Paraguay’s Bitter Harvest: Multinational Corporations Reap Benefits from Coup Government

In a July 22nd speech marking the one month anniversary of the parliamentary coup that overthrew left-leaning Paraguayan President Fernando Lugo, the former leader said that a motivating interest among the coup-plotters was a sought-after deal between Paraguay and the Montreal-based mining company, Rio Tinto Alcan.

“Those who pushed for the coup are those who want to solidify the negotiations with the multinational Rio Tinto Alcan, betraying the energetic sovereignty and interests of our country,” Lugo told supporters.

Such an accusation represents the widespread discontent among Paraguayan people toward current negotiations between Rio Tinto Alcan (RTA) and the government of Federico Franco, Lugo’s right wing replacement.

It also points toward the Franco administration’s larger strategy to open up Paraguay to multinational corporate exploitation, from Rio Tinto Alcan to Monsanto.

The RTA deal for a $4 billion dollar aluminum plant on the shores of the Paraná River had been stalled by the Lugo administration due to concerns over the plant’s environmental impact, as well as how much the company would pay for electricity from Paraguay’s Itaipú and Yacyretá hydroelectric power plants.

Yet shortly after taking office, Franco fast-tracked the RTA negotiations, pressuring his new Minister of Industry and Commerce to swiftly move forward with the deal. Civil society protests ensued and, as Lugo’s comments about the RTA deal suggest, the issue has become a rallying point for justice amidst post-coup Paraguay’s political and social crisis.

The views of Paraguayan engineer Ricardo Canese reflect the main concerns of citizens opposing the deal. In an article from the Paraguayan social research institute BASE-IS, Canese explained that the proposed deal with RTA would disproportionately benefit the company in that the government – through the taxation of the Paraguayan people – would be subsidizing a massive amount of RTA’s energy over a period of 30 years.

Canese further criticized the fact that the taxpayers would be spending $700 million dollars in infrastructure to allow the company to install their operations in the country. And while RTA pledges to create 1,250 jobs, the company would annually use the same amount of electricity that 9.6 million people use during the same period.

Because of the controversial terms that Franco is pushing for with RTA, Lugo believes that the contract will be discontinued once a democratic government returns to power; new elections are slated to take place in April of next year. In one interview, Lugo said, "I strongly doubt that the Paraguayan people will be respecting such a license that gives a single company the right to the electricity for a price as low as they have been talking about. This whole deal is very questionable."

In addition to Franco’s work with RTA, his administration has also allowed Monsanto an expanded presence in Paraguay. Such a move will worsen the existing crisis in the countryside, an area ravaged by soy plantations and pesticides, and where just 2% of landowners control 80% of the land.

In the lead-up to the coup, Lugo and his administration resisted the use of Monsanto’s GMO cotton seeds in the country. Yet just after taking power, the Franco administration threw government critics of the plan out of office, and moved ahead to approve the use of the controversial seeds in the country.

These two relationships with multinational corporations clearly show where the interests of the Franco administration lie. They also demonstrate that, while the Lugo administration failed to fully implement its plans for land reform, justice and expanded rights in Paraguay, the Franco administration, in just one month in office, has already proven to be closer ally of corporate globalization.

As Uruguayan writer Eduardo Galeano said in an interview regarding the coup in Paraguay, the Lugo government tried “to bring about changes that were aimed at making the country more independent and just, but this was an unpardonable sin for the power brokers.”