Updated May 26, 2023
Paraguay: An Overview
Paraguay is a landlocked country in South America
2021, intraparty tensions continued to grow during Abdo
bordered by Argentina, Bolivia, and Brazil. The United
Benítez’s term in office.
States has had close relations with Paraguay for decades,
providing assistance to counter corruption and spur trade
Paraguay at a Glance
and economic development. The United States and
Population: 7.6 mil ion (2023 est, IMF), 95% of whom
Paraguay also work together closely on counterterrorism
identify as mestizo, a mix of Spanish and Indigenous Guarani
and counternarcotics, among other security issues of
descent.
interest to some Members of Congress. Recently, State
Department-imposed visa sanctions against top Paraguayan
Area: 157,047 sq. miles, slightly smaller than California (CIA)
leaders have caused some bilateral tensions.
GDP: $42.8 bil ion (2022 est., current prices, IMF)
Political Background
Per Capita GDP: $5,670 (2023 est., current prices, IMF)
Top imports: mineral fuels (16.5%), electrical machinery
Paraguay had a turbulent political history in the 19th and
(15.6%), nuclear reactors and machinery (11.6%) (2022, TDM)
20th centuries. In the War of the Triple Alliance (1864-
1870), Paraguay lost one-quarter of its original territory to
Top exports: meat (18.4%), mineral fuels (15.6%), cereal
its opponents—Argentina, Brazil, and Uruguay—and more
15% (2022, TDM)
than half of its population died. Political instability
Key trading partners: Brazil (29.5%); Argentina (20.6%);
followed for several decades, including three civil wars in
China (9.6%) (2022, total trade, TDM)
the first half of the 20th century. For 35 years, from 1954
Legislature: Bicameral Congress, with 45-member Senate
until 1989, General Alfredo Stroessner ruled as an anti-
and 80-member Chamber of Deputies
communist military dictator; he ultimately was overthrown
Sources: International Monetary Fund’s World Economic
by a military coup. Paraguay’s next government enacted a
Outlook Database (IMF); Central Intelligence Agency’s World
more democratic constitution in 1992, and the country has
Factbook (CIA); World Bank (WB); and Trade Data Monitor
held competitive elections since 1993.
(TDM).
The conservative Colorado Party (Partido Colorado, also
known as the National Republican Association-Colorado
2023 Elections
Party or ANR-PC) has dominated Paraguay’s political
system. It held power for much of the 20th century,
Santiago Peña, a former finance minister under Cartes, was
including under the Stroessner dictatorship, and won nearly
Honor Colorado’s presidential nominee in the April 30,
every election held since the democratic transition. The
2023, general elections. Several opposition parties from
only exception was in 2008, when former Catholic bishop
center right to the left formed an alliance, the Concertación
Fernando Lugo, affiliated with the main opposition party,
Nacional, and selected Efraín Alegre as their presidential
the Partido Liberal Radical Auténtico (PLRA), won the
candidate. Colorado candidate Peña won a comfortable
presidency. The Colorado-led congress impeached Lugo in
victory, with 43% of the vote to Alegre’s 27.5%, belying
2012, removing him from office in a rapid process that was
pre-electoral polls suggesting Alegre’s growing support
condemned by neighboring countries. The 2013 election of
might present a strong challenge to the Colorado Party. The
Horacio Cartes returned governmental control to the ANR-
most surprising result was the third-place finish of right-
PC despite allegations of Cartes’s involvement in money
leaning, independent candidate Paraguayo Cubas, with 23%
laundering and narcotics trafficking. His attempt to override
of the vote. Peña is scheduled to be sworn in as president on
the prohibition against reelection in 2017 failed but sparked
August 15, 2023. His party won majorities in both the
protests, including the partial burning of the capitol in
Senate and lower chamber and 15 of 17 contested state
Asunción.
governorships.
President Mario Abdo Benítez of the Colorado Party was
Economic and Social Conditions
elected in April 2018, defeating an opposition alliance by a
Paraguay’s economy is driven largely by agricultural
margin of less than 4%. He was inaugurated in August 2018
exports—primarily soybeans and beef—and electricity
for a five-year term. The Colorado Party won a majority of
generated by the binational Itaipú Dam. Its dependence on
the seats in the Chamber of Deputies and a plurality in the
commodities exports and informal labor, which exceeds
Senate. The party divided into competing factions: Honor
60% of the workforce (per U.N. Development Programme
Colorado, led by former President Cartes, and the smaller
statistics), has perpetuated social and economic inequities,
Colorado Añetete, led by President Abdo Benítez. Although
according to some analysts.
former President Cartes helped defeat two opposition
attempts to impeach President Abdo Benítez in 2019 and
Although Paraguay initially appeared to be coping well
with the Coronavirus Disease 2019 (COVID-19) pandemic,
deaths surged in 2021. As of March 2023 (latest data
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Paraguay: An Overview
available), Paraguay had recorded more than 19,800
operation, was assassinated while traveling in Colombia. In
COVID-19 deaths, with a mortality rate of nearly 279
June 2022, a Colombian judge sentenced four men to
deaths per 100,000 persons. Paraguay’s efforts to obtain
lengthy sentences for the murder of Pecci, and a fifth
and deploy vaccines were slower than neighboring
remains wanted by authorities, according to press reports.
countries. Some observers project it could take through
The Brazilian crime gang First Capital Command is
2023 to vaccinate over 60% of the population.
considered to have masterminded the assassination and
recruited the gunmen.
Although affected economically by the pandemic,
Paraguay’s commodities export-based economy suffered
U.S.-Paraguay Relations
less serious impacts than those of several other Latin
The U.S. Congress continues to be interested in U.S.-
American nations. According to the International Monetary
Paraguayan cooperation on counterterrorism,
Fund (IMF), the economy contracted by less than 1% in
counternarcotics, open markets, and bilateral trade, as well
2020 and grew by 4.2% in 2021. Reduced agricultural
as building governmental accountability and reducing
production due to a severe drought stalled the post-
corruption. The U.S. government has assisted Paraguay to
pandemic recovery in 2022, when GDP grew by less than
bolster democratic governance and accountability. The two
0.5%. However, the IMF projects 4.5% growth in 2023 and
governments have collaborated on security,
estimates that Paraguay will reach a slight fiscal surplus.
counternarcotics, and counterterrorism. In March 2021,
The IMF also projects lower inflation (of around 5.2%).
Secretary of State Antony Blinken spoke with President
Abdo Benítez, reiterating U.S. support as Paraguay
Paraguay had been gradually lowering poverty in the years
struggled with the COVID-19 pandemic.
leading up to the pandemic. According to the U.N.
Economic Commission for Latin America and the
In mid-2021, Under Secretary of State for Political Affairs
Caribbean (ECLAC), poverty decreased from 24% of the
Victoria Nuland and other officials traveled to Paraguay for
population in 2016 to 19.4% in 2019, followed by an uptick
the second U.S.-Paraguay Strategic Partnership Dialogue,
to 22.3% in 2020, and a decrease to 20.9% in 2021.
which focused on security, governance, trade, investment,
ECLAC found that social inequality, as measured by the
and ties with allies, such as Taiwan. (Paraguay is the only
GINI coefficient, decreased between 2021 and 2022.
country in South America that recognizes Taiwan and not the
Paraguay may further reduce poverty, if an economic
People’s Republic of China). President-elect Peña, during his
recovery continues to hold.
campaign for office, pledged to sustain Paraguay’s
recognition of Taiwan.
Security Concerns
Porous borders and ineffective law enforcement have
Sanctions. The Biden Administration imposed visa sanctions
contributed to rising insecurity, drug trafficking, and money
in July 2022 on former Paraguayan President Cartes (2013-
laundering, especially in the country’s northern states and
2018) for alleged corruption. In August 2022, the U.S.
the tri-border-area (TBA), where Paraguay borders
government sanctioned Vice President Hugo Velázquez, on
Argentina and Brazil. Paraguay is a transit country for
alleged corruption and bribery, prompting him to withdraw
illegal drugs, especially Andean cocaine, destined for
his candidacy ahead of national elections in April 2023.
neighboring countries and Europe. Paraguay also grows and
exports more marijuana than any Latin American country
Foreign Assistance. As of May 2023, the U.S. State
other than Mexico.
Department and U.S. Agency for International
Development have provided more than 2 million vaccine
Paraguay has experienced violence and kidnappings from
doses and $12 million in COVID-19-related aid to the
the small domestic armed group Paraguayan People’s Army
country, while the Defense Department provided $1.3
(EPP) and its offshoot organizations since 2008. A former
million in life-saving pharmaceuticals. The U.S.
vice president kidnapped in 2020 by the EPP has not been
International Development Finance Corporation is
rescued. U.S. officials have expressed concerns about
financing $333 million toward various projects to support
Hezbollah, the foreign terrorist organization, suspected of
small and medium-sized businesses in Paraguay, with some
drug trafficking and money laundering activity in the TBA
funds targeting women’s economic empowerment. In 2017,
to support its operations. The State Department notes
the United States and Paraguay signed a Trade and
although Paraguay has made progress implementing anti-
Investment Framework Agreement, which entered into
money laundering and terrorism financing laws passed in
force in March 2021, to advance commercial bilateral ties
2019, prosecutions are rare, in part due to public corruption.
and resolve trade-related disputes.
In the 2022 Corruption Perceptions Index by Transparency
International, Paraguay ranked as the second most corrupt
In its FY2024 congressional budget request, the Biden
country in the region, behind only Venezuela.
Administration proposed $4.5 million in bilateral
assistance, including $4 million for Development
In February 2022, the Paraguayan National Anti-Drug
Assistance and $500,000 for International Military
Secretariat, assisted by the U.S. Drug Enforcement
Education and Training. Humanitarian organizations
Administration and other international anti-crime agencies,
operating in Paraguay will receive an additional $336,000
conducted its largest antidrug and money laundering
in FY2023 to assist the roughly 6,500 Venezuelan migrants
operation. Over $100 million of assets were seized and
and refugees and their host communities in the country.
some two dozen suspects arrested. In May 2022, Marcelo
Pecci, a top Paraguayan prosecutor involved in the antidrug
June S. Beittel, Analyst in Latin American Affairs
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Paraguay: An Overview

IF12207


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https://crsreports.congress.gov | IF12207 · VERSION 3 · UPDATED

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