Photo Credit: Negib Giha

Photo Credit: Negib Giha

Paraguay, or el corazon de America, has recently been generating a lot of new flows for its economy, but the problem is, that shares of this growth are not being channeled to all parts of Paraguay’s society equally. With GDP that recorded 14.2 percent increase in 2013, this landlocked South American country took the title of the fastest growing economy on the continent. However, the story of Paraguay is much more complicated than its macroeconomic indicators would suggest. The following paragraphs will try to answer the question of why in the country that is so abundant with productive agricultural land the large part of the campesino population is landless and has no access to political life and economic growth. Moreover, the underlying question is how did Paraguay come to be the most unequal country in Latin America?

Paraguay’s GDP growth records are an envy of many countries, but on the other hand, its low rankings when it comes to HDI (16th in Latin America) show that the majority of population is not feeling the hype that the main macroeconomic indicator would suggest. The unequal distribution of current economic prosperity is closely related to the issue of access to land. Those who own land, a small majority of big landowners, are generating and enjoying the benefits of improved economic situation, while other sectors of society are largely excluded both from the ownership scheme and from the improved economic situation. The above-mentioned situation is reflected clearly in the fact that GINI coefficient for land distribution is 0.94 – the worst in Latin America, since 1.6% of the people own 80% of the land.

Historically, Paraguay’s destiny has been closely tied to its fertile land and agricultural society. Unsurprisingly, after gaining independence Paraguayan state used land assets to obtain and repay its international credits. Country’s reliance on land is seen in the fact that during the 1929 it hardly felt the world economic crisis as majority of its’ population consisted of self-sufficient subsistence farmers. Nonetheless, the position of Paraguayan campesino has been progressively deteriorating throughout history. Even though several mayor events helped shaped the current situation, unjust practices began in 1875 when the “Office of Public Land” was created in Paraguay. This was a turning point at which Paraguay’s most productive asset, namely land, moved from public to private hands. Unfortunately, large part of the population was not in a position to afford purchases. Consequently, many campesinos turned into peones – unskilled farm laborers bound in servitude to a landlord who was also their creditor. Ever since, rich few started accumulating vast communal lands and landless class was slowly but surely beginning to form. Trapped in such circumstances, Paraguayan campesinos have been condemned to self-perpetuating poverty.

After more than 30 years of dictatorial rule of General Stroessner (under whom the policies implemented further encouraged the unjust practices benefiting the regime machinery), Paraguay made a move towards establishment of democratic regime in 1989. In theory, political participation has been seen as an instrument for a more just economic distribution that should be propagated by vested interests that in democracy should be able to organize and press politicians for favorable policy implementation. Under democracy, the less advantaged have a batter chance to organize, and ask for the downward distribution of income (Davide Grassi). Under this new conditions and likewise encouraged by what was happening in other South American countries the poor majority pursued the goal of change through democratic mechanisms. As a result of this cry for change, Fernando Lugo, a Jesuit priest turned politician won the 2008 elections by running on a platform of improving the position of the marginalized groups. The victory of Lugo also meant the end of the 61-year-old rule of Colorado Party, which at that time was the longest period for a party to hold an office in consecutive terms. During his mandate, Mr. Lugo promoted more equal distribution of wealth and also a grater participation of the civil society in politics. In order to achieve this, different social programs were implemented, ranging from free public healthcare, free secondary education and school lunches for children. In addition, Mr. Lugo tried to ban GMO food and the use of pesticides and transgenic seeds so necessary for increased soy production. This move became a fault line that separated the incumbent president and the big agricultural businesses that stood in defense of their interests (i.e. more productivity, more crops, more profit). As the time went by, Lugo started to be perceived as a radical left politician and in 2012 he was ousted from office before ending his term. Some have described his impeachment as a parliamentary coup. The reality was that the decrease in poverty levels during Lugo’s presidency was almost insignificant but the hint of change was what really echoed among the Paraguayan oligarchy as more than social revolution Lugo seemed to offer simply a more inclusive and better democracy.

Paraguay celebrated democracy again in 2013 by electing Horacio Cartes who ran on a platform of “new direction”. Mr. Cartes, himself a big businessmen who besides his numerous possessions is also an owner of soya company, and was alleged of currency fraud, tax evasion and drug trafficking. He was even on the DEA list and became a Wikileaks celebrity in “Operation Heart of Stone”, a project targeting drug trafficking and money laundry outfits in locations such as the Tri Border Area (TBA) between Argentina, Brazil and Paraguay. Additionally, Mr. Cartes spent a year in jail in 1989 and has admitted of having held a secret bank account in HSBC. More than anything, Mr. Cartes seems to be an insurance card for the oligarchic interest and it is very unlikely that he will be able or willing to undertake necessary steps that would improve the day-to-day lives of those who do not belong to the small and closed elite. The evidence points in this direction as under his administration a new law was passed which put forth a new sale of public land to highest bidders and has also fostered the privatization of public services like healthcare and education (Ley Alianza Publico Privada). Furthermore, public demonstrations and land occupations (practices used by campesinos sin tierra) have been additionally criminalized. Taking in consideration the above-mentioned policies implemented during Mr. Cartes’ presidency it becomes quite difficult to discern to what does the “new” in his catchphrase “new direction” refer to.

Moreover, even though many years after the declaration of Paraguay’s independence have passed, the crucial role of land in international relations and in domestic exhibition of power remains unchanged. Recent economic miracle has been predominantly fueled by ever expanding world’s demand for cheap food in which soy plays a major part. Soy crop is hailed as a product that contains the highest amount of protein per hectare and is usually used to feed animals, prepare foods, make vegetable oil and more recently – biofuels. Just as the demand of strong emerging markets (especially and mainly China) increased exponentially in recent years so did the Paraguayan production, seeking for easy and instant profits. Thus, this relatively small country became the world’s 4th biggest exporter of the product, following closely countries with much larger land territories like Brazil, United States and Argentina. 80 percent of arable land in Paraguay is dedicated to soy production, lot of which has been cleared for this use through intensive deforestation. Besides trees, some old laws were cleared to eliminate all obstacles to agribusiness expansion. In addition, Congress passed the law declaring production of raw materials for biofuels (soy) of national interest. Likewise, 70 percent of subsidies are spent in agriculture, more precisely in large-scale soy production. Besides, taxes on rural properties are 23.5 times lower compared to standards in Latin America and 45 times compared to developed world. In 25 years of democracy, 115 leaders and members of campesino organizations have been assassinated or they disappeared. But more frightening is the fact that all of the murders went unpunished, and the possibility of conducting fair trials was obstructed.

Finally, as suggested in the introduction, the access to land has great implications for quality of democracy in Paraguay. It is essential to note that democratic tradition, rather than democracy itself is likely to lower inequality. It seems that throughout the history but also during the more recent democratic era, the Paraguayan elites have impeded the evolution of any kind of progress towards establishment of the democratic tradition. They did this in order to monopolize one of the most valuable resources the country has, namely the land. The possession of land enabled those groups to become the motors of Paraguayan economy (almost all exports are land dependent), which meant that they had interests that needed to be defended. Democracy presented a threat to these established interests, as it seemed to offer a path toward more equal access to land. So, the democracy in Paraguay was turned into the system for few. Consequently, the final outcome is that the persistent losers in Paraguay, be it in the democratic or in the authoritarian system, are the members of the majoritarian campesino community who essentially lack any kind of representation in the existing system. Since this kind democracy did not answer their needs, the revision of land distribution could potentially be a good start for Paraguayan society, but the issue is that this would inevitably imply the much-needed examination of oligarchic democracy.