Americas analyst, BBC Monitoring
US military doctors provide aid in rural Paraguay
Concern is mounting in South America over a series of 13 joint military exercises involving US special forces in Paraguay.
The exercises began in July and are due to run until December 2006.
The Paraguayan foreign ministry and the US embassy in Asuncion have both released statements denying that the US is planning to establish a permanent military base at Mariscal Estigarribia in the Chaco region, close to the border with Bolivia.
But this has failed to reassure Paraguay's neighbours, who point out the same was said of the Manta Base in Ecuador, shortly before the country signed a 10-year agreement with the US air force in November 1999.
In May, the Paraguayan congress granted approval for the presence of up to 400 US marines in the country for an 18-month period.
In return, Washington agreed a funding package of approximately $45,000 per exercise.
Political analysts fear the mere existence of US facilities in Paraguay will increase the likelihood of terrorist attacks.
And left-wing groups say a base would enable the US military to parachute into South America to intervene in the event of a perceived crisis in the region.
Vice-President Luis Castigliani's meeting with his US counterpart, Dick Cheney, in July, US Defence Secretary Donald Rumsfeld's visit to Paraguay in August and plans to open an FBI office in the US embassy in Asuncion next year have all served to heighten speculation about US intervention in the region.
Both countries have been keen to stress the humanitarian aspect of the military cooperation, with US troops already providing medical assistance to poor rural communities.
However, the deputy speaker of the Paraguayan parliament, Alejandro Velazquez Ugarte, said that only two of the 13 exercises are of a civilian nature.
Paraguay's rapprochement with the United States has unsettled neighbouring governments, as well as social and peasant organisations throughout the region
Meanwhile, officers from Paraguay's army, air force and presidential guard are receiving training in counter-terrorism, safeguarding senior officials and rescuing kidnap victims.
This emphasis on national security addresses US concerns that Colombia's Farc rebels are infiltrating the country, and meets Paraguay's requests for help in combating drug flights in their airspace.
Paraguay's rapprochement with the United States has unsettled neighbouring governments, as well as social and peasant organisations throughout the region.
Earlier this month, cabinet ministers in Brazil and Argentina voiced strong opposition to any permanent US presence in Paraguay and called for greater transparency.
In the words of one government official, 'it never hurts to make a bit of noise'
At an international conference of peasant organisations in Paraguay in early September, peasant leader Luis Aguayo announced plans to get the bill allowing US marines into the country repealed.
Peasant movements in Bolivia fear US intervention in the event their radical leader, Evo Morales, wins the presidential elections in December.
Aguayo said the same mechanism would be implemented in neighbouring countries, "in order to expel all US troops from the region".
But it now appears that raising Paraguay's profile both in Washington and closer to home may have been part of the plan all along. In the words of one government official, "it never hurts to make a bit of noise".
Paraguay has long complained that its needs are overlooked by Brazil and Argentina, its two biggest partners in Mercosur, the southern cone's economic bloc.
But Paraguay's neighbours are unlikely to take this latest explanation at face value, given the variety of rumours circulating about Washington's possible ulterior motives in the region.
One popular theory is that the deal is an attempt to break up Mercosur, by offering Paraguay its own bilateral free trade agreement in exchange for a US military base.
Others range from US monitoring of Bolivia's natural gas fields to financial interests in the vast freshwater reserves of the Guarani Aquifer.
Some analysts believe a military base could even provide a bridgehead to the wealth of natural resources in Brazil's Amazon Region.
US suspicions that the Tri-Border Area of Paraguay, Argentina and Brazil is being used as a terrorist training ground have also been mentioned, although claims al-Qaeda is active in the region remain unsubstantiated.
BBC Monitoring selects and translates news from radio, television, press, news agencies and the Internet from 150 countries in more than 70 languages. It is based in Caversham, UK, and has several bureaus abroad.