Paraguay Political Crisis - 1 August 2019

President Mario Abdo Benitez faces a major political crisis due to his secret energy price negotiations with Brazil.

President Mario Abdo Benitez faces a major political crisis due to his secret energy price negotiations with Brazil.

Itaipu is the world’s second largest hydroelectric plant, producing 14 GW of power. Running on the Parana river that divides Brazil from Paraguay, the Paraguayan side of the plant produces far more energy than the country can use. Paraguay sells/exports that excess electricity to Brazil at a price that is renegotiated every year.

Last week, Pedro Ferreira resigned as the head of the National Administration of Energy (ANDE), saying he refused to sign a new agreement with Brazil over the pricing. Fabin Caceres, ANDE’s technical manager, also resigned while revealing that the Foreign Ministry had taken over negotiations and that the new agreement would cost Paraguay US$250 million. 

Abdo’s opposition is hitting the president on two related issues. First, they charge that the negotiation gave an overly generous deal to Brazil for an extended term and question why that happened. Second, they criticize the lack of transparency of the negotiations, noting that the president did not release any details until they hit the media. Specifically, the president did not mention the negotiations in his annual address to Congress even though they had been completed.

With the media and Congress questioning the deal, four more resignations have added to the pressure this week. Foreign Minister Luis Castiglioni and Hugo Saguier, Paraguay’s ambassador to Brazil, resigned as the Congress called them to testify about their role in the negotiations. Additionally, Alcides Jimenez the new head of ANDE who has been in his position for less than a week, and Jose Alderete, the Paraguayan director of Itaipu, also resigned over the scandal.

The Congress is now likely to vote on opening the impeachment process. Impeachment requires a two-thirds majority in both the lower house and the Senate.

Impeachment can happen quickly.

One lesson from the 2012 impeachment of Fernando Lugo was just how quickly impeachment can move through the Paraguayan Congress. The entire process took about a week. On 15 June 2012, a police operation to evict landless farmers at a property owned by a former senator went wrong, leading to the deaths of six police officers and 11 farmers. The lower house initiated impeachment proceedings on 21 June and the Senate voted one day later to impeach and remove the president. Though fully constitutional, the speed of the process led to many critics calling it a coup (inventing the word golpeachment to describe the speedy and unfair legislative overthrow of the president).

Regarding the current controversy, former President Fernando Lugo’s Frente Guasu has already jumped on board with calls of Abdo’s impeachment.

Hugo Velazquez, the country’s vice president, is also implicated in the negotiations with Brazil and would almost certainly be impeached simultaneously if a vote were held.

This means if impeachment occurs this year, Senate President Blas Llano of the opposition PLRA will become the interim president. He would be required to hold new elections for vice president. There are divided constitutional opinions as to whether he must or should hold early elections for president.

A divided Colorado Party is primed to move against Abdo

A portion of the Colorado Party has already announced its support for an investigatory committee into the negotiations, signaling a potential first step in an impeachment process.

The divisions in the Colorado Party likely give the two-thirds majority to open impeachment proceedings in the lower house. Abdo appears to have just enough votes in the Senate to avoid impeachment at the moment, but a few additional defections will cause him to go down.

The Colorado Party never fully healed from the divisive primary battle that made Abdo a candidate for president. Many of the Colorado members of Congress dislike Abdo including former President Horacio Cartes.

Separate from the controversy over Itaipu and complicating matters, former President Horacio Cartes, now a senator, faces a serious criminal and corruption investigation. Dario Messer, an ally of Cartes, was arrested in Brazil for running a money laundering empire that moved US$1.6 billion across a network of over 50 countries. Additional corruption investigations in Paraguay have been stalled due to the former president’s immunity as a sitting member of the legislature, but the issue hangs over him and his political allies as they consider their next moves.

Bolsonaro trying to rescue an ally

In a rare display of diplomacy, Brazil’s president is offering cautious words and the language of compromise as Paraguayan negotiators travel to Brazil to re-renegotiate the deal. He has avoided threats and his typical Brazil-first nationalism, even as Paraguay has said it will cancel a deal that both sides have signed.

Bolsonaro sees Abdo as an ideological ally and knows any future government of Paraguay is unlikely to be as close to his government as the current one. A Liberal Party interim government would take a harder approach to the Itaipu negotiations and many other bilateral and multilateral issues facing the two countries.

Given the current alliance, Brazil is likely to annul the deal and offer a new negotiation as a way to help Abdo save face. However, with energy prices a key issue in Brazilian public opinion, Bolsonaro’s opposition will almost certainly grab on to the issue. So while Paraguay may get a chance to renegotiate, pressure from public opinion and the political opposition will keep Bolsonaro from giving away too much.

If Abdo falls, Bolsonaro is likely to take a much harder position against Paraguay’s position on Itaipu, leading to a significant political clash between the two countries.

Even if Abdo survives this round, the impeachment threat will hurt him for the remainder of his term.

Paraguay’s president has seen his party divide and is facing the threat of impeachment less than one year into his term. 

If he survives the current crisis, Abdo will have a much harder time moving any legislative priorities through the Congress. This will lead to the president engaging in more executive action, which will lead to more crises that lead to future calls for impeachment. Making it through this next month will be difficult for the president, but even if he does, it will most likely begin a cycle of recurring political crises that will become very difficult for Abdo to exit.

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