ELECTIONS : Democracy in Paraguay Facing Crucial Test : Sunday’s presidential vote will tell whether the ruling political and military machine can tolerate an opposition victory.

It will be a milestone on the bumpy byways of Latin American democracy if Paraguayans freely elect a civilian president Sunday, as scheduled, then abide by the results.

They have never done so before.

The question on many minds here is whether the political-military machine that ruled with Gen. Alfredo Stroessner for 35 years will tolerate an opposition victory.

Although Stroessner has been in exile since a 1989 coup, the army and the Colorado Party that long supported him remain entrenched in power. Fears of electoral fraud by the Colorados or a coup by the army make this fledgling democratic process a shaky one.

“This is the first of four democratic elections this year in the hemisphere, and we want this one to work,” said a U.S. Embassy source. Presidential elections are scheduled for June in Bolivia and for December in Chile and Venezuela.

More than 200 foreign observers, including a team from the Organization of American States, are here to reinforce democracy by helping monitor Sunday’s voting. Former President Jimmy Carter will head a 25-member international delegation.

U.S. Ambassador Jon Glassman has provoked the ire of some Colorado politicians with his advocacy of fair elections in this nation of 4 million. One of his remarks was widely interpreted as a rebuke to a powerful army general.

The general, Lino Oviedo, said in April that the army had decided to continue “to co-govern with the glorious and immortal Colorado Party per secula seculorum (for all time) , no matter who likes it, whom it disturbs, whom it hurts.”

Oviedo’s remark set off a flurry of coup rumors. Glassman responded, “If he has said that, he has made a mistake.”

This week, a Colorado congressman submitted a bill to request Glassman’s removal as ambassador for interfering in Paraguayan affairs. Glassman “raises himself up as the censor of the country’s political life,” said Sandino Gil Oporto.

But presidential candidate Domingo Laino, 57, told reporters that the ambassador’s approach contrasted favorably with U.S. support for military dictatorships in bygone years.

Once a left-leaning gadfly who suffered imprisonment and exile for his stubborn defiance of the Stroessner regime, Laino now is a centrist who endorses free-market economics. His Authentic Radical Liberal Party is, in essence, Paraguay’s traditional Liberal Party with a longer name.

The Colorados (Reds) and blue-bannered Liberals have vied for power since the 19th Century. The Colorados have held it since 1947--longer than any Latin American party except Mexico’s Institutional Revolutionary Party.

The aging Stroessner’s control over the dictatorial system was slipping when Gen. Andres Rodriguez, his longtime protege, led the coup against him. A grateful electorate then voted Rodriguez into the presidency for a four-year transition period.

The Colorado candidate for the five-year term starting Aug. 15 is Juan Carlos Wasmosy, 54, an engineer who got rich in the 1970s on contracts to help build the giant Itaipu hydroelectric dam on the Parana River between Paraguay and Brazil. Opposition politicians accuse Wasmosy of receiving contracts unfairly in connivance with Stroessner. “I categorically deny it,” Wasmosy told a news conference this week.

Laino, Wasmosy and Guillermo Caballero are the three leading candidates in a field of nine. Caballero, 49, is a wealthy businessman whose new National Encounter Party has received support from dissident Colorados who say Wasmosy won their party’s primary elections in December by fraud.

An opinion survey in late April by an affiliate of Gallup gave Caballero 35.8% of voters’ preference, Wasmosy 26.6% and Laino 23.2%. Other polls around the same time produced similar results.

Campaign law prohibited publication of polls in the last two weeks. But some analysts say the percentages probably have changed. Laino’s performance in a debate and a massive public rally may have helped him improve his percentage, while strong Colorado appeals for party unity may have won back many dissidents.

If it is a close race, some analysts say, scattered, hard-to-prove voting fraud could be decisive. Another scenario is disruption of the process by vandalism or violence, which could make it necessary to hold new elections. Then there is the coup scenario.

Political analyst Esteban Caballero said the sentiment voiced by Oviedo for keeping the Colorado Party and army in power does not seem to be an isolated attitude. “Nobody has contested him from within the army,” Caballero said.

But Rodriguez vowed in a speech Friday “to carry out the elections in an atmosphere of transparency and democracy so that the result will bestow full legitimacy on the next government.”

Paraguay at a Glance

Population: 4.8 million

Area: 157,047 square miles (about the size of California)

Monetary unit: Guarani

Languages: Spanish, Guarani

Religion: Roman Catholic

Economy: Food processing wood products, textiles, cement, agriculture (corn, cotton beans, sugar cane) and mining (iron, manganese and limestone)