A River for Freedom: The Itaipu Hyrdoelectric Project and the Democratization of Paraguay

Introduction

From 1954 to 1989, Paraguay was subject to the authoritarian regime of Alfredo Stroessner and the Colorado Party. While Stroessner came to power at a time of great economic strife, it was the most prosperous time of his regime that led to his downfall – the construction of the Itaipú hydroelectric project on the Paraguay-Brazil border. While the project gave temporary prosperity to the country, its completion led to economic stagnation and gave opportunistic individuals the capital necessary to take over the party and position themselves to succeed Stroessner. These militantes, “perhaps the most corrupt, repressive and authoritarian element of the Colorado Party,”1 alienated the base of the Colorados and inspired enough discontent for their opponents to stage a coup and send Stroessner into exile. While democratization was low on the list of priorities, Stroessner’s fall combined with international pressure opened the door to democratization – and the Itaipú dam made it possible.

History of the Stroessner Regime

On May 4, 1954, General Alfredo Stroessner of the Portuguese army executed a coup which overthrew then-President Federico Chávez and placed an interim president in power. Three months later, a one-man election was held, marking the beginning of the 35-year Stroessner regime2. Stroessner used repression, contraband, and corruption to form an iron triangle of himself, the armed forces, and the Colorado Party – the only powerful political party at the time, and at times the only one allowed by the government. (Under Stroessner, party membership was compulsory for all government employees and members of the military.) Stroessner had the power to appoint judges, dissolve the Congress, and declare a state of emergency in order to circumvent the constitution.3 This monolithic structure was the key to Stroessner’s success, as it provided him complete control over virtually all aspects of Paraguayan politics: an example of this was the 1967 constitutional convention, in which the constitution was amended to allow Stroessner to “run” for president two more times4. Stroessner was literally the centerpiece of Paraguayan politics; opposition was futile, and would only be met by arrest, torture, death and exile.5 As a result, for decades many believed that they would never see another ruler of Paraguay, and it would be some time before that view changed.

The Itaipú Hydroelectric Project and the Paraguayan Economy

In the 1970s, a massive joint Paraguayan-Brazilian project was launched – the construction of the Itaipú Dam, which to this day remains the largest hydroelectric dam in the world.6 The project brought quick economic growth to Paraguay, peaking at GDP increases of over 11% between 1977 and 1980.7 Along with this growth came high rates of employment, improved living standards, and an implied support for Stroessner’s regime8 – when the economy is booming, people are less likely to complain.

However, Paraguay was largely unable to take advantage of its share of the electricity produced by the project – resistance from “rural elites”9 prevented the country from industrializing. Instead, agriculture became an area of focus, primarily cotton and soybean production. This became a problem: as the construction of Itaipú and the economic stimulus it provided drew to a close, the region was entering a recession and worldwide soybean and cotton prices were plummeting.10 This led Paraguay into a very shaky economic state.

In the early 1980s, the Paraguayan economy was in chaos. Inflation hit 28.1% in 1979, and dropped only slightly to 22.4% in 1980.11 GNP began to decline in 1981, and for the two years following the country experienced negative growth rates. Foreign debt was rising, and without foreign capital for Itaipú to offset it, it reached over 50% of Paraguay’s GNP by 1988.12 This led to widespread criticism of Stroessner’s economic policies, as well as increased social mobilization – both of the populace and within the Colorado Party.

Fall of the Stroessner Regime

As Paraguay dealt with its economic crisis, the rest of Latin America was experiencing Samuel Huntington’s “third wave” of democratization. Despite mounting pressure from the United States, a former ally, Stroessner refused to liberalize his government, so the U.S. sought “more drastic measures” to stabilize Paraguay and open the door to democracy.13 However, it was not the United States who brought an end to Stroessner’s authoritarian rule. The final blow came from a completely unexpected direction – the Paraguayan military.

Empowered by “wealth and patronage” from the construction of Itaipú, a faction of the Colorado Party known as the militantes began to ascend through the ranks of local party elections. The militantes essentially masqueraded as ultra-conservative Stroessner supporters, and as a result gained Stroessner’s support in their “openly fraudulent” ascendancy to control of the Colorado Party.14

The militantes were not content to remain in control of just the party, however. The faction exerted their political will through the Colorado Party to take control of the armed forces –retiring dozens of officers and making political promotions, including Stroessner’s son Gustavo, in preparation to succeed Stroessner upon his death. This led to resentment and factionalism in the military, as well as increasing alarm at the prospect that the militantes would fill the power vacuum left in Stroessner’s wake.

This idea was repulsive enough to inspire a coalition of widespread interests: the traditionalista faction of the Colorado Party, military, business, the Catholic Church, the United States, and the various opposition parties all solidly opposed the militantes. When Stroessner tried to retire his military rival, General Andrés Rodriguez, there was widespread support for what was by then inevitable. Rodriguez struck back against Stroessner, and on February 3, 1989, Stroessner was overthrown and exiled to Brazil after ten hours of bloody fighting.15 Stroessner remained in Brazil until his death in 2006.

The Transition Towards Democracy

Political scientist Guillermo O’Donnell argues that democratic transitions can be broken up into two phases. The first phase is the dissolution of the authoritarian regime, culminating in the establishment of a government elected in a free and fair election which guarantees “traditional democratic rights and liberties.” The second is moving from that first democratic government towards democratic consolidation – the ideological and political shift from authoritarianism to true democracy in all parts of government.16