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WikiLeaks Paraguay: Obama, Rousseff and Chávez Face Off in Geopolitical Battle

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With the U.S. now losing a degree of its economic and political hegemony throughout the world, a key question will be how Washington reconciles itself to emerging powers such as Brazil. A South American powerhouse in the midst of an agricultural commodities boom, Brazil has witnessed the dramatic growth of its middle class and has been increasingly throwing its weight around in the realm of international affairs. In secret diplomatic cables recently disclosed by whistle-blowing outfit WikiLeaks, U.S. diplomats openly admit that Washington is engaged in an undeclared contest with Brazil for regional influence.

So far this rivalry has not become overtly antagonistic, yet beneath the surface lurk tensions which could break out into the open. When and where are such rivalries most likely to cause frictions? Perhaps, the small landlocked nation of Paraguay, which sits on the Brazilian border, could be one source of conflict. Brazil has made Paraguay into a veritable economic satellite, yet a recent political shakeup in Asunción stands to benefit U.S. interests.

Under President Fernando Lugo, Paraguay joined South America's "Pink Tide" to the left which had challenged Washington's traditional standing throughout the hemisphere. Though Lugo cultivated friendly ties with Washington, the Paraguayan leader also staked out an independent foreign policy and challenged American priorities. On the military front, for example, Lugo outright rejected any Pentagon collaboration under the so-called "New Horizons" program.

Washington Stages a Comeback

The overall political equation was hardly agreeable to Washington, yet, in light of recent developments, the U.S. may be poised to stage a comeback. Just over a month ago, in a kangaroo process akin to a "quasi-coup," Lugo was ousted from power by his country's right wing Congress. In a stunning rebuke, legislators accused Lugo of encouraging land seizures which resulted in violent clashes with security forces. In a sham, the Senate gave Lugo a mere two hours to defend himself in a public trial. When Lugo's lawyers requested more time to argue their case, they were rebuffed by the president of the Senate. Then, in an upset, Lugo's rightist vice president, Federico Franco, assumed his old boss' job.

Washington meanwhile hasn't been too enthusiastic about calling for Lugo's reinstatement. Perhaps that is not too surprising in light of the history. Indeed, WikiLeaks cables show that the State Department was very concerned about Lugo, a politician who championed land reform and cultivated links to Hugo Chávez of Venezuela. Suspiciously, no sooner had Lugo been removed from power than legislators met with a group of U.S. generals to discuss the possibility of building a new military base on Paraguayan soil.

Brazil Reacts to Paraguay's Political Crisis

Brazilian President Dilma Rousseff, on the other hand, has been far more outspoken in opposing Paraguay's shakeup. That is not too surprising, given that Rousseff, a protégé of former Workers' Party (or PT) President Luiz Inácio "Lula" da Silva, was a kind of ideological kindred spirit to the progressive-minded Lugo. Responding to rising outrage in civil society, Brazil voted to suspend Paraguay from South American trading bloc Mercosur, a development which prompted a strong rebuke from the new de facto Franco regime in Asunción.

The conventional wisdom is that Paraguay's shakeup represents a big geopolitical blow to Brazil and an upset triumph for Washington. The Center for International Policy remarks "in Paraguay the most backward political and economic forces have gained ground, opening up the possibility of a closer alliance with the United States, which gains an ally in a place where it can do much harm to Brazil." There's a degree of truth in such interpretations, but the situation is a bit more complex and nuanced than analysts let on.

Whatever its' public rhetoric about leftist solidarity in South America, Brazil has been a cynical operator all too willing to deal with the U.S. while secretly inveighing against upstart Venezuela, and WikiLeaks documents are replete with such double-crossing. Fundamentally, while Brazil may be suspicious of Washington, the South American juggernaut is also wary of Chávez and surely does not want to see pesky Venezuela extending its influence into the Southern Cone. Paraguay, then, offers unusual insight into the "Brasilia-Washington-Caracas triangle" and the scramble for geopolitical influence in the heart of South America.

Radicalization in the Countryside

Though Brazil may express political solidarity with the Paraguayan left, the South American nation is compromised by its octopus-like economic interests reaching far afield. In recent years, so-called "Brasiguayos" (Brazilian farmers who moved to Paraguay to cultivate soybeans) have established a huge presence across the border. A socially conservative group some 350,000 strong, the Brasiguayos have spent years locked in violent disputes with Paraguay's campesino squatters. It is widely believed in Paraguay that the Brasiguayos have illegally taken over large swathes of land.

Through his calls for agrarian reform, Lugo hardly ingratiated himself amongst the Brasiguayos. Furthermore, shortly after he was elected, the Paraguayan invited Hugo Chávez to his country to discuss rural collaboration. Chávez, who had earlier pushed his own ambitious land reform project in Venezuela, declared that he was willing to help Paraguay develop an "agro-industrial center" and provide agricultural and technical assistance.

In a candid aside, Paraguay's Minister of Agriculture told the Americans that he was concerned about "radical actors surrounding the President." Specifically, the official was worried "about Venezuelan President Hugo Chávez' presence in rural areas, and [he] predicted an increase in illicit activity where the Paraguayan state has a weak presence." In further conversations, landholders "shared similar concerns about a 'chavista' influence in rural areas, and the growth of marihuana plantations by peasants from some of the same social groups demanding land."

Upping the Ante on Energy Resources

In yet another provocation, Lugo issued fiery nationalist rhetoric on the campaign trail before assuming the presidency. Brazil, Lugo charged, should pay more for electricity which it received from Itaipu, a hydroelectric dam jointly owned by Brasilia and Asunción. The facility lies along the two nations' common border, and according to Americas Quarterly, "the electricity that fattens the Paraguayan coffers also supplies São Paulo state, Brazil's industrial engine, with power."

Much to Brasilia's chagrin, Chávez inserted himself into the energy imbroglio by supporting Lugo's nationalist claims. During a summit of the radical ALBA bloc of Latin American nations, which included Venezuela, Bolivia, Ecuador and Cuba, members stated that Lugo's proposals were a "prerequisite" leading to "the full sovereignty of Paraguay over all its hydroelectric resources." With Chávez, Evo Morales of Bolivia and Rafael Correa of Ecuador looking on, Lugo declared "we believe that a compañero, a friend like Lula cannot defraud us. Lula cannot tell us no when it comes to a just price and free availability of that energy [Itaipu]."

Whether Lula was moved by such solidarity and idealistic rhetoric is unclear, but according to sensitive emails leaked by WikiLeaks, Brazil is very concerned about securing ongoing energy access to Itaipu. The Strafor Corporation, a company that fronts as an intelligence publisher but provides confidential intelligence services to large corporations and U.S. government agencies, was particularly interested in finding out more about Brazil's agenda in Paraguay. One confidential source told the company that Brasilia was concerned about sabotage and unrest at Itaipu, adding that the Brazilian military had a contingency plan to secure the hydroelectric facility in the event of instability.

Meeting with the Americans

If Brasilia did not have its hands full enough with such worries, the Paraguay border presented yet another problem. Along the long and porous Brazilian-Paraguayan frontier, smugglers traffic in drugs and illegal arms and this contributes to rampant crime in Brazil's dangerous favelas. Far from distancing itself from the U.S., WikiLeaks documents reveal that Brazil shares Washington's concerns about the Paraguayan border and holds joint meetings with the Americans to discuss the situation.

In 2005, for example, the U.S. Ambassador in Brasilia hosted a lunch for General Jorge Armando Félix, the Minister for Institutional Security [the rough equivalent of the U.S. National Security Advisor]. During the meeting, the two discussed transnational crime and counter-terrorism operations in the Tri-Border area abutting Brazil, Paraguay and Argentina.

Brazil, then, is enmeshed in an extremely delicate game in the Southern Cone. On the one hand, the South American juggernaut does not want to jeopardize its relations with Washington, but on the other hand Rousseff would like to exert control over Paraguay, a country which has traditionally been a Brazilian buffer state. The Chávez card, meanwhile, adds yet another level of intrigue into the mix, making for an unusual geopolitical triangle.

Brazil Shows Paraguay Who's Boss

One WikiLeaks cable, dating to late 2008, hints at such underlying tensions. With land invasions running high in Paraguay, Brazil staged military exercises along the two nations' common border. According to the U.S. Ambassador in Asunción, Brazilian troops repeatedly encroached on Paraguayan territory. "We now have to demonstrate that we are a power," Brazil's Southern Command Chief warned, "and it is important that our neighbors know about it." In another shot across the bow, the officer reportedly remarked that Brazil would intervene if Itaipu dam were taken over by "social movements."

In an escalating war of words, Lugo retorted "Brazil can do what it wants inside its territory" but "we will not accept any interference." The President added, "If you believe that military exercises at the border or press statements are going to scare us, they will not." The Paraguayan military, meanwhile, went on alert as Lugo traveled personally to the border. The U.S. Ambassador no less accompanied the Paraguayan leader, and privately Lugo officials believed the diplomat's presence represented "a show of U.S. support for Paraguay to Brazil."

Perhaps, press reports speculated, the Brazilian military was sending a message to Venezuela. Just two months prior to Brazil's military encroachment, Chávez visited the rural Paraguayan department of San Pedro, known as the "epicenter of campesino activity." Within the area, agitation against the Brasiguayos was reaching a tipping point and Chávez, fanning the flames, had "singled out the department... for local development assistance."

One political analyst told the Americans that "the purpose of the Brazilian military exercises was to warn... Chávez that Paraguay is linked to Brazil's security plan and to not meddle in Paraguay's internal affairs by financing pro-Venezuelan political campesino groups." If that was the intention, however, then the Brazilian maneuvers surely backfired. In a sign that he would not back down, Lugo banned foreigners from owning property for agricultural purposes.

Removing the Chávez Card

Fast forward a couple of years to Lugo's ouster, and the new political milieu in the Southern Cone would seem to benefit the U.S. while hindering Brazil. The rightist de facto Franco administration in Asunción has realigned itself with Washington and opted out of South America's leftist Pink Tide. After Rousseff moved to suspend Paraguay from Mercosur over the Lugo affair, Asunción even warned Brazil that it might cut off the electrical supply to its powerful neighbor via Itaipu.

Yet, look beneath the surface rhetoric and the new geopolitical configuration may serve to benefit Brasilia in certain respects. The incoming Franco administration has shown itself to be very partial to agribusiness and therefore the Brasiguayos have little to fear in the countryside. Needless to say, with Lugo now gone the prospects for land reform look more distant than ever. Moreover, there is little chance of Chávez causing any rural mischief at this point, since Franco and his clique are virulently anti-Venezuela.

Indeed, if there was any big loser in the Paraguay reshuffle, it was Chávez, whose larger hemispheric ambitions have been dealt a severe blow. The removal of the Venezuela card, then, simplifies the geopolitical battle in the heart of South America which now pits two powers against each other where once there were three. In Paraguay, Washington has political and military leverage, while Brazil enjoys economic influence. So far, Rousseff has been careful not to upset the Obama administration, preferring instead to pursue a kind of "under the radar" diplomatic strategy. As the U.S. stages a comeback in Brazil's backyard, however, Rousseff may wonder whether the time has come to finally push back.

Nikolas Kozloff is the author of Revolution! South America and the Rise of the New Left. Follow him on Twitter: @NikolasKozloff