On the border of Brazil and Paraguay, David Rodrigues Krug is chasing a unicorn.
That’s how he describes his work at the massive Itaipu Dam on the Paraná River, which forms a natural border between the South American neighbors. In three decades of operation, the five-mile-wide, 65-story dam has come close to generating 100 billion kilowatt hours (KWh) in a single year—but has never quite reached that goal.
“This is like our unicorn,” says Krug, chief of staff for Itaipu Binacional, the quasi-private company that owns and operates the hydropower plant. “We want to do it, but it has to be the perfect year in terms of water, in terms of the system. It would be our exceptional year.”
But the unicorn is getting more elusive amid a major drought that is depleting hydropower reservoirs across Brazil and tipping the nation into an energy crisis—underscoring its over-dependence on hydropower and the urgency to shift to other alternative energy sources, such as wind and solar. Brazil relies on hydropower for about three-fourths of its electricity, but across the southeastern and midwestern regions, dam levels are at one-fifth capacity, leading to electricity rationing and rolling blackouts across Brazil, including in the most populous state of São Paulo. This month, Brazil had to import electricity for the first time in five years.
The blackouts are due in part to Itaipu, which opened in 1984 and is now the second-largest hydropower plant in the world. Itaipu’s electricity generation fell 11 percent last year to 87.8 billion KWh— down from 98.6 billion KWh in 2013—causing it to lose its title of world’s largest hydropower generator to the Three Gorges Dam in China, which generated 98.8 billion KWh in 2014. (The Hoover Dam, by comparison, generates 4 billion KWh per year).
On November 29, 2014, Paraguay will celebrate the 33rd anniversary of its establishment of diplomatic relations with the Republic of Indonesia, the world’s fourth-largest nation with over 250 million people. Indonesia is one of the Next Eleven (N-11) Economies, and together with Paraguay, is also a member of the Group of Eleven (G11), whose efforts are focused towards reducing poverty. Both nations became members of the World Trade Organization in 1995.
Because there is great potential to strengthen the commercial, political and economic partnership between the two countries—and due to the deep interest of President Horacio Cartes and his Indonesian counterparts in strengthening the bilateral partnership—the two foreign ministries should take further action to discuss mutually beneficial issues such as bilateral trade, economic growth and cooperation in the industrial and logistical sectors.
In 2012, Paraguay exported more than $19.5 million in goods and services to Indonesia, and there was a significant increase of such imports in 2013, reaching over $121.8 million worth of goods and services. Yet despite the strategic importance of pursuing a Free Trade Agreement between Indonesia and Paraguay, Paraguay is still not a member of the Pacific Alliance, although it is an observer state.
Paraguayan businessman Horacio Cartes of the Colorado Party (Partido Colorado–PC) was inaugurated this morning as the president of Paraguay for a five-year term. Cartes won the presidential election in April with 46 percent of the vote, outpacing his opponent, Efraín Alegre of the Liberal Party (Partido Liberal Radical Auténtico —PLRA), who won 37 percent of votes cast. Heads of state present during the ceremony include Peruvian President Ollanta Humala, Argentine President Cristina Fernández de Kirchner, Brazilian President Dilma Rousseff, Chilean President Sebastían Piñera, Uruguayan President José Mujica, and Taiwanese President Ma Ying-jeou.
Cartes inherits a difficult political and economic situation for Paraguay. In his inauguration speech, the president vowed to strengthen international ties and continue the fight against poverty. Paraguay is one of the more unequal societies in Latin America, with 39 percent of its population of 7 million living in poverty. Cartes and his cabinet will also work to improve bilateral relations throughout the region—beginning with Argentina, Brazil and Uruguay—and will later focus on Paraguay returning to the Mercosur trade bloc. In July, Mercosur lifted its suspension of Paraguay but negotiations continue around the circumstances in which it would re-enter the trade bloc.
An outsider himself in the political sphere, Cartes comprised a cabinet of experts with various backgrounds and experiences, snubbing the more entrenched political leaders of the past. New cabinet ministers represent varied backgrounds: Francisco de Vargas, former head of the National Anti-Drug Secretariat (Secretaria Nacional Antidrogas—SENAD) was appointed as minister of interior, Ana María Baiardi Quesnel formerly the ambassador of Paraguay to Israel is now the minister of women, and Bernardino Soto Estigarribia who is a retired general will be minister of national defense.
Paraguay has just 6.5 million inhabitants who consume 27,000 barrels per day of refined petroleum products. To put that into perspective, Argentina consumes 698,000 barrels per day, Chile 347,000 and Bolivia 62,000. This makes Paraguay’s needs for hydrocarbons very small when compared to its neighbors.
Yet Paraguay is currently importing all of its oil, as it does not have any domestic production. In recent years, the country depended on Venezuela for a good portion of its energy needs, importing close to 8,500 barrels per day in 2011, through a preferential payment program called the Acuerdo de Cooperación Energética de Caracas (Caracas Energy Agreement—ACEC). The program was interrupted by Venezuelan President Hugo Chávez in 2012 after Paraguayan President Fernando Lugo was deposed, leaving Paraguay reeling and awash in $260 million in debt.
Oil in Paraguay has a complex history. The Chaco region is believed to have massive oil reserves, with estimates of some 4 billion barrels—just less than half of the estimated reserves of Brazil’s famed Libra pre-salt field. Because of these resources, Paraguay and Bolivia went to war in 1928 over claims to part of the region, where oil had been discovered by Standard Oil of New Jersey. The Chaco War, which raged until 1935, resulted in 100,000 casualties and, despite winning the war, Paraguay was never able to develop the region’s potential, while Bolivia went on to become a major producer.
Subsequent to the end of the war, numerous exploration and production companies came to Paraguay, but there were never any significant finds. Between 1947 and 2005, 49 wells were drilled without major production. A hydrocarbons law attractive to foreign investors was passed after the end of the Alfred Stroessner dictatorship (1954-1989), which provided favorable terms for companies wishing to develop projects in the country. Yet nothing to date has yielded tangible results.
A summit of Mercosur countries—a regional bloc that includes Argentina, Brazil, Uruguay, and Venezuela as full members with Paraguay suspended from the group—will convene tomorrow in Montevideo to discuss Paraguay’s possible re-admission to the group as Venezuela takes the helm of the South American trade bloc.
Venezuela, which became a full member of Mercosur in July 2012, will assume pro tempore presidency of the bloc for the first time on Friday, taking over from Uruguay. Argentina, Brazil and Uruguay admitted Venezuela to the group last year, despite vehement opposition from Paraguay—an obstacle that disappeared when Paraguay was suspended from Mercosur after the controversial impeachment of former Paraguayan President Fernando Lugo in June 2012.
The Paraguayan government’s relationship with Venezuela cooled further when Nicolás Maduro, the Venezuelan president who was foreign minister at the time, reportedly called for troops to enter the streets of Asunción to prevent Lugo’s impeachment.
Last week, Maduro said that his country would make every effort to re-admit Paraguay to Mercosur once his country had assumed leadership of the trade bloc. However, Paraguayan Foreign Minister José Félix Fernández said on Tuesday that Paraguay was not interested in rejoining Mercosur if Venezuela took over as chair of the group. “If international law is not complied [with], if the rule of law and Paraguay’s institutions and dignity are not recognized and respected, we can’t continue in Mercosur,” said Fernández.
For his part, Paraguayan President-elect Horacio Cartes said on June 25 that he would not accept Venezuela’s leadership of Mercosur. Cartes will be sworn in as president of Paraguay on August 15. At that point, Paraguay will be eligible to return to the group.
Other matters to be discussed at the summit include Bolivia’s possible incorporation into Mercosur, Ecuador’s request to join the bloc, and the expected entry of Guyana and Suriname as associate members.
Paraguayans head to the polls this Sunday to elect their next president amid a tightening in the race between the two main candidates, Horacio Cartes of the Partido Colorado (The Colorado Party–PC) and Efraín Alegre of the Partido Liberal Radical Auténtico (The Liberal Party—PLRA). Cartes leads Alegre by nearly six percentage points (37.6 percent support versus 31.7 percent) in an April 5 public opinion survey conducted by First Análisis y Estudios. This is the last poll to be released prior to the election as election law prohibits voter surveys within 15 days of a vote.
Either candidate would inherit a country still trying to move past the impeachment last year of former President Fernando Lugo.
Cartes is a political newcomer and millionaire who is trying to put the Colorado Party back in power after its six decades of uninterrupted rule was broken by the 2008 election of former President Lugo. Despite having lost in 2008, the Colorado Party still maintains a strong grip on the three branches of government. Alegre is a long-time politician and attorney who served as Lugo’s public works minister.
Throughout the campaign both candidates have been accused of corruption, however no charges have been formally brought against them. Cartes faces accusations of tax evasion, money laundering and trafficking contraband, and Cartes claims that Alegre embezzled $25 million upon his departure from the ministry of public works and “handles public money as it were private.” Both deny the allegations.
Paraguay’s membership in Mercosur and Unasur was suspended last year after Lugo’s impeachment, saying there was a “rupture in the democratic process.” Both candidates would look to quickly rejoin both blocs. Although nearly 40 percent of Paraguayans live in poverty, the economy is projected to increase by 13 percent—due to record soybean production—after having contracted by 1.2 percent last year.
According to data from the Justicia Electoral (Electoral Justice), approximately 3.6 million Paraguayans are eligible to vote in the general elections this Sunday, of which 21,981 are enrolled abroad.
Top stories this week are likely to include: Cuba prepares for political successors in 2018; Venezuela’s opposition protests lack of information on Chávez; Tensions between Chile and Bolivia rise over Bolivian soldiers’ arrest; Oscar Arias visits Paraguay for OAS elections observations; and Cerrejón strike continues after explosives destroy trucks.
Raúl Castro Says he'll Step Down in 2018: On Sunday, Cuban President Raúl Castro told the Cuban National Assembly that he will step down at the end of his upcoming five-year term as president in 2018. Revolutionary icon Fidel Castro, whose public appearances are now rare, was present when his brother made the announcement putting an official end-date on an era of Castro rule that began in 1959. Raúl Castro then named Miguel Diaz-Canel Bermúdez, 52, his first vice-president. The younger Castro had indicated on Friday that he was thinking of retiring and might name a successor from among the next generation of Cuban politicians.
Venezuelan Opposition Demands Information as Chávez' Health Remains Uncertain: Hundreds of government opponents marched in Caracas on Saturday as part of the opposition’s new political offensive to protest the current political stasis in Venezuela as President Hugo Chávez remains out of sight in a military hospital. Since returning from Cuba on February 18, the Venezuelan government has shared limited information about the president’s cancer treatment and prognosis. On Friday, Venezuelan Vice-President Nicolás Maduro said that Chávez was “energetic” and had participated in a five-hour meeting with government leaders, though he acknowledged that the president can't speak because he is breathing through a tracheal tube. Meanwhile, Chávez supports held candlelit vigils outside the presidential palace to pray for the president’s recovery.
Hearing for Bolivian soldiers in Chile begins Monday: Three Bolivian soldiers arrested in Chile for crossing the border with weapons on January 25 will face a judicial hearing today in the northern Chilean city of Iquique to determine whether they'll remain in prison. The arrest of the soldiers has increased the diplomatic strain between Bolivia and Chile after Bolivia denounced Chile's actions via a letter to the UN on February 18. On Sunday, Bolivian President Evo Morales compared Chile’s imprisonment of the soldiers with Bolivia’s lost access to the Pacific Ocean since 1879, another source of recent tension. Chilean Minister of Foreign Affairs Alfredo Moreno said that Bolivia is blocking a swift resolution to the soldiers’ cases.
Oscar Arias Visits Paraguay to Prepare for April Elections: Former Costa Rican President Oscar Arias is visiting Asunción, Paraguay, until February 27 as head of the Electoral Observation and Political Accompaniment Mission of the Organization of American States (OAS). The mission aims to facilitate and monitor Paraguay’s presidential elections on April 21 to ensure that they are free and fair. It will be setting up elections observers and meeting with members of the Paraguayan government for the next two months. A number of the country’s neighbors view Paraguayan President Federico Franco as illegitimate due to the controversial impeachment of his predecessor, former Paraguayan President Fernando Lugo, in June 2012. Members of Mercosur and Unasur elected to suspend Paraguay from regional membership until the elections are held.
Explosives Destroy Trucks at Cerrejón while Mining Strike Continues: Unknown assailants detonated explosives at the Cerrejón coal mine in Colombia on Sunday as a strike that began on February 7 continued into its seventeenth day. Both Cerrejón and the leader of Sintracarbon, the coal miners' union, denounced the attack, which damaged four trucks but reportedly did not result in casualties. Cerrejón workers initially demanded a 7 percent pay raise, but they have since decreased that amount to 5.8 percent. According to the World Coal Association, Cerrejón’s coal accounted for 80 percent of Colombia’s coal exports last year. Union leader Igor Diaz said that the workers will meet with Cerrejón today to restart wage negotiations despite the attack.
Watch a recent AQ documentary on Cerrejón. http://www.americasquarterly.org/rio-rancheria-documentary
La Unión de Naciones Sudamericanas (Union of South American Nations—Unasur) was notably excluded from Paraguay’s list of observers for the 2013 presidential election announced by President Federico Franco on Monday. The European Union (EU), Organization of American States (OAS) and The Carter Center, all prestigious and internationally renowned organizations according to Franco, will be allowed to monitor the elections on April 21, 2013. However, he refused to comment on Unasur, which temporarily suspended Paraguay after former President Fernando Lugo was unanimously impeached in January.
Monday’s announcement comes one month after President Franco denounced Paraguay’s suspension from Mercosur during his remarks at the United Nation General Assembly. Despite the fact that much of the international community viewed President Fernando Lugo’s ouster as a coup d’état, President Franco has consistently defended the nearly unanimous congressional impeachment process that took place last January. Former President Lugo was voted out of office by the opposition-controlled senate for his ties to officers responsible for the June 15 massacre at Curuguatay in which 17 peasants were killed by police who were attempting to evict them from private property near the Brazilian border.
President Franco, who is not allowed to run in next year’s election, has emphasized that the participation of the EU, OAS, and The Carter Center will ensure a transparent election.
General debate of the 67th Session of the UN General Assembly began today with presidents from across the region scheduled to address world leaders. A number of high-level meetings will also take place throughout the week, covering topics like the rule of law, sustainable energy, nutrition, countering nuclear terrorism, and the chemical weapons convention.
Brazilian President Dilma Rousseff delivered the first address this morning for the second year in a row. In her speech, she addressed poverty and gender equality as well as security in Syria and the rest of the Middle East. She also defended policies to protect domestic industries, emphasizing that it unfair for “legitimate trade defense initiatives by developing countries to be unfairly classified as protectionism.”
On Thursday, Paraguayan President Federico Franco will speak out against Paraguay’s suspension from Mercosur and condemn Venezuela’s incorporation into the trade bloc—decisions which he called “illegitimate and illegal.” Franco also plans to defend the nearly unanimous congressional impeachment process that ousted former President Fernando Lugo in January.
In addition to President Rousseff, other Latin American heads of state that are addressing the General Assembly today include President Danilo Medina of the Dominican Republic, President Porfirio Lobo of Honduras, President Cristina Fernández de Kirchner of Argentina, and President Mauricio Funes of El Salvador. On Wednesday President Juan Manuel Santos of Colombia, President Otto Pérez Molina of Guatemala, President Michel Martelly of Haiti, and President Evo Morales of Bolivia will address the body. Mexican President Felipe Calderón will give his final address. President Ollanta Humala will join President Franco in speaking on Thursday, while Chilean President Sebastian Piñera and Uruguyan President José Mujica will speak Friday and Saturday respectively. On the final day of general debate Costa Rican President Laura Chinchilla, Nicaraguan President Daniel Ortega and Ecuadorean President Rafael Correa will end the session.
Top stories this week are likely to include: Enrique Peña Nieto tours Latin America; United Nations General Assembly gets underway; Venezuela’s presidential election intensifies; European Union continues free-trade talks with Canada; and Paraguay seeks reparations from Mercosur.
Peña Nieto Visits Latin America: Mexican President-elect Enrique Peña Nieto departed yesterday evening for his six-country Latin America tour, which will take him to Guatemala, Colombia, Chile, Argentina, Brazil, and Peru this week. Eduardo Sánchez, spokesperson for Peña Nieto, says that the trip’s purpose is to strengthen “the position that Mexico has in the region and the possibilities that it has as a country to build itself as a facilitator” in Latin American relations. Issue topics that are expected to dominate the agenda include security, migration and trade. AQ Senior Editor Jason Marczak adds, “each visit will highlight how a Peña Nieto government will seek to elevate Mexico’s role in the region and in working with each country bilaterally. Strengthened cooperation with Guatemala is critical for improving security and migration flows, Colombia has important lessons learned in security, the Chile and Peru visits are linked to trade and the Trans-Pacific Partnership, and the Brazil visit will likely seek to set the two countries on a path toward trade collaboration rather than trade competition.” Peña Nieto told Brazil’s Época magazine that “free trade, far from protectionism, is the path that we should take to make Latin America a thriving actor in the global economy.”
UNGA Gets Underway: The sixty-seventh session of the United Nations General Assembly opens debate tomorrow afternoon at 3:00p.m. in the New York secretariat. Access the agenda here. Heads of state are expected to arrive next week, where they will make their plenary addresses.
Venezuela's Presidential Election: In the lead-up to Venezuela’s October 7 presidential contest, it was revealed over the weekend that incumbent President Hugo Chávez would not select a running mate in spite of his widely speculated deteriorating health. Chávez’ challenger, Henrique Capriles, has not selected a likely vice presidential candidate either. Further, Venezuelan polling firm Consultores21 released a poll over the weekend putting Capriles Radonski two percentage points ahead of Chávez – 48 percent to 46 percent.
Related: Americas Society and Council of the Americas will host a discussion on September 18, titled “The Road to Venezuela’s Elections: A Look at the Media, Public Opinion, and the Economy.” The president of Consultores21 will speak on the panel.
EU - Canada Trade Talks Continue: Officials from the European Union will arrive in Ottawa this week for the penultimate round of negotiations with Canada on a free-trade pact. An agreement is farther behind schedule. As Americas Quarterly reported in early 2011, the Comprehensive Economic and Trade Agreement was anticipated to be signed in the middle of last year.
Paraguay to Demand Reparations from Mercosur: The Paraguayan foreign ministry filed grievances with the Argentine, Brazilian and Uruguayan embassies in Asunción a few days ago on the charge of “grave arbitrariness” since its suspension from Mercosur following the ouster of former President Fernando Lugo. In a separate release, the foreign ministry noted that “Paraguay has the right to demand moral reparation for the offences infringed upon the dignity of the Republic, as a State and as a member of the international community, as well as claim compensation for the economic losses and damages suffered.” President Federico Franco has charged Mercosur as an “ideological club of friends,” and is intensifying his rhetoric against the South American trade bloc that does not recognize his presidency as legitimate. Expect Argentine, Brazilian and Uruguayan responses from the grievances this week.
Extra: Today begins the first full week of National Hispanic Heritage Month in the U.S., which lasts from September 15 to October 15.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.