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What the new President has in store for Paraguay

Analysts believe he will promote pragmatic policies and restore relations with neighbors.

The candidate of Paraguay’s conservative Colorado Party coasted to victory on Sunday, marking a return to power for the party that ruled the country for 61 years before losing to Fernando Lugo in 2008.

The country made headlines last year when Lugo was removed from power in an express impeachment (which some called a coup) by opposition Colorado senators that saw the country expelled from regional trade bloc Mercosur and the Union of South American Nations.

The new president-elect – Horacio Cartes – is a businessman and tobacco farmer, and a political neophyte. He has never before held political office, and declared that this was the first election in which he ever voted.

While the president proposed no concrete economic platform during the campaign, analysts believe he will promote a pro-business agenda. “His economic policies are going to derive from his history as a businessman,” says Miguel Carter of American University.

This will include continuing the fiscal prudence of the Liberal Party that preceded him, which permitted the country to issue its first sovereign bond in decades; the country should also experience double-digit economic growth by year’s end due to a record soybean crop after a small contraction last year. 

Carter says Cartes will support the status quo and will be pragmatic. He points out that Cartes has firmly opposed changes to the country’s tax code that would allow the taxation of agriculture exports on the basis that it would hurt exporters.  On the campaign trail he promised to create jobs, promote rural development, increase manufacturing, and promote public-private partnerships.  This pragmatism extends to cabinet appointments, which he promised would go to those most qualified.

But this insistence on pragmatism might run counter to his party’s expectations, says Carter. The Colorados have a long history of handing out jobs based on patronage and political connections, and will expect Cartes to deliver them. “It’s going to be a tight balancing act between pragmatism and pleasing his party,” Carter says.

On the international front, Cartes has expressed his desire for the country to rejoin Mercosur, the regional trade bloc it founded with neighboring Argentina, Brazil, and Uruguay. The remaining three members took Paraguay’s expulsion from the body to approve the entry of Venezuela into the bloc, which had long been held up by the Paraguayan Senate.

Analysts believe Cartes will push for the Senate to approve Venezuela’s entry. Gunther Baumgarten, an analyst at Latin News says he might use Paraguayan approval of Venezuela’s admission into Mercosur as leverage in negotiating the joint hydroelectric dam projects the country shares with Argentina and Brazil – Yacyretá and Itaipú, respectively. “Cartes could definitely hold Venezuela’s admission over their heads as a bargaining piece for better terms on the dams,” Baumgarten said. 

Cartes will assume office from sitting President Federico Franco on August 15.

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