U.S. Department of State 
Background Notes: Paraguay, January 1999
Released by the Bureau of Western Hemisphere Affairs 

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 years male; 
75 years female.
Work force (1995, 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 the Paraguay River--grassy plains, wooded hills, 
tropical forests; West of the 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: 17 departments.
Political parties: Colorado (National Republican Association), Authentic 
Radical Liberal, National Encounter, Christian Democratic, and numerous 
smaller parties not represented in Congress. 
Suffrage: 18 years of age; universal and compulsory up to age 75.

Economy (1998 est.) 

GDP: $10 billion.
Annual growth rate: 2.6% (1997).
Per capita GDP: $1,600.
Natural resources: Hydroelectric sites, forests. 
Agriculture (26% of GDP): Products--cotton, sugarcane, soybeans. Arable 
land--9% million hectares, of which 30% is cultivated.
Manufacturing (15% of GDP): Types--sugar, cement, textiles, beverage, 
and wood products.
Trade (1997): Exports--$3.6 billion (*): meat and meat products, lumber, 
vegetable oil, yerba mate, cotton, soybeans. Major markets--Brazil, 
Argentina, EU.  
Imports--$4.2 billion: machinery, fuels and lubricants, electronics, 
consumer goods. Major suppliers--Brazil, EU, U.S. (22% *), Japan, 
Argentina. 
Official exchange rate (September 1998): 2,800 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 miles) 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, ethnic 
Chinese, Arabs, Brazilians, and Argentines are among those who 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 the 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. 

On May 9, 1993, Colorado Party presidential candidate Juan Carlos 
Wasmosy was elected as Paraguay's first civilian president in almost 40 
years in what international observers deemed fair and free elections. 
The newly elected majority-opposition Congress quickly demonstrated its 
independence from the executive by rescinding legislation passed by the 
previous Colorado-dominated Congress. Wasmosy worked to consolidate 
Paraguay's democratic transition, reform the economy and the state, and 
improve respect for human rights. His major accomplishments were 
exerting civilian control over the armed forces and undertaking 
fundamental reform of the judicial and electoral systems. 

With support from the United States, the Organization of American 
States, and other countries in the region, the Paraguayan people 
rejected an April 1996 attempt by then-Army Chief General Lino Oviedo to 
oust President Wasmosy, taking an important step to strengthen 
democracy. 

Oviedo sought to become president in the 1998 election, but when the 
Supreme Court upheld in April his conviction on charges related to the 
1996 coup attempt, he was not allowed to run, and his former running 
mate Raul Cubas Grau became the Colorado Party's candidate.  Cubas was 
elected on May 10 in elections deemed by international observers to be 
free and fair, and he took office on August 15.  One of his first acts 
in office was to commute Oviedo's sentence to time served and release 
him from confinement.  On December 2, 1998, Paraguay's Supreme Court 
declared these actions unconstitutional.

Cubas has cited as priorities for his administration addressing 
Paraguay's economic crisis and its growing budget deficit, reducing 
military spending, fighting corruption and narcotics trafficking, and 
improving protection of intellectual property rights.

GOVERNMENT AND POLITICAL CONDITIONS 

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 are scheduled for 2003. The bicameral 
Congress consists of an 80-member Chamber of Deputies and a 45-member 
Senate, 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 
17 departments is headed by a popularly elected governor. 

Principal Government Officials 

President--Raul CUBAS Grau
Minister of Foreign Affairs--Dido FLORENTIN Bogado
Ambassador to the U.S.--(vacant); 
Charge d'Affaires - Elianne Cibils
Ambassador to the OAS--Carlos Victor MONTANARO
Ambassador to the UN--Hugo SAGUIER 

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 large underground re-export sector. 
The country has vast hydroelectric resources including the world's 
largest hydroelectric generation facility at the Itaipu Dam, but it 
lacks significant mineral or petroleum resources. The government 
welcomes foreign investment and provides national treatment to foreign 
investors and businesses.  

The economy is dependent on exports of soybeans, cotton, cattle, and 
timber; on electricity generation; and to a decreasing degree on re-
exporting products made elsewhere. It is therefore vulnerable to the 
vagaries of weather and to the fortunes of the Argentine and Brazilian 
economies, which purchase most of its exports.  

According to Paraguayan Government statistics, Paraguay's GDP of $10 
billion in 1997 represented real growth of 2.6% over 1996. However, 
given the importance of the informal sector, accurate economic measures 
are difficult to ascertain.  Paraguay generally maintains a small 
balance-of-payments surplus. In early 1998, official foreign exchange 
reserves had fallen below $800 million and foreign official debt 
remained about $1.3 billion. On a per capita basis, GDP declined by 1.0% 
during 1997, and inflation fell to 6.2%. 

Agriculture and Commerce 

Agricultural activities, most of which are for export, represent about 
20% of GDP. 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.  The 
recorded activities of this sector have declined significantly in recent 
years, placing a strain on government finances, which depend heavily on 
taxes on this trade. 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, 
may equal the formal economy in size. 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 Cubas government has pledged to reduce the rising government deficit 
by cutting spending; address a financial sector crisis that has 
continued since 1995 by borrowing some $400 million from abroad; 
privatize state-owned enterprises; fight official corruption; and 
attract foreign investment by improving protection of intellectual 
property rights protection. 

The total public sector budget represents close to one-third of GDP. Of 
the $3.75 billion 1997 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, the 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. It also belongs to the Organization of American 
States, the Latin American Integration Association (ALADI), the Rio 
Group, INTELSAT, INTERPOL, and most recently, MERCOSUR (the 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 U.S. strongly supports consolidation of Paraguay's democracy and 
continued economic reform, the cornerstones of cooperation among 
countries in the hemisphere.  The U.S. played an important role in 
helping resolve the April 1996 crisis that threatened Paraguay's seven-
year-old democracy. 

The United States and Paraguay have an extensive relationship at the 
government, business, and personal level.  Although U.S. imports from 
Paraguay are only about $40 million per year, 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.  In November 1998, U.S. and Paraguayan officials signed a 
memorandum of understanding on steps to improve protection of 
intellectual property rights in Paraguay.

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. 

The U.S. also looks to Paraguay, which has substantial rain forest and 
riverine resources, 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. 

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 provided more than $5 million in assistance per 
year for Fiscal Years 1997 and 1998 and anticipates a similar level in 
Fiscal Year 1999.

The U.S. Department of State and the Drug Enforcement Administration 
provide 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 provides 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--Maura A. Harty
Deputy Chief of Mission--Stephen McFarland
Political Officer--David Lindwall
Economic/Commercial Officer--Richard C. Boly
Consul--Charles S. Smith
Administrative Officer--Frank Ledahawsky
USAID Representative--Wayne Tate
Public Affairs Officer--James Dickmeyer
Defense Attache--Ltc. Charles A. Rowcliffe
Office of Defense Cooperation--Col. Martin Reyes 

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., NW
Washington, DC 20230
Tel: (202) 482-0477, 800-USA-TRADE
Fax: (202) 482-0464 
Internet: http://www.ita.doc.gov

Paraguayan-American Chamber of Commerce
Edif. El Faro Internacional, Piso 4
Asuncion, Paraguay
Tel: (595) 21-442-136, Fax: (595) 21-442-135
E-mail: pamcham@infonet.com.py
(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). 
Registering with the embassy may help you to replace lost identity 
documents or help family members contact you in case of an emergency.

Further Electronic Information:

Department of State Foreign Affairs Network. Available on the Internet, 
DOSFAN provides timely, global access to official U.S. foreign policy 
information. Updated daily, DOSFAN includes Background Notes; Dispatch, 
the official magazine of U.S. foreign policy; daily press briefings; 
Country Commercial Guides; directories of key officers of foreign 
service posts; etc. DOSFAN's World Wide Web site is at 
http://www.state.gov.

U.S. Foreign Affairs on CD-ROM (USFAC). Published on an annual basis by 
the U.S. Department of State, USFAC archives information on the 
Department of State Foreign Affairs Network, and includes an array of 
official foreign policy information from 1990 to the present. Contact 
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.


(###)
Return to Western Hemisphere Background Notes Archive
Return to Background Notes Archive Homepage
Return to Electronic Research Collection Homepage