Updated February 12, 2024
Paraguay: An Overview
Paraguay is a landlocked country in South America
(renamed Fuerza Republicana in 2023), led by President
bordered by Argentina, Bolivia, and Brazil. The United
Abdo Benítez. Although Honor Colorado helped defeat two
States has had close relations with Paraguay for decades,
opposition attempts to impeach President Abdo Benítez in
providing assistance to counter corruption and spur trade
2019 and 2021, the relationship between the two factions
and economic development. The United States and
became increasingly combative.
Paraguay also work together closely on counterterrorism
and counternarcotics, among other security matters of
Paraguay at a Glance
interest to some Members of Congress. Recently, U.S.-
imposed sanctions against top Paraguayan leaders have
Population: 7.6 mil ion (2023 est., IMF), 95% of whom
caused some bilateral tensions.
identify as mestizo (mixed Spanish and Indigenous Guarani
descent)
Political Environment
Area: 157,047 sq. miles, slightly smaller than California (CIA)
Paraguay had a turbulent political history in the 19th and
GDP: $44.1 bil ion (2023 est., current prices, IMF)
20th centuries. In the War of the Triple Alliance (1864-
1870), Paraguay lost one-quarter of its original territory to
Per Capita GDP: $5,843 (2023 est., current prices, IMF)
its opponents—Argentina, Brazil, and Uruguay—and more
Top Imports: electrical machinery, mineral fuels, heavy
than half of its population died. Political instability
machinery (2023, TDM)
followed for several decades, including three civil wars in
Top Exports: soy beans, beef, electrical energy, cereals
the first half of the 20th century. From 1954 to 1989,
(2023, TDM)
General Alfredo Stroessner ruled as an anti-communist
Key Trading Partners: Argentina (25.7%); Brazil (25.1%);
military dictator; he ultimately was overthrown by a
United States (11.3%) (2023, total trade, TDM)
military coup. A constituent assembly elected in 1991
promulgated a more democratic constitution in 1992 that
Sources: International Monetary Fund, “World Economic
divides power among the president; a bicameral congress
Outlook Database” (IMF); Central Intelligence Agency, World
comprising a 45-member Senate and 80-member Chamber
Factbook (CIA); Trade Data Monitor (TDM).
of Deputies; and the judiciary, headed by the supreme
The 2023 general elections resulted in a resounding victory
court. Paraguay has held regular elections since 1993, but
the country’s citizens continue to face
for the ANR-PC, with the party capturing the presidency,
some challenges in
majorities in the Chamber of Deputies and Senate, and 15
exercising their political rights and civil liberties.
of 17 state governorships. Paraguay elected Santiago Peña,
The conservative Colorado Party (also known as the
a former finance minister under Cartes and Honor
Colorado’
Asociación Nacional Republicana—Partido Colorado or
s presidential nominee, to a five-year presidential
ANR-PC) has dominated Paraguay’s political system. It
term. Peña obtained 43% of the vote, comfortably defeating
held power for much of the 20th century, including under
Efraín Alegre, the candidate representing the PLRA-led
the Stroessner dictatorship, and has won nearly every
opposition alliance, Concertación Nacional, and Paraguayo
election held since the democratic transition. The only
Cubas, of the far-right party Partido Cruzada Nacional.
exception was in 2008, when former Catholic bishop
International observers commended Paraguay for the
Fernando Lugo—affiliated with the main opposition party,
election’s transparency but noted some irregularities.
the Partido Liberal Radical Auténtico (PLRA)—won the
Following Peña’s victory, authorities arrested Cubas and
presidency. The Colorado-led congress impeached Lugo in
charged him with several crimes, including disturbing the
2012, removing him from office in a rapid process
peace, after his allegations of electoral fraud sparked
condemned by neighboring countries. The ANR-PC
violent protests in Asunción. As of February 2024, Cubas is
regained control of the presidency with the 2013 election of
awaiting trial under house arrest.
business magnate Horacio Cartes (2013-2018), despite
allegations Cartes was involved in money laundering and
Since his inauguration in August 2023, Peña has largely
narcotics trafficking. Cartes’s attempt to override
continued his predecessor’s policies. His administration has
Paraguay’s prohibition against reelection in 2017 failed but
pursued market-oriented economic policies, supported
sparked protests, resulting in the partial burning of the
reforms to increase transparency in the civil service and the
capitol in Asunción.
public pension system, and increased funding for school
lunch programs. A key priority of Peña’s administration in
President Mario Abdo Benítez (2018-2023) extended the
2024 is renegotiating the financial terms of the binational
ANR-PC’s hold on the presidency, although his term was
Itaipú hydroelectric dam with Brazil.
marked by rising intraparty tensions. The ANR-PC divided
into competing factions: Honor Colorado, led by former
President Cartes, and the smaller Colorado Añetete
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Paraguay: An Overview
Economic and Social Conditions
U.S.-Paraguay Relations
Paraguay’s economy is driven largely by agricultural
U.S.-Paraguayan cooperation focuses on improving
exports—primarily soybeans and beef—and electricity
governance, combatting transnational crime and terrorism,
generated by the Itaipú Dam. Its dependence on
and expanding trade and investment. In November 2023,
commodities exports and informal labor, which exceeds
Under Secretary of State for Economic Growth, Energy,
60% of the workforce, has perpetuated social and economic
and Environment José Fernandez traveled to Paraguay for
inequities, according to some analysts.
talks focused on deepening trade and investment ties,
cybersecurity cooperation, environmental concerns, and
Although affected by the COVID-19 pandemic, Paraguay’s
support for Taiwan. (Paraguay is the only country in South
economy suffered less serious impacts than those of several
America that maintains formal diplomatic relations with
other Latin American nations. According to the
Taiwan and not the People’s Republic of China).
International Monetary Fund (IMF), the economy
contracted by less than 1% in 2020 and grew by 4% in
Sanctions. In 2022, the Biden Administration imposed visa
2021. Reduced agricultural production due to a severe
sanctions on former President Cartes and then-Vice
drought stalled the post-pandemic recovery in 2022, when
President Hugo Velázquez for alleged corruption, pursuant
GDP grew by 0.1%. However, the IMF estimates the
to Section 7031(c) of the Department of State, Foreign
economy grew 4.5% in 2023, with strong agricultural and
Operations, and Related Programs Appropriations Act,
electricity exports, lower-than-expected inflation, and stable
2022 (P.L. 117-103, Division K). The State Department
macroeconomic conditions.
asserts that Cartes “obstructed a major international
investigation into transnational crime,” undermining the
Paraguay had been gradually reducing poverty in the years
stability of Paraguay’s democratic institutions and the
leading up to the pandemic. According to the U.N.
“security of the United States against transnational crime
Economic Commission for Latin America and the
and terrorism.” In January 2023, the U.S. Treasury
Caribbean (ECLAC), poverty decreased from 24% of the
Department levied additional asset blocking sanctions
population in 2016 to 19.4% in 2019, followed by an uptick
against Cartes and Velázquez pursuant to Executive Order
to 22.3% in 2020 and a decrease to 21.1% in 2022. ECLAC
13818, which builds upon and implements the Global
found that income inequality increased in 2022 and is above
Magnitsky Human Rights Accountability Act (22 U.S.C.
the Latin American average.
§2656 note). Velázquez withdrew his candidacy ahead of
Security Concerns
the 2023 elections; Cartes, however, was elected—and
remains—the leader of the ruling ANR-PC.
Porous borders and ineffective law enforcement have
contributed to rising insecurity, drug trafficking, and money
Foreign Assistance. The Biden Administration allocated an
laundering, especially in Paraguay’s northern states and the
estimated an $4.3 million in bilateral foreign assistance to
tri-border area (TBA) with Argentina and Brazil. Paraguay
Paraguay in FY2022 and an estimated $3.9 million in
is a transit country for illegal drugs, especially Andean
FY2023. For FY2024, the Biden Administration requested
cocaine, destined for neighboring countries and Europe.
$4.5 million in bilateral assistance for Paraguay. That total
According to the United Nations, Paraguay is one of the
included $4 million in Development Assistance, primarily
largest marijuana producers in South America. Paraguay
to support government transparency and accountability, and
also has experienced violence and kidnappings since 2008
$500,000 for International Military Education and Training.
from the Paraguayan People’s Army, a small domestic
armed group, and its offshoot organizations.
Paraguay typically receives additional aid through global
and regional U.S. foreign assistance accounts. In recent
U.S. officials have expressed concerns that Hezbollah, an
years, this has included security assistance to combat
Iran-backed Lebanese Shia militia and U.S.-designated
transnational crime and terrorism and humanitarian
Foreign Terrorist Organization, is engaged in drug
assistance to respond to the COVID-19 pandemic and assist
trafficking and money laundering activity in the TBA to
the roughly 5,200 Venezuelan migrants and refugees
support its operations. The State Department notes that
residing in the country. In FY2022, total U.S. assistance
although Paraguay has made progress implementing anti-
obligations from all agencies amounted to $25.5 million.
money laundering and terrorism financing laws passed in
2019, prosecutions are rare, in part due to corruption in the
Trade and Investment. In September 2023, the United
political and judicial sectors.
States and Paraguay held a second meeting under the
auspices of a 2017 Trade and Investment Framework
In February 2022, the Paraguayan National Anti-Drug
Agreement. Participants reportedly discussed regulatory
Secretariat, assisted by the U.S. Drug Enforcement
practices, trade facilitation, anti-corruption efforts,
Administration and other international anti-crime agencies,
intellectual property, and sustainable agriculture, among
conducted its largest antidrug and money laundering
other areas of cooperation. U.S.-Paraguay merchandise
operation to date. Paraguayan authorities seized more than
trade exceeded $3 billion in 2023. The United States
$100 million of assets and arrested some two dozen
exported nearly $2.8 billion of goods to Paraguay, led by
suspects. In May 2022, Marcelo Pecci, a top Paraguayan
machinery, and imported $259 million of goods from
prosecutor involved in the operation—as well as other
Paraguay, led by agricultural products. As of 2022, the
narcotics trafficking, money laundering, and corruption
stock of U.S. foreign direct investment in Paraguay was
cases—was assassinated while traveling in Colombia.
$187 million.
Colombian authorities maintain that criminal organizations
in Paraguay, Colombia, and Brazil conspired to carry out
Joshua Klein, Analyst in Foreign Affairs
the assassination.
IF12207
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Paraguay: An Overview


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https://crsreports.congress.gov | IF12207 · VERSION 4 · UPDATED

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