New Leader Vows to Clean Up Paraguay

After surviving the worst political violence since the overthrow of a kleptocratic dictator 10 years ago, Paraguay’s new government Monday hailed the heroes of a weeklong national drama and promised to bring the villains to justice.

New President Luis Gonzalez Macchi said the heroes were students who dodged sniper fire to defend democracy in a vigil outside the National Congress. Many Paraguayans saw the villains as the thuggish forces of former Gen. Lino Oviedo, the strongman who found himself disgraced and in exile after the president who was his political protege resigned Sunday to avert a blood bath.

After a swearing-in ceremony in the National Congress, during which he shook hands with a stretcher-borne youth recovering from a gunshot wound, Macchi promised Monday that his coalition government will attack institutionalized lawlessness.

“Our first measure will be the fight against corruption,” said Macchi, a member of the long-ruling Colorado Party. “That is vital. I don’t think Paraguay will have another opportunity like this one for all of us to work together for progress.”

The government has a lot of work to do. During the 10 years in which Oviedo became a dominant political figure here, Paraguay consolidated its role as a strategic bastion of mafias involved in billion-dollar criminal industries, including contraband, drug smuggling, money laundering, product piracy, even Middle Eastern terrorism.

Widespread accusations here that Oviedo ordered last week’s assassination of Vice President Luis Maria Argana, which detonated this latest national crisis, only reinforced the worst-case scenario envisioned by South American and U.S. diplomats: the rise of Paraguay as a gangster-state.

“At what point does it become a failed state?” a U.S. official asked. “At what point do you have a criminal class that has more power and resources than the political class? We aren’t there yet, but if you look at it on the continuum, it’s not incredibly far down the road.”

Meanwhile, Argentine authorities angered Paraguayans on Monday by granting political asylum to Oviedo. He had fled with his family in a private plane to Argentina on Sunday night after the resignation of President Raul Cubas Grau, who diplomats say had allowed Oviedo to largely control the government.

The asylum decision “is not a value judgment on a person as much as an effort to resolve a difficult political situation,” said Argentine Justice Minister Raul Granillo, asserting that Argentina wants to help pacify Paraguay. “Asylum by no means impedes extradition.”

In fact, Paraguayan prosecutors arrived in Buenos Aires on Monday intent on extraditing the fugitive ex-general. They want to return him to prison to complete a 10-year sentence he received for attempting a military coup in 1996--an imprisonment interrupted when Cubas ordered his release last year.

Moreover, Oviedo is under investigation in the slayings of six pro-democracy demonstrators last weekend at the hands of Oviedo supporters--including a Finance Ministry bureaucrat whom television cameras showed casually firing a pistol into a crowd--and in Argana’s assassination.

Argana’s death in a street ambush a week ago, and ensuing scenes of bodyguards rushing senators in bulletproof vests into the National Congress, recalled Colombia and other Latin nations besieged by organized crime.

The crisis culminated a three-month terror campaign in which assailants armed with guns and bombs attacked the homes of Oviedo’s political rivals, including a former president and a Supreme Court justice. Although corruption is a tradition here--a government watchdog agency estimates that more than $6 billion was pilfered in 1997 and 1998--political violence is not.

“The slaying of Argana really broke the rules,” said U.S. Ambassador Maura Harty. “It was an escalation from violent rhetoric to actual violence.”

Argana’s allies have alleged that drug traffickers played a role in the killing. And Oviedo’s alleged links to drug traffickers based at the porous border with Brazil heightened fears of a “Colombianization” of Paraguay, a process rooted in the dictatorship of Gen. Alfredo Stroessner.

During his 35-year regime, which ended in 1989, Stroessner turned this landlocked nation the size of California into a smugglers’ paradise. His successor, Gen. Andres Rodriguez, also was accused of enriching himself off smuggling, particularly the drug trafficking that uses Paraguay as a transit nation for Bolivian cocaine bound for Europe and the United States.

Oviedo is the product of a political and military hierarchy that is widely alleged to have taken payoffs from an influx of Asian- and Arab-dominated mafias to the triple border where Paraguay, Argentina and Brazil meet. His political machine was lavishly--some say suspiciously--financed, according to U.S. officials and his Paraguayan rivals.

“This guy spent a career in the armed forces as a mover and a shaker,” a U.S. official said. “He made a lot of money in an old-fashioned protection scam because he controlled the guys who looked the other way. He had all sorts of nefarious contacts with people doing nefarious things. No big deal went down in this country without him knowing about it.”

Although Oviedo has denied links to traffickers, Paraguay’s anti-drug fight deteriorated as his power increased. Last year, the United States gave Paraguay its second failing grade in recent years during the annual drug certification process. The U.S. review cited distracting political turmoil spurred by Oviedo and “no serious investigations” into allegations that judges, police, the military and legislators protect traffickers.

Organized crime interlocks with another destabilizing factor that worries the U.S. and Israel: Middle Eastern terrorism in the heart of the continent. The CIA and FBI are aiding a multination crackdown on members of Hezbollah and other groups who take refuge in Arab merchant communities at the triple border, easily acquire fake documents from Paraguayan officials and finance themselves with illicit activities. The region allegedly was a base for terrorists who have carried out two major bombing attacks on Jewish buildings in Argentina this decade.

In January, the CIA and Argentine agents engineered the arrest of an alleged Egyptian terrorist whom they detected living at the triple border. He is a suspected lieutenant in the Islamic Group, an organization linked to the World Trade Center bombing and terrorist warlord Osama bin Laden.

“What’s remarkable is how the Middle East combat has spread to Latin America,” said a senior Argentine intelligence official. “You have all the principal terrorist groups establishing themselves at the triple border.”

Despite positive rhetoric from the Cubas government on anti-terrorism, all manner of law enforcement cooperation deteriorated during past months as Paraguay slid into near-anarchy, according to U.S. officials.

Now the “national unity” government assembled by Macchi, which includes members of the longtime political opposition, must make good on its promises to investigate the alleged crimes of the Oviedo forces and, more broadly, dismantle a veritable culture of corruption.

“The embassy is hopeful that reform will be a little easier, that they will attack corruption a little more,” a U.S. official said. “But we have no illusions that it will change overnight.”