Foreign policy and defense
Based on geographical map from Digopaul, Paraguay is a nation in South America. Its capital city is Asuncion. Paraguay has for many decades had the United States as its main ally, long as a reward for its strong anti-communist profile. For economic reasons, the country usually also has a month on relations with Brazil and Argentina.
During the Stroessner dictatorship (1954–1989), Paraguay maintained a low profile in the outside world. The Cold War between the East and the West after World War II onwards meant that the United States supported anti-communist countries in Latin America without interfering with their domestic policies, which Stroessner took advantage of. During the 1960s and 1970s, Paraguay’s foreign policy was also oriented towards Brazil. The cooperation consisted, among other things, of various construction projects, such as a bridge between the countries and the Itaipú power plant (see Natural Resources, Energy and Environment).
- Countryaah: Overview of business holidays and various national observances in Paraguay for years of 2020, 2021, 2022, 2023, 2024 and 2025.
When the Cold War ended towards the end of the 1980s, US support for Paraguay decreased due to the Stroessner regime’s human rights violations. The democratization of Argentina and Brazil led to Paraguay becoming increasingly isolated. The only foreign contacts the country had were with regimes such as South Africa, Taiwan and South Korea.
After the fall of the dictatorship, the isolation was broken and Paraguay has since approached Brazil, Argentina and the United States. Today, the United States has the greatest influence over the country, which is active in the fight against drug trafficking and organized crime in Paraguay, among others. The two countries also cooperate militarily, including training in counterterrorism and drug fighting as well as hostage-taking exercises.
Paraguay also followed in the footsteps of the United States when the country in May 2018 moved its embassy in Israel, from Tel Aviv to Jerusalem. It is perceived by many as a symbolically charged position in the conflict between Israelis and Palestinians.
In 1991, Paraguay, Brazil, Uruguay and Argentina formed the regional free trade organization Mercosur. In 2008, the Mercosur countries also joined Unasur, which was intended to be a South American equivalent to the EU. However, Unasur has been characterized by internal contradictions and Paraguay was one of six countries that first canceled their participation in the Union 2018.
Both Mercosur and Unasur closed down Paraguay in June 2012, due to the lawsuit against President Lugo (see Modern History). The exclusion would be valid until the Paraguayan elections in April 2013. After that, Paraguay was also re-elected in Unasur but the re-entry into Mercosur took a little longer as Paraguay’s new president Horatio Cartes was critical of Venezuela being accepted as a member during Paraguay’s suspension. However, in December 2013, both congresses of Congress approved Venezuela’s membership and Paraguay could re-enter Mercosur.
Despite the cooperation, relations with the other Mercosur countries have been somewhat strained due to the extensive smuggling to and from Paraguay (see Economic overview) and the country’s military cooperation with the USA.
Contacts with the left-wing government of Venezuela improved in the short time that Paraguay was ruled by President Lugo but has cooled down since he was deposed. Lugo’s good contacts with Venezuela were cited as one of the arguments for dismissing him.
In practice, relations with Bolivia were frozen from the end of the Chaco War in 1935 (see Older History) until the early 2000s. In 2000, Bolivia signed an association agreement with Mercosur and in 2004 the country’s presidents met for the first time since the Chaco War. Bolivia and Paraguay signed a peace agreement in 1938, but it was not until spring 2009 that the countries could agree on the border demarcation in the disputed area.
Paraguay is the only country in South America to have diplomatic relations with Taiwan, and thus not with China. The two strongly anti-communist governments have regarded each other as natural allies. Paraguay’s diplomatic backing has generated extensive financial support from Taiwan. But it is often speculated whether or not Paraguay will soon “switch sides” and establish formal relations with Beijing instead. Trade exchanges with China have grown rapidly and are now much larger than those with Taiwan.
The defense has traditionally been closely associated with political power. Even after Stroessner’s fall, the military has played a prominent political role, despite the fact that militants are not allowed to participate in political activities. The president is also formally commander in chief.
Mandatory military service for one year applies to all men from the age of 18; For recruits in the country’s small marine force (which patrols the rivers), the military duty is two years.
FACTS – DEFENSE
Army: 7,600 men (2017)
The air Force: 1 100 Men (2017)
The fleet: 1 950 men (2017)
Military expenditure’s share of GDP: 1.2 percent (2017)
Military spending’s share of the state budget: 4.7 percent (2017)
Lugo is threatened with national law, dismisses military commanders
Lugo dismisses the chief of defense as well as the heads of the army, the air force and the navy after the coup dive. Several senators threaten Lugo with national law. He is accused, among other things, of neglecting security issues, stirring up class warfare and corruption in connection with the purchase of land from Brazilian landowners (see October 2008).
Brazil will pay more for electricity
Paraguay and Brazil agree that Brazil will pay three times more for the electricity it purchases from the Itaipú hydroelectric plant on the Paraná border. However, the implementation of the agreement will extend until May 2011.
The opposition wants to dismiss Lugo
The opposition is trying to initiate a civil procedure against President Lugo, but is not getting enough support from the National Congress.
Lugo confesses paternity
Lugo acknowledges paternity for a two-year-old son, since his mother sued him. Several women claim that Lugo is the father of their children and that the children became when he was a bishop. He rejects demands that he resign.
Protest against slow land reform
Thousands of people take part in a protest in Asuncion against slowing land reform.
First phase of land reform
The government presents what is called the first stage of land reform, which is concentrated on rural development and does not contain any redistribution of land.