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. 202-483-6960).  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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