguay's lengthy and undeveloped land borders, extensive river network, and numerous airstrips (both registered and unregistered). The Islamic extremist organization Hezbollah and other militant organizations are active in the so-called Iguazu triangle region, which is delineated by the cities of Ciudad del Este in Paraguay, Foz do Iguacu in Brazil, and Puerto Iguazu in Argentina. A joint intelligence center run by Argentina, Brazil, and Paraguay monitors the region, and all three countries use their air forces for surveillance and interdiction efforts.
The constitution provides indigenous people with the right to participate in the economic, social, political, and cultural life of the country. However, in practice, the indigenous population is unassimilated and neglected. Low wages, long work hours, infrequent payment or nonpayment of wages, job insecurity, lack of access to social security benefits, and racial discrimination are common. Peasant and Indian organizations that demand and illegally occupy land often meet with police crackdowns, death threats, detentions, and forced evictions by vigilante groups in the employ of landowners.
Paraguay's economy remains heavily based on agriculture and various forms of contraband. The country has one of the most unequal distributions of land in the world, and it has been the booming agri-business industry that has kept the country from bankruptcy in the past five years. According to the Ministry for Social Action, 66 percent of the country's land is held by 10 percent of the population, while nearly one-third of Paraguayans have no land of their own. The top 10 percent own 40 percent of the wealth.
Sexual and domestic abuse of women, which is both widespread and vastly underreported, continues to be a serious problem in Paraguay, and employment discrimination is pervasive. Spousal abuse is common. Trafficking in persons to, from, and within the country is proscribed by the constitution and criminalized in the penal code; however, there were occasional reports of the practice for sexual purposes.