Ex-Dictator’s Party Bids to Regain Power in Paraguay Vote

The outcome of Paraguay’s election this weekend is too close to call after Horacio Cartes, a tobacco magnate and political newcomer, saw his comfortable lead in the polls ebb away in the past few weeks.

Efrain Alegre, a former public works minister, had 37 percent support in an April 3-11 poll by Gabinete de Estudios de Opinion, while Cartes had 35 percent. The survey of 1,400 people had a margin of error of 2.6 percentage points. A month earlier, surveys gave Cartes a lead of as much as 13.5 percentage points.

Cartes, 56, wants to return the Colorado Party of former dictator Alfredo Stroessner to power after it lost elections in 2008 and left office for the first time in six decades. Cartes backers say they hope he can use his entrepreneurial skills to sustain and develop an agricultural boom forecast to spur the fastest growth in South America this year. Opponents say he won’t tackle inequalities that fueled a constitutional crisis 10 months ago and led to the ouster of President Fernando Lugo.

“Paraguay has a deeply entrenched, conservative elite,” said Andrew Nickson, who directed a European Union project on state reform in the landlocked nation and forecast a victory for Cartes. “You have a rapidly growing economy and the trickle-down effect of that is minimal.”

Support for Alegre grew after he won the backing of the Unace party of the late Lino Oviedo, a former army chief who was polling in third place before his Feb. 2 death in a helicopter crash, Jose Morinigo, director of Gabinete de Estudios de Opinion, said by phone from Asuncion.

Winner’s Challenge

Paraguay is the poorest country in South America after Bolivia, with a gross domestic product per capita of $6,788 this year, according to the International Monetary Fund.

Paraguay sold debt overseas in January for the first time to finance investment in infrastructure. The $500 million bond sale came after Moody’s Investors Service raised the nation’s credit rating one level to Ba3 on Jan. 8, citing its “improved medium-term growth prospects.”

The economy of the world’s fourth-largest soybean exporter will expand 11 percent this year due to a bumper harvest, according to the IMF. Agriculture accounts for a quarter of the nation’s $24 billion economy.

The yield on Paraguay’s 4.625 percent dollar bond due January 2023 has declined 30 basis points, or 0.30 percentage point, to 4.41 percent since Feb. 1. The guarani slid 0.7 percent to 4160 per U.S. dollar in trading today, according to prices compiled by Bloomberg.

Easing Poverty

The challenge for the winner of the April 21 vote is to help lift the third of the nation’s 6.6 million citizens living on less than $4 a day out of poverty. Although Paraguay is the world’s largest generator of hydro-electricity, the capital of Asuncion suffers from frequent blackouts because of under-investment in transmission lines.

The winner will have to rebuild ties with the regional trade bloc, Mercosur, after Paraguay’s membership was suspended last June when lawmakers ousted Lugo, a former Catholic priest.

Lugo’s impeachment was so quick that South American leaders likened it to a parliamentary coup. Mercosur includes Brazil, Argentina, Uruguay and Venezuela.

Alegre, a 50-year-old senator, was Paraguay’s most successful public works minister, overseeing a surge in road-building under Lugo, according to Fernando Masi, director of Asuncion-based economic research company Cadep.

Over two decades Cartes has built a business empire that spans the cigarette, banking, cattle-rearing, and fruit juice industries and is president of Club Libertad, one of the country’s top soccer teams.

‘Land Inequality’

Cartes, who helped secure passage last year of the country’s first income tax legislation, said if elected he’ll boost tax collection and spur private investment in infrastructure. Alegre has pledged to crack down on corruption and drug-trafficking and provide credit lines to small farmers to ease rural poverty.

Lugo failed to build support for his policies of redistributing land and was blamed by the country’s elites for an increase in territorial disputes.

The event that triggered impeachment came on June 15, 2012, when a shootout between landless peasants and police left 17 dead, including six officers.

Federico Franco, Lugo’s vice president, is leading the country until the new president takes office Aug. 15.

“The problem of land inequality is a time bomb,” said Nickson, who’s been a regular visitor to the country since the 1960s and co-edited the political and historical anthology “The Paraguay Reader” published last year. “It’s one of Lugo’s biggest failings that he didn’t get to grips with the growing problem of landlessness, nor is it being addressed by the two major parties.”

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