U.S. Department of State
Background Notes: Paraguay
Released by the Bureau of Inter-American Affairs
May 1997

OFFICIAL NAME:  REPUBLIC OF PARAGUAY

PROFILE

People

Nationality: Noun and adjective--Paraguayan(s).
Population: 4.8 million.
Annual growth rate: 2.7%.
Ethnic groups: Mixed Spanish and Indian descent (mestizo) 95%. 
Religions: Roman Catholic 90%; Mennonite and other Protestant 
denominations.
Languages: Spanish, Guarani.
Education: Years compulsory--6. Attendance--86.6%. Literacy--90.7%. 
Health: Infant mortality rate--38/1,000. Life expectancy--68 yrs male; 
75 yrs female.
Work force (1.7 million): Agriculture--45%. Industry and commerce--31%. 
Services--19%. Government--4%.

Geography

Area: 406,752 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.

Government

Type: Constitutional republic.
Independence: May 1811.
Constitution: June 1992.
Branches: Executive--president. Legislative--Senate and Chamber of 
Deputies. Judicial--Supreme Court of Justice. 
Administrative subdivisions: 19 departments.
Political parties: Colorado (National Republican Association), Authentic 
Radical Liberal, National Encounter, Christian Democratic, Febrerista 
Revolutionary, Popular Democratic, and numerous smaller parties not 
represented in Congress. 
Suffrage: 18 years of age; universal and compulsory up to age 75.

Economy (1996 est.)

GDP: $9.6 billion.
Annual growth rate: 1.2%.
Per capita GDP: $1,946.
Natural resources: Hydroelectric sites, forests. 
Agriculture (26% of GDP): Products--cotton, sugarcane, soybeans. Arable 
land--9 million hectares, of which 30% cultivated.
Manufacturing (15% of GDP): Types--sugar, cement, textiles, beverage, 
and wood products.
Trade: Exports--$1 billion: soybeans, meat and meat products, lumber, 
vegetable oil, yerba mate, cotton. Major markets--Brazil, Argentina, EU, 
U.S. (6%). Imports--$2.2 billion: machinery, fuels and lubricants, 
electronics, consumer goods. Major suppliers--Brazil, EU, U.S. (18% *), 
Japan, Argentina. 
Official exchange rate (May 1997): 2,150 guaranies=U.S. $1. 

(* Source: Government of Paraguay)


PEOPLE

Paraguay's population is distributed unevenly throughout the country. 
The vast majority of the people live in the eastern region, 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 2% of the population.

Ethnically, culturally, and socially, Paraguay has one of the most 
homogeneous populations 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 semi-nomadic, 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. Paraguay declared its independence by 
overthrowing the local Spanish authorities in May 1811.

The country's formative years saw three strong leaders who established 
the tradition of personal rule that lasted until 1989: Jose Gaspar 
Rodriguez de Francia, Carlos Antonio Lopez, and his son, Francisco 
Solano Lopez. The younger Lopez 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. A succession of presidents governed Paraguay under the 
banner of the Colorado Party from 1880 until 1904, when the liberal 
party seized control, ruling with only a brief interruption until 1940.

In the 1930s and 1940s, Paraguayan politics were defined by the Chaco 
War against Bolivia, a civil war, dictatorships, and periods of extreme 
political instability. General Alfredo Stroessner took power in May 
1954. Elected to complete the unexpired term of his predecessor, he was 
re-elected president seven times, ruling almost continuously under the 
state-of-siege provision of the constitution with support from the 
military and Colorado Party.

During Stroessner's 34-year reign, political freedoms were severely 
limited and opponents of the regime were systematically harassed and 
persecuted in the name of national security and anti-communism. Though a 
1967 constitution gave dubious legitimacy to Stroessner's control, 
Paraguay became progressively isolated from the world community.

On February 3, 1989, Stroessner was overthrown in a military coup headed 
by General Andres Rodriguez. Presidential and congressional elections 
were held on May 1, 1989. Rodriguez, as the Colorado Party candidate, 
easily won the presidency, and the Colorado Party dominated the 
Congress. In 1991 municipal elections, however, opposition candidates 
won several major urban centers, including Asuncion. As president, 
Rodriguez instituted political, legal, and economic reforms and 
initiated a rapprochement with the international community. The June 
1992 constitution established a democratic system of government and 
dramatically improved protection of fundamental rights.


GOVERNMENT AND POLITICAL CONDITIONS

On May 9, 1993, Colorado Party presidential candidate Juan Carlos 
Wasmosy was elected president in what international observers deemed 
fair and free elections. A majority-opposition Congress also was 
elected, which 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, 
Wasmosy has worked to consolidate Paraguay's democratic transition, 
reform the economy and the state, and improve respect for human rights. 
His major accomplishments to date have been exerting civilian control 
over the armed forces and undertaking fundamental reform of the judicial 
and electoral systems. 

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, appoints a cabinet. 
The next presidential elections will take place on May 10, 1998. The 
bicameral Congress consists of a 45-member Senate and an 80-member 
Chamber of Deputies, elected concurrently with the president through a 
proportional representation system. Deputies are elected by department 
and Senators nationwide. Paraguay's highest court is the Supreme Court. 
The Senate and the President select its members on the basis of 
recommendations from a constitutionally created Magistrates Council. 
Each of Paraguay's 19 departments is headed by a popularly elected 
governor. 


Principal Government Officials

President--Juan Carlos WASMOSY Monti
Minister of Foreign Affairs--Ruben Dario MELGAREJO Lanzoni
Ambassador to the U.S.--Jorge PRIETO Conti
Ambassador to the OAS--Carlos Victor MONTANARO
Ambassador to the UN--Jose Felix FERNANDEZ Estigarribia

Paraguay maintains an embassy in the United States at 2400 Massachusetts 
Avenue, N.W., Washington, D.C. 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. The country has vast hydroelectric potential (including the 
world's largest hydroelectric generation facility at the Itaipu Dam), 
but lacks significant mineral or petroleum resources. The government 
welcomes and provides national treatment to foreign investors and 
businesses.

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 of the Argentine and Brazilian economies.

According to Paraguayan Government statistics, Paraguay's GDP of $9.6 
billion in 1996 represented real growth of 1.2% over 1995. However, 
given the importance of the informal sector, accurate economic measures 
are difficult to ascertain.

Paraguay generally maintains a small balance-of-payments surplus. 
Official foreign exchange reserves increased to $1.3 billion and foreign 
official debt remained about $1.3 billion. On a per capita basis, GDP 
declined by 1.8% at the end of 1996. Inflation continued to drop, 
standing at 8.2%.

Agriculture and Commerce

Agricultural activities represents about 20% of GDP, most of which is 
for export. More than 200,000 families depend on subsistence farming 
activities and maintain marginal ties to the larger, productive sector 
of the economy.

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 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 total public 
sector budget represents close to one-third GDP. Of the $3.5 billion 
1996 government budget, 40% was assigned to the central government, with 
the remaining 60% targeted for the decentralized agencies and state-
owned enterprises.


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. Of the three services, the army has the majority of personnel, 
resources, and influence. With about 12,000 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 2,000 personnel 
divided into three service branches. The air force, newest and smallest 
of the services, has about 1,500 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 (ALADI), the Rio Group, INTELSAT, 
INTERPOL, and most recently, 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

U.S. Interests in Paraguay

The United States and Paraguay have an extensive relationship at the 
government, business, and personal level. Paraguay is a partner in 
hemispheric initiatives to improve counternarcotics cooperation, combat 
money laundering and other illicit cross-border activities, and 
adequately protect intellectual property rights. With substantial rain 
forest and riverine resources, the U.S. looks to Paraguay to engage in 
hemispheric efforts to ensure sustainable development. As a member of 
the Southern Cone Common Market (MERCOSUR in Spanish), Paraguay supports 
the move toward a Free Trade Area of the Americas early in the next 
century. The U.S. and Paraguay also cooperate in a variety of 
international organizations.

The U.S. strongly supports consolidation of Paraguay's democracy and 
continued economic reform, cornerstones of cooperation among countries 
in the hemisphere. The U.S. played an important role in helping resolve 
the April 1996 constitutional crisis, which threatened Paraguay's seven-
year-old democracy. With support from the United States, the 
Organization of American States, and other countries in the region, the 
Paraguayan people rejected an attempt by then-Army Chief General Lino 
Oviedo to subvert President Wasmosy, taking took an important step to 
strengthen democracy. 

U.S. exports to Paraguay approach $1 billion per year, according to U.S. 
Customs data. More than a dozen U.S. multinational firms have 
subsidiaries in Paraguay. These include firms in the computer, 
manufacturing, agro-industrial, and banking and other service 
industries. Some 75 U.S. businesses have agents or representatives in 
Paraguay, and over 3,000 U.S. citizens reside there.

U.S. Assistance

The U.S. Government has assisted Paraguayan development since 1937. The 
U.S. Agency for International Development (USAID) currently supports a 
variety of programs to strengthen Paraguay's democratic institutions, 
particularly in the legislative and judicial branches, local government, 
and elections, as well as to protect the environment and stabilize 
population growth. USAID anticipates an assistance program of over $5 
million per year for FY 1997-1999.

The U.S. Department of State and the Drug Enforcement Administration are 
providing technical assistance, equipment, and training to strengthen 
counternarcotics enforcement and to assist in the development and 
implementation of money laundering legislation. The U.S. Department of 
Defense is providing technical assistance and training to help 
modernize, professionalize, and democratize the military. The Peace 
Corps has about 170 volunteers working throughout Paraguay on projects 
ranging from agriculture and natural resources to education, rural 
health, and urban youth development. The U.S. Information Service (USIS) 
is also active in Paraguay, providing information on the United States 
to the press and public, as well as helping to arrange educational and 
citizen exchanges to promote democracy.

Principal U.S. Officials

Ambassador--Robert E. Service
Deputy Chief of Mission--Stephen McFarland (summer 1997)
Political Officer--Alexander H. Margulies
Economic/Commercial Officer--Francisco J. Fernandez
Consul--Charles S. Smith
Administrative Officer--Amy Pitts
USAID Representative--Barbara Kennedy
Public Affairs Officer--James Dickmeyer
Defense Attache--Ltc. Charles A. Rowcliffe
Office of Defense Cooperation--Col. David Wilderman

The U.S. embassy in Paraguay is located at 1776 Avenida Mariscal Lopez, 
Asuncion (tel. (595) (21) 213-715, fax (595) (21) 213-728). The 
embassy's Home Page address on the World Wide Web is: 
http://www.usia.gov/posts/asuncion.html.


Other Contact Information

U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th & Constitution Ave., N.W.
Washington, D.C. 20230
Tel: (202) 482-0477, 800-USA-TRADE
Fax: (202) 482-0464

Paraguayan-American Chamber of Commerce
Edif. El Faro Internacional, Piso 4
Asuncion, Paraguay
Tel: (595) 21-442-136, Fax: (595) 21-442-135
(Branch office in Ciudad del Este)


TRAVEL AND BUSINESS INFORMATION 

The U.S. Department of State's Consular Information Program provides 
Travel Warnings and Consular Information Sheets. Travel Warnings are 
issued when the State Department recommends that Americans avoid travel 
to a certain country. Consular Information Sheets exist for all 
countries and include information on immigration practices, currency 
regulations, health conditions, areas of instability, crime and 
security, political disturbances, and the addresses of the U.S. posts in 
the country. Public Announcements are issued as a means to disseminate 
information quickly about terrorist threats and other relatively short-
term conditions overseas which pose significant risks to the security of 
American travelers. Free copies of this information are available by 
calling the Bureau of Consular Affairs at 202-647-5225 or via the fax-
on-demand system: 202-647-3000. Travel Warnings and Consular Information 
Sheets also are available on the Consular Affairs Internet home page: 
http://travel.state.gov and the Consular Affairs Bulletin Board (CABB). 
To access CABB, dial the modem number: (301-946-4400 (it will 
accommodate up to 33,600 bps), set terminal communications program to N-
8-1 (no parity, 8 bits, 1 stop bit); and terminal emulation to VT100. 
The login is travel and the password is info (Note: Lower case is 
required). The CABB also carries international security information from 
the Overseas Security Advisory Council and Department's Bureau of 
Diplomatic Security. Consular Affairs Trips for Travelers publication 
series, which contain information on obtaining passports and planning a 
safe trip abroad, can be purchased from the Superintendent of Documents, 
U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-
7954; telephone: 202-512-1800; fax 202-512-2250. 

Emergency information concerning Americans traveling abroad may be 
obtained from the Office of Overseas Citizens Services at (202) 647-
5225. For after-hours emergencies, Sundays and holidays, call 202-647-
4000. 

Passport Services information can be obtained by calling the 24-hour, 7-
day a week automated system ($.35 per minute) or live operators 8 a.m. 
to 8 p.m. (EST) Monday-Friday ($1.05 per minute). The number is 1-900-
225-5674 (TDD: 1-900-225-7778). Major credit card users (for a flat rate 
of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648) 

Travelers can check the latest health information with the U.S. Centers 
for Disease Control and Prevention in Atlanta, Georgia. A hotline at 
(404) 332-4559 gives the most recent health advisories, immunization 
recommendations or requirements, and advice on food and drinking water 
safety for regions and countries. A booklet entitled Health Information 
for International Travel (HHS publication number CDC-95-8280) is 
available from the U.S. Government Printing Office, Washington, DC 
20402, tel. (202) 512-1800.

Information on travel conditions, visa requirements, currency and 
customs regulations, legal holidays, and other items of interest to 
travelers also may be obtained before your departure from a country's 
embassy and/or consulates in the U.S. (for this country, see "Principal 
Government Officials" listing in this publication). 

U.S. citizens who are long-term visitors or traveling in dangerous 
areas, are encouraged to register at the U.S. embassy upon arrival in a 
country (see "Principal U.S. Embassy Officials" listing in this 
publication). This may help family members contact you in case of an 
emergency. 


Further Electronic Information: 

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gopher://gopher.state.gov.

U.S. Foreign Affairs on CD-ROM (USFAC). Published on a semi-annual basis 
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the Superintendent of Documents, U.S. Government Printing Office, P.O. 
Box 371954, Pittsburgh, PA 15250-7954. To order, call (202) 512-1800 or 
fax (202) 512-2250.

National Trade Data Bank (NTDB). Operated by the U.S. Department of 
Commerce, the NTDB contains a wealth of trade-related information, 
including Country Commercial Guides. It is available on the Internet 
(www.stat-usa.gov) and on CD-ROM. Call the NTDB Help-Line at (202) 482-
1986 for more information. 

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