Paraguay's unrest threatens stability of divided Mercosur

Paraguay's political instability continues to reveal the cracks in the regional common market, Mercosur, made up of Argentina…

Paraguay's political instability continues to reveal the cracks in the regional common market, Mercosur, made up of Argentina, Uruguay, Brazil and Paraguay, which aims to become the Latin American equivalent of the EU.

While Argentina and Brazil both played a major role in resolving Paraguay's immediate crisis last week, the methods used to do so - granting asylum to political leaders the Paraguayan opposition would like to bring to trial - leave many problems unresolved.

Tensions within the country still remain high. The new president, Mr Luis Gonzalez Macchi, is trying to control the unrest bequeathed by his predecessor, Mr Raul Cubas (now in exile in Brazil) and Mr Cubas's mentor, Gen Lino Oviedo (now in exile in Argentina).

Meanwhile, Uruguay has yet to formally recognise the new Paraguayan government as allegations fly between the two countries of involvement by Uruguayan politicians in the assassination of former vice-president, Luis Maria Argana, shot dead in the capital, Asuncion two weeks ago.

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e Luis Galaverna, a Paraguayan senator and close ally of the new President Luis Gonzalez Macchi, accused former Uruguayan president, Dr Luis Sanguinetti, of harbouring "sympathy and support" for Gen Oviedo. More serious, however, were Mr Galaverna's allegations against Mr Walter Nessi, Mr Sanguinetti's right-hand man, who, according to Mr Galaverna, financed the assassination of vice-president Mr Argana, the event which sparked off the current crisis and toppled President Raul Cubas, now in Brazil.

Mr Galaverna also pointed the finger at Mr Raul Reali, an Argentinian businessman, an Oviedo ally and director of the multibillion dollar Yacyreta dam project, claiming he paid $150,000 to finance Mr Argana's killing.

Uruguay justified the delay in recognising Mr Macchi's government, commenting that "the situation has yet to be clarified", a reference to Mr Macchi's initial plan to remain in government until the year 2003, since revised to permit fresh elections next November.

President Macchi finished a turbulent Easter week by announcing he would seek to "revise" the Mercosur treaty as it was "inherently imbalanced" against smaller countries, such as Uruguay and his own country.

Mr Macchi compared Paraguay's entry to Mercosur with the entry of Ireland and Portugal into the EU, citing the provision of structural funds to help weaker European economies survive the adjustment to economic unity with more powerful neighbours.

"Integration took 50 years in Europe," said Mr Macchi, "and we were supposed to achieve it in just five years." Paraguay has a population of five million people, just over 2 per cent of the combined Mercosur population.

The situation in Paraguay itself remains far from stable. Within 72 hours of Mr Macchi's new coalition government taking office in Asuncion last Tuesday, 200 arrest warrants had been issued against suspected allies of exiled coup general, Lino Oviedo. Two journalists were imprisoned for "incitement to violence" and a pro-Oviedo senator was attacked in congress, narrowly escaping a lynch mob by barricading himself inside an office until police reinforcements arrived.

The crisis has also brought into sharp focus the thorny issue of political asylum within Mercosur for leaders with dubious democratic credentials. The presence of Gen Oviedo in Argentina, convicted of organising a coup attempt, as a guest of a business associate of the President, Mr Carlos Menem, continues to raise hackles. Mr Macchi has been needling Mr Menem through the press.

"Argentina might have their reasons to grant asylum for now, but we will see how they react when we prove that he [Oviedo] is a common criminal," Mr Macchi said. Mr Menem defended the asylum granted to Gen Oviedo, reminding Mr Macchi of the "historic debt" incurred by his country when Paraguay provided a ship and a safe haven to the late president, Juan Peron, the night he was toppled by a military coup in 1955.

Gen Oviedo's exile was negotiated between Mercosur members with the approval of the US government, embarrassed at the rise of yet another ambitious military figure at a time when civilian rule is de rigeur in the region, and a basic principle for Mercosur membership.

Brazil and Argentina are now home to Paraguay's three most controversial political figures of the past half century; former dictator Alfredo Stroessner, Gen Oviedo and Raul Cubas. The Pinochet case raises some interesting - and potentially embarrassing - parallels.

"The personal and financial interests linking Mercosur politicians and generals are far too inter-dependent to allow any such trial," commented Mr Roger Garcia Lupo, an Argentinean political analyst.

The incomplete resolution of the Paraguayan crisis is a reminder that Mercosur countries are still sharply divided by competing political and business interests, after decades of corrupt rule, in which fortunes were made by ties to powerful politicians and generals rather than through personal capacity.

"Mercosur is so important that over time, the affairs of our neighbours are becoming our affairs too," wrote Vice President Carlos Ruckauf of Argentina in an opinion column published yesterday, suggesting that regional pressure will be exerted to continue Paraguay's tortuous path to democracy, paved with thousands of deaths over the past 50 years.