June 27, 2012

Paraguay President Ousted in Hasty Impeachment Trial

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

In a remarkable turn of events, within a 48-hour period late last week, the Congress of Paraguay voted to impeach and then convict President Fernando Lugo removing him from the presidency which he has held for four years. The charges for which he was convicted included: malfeasance in office, he did not do enough to prevent the deaths of landless protesters and policemen two weeks ago that left 17 dead, he allowed leftist parties to hold a political meeting on an army base, and his opponents were incensed that he signed an agreement with Unasur (The Union of South American Nations) that allowed the organization to exert pressure on any government if its elected leader was overthrown.

By any measure, his removal from office was a new type of coup, legal but certainly not legitimate. The vice president, Federico Franco who is a medical doctor, was quickly sworn in as the new president. It remains to be seen if the new government will be considered legitimate by Paraguayans themselves or by Paraguay's neighbors especially Brazil.

As far as agriculture is concerned, Lugo's removal could have a significant impact on the agrarian reform movement in Paraguay. President Lugo campaigned on the promise of giving land to the landless workers and a conflict over this very issue is what led to his removal. The land dispute that left 17 dead was triggered by the attempt to remove 150 protesters from a huge estate owned by a Colorado party official. The protesters claim that the land was obtained decades ago through political influence and it should be expropriated and used for agrarian reform.

Over the last several years protesters have conducted numerous invasions of farms owned by Brazilian soybean farmers demanding that the land be expropriated and given to the local workers. For their part, the Brazilians say they purchased the land legitimately and they have been supported by the Paraguayan courts. The protesters simple refuse to accept the legitimacy of the land titles held by the Brazilians. Several hundred thousand Brazilian farmers immigrated to Paraguay over the last thirty years in search of cheap land to grow soybeans. The Brazilians are now responsible for most of the soybeans produced in the country, which is the number one crop and export of the country.

With President Lugo out of office, the protesters have lost their number one advocate in the government, but it is unclear if their movement will now face additional hurdles or if it will energize them to step up their demands.

Mr. Franco, Paraguay'Jbfs new president, has said that the country needs to focus more attention on energy policy and industrial development including the export of electricity to Brazil and Argentina from the Itaipu hydroelectric dam on the Parana River, which divides Paraguay and Brazil. Paraguay has complained that the contracts for electricity signed decades ago are undervaluing the electricity and they want the contracts renegotiated.