Organization of American States (OAS) Secretary-General José Miguel Insulza rejected a request yesterday to suspend Paraguay as a member state over the impeachment of former President Fernando Lugo. During an emergency meeting of the OAS Permanent Council in Washington DC, Insulza explained that Paraguay’s suspension would negatively affect the country politically and economically while doing little to strengthen democratic institutions.

Bolivia and Venezuela were among the 20 member countries to demand Paraguay’s suspension after Lugo was quickly removed from office by the Paraguayan Congress last month. Lugo called the impeachment a “parliamentary coup” and said the unpopularity of his social programs among legislators was responsible for his ouster. Questioning the democratic nature of the impeachment, regional organizations like Mercosur and UNASUR suspended Paraguay’s membership and Venezuelan President Hugo Chávez said his government would cut off fuel sales.

Insulza’s response to the episode was more tempered. Shortly after Lugo’s ouster, he recommended that the OAS Permanent Council send a mission to Paraguay to monitor the executive management of the current administration until the general elections in April 2013. The mission would "strengthen governance, to avoid new crises and observe respect for political guarantees," Insulza said.

While bolstered by the OAS decision, Federico Franco, Paraguay’s new president, still faces the daunting task of repairing diplomatic relations damaged by Lugo’s removal.

The Brazilian Senate approved an agreement late Wednesday night to triple the amount Brazil pays for surplus electric energy from Paraguay's share of the joint Itaipu hydroelectric dam. Brazil’s annual payments jumped from $120 million to $360 million due to growing concerns that Paraguayan President Fernando Lugo could get a better price for its surplus energy from Argentina or Uruguay or on Brazil's unregulated energy market. Brazil’s state-controlled utility company, Eletrobras, will be responsible for payment.

Under the 1973 Itaipu Treaty, both countries have rights to 50 percent of the electric energy from the 14,000 megawatt dam—the second largest hydroelectric dam in the world. Yet Paraguay’s total population is only 3 percent that of Brazil’s and therefore sells 95 percent of its electricity share to its larger neighbor.

The agreement was originally proposed by former President Luiz Inácio Lula da Silva. It was approved by the lower House in April, and now that it has passed the Senate, it does not need President Dilma Rousseff’s signature to go into effect. Wednesday’s Senate vote comes two days after southern Chile’s Environmental Assessment Commission of Coyhaique approved the $3.2 billion HidroAysen hydroelectric project in the Patagonia region. Brazil also plans to develop the Belo Monte hydroelectric dam in the Amazon, costing between $11 billion and $17 billion.

To date, the Itaipu project has displaced over 10,000 families living beside the Paraná River and flooded the Guaíra Falls National Park. Chile’s HidroAysen is projected to flood 5,900 ha (14,580 acres) along the Baker and Pascua Rivers. Environmental groups claim that Belo Monte could displace up to 50,000 indigenous Brazilians. Despite controversy, all three projects represent a larger movement in Latin America to invest in renewable energy and lessen the regions dependence on oil and coal.