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Canadian company linked to the Right-Wing Coup in Paraguay: Lugo’s Left-Wing Policies Made Him U.S. Target for Ouster

By Asad Ismi

On July 22, one month after being ousted from power in a parliamentary coup, Paraguay’s leftist President Fernando Lugo publicly linked his removal to the interests of a Canadian mining company when he stated: “Those who pushed for the coup are those who want to solidify the negotiations with the multinational Rio Tinto Alcan, betraying the energy sovereignty and interests of our country.”

Montreal-based Rio Tinto Alcan (RTA) is the Canadian subsidiary of British-Australian mining giant Rio Tinto, the third largest mining company in the world.

The Paraguayan government’s negotiations with RTA are for the setting-up of a $4 billion dollar aluminum plant which Lugo would not permit because of environmental concerns and the great extent to which the state would have to subsidize the corporation’s electricity costs. In one year, RTA would be using as much electricity as 9.6 million people, and the government would also have had to create infrastructure worth $750 million to support the company’s operations.

Federico Franco, the new right-wing president who took over from Lugo, has quickly pressed ahead with the RTA deal on terms favourable to the corporation. Both sides have come to quick agreement that their arrangement will last 30 years and that RTA will get a large amount of electricity at preferred rates from a power plant partly owned by the government.

“I strongly doubt,” says Lugo, “that the Paraguayan people will be respecting such a license that gives a single company the right to electricity for a price as low as they have been talking about. This whole deal is very questionable.”

According to Ph.D. candidate Johannes Wilm, who interviewed the deposed president after the coup, Lugo believes that one could see the coup as a battle between the state and multinational companies. “If we look at some of the first things the coup makers have done,” Lugo explained to Wilm, “it is quite clear where this is going: First, they opened the doors for genetically modified food; second, they decided that soya-production should not be taxed; third, Rio Tinto Alcan was allowed to establish itself in Paraguay. These are three important decisions that we had been discussing in a two-year participative process in which we tried to study exactly what the consequences would be. Now all this has been rushed through at an incredible pace. This shows just how important the question of national sovereignty in the process is.”

Lugo was impeached by Paraguay’s right-wing-dominated Congress on June 22 in the breathtaking time of two days, and given only two hours to defend himself. This in itself makes the farcical proceedings an obvious coup. As journalist Pepe Escobar, who writes for Asia Times, put it: “They used a technicality to launch an impeachment process that lasted between 24 and 48 hours. This is unheard of in modern democratic political history.” Legislators accused Lugo of “encouraging landless farmers’ occupations, of a poor performance as president, and failing to bring about social harmony in the country.” New elections are scheduled for April 2013 when Lugo’s term would have ended.

The immediate impetus for Lugo’s removal according to his Congressional opponents, was the killing of 17 people in a land dispute in April when 60 landless farmers occupied an estate in Curuguaty (in northeastern Paraguay) owned by former Colorado Party Senator Blas N. Riquelme, one of the richest landowners in the country. The right-wing Colorado Party ruled Paraguay for 61 years before Lugo was elected in 2008. When police and U.S.-trained army commandoes acted to remove the farmers, 11 of them and six police officers were killed in suspicious circumstances. Farmers believe that there were infiltrators from the security forces among the occupiers, and so does Pepe Escobar.

“There were snipers planted among the farmers who were shooting at the police and commandoes,” says Escobar. “So the official explanation by the senators and landowners that they were attacked and that this was incompetence by the government does not hold at all. It was a set-up, and it was provoked to find a way to get this through Parliament so they could arrange their impromptu impeachment. This is what is called nowadays in South America, ‘democraship’.”

Paraguay’s political crisis stems from the extreme concentration of land ownership in a substantially agricultural country. Eighty-five percent of the land is owned by two percent of the people, and 60% of Paraguayans live in poverty. As The New York Times put it, “Paraguay remains the country with the most uneven distribution of land and wealth on the planet.” The feudal oligarchy that rules Paraguay treats the mestizo (mixed indigenous and Spanish) majority as slaves, and brutally represses them when they try to attain some land or other economic or political rights. The feudal élite is backed by the United States, which trains, arms, and finances the military to carry out massive repression. The oligarchy had been ruling Paraguay as a dictatorship for the 130 years before Lugo’s election in 2008.

Particularly brutal was the reign of President-for-life General Alfredo Stroessner (affiliated to the Colorado Party), who ruled for 35 years, from 1954 to 1989. European reporters who visited Paraguay during this time described Stroessner’s government as “the poor man’s Nazi regime.” Many Nazi war criminals, such as Joseph Mengele, settled in Paraguay with Stroessner’s approval. As one observer put it, “From the Nazis, the Paraguayan military learned the art of genocide.” U.S. training reinforced such lessons.

Other important partners of the Paraguayan dictatorship and élite were U.S. and European multinational corporations (today represented by Monsanto, Cargill, and Rio Tinto Alcan), who were given large tracts of land. The native Ache community was considered by Stroessner to be in the way of such corporations’ plans to exploit the country’s forest and mines. So the Ache were hunted down, the parents killed and the children enslaved. High-ranking members of the regime were also involved in drug trafficking.

The Stroessner dictatorship also played an active role in the sinister “Operation Condor”, which was facilitated by the U.S. In this operation, the militaries of Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay co-operated in killing each other’s political exiles. At the time, all six countries were ruled by U.S.-backed military dictatorships which in this joint operation killed 50,000 people, disappeared 30,000, and imprisoned 400,000.

Fernando Lugo’s election in 2008 was the first time a popular government came to power democratically in Paraguay, supported mainly by the country’s poor rural farmers. Lugo, a former Catholic bishop, is a believer in liberation theology and is known as “the Bishop of the Poor.” He did not gain a majority in the Paraguayan Congress, however, and was dependent on the support of the right-wing Liberal Party. Federico Franco, the current president, who helped oust Lugo, was his vice-president and belonged to the Liberal Party. The Colorado Party holds most seats in the legislature. Between them, these two right-wing parties made sure that no major progressive initiatives planned by Lugo, such as land reform, would be legislated and that no significant wealth redistribution would be made.

Still, Lugo refused to capitulate completely to the Paraguayan élite, the U.S., and multinational corporations. Along with his refusal to allow Rio Tinto Alcan to set up operations, Lugo also prohibited Monsanto from using its genetically modified cotton seeds in Paraguay. Many of Paraguay’s family farms have been forcibly replaced over the years by large mono-crop plantations that now grow Monsanto’s GM soy.

Lugo also rejected further U.S. troop deployments in Paraguay in 2009 since the U.S. already had two military bases in the country. In a press conference, he made clear that “we don’t see it as convenient that the [U.S.] Southern Command has a presence in Paraguay.” The president explained that “the Union of South American Nations (UNASUR — the left-wing alliance of 12 South American countries of which Paraguay is a member) had questioned the wider U.S. military role in the region.”

Lugo opposed a large-scale military exercise called “New Horizon” proposed by the Pentagon for 2010. According to a secret U.S. embassy cable released by WikiLeaks, U.S. embassy officials in Paraguay had tried to “to force acceptance of the operation” by the Lugo government. The cable “accused Lugo of getting cold feet and of seeking to curry favour with Venezuela’s Hugo Chavez in order to get a better deal on oil imports.”

Nikolas Kozloff, author of Revolution! South America and the Rise of the New Left explains it this way: “Even before Lugo came to power, Washington saw Paraguay as a key regional ally against leftist [President] Hugo Chávez of Venezuela.” Washington needs to counter not just Chavez, but the entire left-wing tide sweeping Latin America known as the Latin American Revolution which has brought 11 leftist governments to power (including Lugo’s). One U.S. method of doing this is to overthrow such governments, as the Obama administration did with Honduras in 2009.

Lugo’s opposition to an expanding U.S. military presence in Paraguay and to corporate domination, his increasing collaboration with Chavez, his professed admiration for the progressive changes brought about by the Latin American Revolution, his support for regional integration, and his close relations with other left-wing Latin American leaders such as Presidents Evo Morales in Bolivia and Cristina Fernandez in Argentina – all these actions certainly alarmed Washington and marked him as a target for regime change.

It is unlikely that the Paraguayan elite which has been dominated by the U.S. for more than seven decades would have moved against Lugo without Washington’s approval. This is then the Obama administration’s second coup in Latin America. In 2009 it overthrew the elected government of Manuel Zelaya in Honduras.

“To pursue an independent foreign policy in Latin America” writes Kozloff, “does not go over very well in Washington, and we know this clearly from WikiLeaks cables [saying] that U.S. diplomats expressed displeasure at Lugo’s independent foreign policy, specifically forging links with Hugo Chavez of Venezuela, and with Bolivia as well. Lugo questioned U.S. military involvement, which was extremely controversial.”

Kozloff points to U.S. officials’ “paranoia” about Lugo’s “reformist presidency,” which he says is “pervasive throughout the Wikileaks cables,” and adds that U.S. Secretary of State Hilary Clinton “sounded the alarm bell on Lugo.” According to Kozloff, “In an unbelievably suspicious development, even as [the Paraguayan] Congress was moving to impeach Lugo, a group of U.S. generals met with legislators to discuss the possibility of building a military base in the Paraguayan Chaco region.”

Faced with this attempt by the U.S. to make an imperialist comeback in a region where its influence has been almost eradicated, progressive Latin American governments have been united in their condemnation of the Paraguayan coup. Presidents Cristina Fernandez of Argentina, Rafael Correa of Ecuador, and Chavez of Venezuela refused to recognize the Franco government, and Brazil recalled its ambassador. Paraguay was thrown out of MERCOSUR, the important regional trade bloc which includes Argentina, Brazil, Uruguay, and Venezuela. Chavez called the new Franco regime “worthless, illegal, and illegitimate.”

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Published in the Canadian Centre for Policy Alternatives Monitor, October 2012

Asad Ismi is the CCPA Monitor’s international affairs correspondent. He is author of the radio documentary The Latin American Revolution which has been aired on 40 radio stations in the U.S., Canada and Europe reaching about 33 million people. He is also author of the anthology with the same title which can be ordered from the CCPA. This article is the 15th in a series on the Latin American Revolution and is in the anthology.

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