There was hostile reaction in the region to the president's instant impeachment, and his replacement by the former vice-president, Federico Franco, with Paraguay risking diplomatic isolation. The criticism ranged across the ideological spectrum: Chile and Colombia; Venezuela and Bolivia; Argentina, Brazil and Uruguay - all recalled their ambassadors and (in the case of the last group) suspended Paraguay from membership in the Mercosur economic block until the April 2013 elections. Paraguay was also been suspended from Unasur, the South American regional political bloc.
Cristina Kirchner, Argentina's president, accused the Paraguayan congress of a "parliamentary coup". Dilma Rousseff, Brazil's president, was also unwavering in her support for Lugo, despite being pressed to recognise the new government by the powerful brasiguayo lobby (the 350,000-strong Brazilian farming community inside Paraguay that has strong links with Brazil's rural landowning class).
In response to the strong international condemnation, the Franco administration has tapped into the national psyche by accusing Mercosur partners of resurrecting the "triple alliance" (Argentina, Brazil and Uruguay) that decimated the country in the war of 1865-70 and by making allegations of an international communist conspiracy against Paraguay led by the Venezuelan president, Hugo Chávez (thus mirroring the cold-war propaganda of the Stroessner dictatorship). Franco accused the Venezuelan government of putting pressure on the armed forces to oppose the impeachment of Lugo and his defence minister, Maria Liz Garcia, accused Venezuelan foreign minister Nicolas Maduro of meeting with senior Paraguayan military officials before the Paraguayan congress met to vote for Lugo's removal.
Canada and Germany, by contrast, were quick to appease the new government. The Canadian-based multinational mining giant Rio Tinto Alcan (RTA) is in advanced negotiations with the Paraguayan government to construct a 674,000-tonne Greenfield aluminium-smelter at a cost of $3.5 billion that would use cheap bulk energy from the massive Itaipú hydroplant (which is under joint Paraguay-Brazil ownership).
The United States for its part is vacillating in its response to Lugo's overthrow. Washington expressed reservations about the haste of the impeachment process, and said it would await the outcome of an investigative mission from the Organisation of American States (OAS) arrived in Paraguay on 1 July 2012; it is scheduled to report its findings on 10 July.
The congress
Why, then, did the Paraguayan congress impeach Lugo so quickly - and only ten months before he would be leaving office in any case? The answer to this question raises difficult issues about the nature and limits of democratisation in Latin America.
An early clue lies in the identity of Paraguay's congressmen and congresswomen. The most obvious thing to note is that they are almost all large rural landowners, with titles held either directly or in the names of friends and family. In 2008, a former head of the World Bank in Paraguay expressed his shock at discovering that virtually every member of congress that he met fitted this description. Many were also beneficiaries of the illegal transfer of large tracts of state lands (typically 2,000 hectares and above) to military and civilian supporters of the Alfredo Stroessner dictatorship, a process that continued through the subsequent two decades of Colorado governments.
Through this "land reform" scam, Paraguay's rich and powerful - assisted by venal lawyers and officials of the "land reform agency" - masquerade as landless peasants, enabling them to buy virgin forest at a rock-bottom "fiscal" price that is now typically between 1%-5% of its true commercial value. None of these illegal beneficiaries were eligible under the country's land-reform legislation, which was designed to benefit landless families. They received plots (so-called tierras malhabidas [ill-gotten lands]) far in excess of the legal limits, and were sometimes even granted more than one plot of land in different parts of the country. The report of Paraguay's truth-and-justice commission (2008) that investigated human-rights abuses during the Stroessner period found that from 1954-2003, some 3,336 beneficiaries were in this way illegally awarded 4,232 tierras malhabidas totalling 7.8 million hectares (see Isabel Hilton, "Alfredo Stroessner: revisiting the general", 17 August 2006).
Fernando Lugo's government did nothing to recuperate this land, and did not even set up a cadastre (rural land-registry) to find out who actually owned what. He proved incapable of halting the illegal transfer, which continued throughout his presidency. In September 2011, Alberto Antebi Duarte - the son of Paraguay's second richest landowner, Roberto Antebi - was awarded 4,000 hectares by this means thanks to high-level corruption in Indert, the state body charged with "land reform".
