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COUNTRY PROFILES


PROFILE

Country Facts

Full country name: Republic of Paraguay
Area: 406,752 sq km; 14 people per sq km; 157,042 sq miles
Population: 6.34 million
Capital City: Asunción
People: 95 percent of Paraguayans are Mestizos (people of mixed Spanish and Native American ancestry). Minority groups include individuals of pure Spanish ancestry, unassimilated Guaraní people of the eastern forest region, and many small colonies of immigrants from Canada, Japan, Korea, Italy, Germany, Russia and others.
Life expectancy at birth m/f (years): 72 and 77
Infant mortality m/f (per 1000): 23 (World Health Organization (2009)
Language(s): Spanish and Guaraní are the official languages.
Religion(s): 90% of Paraguayans are Roman Catholics. The remaining 10% are mainly Protestant (of which the Mennonite group is the largest), Mormons, Jewish, and Russian Orthodox.
Currency: Guarani (G) 1GBP = 6,811 PYG or 10,000 PYG = 1.47 GBP (Nov. 2011).

Terrorism

There have long been accusations that the tri-border area of Argentina, Brazil and Paraguay has been a haven for Middle Eastern terrorists and press allegations have magnified this impression. These accusations emanate from the fact that there is a large Middle Eastern community, mainly Lebanese, in the region. There is no evidence to support these allegations. A principal concern with the tri-border area is the lack of proper financial controls and growing evidence that the region is a centre for money laundering, counterfeiting and smuggling.

Drugs


Paraguay's geographical position and lack of radar cover make it a transit country for cocaine, principally from Bolivia. There is a problem with the cultivation of marijuana in Paraguay, but this is descreasing. As part of efforts to combat narcotics trafficking, the National Anti-Drugs Secretariat (SENAD) and the Paraguayan Narcotics Police (DINAR) were established in 1991.

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ECONOMY

Basic Economic Facts

Nominal GDP: US$18.4bn (2010)
GDP per head (PPP): US$11,239 (2010)
Real Annual GDP Growth: 15% (2010)
Annual Inflation Rate: 4.7% (2010)
Total health expenditure per capita (US$ 2009): 158.9
Total health expenditure as % of GDP (US$ 2009): 7.1
(Source: The World Bank 2009)
Agriculture is the predominant industry contributing just over 20% of Gross Domestic Product (GDP). Leading agricultural products are soya bean, cassava, cotton, sugarcane, corn, wheat, root crops and fruits. Livestock breeding is a major agricultural occupation (cattle, horses, pigs, goats and sheep). Forestry is very important. Forest products include timber, tannin and petitgrain oil (perfume base). Manufacturing is confined largely to agricultural and forestry products and to basic consumer goods. Other important products are processed meat and other foodstuffs, textiles, wood products and chemicals. Private investment into the services sector, particularly telecommunications, has risen is recent years.

Oil and gas exploration is attracting increasing volumes of (mainly British) finance and could become a significant contributor to Paraguay's economy in the future.

Paraguay is a market economy with a large informal sector. Up until 2002, the economy had been shrinking due to political instability and stagnation. This was partly caused by the knock-on effect of the declining Brazilian and Argentine economies in the late 90s. But, since the 2002 financial crisis and the implementation of economic reforms, growth has improved significantly. It was at almost twice its long term average in 2007. Poverty is still high but per capita income has increased to its highest level for 8 years. Extreme poverty has reduced by a third. Public finances have improved mainly because of higher tax collection, supported by a 2004 tax reform. Strict implementation of a 2004 financial plan has kept public expenditure under control.

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HISTORY

Asunción was founded on 15 August 1537 and is the oldest capital in Latin America. Paraguay declared independence on 14 May 1811, and Spanish rule ended peacefully. In 1865 war over land broke out against Brazil, Argentina and Uruguay (the War of the Triple Alliance) and lasted until 1870. Paraguay suffered terribly and ended the war tragically under-populated and having lost some 55,000 square miles of territory to Brazil and Argentina, leaving it landlocked.

In 1932 war broke out against Bolivia over delimitation of borders in the Chaco region. Paraguay emerged victorious after three years of fighting and was awarded two-thirds of the disputed territory.

A period of considerable unrest began in 1947 and in May 1954 General Alfredo Stroessner (who had come to prominence during the Chaco War and who in 1947 helped the then government suppress an attempted rebellion) led a successful coup d’état . He subsequently ruled Paraguay by dictatorship for 35 years. Although he presided over a period of consistent growth and infrastructure development, there is evidence and allegations of a catalogue of serious human rights abuses during his rule. Corruption levels also greatly increased.

In 1989 Stroessner was ousted by another military coup led by his son-in-law General Andres Rodriguez. General Rodriguez held elections which he subsequently won. During his term in office he undertook some reforms and began a privatisation programme.

In May 1993 Juan Carlos Wasmosy won Paraguay’s first fully democratic elections and democratic rule has continued ever since, despite several challenges. Under Wasmosy, Paraguay became a founder member of Mercosur, the Southern Cone Common Market, with Argentina, Brazil, and Uruguay.

In May 1998 Raul Cubas Grau was elected President, backed by General Lino Oviedo, Commander of the Armed Forces. A period of political instability followed, culminating in the assassination of Vice President Luis Maria Argana in March 1999. Cubas resigned and was succeeded by Luis Gonzalez Macchi, then President of Congress. He faced an attempted coup in 2000 and survived an impeachment vote in 2002 for alleged fraud and corruption.
In April 2003 Nicanor Duarte Frutos won the presidential elections with 38% of the vote. He pledged to improve the economy and crack down on corruption. His tenure coincided with a renewed period of economic growth for Paraguay, underpinned by good global macro-economic fundamentals. His government's stand-by arrangement with the MIF on debt and public financing helped lay the groundwork for more sustainable growth.

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INTERNATIONAL RELATIONS

Relations with Neighbours

Paraguay has friendly relations with all its neighbouring countries. It is however strongly dependent on the economies of Brazil and Argentina and is often overshadowed economically by its larger neighbours.

Paraguay is a founding member of Mercosur (the Southern Cone Common Market), along with Argentina, Brazil and Uruguay. It is also a founding member of Banco de Sur (Bank of the South) an embryonic regional development bank.

Relations with the International Community

Paraguay and the EU

Paraguay receives a significant amount of non-reimbursable aid from the EU. Key areas of cooperation are protection of human rights, consolidation of democracy, reducing social barriers, good management of public resources, protection of the environment, trade liberalisation through a regional integration process, and cultural assistance.

Paraguay's Relations with other International Organisations

As a member of the WTO, Paraguay supported the launch of the Doha round and pressed for special attention for the needs of the developing countries. It is a member of the Cairns group and strongly supports efforts to fully liberalise international agricultural trade to ensure a fair market access.

Within the UN, Paraguayan forces have participated in UN peacekeeping missions in Cyprus and DR Congo amongst others.

Relations with the UK

Relations with the UK are covered by the British Embassy in Buenos Aires. The UK provides technical cooperation to Paraguay via the EU and has a small bilateral cooperation programme.

In 2007 the UK government ran bilateral counter-terrorism and counter-narcotics workshops for government officials. A cross-party group of UK MPs visited in September 2007. In 2008-09 the UK government funded projects on access to information, and on the impact of biofuels on the social and environmental energy matrix, both with local NGOs. The British Government also provides annual scholarships to UK universities for post-graduate studies, funded by the Chevening Scheme. The scholarships targets subject areas within the FCO Strategy which are important for Paraguay's development, offering training in skills which would benefit the country on the scholar's return.

The Anglo-Paraguayan Centre, a private foundation, is active mainly in English Language Training. Cultural events also take place on their premises. The British Council cover Paraguay from their office in Buenos Aires, Argentina.

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GEOGRAPHY

Paraguay, a land locked country, is located in the heart of South America. It has borders with Bolivia on the north-west and north (750 km), Brazil on the north-east and east (1,290 km), and Argentina on the south-east, south, and west (1,880 km).

The Paraguay River divides the country into sharply contrasting regions: the Región Oriental in the east and the Chaco or Región Occidental in the west.

The Oriental region, where over 95% of Paraguayans live, consists mainly of the southern extension of the Paraná plateau. This elevation, from 300 to 600m high, forms a watershed that gives rise to numerous tributaries of the Paraguay and Paraná rivers. It has a grassy and fertile soil. Lake Ypoa and Lake Ypacarai are the main large inland bodies of water.

The Gran Chaco is an alluvial plain that extends from Paraguay into Bolivia (west), Argentina (south) and Brazil (east). It has a semi-arid climate and consists mainly of grassy plains, swamps and scrub forest. Except for a few Mennonites colonies it is almost unpopulated. The climate is subtropical, with heavy rainfall in summer. Average temperatures range from about 17°C in July to 40+°C in January.

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TRADE AND INVESTMENT

Trade and Investment with the UK

The Paraguayan British Chamber of Commerce is an active organisation representing companies which have a connection with the UK.

There are several British companies active in Paraguay, for example: HSBC acquired all of Lloyds TSB branch assets in Paraguay in 2006 and are now operating there. Filtrona Ltd produces tobacco products; Molins Ltd sells machinery and parts for the tobacco industry. Shell, Unilever and Diageo, Landrover are also represented in the market.

In January 2004, the British firm CDS Oil & Gas Ltd. launched an exploration programme to determine the presence and volume of oil and natural gas in the Chaco.

Export and Investment Opportunities

Agriculture and agro-industry, the mainstays of the economy (accounting for 30% of output), offer worthwhile opportunities for British exporters and investors. There are opportunities for UK companies with technological expertise in the health, agricultural, oil and gas and telecommunications sectors. Substantial investment in irrigation and road building are also needed.

Principal UK exports are alcoholic beverages followed by textiles, road vehicles, organic chemicals, power generating machinery and equipment and chemical materials. The UK's main imports are sugar, cork and wood, beverages, organic chemicals and clothing. The Paraguayans are actively trying to develop export markets for some agricultural and handicraft products (beef, charcoal and leather goods) through the trade promotion organisation PROPARAGUAY.

Contact details for PROPARAGUAY:
PROPARAGUAY - Dirección General de Promoción de las Exportaciones e Inversiones
MINISTERIO DE RELACIONES EXTERIORES
Rep. Dominicana esq. Juan de Salazar
Asunción, Paraguay
Telefax (595 21) 20 70 55

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POLITICS

Major political parties: Alianza Patriotica por el Cambio (APC); Asociación Nacional Republicana (ANR), known as the Partido Colorado (PC); Partido Liberal Radical Auténtico (PLRA) - known as the Liberal Party, Patria Querida (PQ), UNACE (Unión Nacional de Ciudadanos Éticos). APC is a political alliance supported by several centre and left movements and parties, including: Encuentro Nacional (EN), Pais Solidario, Partido Cristiano Democratico, Partido Revolucionario Febrerista, Partido Frente Amplio, Bloque Social y Popular.

Government: Paraguay is a constitutional democracy. Paraguay has a presidential and bicameral parliamentary system. It is divided into seventeen departments each with its own elected Governor and Departmental Council. The capital of Asunción is a separate administrative area, independent of the department of which it is located. Mayors and city councils administer municipalities. National elections for President, Vice-President, Congress, Governors are held every five years, as are municipal elections.

Head of State: President Fernando Armindo Lugo Mendez
Foreign Minister: Jorge Lara Castro
Membership of international groupings/organisations: Cairns Group, International Labour Organisation (ILO), International Maritime Organisation (IMO), International Monetary Fund (IMF), Interpol, Mercosur, Non Aligned Movement (Observer), Organisation of American States (OAS), United Nations (UN), World Bank, World Health Organisation (WHO) and Pan-American Health Organisation (WHO/PAHO), World Trade Organisation (WTO), G-77, ALADI, OEA, Inter American Development Bank (IDB), UN Educational, Scientific and Cultural Organisation (UNESCO), UN Food and Agriculture Organisation (FAO), UN Programme for Development (UNDP)

Presidential and Congressional elections were held in April 2008. Fernando Lugo, (Patriotic Alliance for Change), won the Presidency, beating the other two leading candidates by 10% (Ovelar) and 20% (Oviedo). His win ended 61 uninterrupted years of power for the Colorado Party. He took office on 15 August 2008.

Paraguay's Congress has a strong institutional and political role. The Liberal Party, allied with Lugo's APC, won 13 Senate seats. The Colorado Party won 16. The APC alliance won a total of 48 seats in the Lower House (Diputados). The Colorado Party won 30. These results give Lugo a secure base on which to govern, provided the APC coalition holds together. His support from within the loosely allied APC comes from a mixture of leftist movements and parties and a strategic alliance with the Liberal Party (centre right) the second largest political party after the Colorado Party.

Lugo was a Roman Catholic Bishop prior to the elections. His election campaign was notable for its appeal for a need for change and his key message of fighting corruption.

His domestic priorities include agrarian reform and addressing corruption, as well as streamlining the health and education systems. Internationally his top priorities are closer cooperation with Mercosur and to re-negotiate the agreement by which Brazil (Itaipu) and Argentina (Yacreta) built dams on rivers owned 50% by Paraguay. The then Stroessner Government agreed that, in return for bearing the cost of the dams, any energy not used by Paraguay would be sold to Argentina and Brazil at fixed cost based on a barrel of oil (i.e. early and late 1970s prices).

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HUMAN RIGHTS

While the human rights situation in Paraguay has improved markedly in the past decade, concerns about the application of human rights in Paraguay continue. The welfare of prisoners, especially juvenile offenders, under-age conscripts and accusations of police heavy-handedness are of particular concern.

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Last Updated: December 2011

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