Page last updated at 10:01 GMT, Friday, 15 August 2008 11:01 UK

Paraguay's president faces huge task

By James Painter
BBC Latin America analyst

Paraguay's new left-leaning president, 57-year-old Fernando Lugo, is unusual in all sorts of ways: he is the first former bishop to become a president in Latin America.

Last month, in an unprecedented move, Pope Benedict XVI personally agreed to his resignation as bishop.

Fernando Lugo
Fernando Lugo has promised to tackle corruption

For his inauguration ceremony, Mr Lugo said he would wear a new pair of sandals - a symbol of his relaxed style and commitment to the poor.

But his simple footwear is in sharp contrast to the complex and monumental task of bringing change to a country weighed down by decades of corruption, poverty and inequality.

First and foremost Mr Lugo is a political novice, only entering politics in 2006. But some say his 30 years' experience of working within the Roman Catholic Church, first as a priest and then as a bishop, is a good training ground for the political skills he needs to hold together a loose coalition.

He won elections in April as head of the Patriotic Alliance for Change (APC), bringing an end to 61 years of rule by the right-wing Colorado Party.

But the APC contains a wide spectrum of forces from the centre-right Authentic Radical Liberal Party (PLRA) to several left-wing parties closer to Mr Lugo's own views.

The APC does not have a majority in either house of the new Congress and will have to form alliances with dissident Colorado factions to pass new legislation. Furthermore, the Colorado Party still has a huge presence in the country, particularly amongst the judiciary, and could be a major brake on change.

Mr Lugo, in an interview last week with the BBC, said opposition forces were plotting to destabilise his new government by creating false shortages of fuel and hospital supplies.

He also told the BBC his first priority was to tackle corruption - one of the many legacies of General Alfredo Stroessner who ruled Paraguay as his personal fiefdom from 1954-1989.

General Stroessner turned a blind eye to his cronies controlling a large contraband economy, including drugs, whisky and electronic goods, which was probably worth as much as the formal economy.

Cautious reform

Mr Lugo will parade his personal honesty as an antidote to the ubiquitous corruption, but it will be a long task to make inroads. Transparency International rated Paraguay as the 38th most corrupt country in the world in 2007 out of the 180 on its list.

View of Paraguay's capital, Asuncion
Landlocked Paraguay is highly dependent on its big neighbours

The new president made his name by supporting poor peasants taking over large estates in the department of San Pedro where he was bishop. But all the signs are that Mr Lugo will tread cautiously in bringing change to a very unequal pattern of land ownership - one of the worst in Latin America.

Access to land is crucial in a country where there are few jobs in industry. Soya is Paraguay's largest export and the country is the world's fourth largest soya exporter. So Mr Lugo will not want to do anything to threaten the large soya landowners, many of whom are Brazilian, who are the main drivers of the economy.

But he will also come under huge pressure from an increasingly strong peasant co-operative movement who have been stepping up land invasions in recent months. Some peasant leaders said they would start more invasions the day following Mr Lugo's inauguration.

Mr Lugo has said his first steps will be to start a national dialogue and implement a nationwide agrarian census to try to bring some order to the chaotic state of land ownership where few Paraguayans have proper titles to their land.

He has ruled out forced expropriations and called for patience. But delivering improvements to the rural poor fast enough will be his biggest challenge.

One of his other main tasks is to try and persuade Paraguay's giant neighbour, Brazil, to pay more for the electricity it gets from the world's largest hydroelectric dam at Itaipu.

Paraguay has joint ownership of the dam but only uses a fraction of its output. Brazil however, relies on Itaipu for about 20 per cent of its electricity supplies.

Distinct path

The government of President Luiz Inacio Lula da Silva has been cautious about the possibility of any new deal with Paraguay.

Paraguay has very little negotiating power as it cannot export its electricity to any other country, but President Lula may want to do his ideological ally a favour.

The indications are that in other areas too, change will be gradual. Mr Lugo's economic team speak of tax reform, private sector investment in state enterprises and controlling inflation. This is hardly the radical socialist talk of President Evo Morales in neighbouring Bolivia or President Chavez in Venezuela.

Paraguay has often followed a distinct historical path to other countries in Latin America. Mr Lugo may be joining the recent "pink tide" of left-leaning presidents coming to power in the region. But he has said he wants "Paraguayan solutions to Paraguayan problems".

Paraguayan voters savour change
21 Apr 08 |  Americas
Opposition victorious in Paraguay
21 Apr 08 |  Americas
Power struggles loom in Paraguay
21 Apr 08 |  Business
Profile: Fernando Lugo
04 Aug 08 |  Americas
Country profile: Paraguay
22 Apr 08 |  Country profiles

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