Citizenship: A fistful of euros

EU aid to Paraguay: corruption and mismanagement?

Edward Stourton travels to Paraguay to see how the EU spends its aid money as part of six part documentary series investigating the EU's commitment to fundamental rights

Chris Patten, the European Commissioner for External Relations, was engagingly frank when I asked him what problems he had found in the EU's aid programme when he took it on a year and a half ago; there was an eloquent pause before he said "Oh God" and then launched into a confessional litany of institutional sins.

He has set in train reforms which he hopes will, as he put it, "turn the tanker round", but he concedes that the team trying to put them into practice faces an uphill task. "Every time they open a cupboard", he told me, "a skeleton falls out".

Skeletons in the cupboard

We found plenty of skeletons when we started looking in the cupboards of the EU's aid programme in Paraguay.

Edward Stourton

We found plenty of skeletons when we started looking in the cupboards of the EU's aid programme in Paraguay. We picked the country because it seemed such a long way from Brussels - an unlikely recipient of our tax euros.

The 10 million euros the Commission spends in Paraguay each year is a relatively modest amount by the EU's standards - between them the Union's members account for more than half the international aid spent in the developing world - but it is still a substantial sum, and in such a small economy it makes those who dispense it big players.

In 1999 the EU planned a programme to reform Paraguay's state institutions. After 42 years of military dictatorship, the army, the judiciary and the civil service all needed a solid grounding in the way a democracy should work.

This kind of programme had been tried before in Eastern Europe -

Andrew Nickson, a Reader in Public Management Reform and Latin American Development at Birmingham University, was put in charge of the programme.

Dubious political friends

The idealism with which he set about his task was soon tarnished. He found that he was being asked to work with a Paraguayan co-director who had been appointed purely for political reasons.

The usual EU guidelines for open recruitment had been by-passed, and the man put into the job had some dubious political friends.

General Lino Oviedo tried to stage a coup five years ago and is currently in Brazil fighing an extradition request in connection with the assassination of Paraguay's vice-president, Luis-Maria Aragana

Edward Stourton

One of them, General Lino Oviedo, tried to stage a coup five years ago and is currently in Brazil fighting an extradition request in connection with the assassination of Paraguay's vice-president, Luis-Maria Aragana. But that was not the only problem. There was worse to come.

To fill the post of finance director, Andrew Nickson went through the normal procedure of putting an advert in the newspaper and drawing up a shortlist, only to be told that he had to make another political appointment - of a civil engineer with no accountancy experience at all.

This time he resolved to fight the Spanish consultancy firm who were managing the project on behalf of the EU - and wound up losing his job.

Bitter land disputes

Indigenous indians have concerns about the delivery of EU Aid

By far the largest region of the country is an area known as the Chaco - a vast wilderness, bigger than the whole of the United Kingdom, which is home to a mere 125,000 people.

Much of it is owned by cattle ranchers, and they have for many years been locked in a sometimes bitter dispute over land rights with the indigenous Indians who make up the majority of the population.

The EU decided to spend around £10m on programmes to help the indigenous peoples

They hired a well-known Austrian anthropologist to advise them, but when he argued that no money should be spent until the land-rights issue had been resolved he made himself extremely unpopular with the Paraguayan government.

The EU bowed to political pressure, and he was kicked off the project and out of the country.

Windmill pumping aimlessly

The way the money has been spent since then gets at best mixed reviews.

In one village we found a windmill that was built last June to pump water out of a marsh and through a filtration system; the pipes were never connected up, and it has been pumping aimlessly ever since.

The villagers had been trained to keep bees and provided with hives; unfortunately they are four hours' drive from the nearest town and no one owns a car anyway.

Edward Stourton

In another Indian community, the villagers had been trained to keep bees and provided with hives; unfortunately they are four hours' drive from the nearest town and no one owns a car anyway. They had hardly been able to sell any of the honey they'd produced.

There is no doubting the commitment of many of those working on the EU projects in Paraguay - and a dynamic new ambassador, Stella Zervoudaki, has been appointed to the region to sort things out.

But if the Paraguayan template is anything to go by, there is still a long way to go before Chris Patten can claim to have turned the tanker round.

Correspondent: A Fistful of Euros: Sunday 8th April, 19.20 GMT

Reporter: Edward Stourton
Producer: Guy Smith
Executive Producer: Farah Durrani
Series Producer: Kate Snell