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Paraguayan President-elect Fernando Lugo is slated to take power Aug. 15. As Paraguay’s first leftist president in 61 years, Lugo will have a great deal on his plate and great battles on the horizon. The most formidable of these challenges will be a renegotiation of Paraguay’s relationship with Brazil — a process that could fundamentally redefine the geopolitics of South America.
Lugo means to change the status quo after the conservative Colorado party’s 61 unbroken years of rule in Paraguay. Though major land redistribution issues are on his agenda, Lugo will not necessarily follow in the footsteps of the regional leftist leaders — like Venezuelan President Hugo Chavez — who have pursued populism to the point of impoverishing their states.
So far, Lugo has eschewed regional power politics in favor of focusing on domestic issues — but Lugo’s key policy goal of renegotiating the price at which Paraguay sells electricity to Brazil has implications for all of South America. Paraguay’s location between regional powers Argentina and Brazil, along with its historical relationship to both countries, makes Paraguay a pivotal state in the geopolitical balance of South America. How Lugo establishes a relationship with Brazil will thus be critically important for the regional balance of power.
Though the Paraguay of today is destitute and highly marginalized, it has not always been so. Paraguay in the mid-1880s was a prosperous and rapidly developing nation. Between 1844 and 1865, Paraguay made several major steps toward sustained development, including building its own railroad, creating a national school system, opening a newspaper and importing skilled labor from Europe.
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