When Nicanor Duarte, the candidate of the ruling Colorado Party, won the Paraguayan presidential elections in April 2003, few observers felt there was much to celebrate. The Colorado Party had, after all, been in power for over 50 years through civil war, dictatorship and, more recently, constitutional democracy. The introduction of any significant changes seemed unlikely.
Since the beginning of Paraguay’s democratic transition in 1989, four successive Colorado administrations have been characterized by inefficiency, economic mismanagement and rampant corruption. By the time Duarte came to power, economic stagnation combined with unemployment and the decline of public welfare services had led to an unprecedented rise in poverty, reaching almost 50% of the population. Meanwhile, according to the rankings of Transparency International, the escalation of institutionalized corruption had earned Paraguay its place as the most corrupt country in Latin America. And as if this were not enough, Paraguay faced an unmanageable fiscal deficit and was on the verge of economic collapse.
The country had taken its place among the poorest, most corrupt and most socially unequal of Latin America’s new democracies. Not surprisingly, public confidence in democracy was lower in Paraguay than in almost any other country in the region.
In this dismal landscape, however, Duarte surprised many in his first year by pursuing a number of policies aimed at achieving sustainable development and improving governance, policies that were completely out of step with his party. Indeed, he is not a traditional Colorado politician: he is of humble origins with a background in journalism and education. And, more importantly, he has no links to the dictatorship of Alfredo Stroessner (1954-1989) or to either of the two traditionally powerful sectors of the Colorado Party—the military and the business sector.
With a discourse that is at times openly populist, he has portrayed himself as a progressive reformer and has declared himself vehemently opposed to neoliberalism and to the power of traditional elites, instead favoring social reform and poverty alleviation. He has also sought to promote regional solidarity, firmly allying himself with the left-leaning governments of Lula in Brazil, Kirchner in Argentina and Chávez in Venezuela. On the domestic front, he has further distanced himself from the Stroessner dictatorship by establishing a Commission for Truth and Justice to investigate human rights violations committed during the 35-year dictatorship.
Duarte has also won widespread acclaim for his fight against corruption, which he has identified as a major obstacle to democratic economic development. In his first year he replaced a number of senior government officials, including the Minister of the Interior, the head of social security and the president of the state-owned oil company, as well as a number of high-ranking police officers, all on corruption-related charges. Moreover, with the support of Congress, he replaced six out of nine members of the Supreme Court following widespread allegations of corruption in April 2004. He also took on the customs service, previously a byword for corruption, by introducing greater transparency and placing it under the control of Margarita Díaz de Vivar, now known as Paraguay’s own “Iron Lady.”
Central to Duarte’s reform policies is his Minister of Finance, Dionisio Borda, a respected independent, left-of-center economist. Not only has Borda managed to avoid major debt default, regain macroeconomic balance and reduce inflation, but he has also been instrumental in promoting public sector transparency. The Ministry of Finance is quickly becoming known as an island of integrity in a state sector normally laden with corruption. Improvements in internal auditing, public transparency and public sector procurement, have made the Ministry a model for future civil service reform. Furthermore, in its first year, a major campaign against the country’s rampant tax evasion has resulted in a 44% increase in fiscal revenues, which, as Borda is keen to point out, has allowed for increased delivery of funds to social welfare projects.
Borda has also managed to convince Paraguayans to accept income and property taxes for the first time. Although watered down by a fearful Congress, a law passed in August 2004 introduced an income tax of 10% for those earning over ten times the minimum wage—that is, the richest 20% of the population—as well as a rural land tax on properties of more than 300 hectares (750 acres). Both measures will have the effect of reducing Paraguay’s dependence on regressive indirect taxation, and force the wealthiest sectors, previously adept at avoiding such inconveniences, to contribute to Paraguay’s development.
Duarte enjoys approval ratings as high as 70%, but his popular support obscures the fact that he is in an isolated and vulnerable position, under criticism from all sides. His progressive reforms have incurred the hostility of powerful groups, including the privately owned media, the land-owning oligarchy, economic elites often operating outside the law and conservative sectors within his own party. With their interests threatened by tax and land reforms as well as anti-corruption measures, many are calling for the removal of Finance Minister Borda as they seek to block further reforms. Moreover, the return from exile of notorious ex-General Lino Oviedo to stand trial for his involvement in coup attempts in 1996, 1999 and 2000, could further serve to destabilize the Administration. Oviedo, who stands in vehement opposition to Duarte, remains a widely popular figure in the country.
While under attack from the right, Duarte has failed to generate widespread support among the political left, which remains highly suspicious and critical of his openly populist rhetoric, his Colorado Party affiliation and his autocratic style. Wide sectors of civil society, including campesino organizations, unions and civic groups, have been vocal in criticizing his prioritization of macroeconomic stability to the exclusion of pressing social problems. Even the Church, previously supportive of his anti-corruption measures, has shown concern not only over the lack of measures to relieve the growing rural crisis, but also, in the words of a communiqué from the Bishops’ Conference, the “contradictory measures and duplicitous discourse of our authorities.”
Successive Colorado Party governments have promised much, but delivered very little, a charge frequently leveled at Duarte’s social reform efforts. “[The President] is a difficult politician to pin down,” says Roberto Villalba, an analyst for the Asunción-based Center for Documentation and Study. “He talks of social reform, but what action has he actually taken? What significant reforms has he implemented? He is a self-proclaimed social democrat but with strong populist and authoritarian tendencies.” Villalba considers Duarte “an opportunist who bends with the wind, who is portraying a progressive image at the moment simply because this is what he thinks will serve him best in the regional context.”
Similar criticisms have come to the forefront amid the escalating conflict over the key issue of land. Paraguay has one of the greatest disparities of landownership in the world, with over 30% of the rural population lacking access to cultivable land. Although partly a legacy of years of dictatorship, the strength of land-owning elites and a sequence of corrupt governments, Duarte paid little attention to the issue early on in his term. Following repeated promises of reform alongside continued government inaction over the growing crisis, the patience of the two major peasant unions—the National Coordinating Board of Campesino Organizations (MCNOC) and the National Federation of Campesinos (FNC)—finally ran out. In September 2004, they organized a series of nationwide mass land occupations and protests, demanding immediate land reform.
Initially, security forces met the protestors with the usual heavy-handed response, but Duarte swiftly backtracked and entered into negotiations with the peasant unions, reaching a deal that promised significant reform to begin within two months. This provoked a furious response from the powerful landowners’ association, the Rural Association of Paraguay (ARP), and the organization representing the business sector, FEPRINCO. Under increasing pressure from these traditional elites to adopt a hard-line approach, Duarte stalled, failing to comply with his part of the September deal. This in turn provoked the first general strike called against his administration, which lasted nearly two weeks in November. Despite meager nationwide support, it led to the resumption of campesino occupations and protests, roadblocks, increasingly violent clashes with security forces and mass arrests.
Duarte now finds himself caught between threats of mass protest from an increasingly desperate peasantry on the one hand, and the outrage of landowners who already speak of betrayal, anarchy and violence, on the other. His response, so far, has been to pursue an indecisive policy, a delicate balancing act seeking to satisfy both camps to avert a social explosion. He has strongly condemned illegal campesino occupations, while still promising future reform.
In early December, the FNC resumed land invasions, demonstrating that the conflict will not simply disappear, particularly in the context of growing rural poverty, landlessness and unemployment. According to the FNC’s Secretary General Odilón Espínola, “Agrarian reform is desperately needed in Paraguay, and we can only put forward our demands through mass mobilization.” The land reform issue has been widely seen as a decisive litmus test for the Administration’s self-proclaimed progressive nature and its commitment to social change. Faced with growing polarization and violence, Duarte finds himself with decreasing room to maneuver.
Duarte’s achievements in the economy and in the struggle against corruption have been widely recognized, and if they become coupled with long-awaited social reforms, his administration might manage to reduce inequality and poverty. He is the first president who has dared to challenge the power of economic and political vested interests. There is little doubt that Duarte represents the greatest opportunity for progressive reform in Paraguay’s recent history, but he is under growing pressure from conservative forces—mainly within his own party—to refrain from further reform or face serious consequences. Faced with this prospect, it is still unclear which path the enigmatic president will choose.
Finance Minister Dionisio Borda remains convinced of Duarte’s reformist credentials. “I have no doubt that Nicanor is committed to social reform. It is simply a question of strategy, timing and sequence,” says Borda. “The key is that we must now move fast. If we do not maintain our momentum, powerful and conservative interests will regroup and regain initiative, and this window of opportunity for reform will be lost.” If this analysis is correct, then Duarte and Paraguay currently find themselves at a key juncture. Duarte may still prove himself to be a progressive leader who is able to transform powerful rhetoric into long overdue social reform to benefit the poor. But time is fast running out.
About the Author
Peter Lambert is senior lecturer in Latin American studies at the University of Bath, UK. He lived in Paraguay from 1987 to 1991, where he worked as a political analyst and researcher at the Centro de Documentación y Estudios (CDE).
