Wayzata World Factbook 1996/The World Factbook - 1996 Edition - Wayzata Technology (3079) (1996).iso/pc/text/backgrd/paraguay.bkg

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U.S. DEPARTMENT OF STATE
BACKGROUND NOTES: PARAGUAY
PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS
NOVEMBER 1994

Official Name:  Republic of Paraguay

PROFILE

Geography
Area:  406,750 sq. km. (157,047 sq. mi.); about the size of California.
Cities:  Capital--Asuncion (pop. 502,000). Other cities--Caaguazu,
Coronel Oviedo, Pedro Juan Caballero, Encarnacion, and Ciudad del Este.
Terrain:  East of Paraguay River--grassy plains, wooded hills, tropical
forests; west of Paraguay River (Chaco region)--low, flat, marshy plain.
Climate:  Temperate east of the Paraguay River, semiarid to the west.

People
Nationality:  Noun and adjective--Paraguayan(s).
Population:  4.2 million.
Annual growth rate:  3.1%.
Ethnic groups:  Mixed Spanish and Indian descent (mestizo) 95%.
Religions:  Roman Catholic 97%; Mennonite and other Protestant
denominations.
Languages:  Spanish, Guarani.
Education:  Years compulsory--6.  Attendance--83%.  Literacy--90%.
Health:  Infant mortality rate (1992)--
47/1,000.  Life expectancy--65 yrs. male;
69 yrs. female.
Work force (1.4 million):  Agriculture--37%.  Industry and commerce--
31%.  Services--19%.  Government--4%.

Government
Type:  Constitutional republic with strong presidency.
Independence:  May 1811.
Constitution:  June 1992.
Branches:  Executive--president.  Legislative--Senate and Chamber of
Deputies.  Judicial--Supreme Court of Justice.
Administrative subdivisions:  17 departments.
Political parties:  Colorado (National Republican Association),
Authentic Radical Liberal, National Encounter, Febrerista Revolutionary,
and numerous smaller parties not represented in Congress.
Suffrage:  Adults age 18 and older.

Economy
GDP (1993):  $7.2 billion.
Annual growth rate (1993):  3.7%.
Per capita GDP (1993):  $1,550.
Natural resources:  Hydroelectric sites, forests.
Agriculture (27% of GDP): Products--meat, corn, sugarcane, soybeans,
lumber, cotton.  Arable land--9 million hectares, of which 30%
cultivated.
Industry (16% of GDP):  Types--sugar, cement, textiles, beverage, and
wood products.
Trade (1993):  Exports--$750 million: soybeans, meat and meat products,
lumber, vegetable oil, yerba mate, cotton. Major markets--Brazil,
Argentina, EU, U.S. (7%).  Imports-- $1.7 billion:  machinery, fuels and
lubricants, electronics, consumer goods.  Major suppliers--EU, U.S.
(30%), Japan, Argentina, Brazil.
Official exchange rate:  1,905 guaranies = U.S. $1.  n


PEOPLE

Paraguay's population is distributed unevenly throughout the country.
The vast majority of the people live in the east, most within 160
kilometers (100 mi.) of Asuncion, the capital and largest city.  The
Chaco, which accounts for about 60% of the territory, is home to less
than 4% of the population.

Ethnically, culturally, and socially, Paraguay has one of the most
homogeneous population in South America.  About 95% of the people are of
mixed Spanish and Guarani Indian descent.  Little trace is left of the
original Guarani culture except the language, which is understood by 90%
of the population.  About 75% of all Paraguayans speak Spanish.  Guarani
and Spanish are official languages.  Germans, Japanese, Koreans,
Brazilians, and Argentines have settled in Paraguay.


HISTORY

Pre-Columbian civilization in the fertile, wooded region that is now
Paraguay consisted of numerous seminomadic, Guarani-speaking tribes of
Indians, who were recognized for their fierce warrior traditions.  They
practiced a mythical polytheistic religion, which later blended with
Christianity.

Spanish explorer Juan de Salazar founded Asuncion on the Feast Day of
the Assumption, August 15, 1537.  The city eventually became the center
of a Spanish colonial province encompassing most of southern South
America.  Paraguay declared its independence by overthrowing the local
Spanish authorities in May 1811.

The country's formative years were dominated by three strong leaders:
Jose Gaspar Rodriguez de Francia (1814-40), Carlos Antonio Lopez, (1841-
62), and his son, Francisco Solano Lopez (1862-70).  The latter waged a
war against Argentina, Uruguay, and Brazil (War of the Triple Alliance,
1864-70) in which Paraguay lost half its population; Brazilian troops
subsequently occupied the country until 1874.  From 1880 until 1904, a
succession of presidents governed Paraguay under the banner of the
Colorado Party.  The Liberal Party seized control of the government in
1904 and ruled, with only a brief interruption, until 1940.

Throughout the 1930s and 1940s, Paraguayan politics were characterized
by the Chaco war, civil war, dictatorships, and periods of extreme
political instability. Gen. Alfredo Stroessner assumed power in May
1954. He was elected to complete the unexpired term of his predecessor
and was subsequently re-elected President in 1958, 1963, 1968, 1973,
1978, 1983, and 1988.  He ruled the country almost continuously under
the state-of-siege provision of the constitution.  When invoked, usually
in political cases, state-of-siege measures effectively set aside habeas
corpus and other legal guarantees.

The Colorado Party, the military, and the government were the pillars of
the Stroessner regime.  During this period, political freedoms were
severely limited and opponents of the regime were systematically
harassed and persecuted.  In August 1967, a Colorado-dominated
constitutional convention imposed a new constitution which gave a
dubious legitimacy to Stroessner's control of political and economic
forces in Paraguay.  Throughout Stroessner's 34-year reign, Paraguay's
image became progressively tarnished and the country increasingly
estranged from the world community.

On February 3, 1989, General Stroessner was overthrown in a military
coup headed by Gen. Andres Rodriguez.  Presidential, congressional, and
municipal elections were held on May 1, 1989.  General Rodriguez, as the
Colorado Party candidate, easily won in presidential elections in which
eight political parties participated.  As President, he instituted
political, legal, and economic reforms and initiated a rapprochement
with the international community.  In municipal elections, opposition
candidates won several towns--notably, a labor union leader was elected
mayor of the capital, Asuncion.  A multi-party constituent assembly was
elected in December 1991 to draft a new constitution.  It went into
effect in June 1992 and was a dramatic improvement over the 1967
constitution in protecting fundamental rights and establishing a
democratic system of government.


GOVERNMENT AND POLITICAL CONDITIONS

On May 9, 1993, Colorado Party presidential candidate Juan Carlos
Wasmosy was elected President in what international observers deemed
Paraguay's most fair and free elections.  A majority-opposition Congress
also was elected.  Although only three parties elected officials to
national office, several parties contested the major leadership
positions in the elections.  The new opposition-dominated Congress
quickly demonstrated its independence from the executive by rescinding
legislation passed by the previous Colorado-dominated Congress.  As
Paraguay's first civilian President in almost 40 years, President
Wasmosy has pledged to consolidate Paraguay's democratic transition,
reform the state, and improve respect for human rights.

Paraguay's highly centralized government was fundamentally changed by
the 1992 constitution, which provides for a division of powers.  The
president, popularly elected for a five-year term, is assisted by an
appointed cabinet.

The bicameral Congress consists of a 45-member Senate and a 80-member
Chamber of Deputies.  Senators and deputies are elected concurrently
with the president.  Senators are elected through a proportional
representation system using the nation as a single legislative district.
Deputies are elected on the departmental level through a proportional
representation system.  Paraguay's highest court is the Supreme Court.
Its members are selected by the Senate and the president through the
recommendations of a constitutionally created Magistrates Council.
Paraguay is divided into 17 departments, each headed by a popularly
elected governor.

Principal Government Officials
President--Juan Carlos Wasmosy
Minister of Foreign Affairs--Luis Maria Ramirez Boettner
Ambassador to the U.S.--vacant
Ambassador to the OAS--vacant
Ambassador to the UN--Jose Felix Fernandez Estigarribia

Paraguay maintains an embassy in the United States at 2400 Massachusetts
Avenue NW, Washington, DC 20008 (tel. [phone]).  Consulates are in
Miami, New York, New Orleans, Chicago, Detroit, and Los Angeles.


ECONOMY

Paraguay has a predominantly agricultural economy, with a thriving
commercial sector.  There is a large subsistence sector (including
sizable urban underemployment) and a larger underground re-export
sector.  Although the country has vast hydroelectric potential
(including the world's largest hydroelectric generation facility at the
Itaipu dam), it lacks significant mineral or petroleum resources.  The
government welcomes and provides national treatment to foreign investors
and businesses.

The country had a GDP of $7.2 billion in 1993.  The economy--dependent
on exports of soybeans, cotton, cattle, and timber; on electricity
generation; and on the lucrative business of re-exporting products made
elsewhere--is vulnerable to the vagaries of weather and to the fortunes
and misfortunes of the Argentine and Brazilian economies.

Paraguay achieved a balance-of-payments surplus of $89 million in 1993,
or about 1.3% of GDP; this represented a reversal from 1992's $351-
million balance-of-payments deficit.  In 1993, official foreign exchange
reserves increased to $700 million.  Foreign official debt declined
slightly to $1.2 billion, following a buyback of all commercial debt in
1992.  Strong capital flows continued in 1994, and the government
registered a balance-of-payments surplus of almost $300 million for the
first six months of the year.

Agriculture and Commerce

Agricultural activities represented more than 25% of GDP for 1993.  More
than 200,000 families depend on subsistence farming activities and
maintain marginal ties to the larger, productive sector of the economy.
In 1993, a rebound in cotton production and a record soybean crop buoyed
the economy.  Rural income increased, and aggregate demand rose.  GDP
rebounded from a meager 1.8% increase--and negative 1.3% per capita GDP
growth--in 1992 to 3.7% in 1993.  As inflationary pressures accelerated,
1993 closed with a 20.4% rate.

The commercial sector is primarily engaged in the import of goods from
Asia and the United States for re-export to neighboring countries.  In
general, Paraguayans prefer imported goods, and local industry relies on
imported capital goods.  The underground economy, which is not included
in the national accounts, is estimated to generate transactions
amounting to $3 billion to $7 billion per year.  The bulk of underground
activity centers on the unregistered sale of imported goods--including
computers, sound equipment, cameras, liquor, and cigarettes--to
Argentina and Brazil.

Post-Stroessner Reforms

Since 1989, the government has deregulated the economy, previously
tightly controlled by President Stroessner's authoritarian regime.  The
Rodriguez and Wasmosy administrations eliminated foreign exchange
controls and implemented a free-floating exchange rate system; reformed
the tax structure and established tax incentives to encourage and
attract investment; reduced tariff levels; launched a stock exchange
market; and began a process of financial reform.

The Wasmosy government has pledged to strengthen market-based economic
reforms initiated since 1989.  To do this, the government pledged to:
keep government expenditures in line with revenues; combat inflation;
eliminate restrictions on capital flows; reform and deregulate the
financial sector; keep customs duties low and uniform; encourage
production and exports; privatize state-owned enterprises; and fight
official corruption.

Although President Wasmosy has vowed to privatize state enterprises
which produce goods and services in order to rationalize resources,
privatization has stalled due to opposition from many parts of the
society long accustomed to a large public sector.  The government still
plays a major role in the Paraguayan economy.  The total public sector
budget represents close to 50% of GDP.  Of the $3.3-billion 1994
government budget, 40% was assigned to the central government, with the
remaining 60% targeted for the decentralized agencies and state-owned
enterprises.  During the first half of 1994, $340 million (about 15% of
the government's investment budget) was allocated .


DEFENSE

The constitution designates the president as commander-in-chief of the
armed forces.  Military service is compulsory, and all
17-year-old males are liable for one year of active duty.  Although the
1992 constitution allows for conscientious objection, no enabling
legislation has yet been approved, and conscientious objection does not
occur in practice.

The army has the majority of personnel, resources, and influence.  With
about 15,000 personnel, it is organized into three corps, with six
infantry divisions and three cavalry divisions.  The army has two
primary functions:  to maintain the national defense (including internal
order) and to manage some civic action projects in the countryside.  The
navy consists of about 4,000 personnel divided into three service
branches.  The air force, newest and smallest of the services, has about
2,000 personnel.


FOREIGN RELATIONS

Paraguay is a member of the United Nations and several of its
specialized agencies, the Organization of American States, the Latin
American Integration Association, the Rio Group, INTELSAT, INTERPOL, and
most recently, the MERCOSUR (Southern Cone Common Market).  Its foreign
policy has followed closely the Rio Group's lead on many issues of wide-
ranging political importance.


U.S.-PARAGUAY RELATIONS

In the post-Stroessner years, U.S.-Paraguay relations have improved.
The U.S. wishes to continue its constructive relations with the
Government of Paraguay, and it supports Paraguay's increased
democratization, commitment to economic reform, and improved
counternarcotics cooperation.  U.S.-Paraguay cooperation in
international organizations traditionally has been good.

The U.S. Agency for International Development (USAID) has assisted
Paraguayan development since 1946.  USAID currently supports a variety
of programs to strengthen Paraguay's democratic institutions,
particularly in the legislative and judicial branches, local government,
and union development.  In FY 1995, USAID will spend about $4 mil-lion
in the country.  The Peace Corps and the U.S. Information Service both
are active in Paraguay.

Principal U.S. Officials

Ambassador--Robert E. Service
Deputy Chief of Mission--Gerald C. McCulloch
Political Officer--Alexander H. Margulies
Economic/Commercial Officer--Francisco J. Fernandez
Consul--Eigel V. Hansen
Administrative Officer--Franklin English
USAID Representative--Richard Nelson
Public Affairs Officer--Mark T. Jacobs
Defense Attache--Lt. Col. Alfonso Gomez
Office of Defense Cooperation--Col. Raymond H. Becerril

The U.S. embassy in Paraguay is located
at 1776 Avenida Mariscal Lopez, Asuncion (tel. (595) (21) 213-715, fax
(595) (21) 213-728).

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