Mercosur Members Suspend Paraguay

By Lucy Jordan, Contributing Reporter

BRASÍLIA, BRAZIL – Mercosur members including Brazil have suspended Paraguay from the South American economic alliance following Friday’s impeachment of President Fernando Lugo. They will discuss further measures at the bloc’s presidential summit this Friday in Mendoza, Argentina, a joint statement said.

Paraguay’s opposition-dominated Senate voted to remove the former bishop from power last week, claiming mismanagement following land clashes earlier this month that left seventeen dead. Vice President Federico Franco was sworn in moments later and announced his cabinet Monday.

Paraguay claimed to follow due legislative process, but the swiftness of the procedure alarmed its neighbors. Brazil and Argentina recalled their ambassadors, while Venezuela suspended its supply of oil to the landlocked nation.

Michael Shifter, President of the Inter-American Dialogue, called Brazil “the crucial player” on this issue. “It will necessarily shape the regional response,” he said. “The Mercosur summit will focus on how best to deal with the Franco government, and what instruments, either diplomatic or economic, should be applied.”

Sanctions from Brazil, Paraguay’s biggest trading partner, would have serious consequences for the small, landlocked nation’s economy. Of particular significance, says David Fleischer, a political scientist at the University of Brasília, is Brazil and Paraguay’s joint stewardship of the Itaipú hydroelectric dam.

At present, Paraguay uses only five percent of its fifty percent share of the power produced by Itaipú, and sells the rest back to Brazil. A new transmission line is currently being built to increase Paraguay’s access to electricity.

“The most effective sanctions that Brazil could suggest would be, number one, to suspend construction of the power line,” Professor Fleischer said. “Number two would be cutting off access to the port of Paranaguá…and to embargo the river into Paraguay and block trade.”

As a landlocked country that manufactures few consumer goods, Paraguay is dependent on imports and access to trade conduits.

Similar threats have proved persuasive before, as in 1996, Argentina and Brazil successfully forestalled a coup attempt when Brazil warned it would close Paraguay’s transport channels and halt payments for the electricity generated by the Itaipú Dam, accounting for 26 percent of the Paraguayan government budget.

Also at issue is how Paraguay could retaliate to sanctions. One method would be to put pressure on Brazilian landowners in Paraguay known locally as ‘Brasiguaios’. There has been tension in recent months between Brasiguaios and Paraguay’s landless peasants, who resent the farmers in a country where two percent of the population control eighty percent of viable farmland.

Veja reported Sunday that the Brasiguaios, fearful of reprisal over Brazil’s condemnation of the impeachment, plan to ask President Rousseff to recognize Franco as Paraguay’s president. Colin Snider, an professor of Latin American history at Stephen F. Austin State University in Texas, says these interests and Brazil’s energy concerns could mean Brazil will take a softer stance towards Franco than Argentina.

“Brazil has more at stake,” he said. “Members of Mercosur are going to have to consider whether or not it is worth it to take a stand against the undermining of democratic institutions, even if such a stance runs the risk of hurting their own national economic interests.”

Even if punitive measures are introduced, said Mr. Shifter, they are unlikely to bring Lugo back to power. “From all accounts, he [has] more political support outside of Paraguay than inside,” he said. “That is not enough to mount pressure for his return.”