Paraguay is mocked once again

By Peter Tase

Connecting Paraguay closer to the Asia-Pacific countries has been a  heartfelt priority for President Horacio Cartes as an overall strategic objective in his foreign policy. The truth is that the foreign ministry of Paraguay has rarely undertaken such concrete and positive steps towards reaching President Cartes’ aspiration, while Asuncion’s assets are not always limited.   Unfortunately the efforts of Paraguayan diplomacy are irrelevant and lack pragmatism.

Paraguay has an unfavorable geographic position as it is one of the two land locked countries of South America (the other being Bolivia). Asuncion has been forced to utilize more political arm twisting and regional foreign policy resources in order to overcome its geographical limitation.  Bolivian border is key for Paraguayan exports and economic growth, so that future supply levels of Paraguay’s agricultural products, which are highly in demand,  continue to grow in the markets of the Andean region as well as in the ten member countries of the Association of South East Asian Nations (ASEAN).  Moreover, establishing closer ties with Bolivia would help Paraguay avoid its normally troubled trade routes via Argentina, which always have proved to be problematic and have caused a great deal of damage to Paraguayan international trade ambitions. Those Paraguayan export-import companies whose shipments proceed through the  Argentinean territory are subjected to extensive search by border patrol and currently will receive even more touch sanctions in addition to receiving a delayed service by Port Authorities in Buenos Aires. [1] The Paraguayan Foreign Ministry does not realize the importance of establishing pragmatic relations with Bolivia in order to further develop international trade, in order to reduce poverty levels at both sides of the border and bolstering its economic integration.  Asuncion’s current relations with La Paz are a clear example of how Paraguayan Foreign Minister, Ambassador Eladio Loizaga is implementing his nation’s foreign policy, and particularly its bilateral relations with Bolivia, a country that received President Cartes on December 6^th, 2013. [2]

There are no reasons why both countries can’t resume their regular meetings of the Bilateral Cooperation Technical Committee, which first met in Bolivia over two years ago and awaits Asuncion’s formal invitation letter to attend the second round of meetings on the Paraguayan soil.  Paraguay’s Foreign Ministry, on many occasions, as in the case of Bolivia, has proved to be operating at a slow tempo and in some cases does not even execute the prioritized items of President Cartes’ agenda.  In the last six years, Asuncion has not appointed an Ambassador to Bolivia, which on its part, is a marked sign of disrespect and negligence.  Currently, Asuncion has only three diplomats in the Bolivian capital, while La Paz has a diplomat in charge of commercial affairs in Asuncion. [3] In December 2013, President Cartes met in La Paz with President Evo Morales; on this occasion, both leaders signed a memorandum of bilateral cooperation.[4] Nevertheless, in spite of this gesture of good-will, the diplomatic representation of both countries has not been elevated to the Ambassadorial level. [5]   The lack of sufficient interest on the part of the Paraguayan Foreign Ministry is counter-intuitive, given that Bolivian territory and infrastructure networks could play an important role towards expanding the presence of Paraguayan products in the Andean nations’ markets.  As of 2013, Peru, Bolivia and Chile imported more than US$831 million worth of products from Paraguay.  At the same time, Paraguay’s magnitude of trade is almost insignificant with Ecuador, Colombia and Panama.  (See note A) [6]

Obsolete Foreign Policy

Dr. Eladio Loizaga,  Paraguay’s Minister of Foreign Affairs, is perhaps the sole cabinet member responsible for making the Paraguayan state suffer from the consequences of not being able to reap the benefits of a prospering regional commerce that is vital for its economy.  The rural sector in Paraguay continues to linger from a lack of resources and a marginalized commercial industry, due to the unwillingness of Foreign Minister Loizaga to work with multi-national corporations who are eager to invest in Paraguay.  The rural territories of Paraguayan Chaco, the City of Villa Florida and Department of Ñeembucú have experienced tremendous losses in livestock, destruction of more than ten thousand homes and the road infrastructure is under water, due to the recent flooding caused by a heavy rain, during the last month.    According to a currently-serving Paraguayan key diplomat who spoke with Foreign Policy News research staff on the condition of anonymity, “Mr. Loizaga is a career Ambassador who has clearly demonstrated that he has not learned his country’s diplomatic-priorities when appointed  abroad as the highest representative of his country.”

It would be useful to know the main agenda items of Minister Loizaga and the daily priorities of the majority of Paraguay’s career diplomats when they return to Asuncion after representing and serving for their country abroad.

In assessing the abandonment of Paraguayan interests in Bolivia, there is no other choice but to raise  the question: Do the leaders of the Paraguayan Foreign Ministry understand that Paraguay is a land locked country that needs to strengthen ties with Bolivia, which is the only bordering country that imports more products from Paraguay than it exports? (See note B) It is unavoidable for Paraguay to embrace Bolivian infrastructure in order to reach the Pacific Markets and free trade zones-deep water ports provided by the Chilean government, such as the cargo and logistical hub of Antofagasta with access to the Pacific shipping routes.  At the same time, Peru has been markedly cooperative with the government of President Cartes; including the opening of two free trade zones in Illo and Matarani.[7]

Diversification of global presence

Paraguay’s priority is to break its dependency from its partner countries in MERCOSUR trade bloc.  In order to achieve this goal it is vital to find new markets, routes and ways of communication with Andean countries, as well as take advantage of their highly cooperational attitude and use them as a bridge for reaching the Pacific Coast to expand ties with South-East Asian developed nations.  In May, 2013, Asuncion became one of the thirty observing countries of the Pacific Alliance, and is expected to become a full member of the bloc within the next two to three years. The nation also has yet to  appoint ambassadors  to Peru and Mexico.

Historically, Argentina has placed obstacles and extensive customs controls against exports such as clothing, cotton and beef products to Chile and organic sugar to Europe that has been delayed in the process of shipment at the port of Rio de la Plata. [8] It is customary for Argentinean authorities to exert extensive controls over Paraguayan exports destined for the Pacific Coast with the intention of causing critical problems to the Paraguayan economy and its international commercial shipment routes. Additionally, Buenos Aires refuses to respect the framework of the La Plata Basin Treaty of 1969 termed as ‘Hydrovia’ which assures the river transportation is operational year round as well dredge and straighten major portions of the Paraná and the Paraguay rivers.  Such actions by Buenos Aires are also against the international treaties signed by both countries at the World Trade Organization. [9] There are two particular problems that Paraguay has faced with Argentinian border patrol agents: For one, Argentina’s border stations where extensive control of shipments witness exhaustive long waiting lines hinders the progress of Paraguay’s international trade; are far from being routed.   Secondly, the shipments of Paraguayan commodities to Chile that are delayed as a result oblige Chilean customers to find other providers of agricultural commodities.[10] Taking this into account, the only way to avoid tiresome and time consuming route corridors in Argentina’s territory is to go through Bolivia.

Improvement of Relations with Bolivia

There is a  strong likelihood that Paraguay’s Career Diplomats do not realize that Bolivia is the only neighboring country that imports more products and crops from Paraguay than it exports.

Indeed, there are high commercial and economical stakes involved in the expanding bilateral relations between Bolivia and Paraguay.  When President Cartes visited President Morales on December 6^th, 2013, which was his first official visit to Bolivia, he stated:  “I feel highly emotional, I will express to President Morales that I am here with a great joy.  Look at the map and see our countries together… Paraguay is Bolivia, our roads and rivers are for Bolivia. The two of us [Morales and Cartes] have an obligation to unite both [of their] nations.” [11] In his meeting with President Morales, the Paraguayan head of state, initiated a bilateral dialogue for importing Bolivian natural gas to the Paraguayan territory. [12] Hope remains high that the Paraguayan Foreign Ministry would actively pursue this strategic initiative that would potentially integrate further the economies of the two countries.

The future of regional presence and Bolivia’s role in the process

In order to seek major commercial gains, it is of critical importance for Paraguay to expand its global reach with agricultural and livestock products of high quality and increase its volume of exports to Ecuador, Colombia, Guatemala, Panamá and Nicaragua.  Moreover, Paraguay should explore the development of free trade agreements with countries beyond Latin America, such as Indonesia, Vietnam, Malaysia, South Korea, Taiwan and Thailand, with which it currently has significant trade and political ties.

Bolivia is the perfect country to help Paraguay succeed economically as well as to significantly expand its presence abroad.  It is clear that Paraguay’s “Career Diplomats” ignore the country’s geographic limitations and lack a vision towards implementing the dynamic and notably pragmatic agenda of President Horacio Cartes.

Dr. Eduardo Insfrán, a former Paraguayan ambassador to Argentina, Costa Rica, and Panama, who has served his country for over 25 years,  assures the Foreign Policy News that his former employer has not showed any keen interest to develop and invite SinoHidro to potentially establish a regional office in Asuncion. [13] This company is a 60-year-old Chinese corporation and enterprise to be found in the infrastructure sector, its strategic interest is to expand its operations in Latin America.

According to Ambassador Insfrán:  “The Foreign Ministry has no interest to receive grants and significant funds that could transform the logistical technology and infrastructure of Paraguay. What we are seeing is the result of a lethargically professional lifestyle and inactions of Foreign Minister Loizaga. [14]

The bilateral relations of Paraguay with Bolivia, are characterized by ABC Color, Paraguay’s largest national newspaper, ‘as a sign of being rude and impertinent” due to the absence of its ambassador in La Paz.   Even though Bolivia has a strategic importance as Paraguay’s corridor to the Pacific Alliance and ASEAN, in addition to orchestrating President Cartes’ official visit, Asuncion has not managed to commission a single initiative to improve its relations with the Morales Administration. [15]

Bolivia is the only country in the region that has not granted official permission to Paraguay in order to transport Paraguayan products through its road system. [16] Meanwhile, the representatives of Bolivian Foreign Ministry confirmed again that Bolivian diplomats are waiting for a formal invitation from Ambassador Rigoberto Gauto Vielman, the newly appointed Paraguayan vice Minister of Foreign Affairs in charge of economic integration affairs, in order to schedule a meeting and to define the appropriate route corridors to be used by Paraguay. [17]

Demonstrably,  it is not the fault of Bolivia, since it is up to Asuncion to continue the discussions that were initiated in Bolivia, in the course of the last trip of President Cartes in December, 2013.

Bolivia is a mountainous country, but its roads were built while following the sectors with a lower altitude and above all is currently building a sustainable infrastructure that connects valleys and high plateaus. By  going through Bolivia, Paraguayan logistical companies and exporters could save 800 kilometers every time they travel to Chile. Recent developments and the great infrastructure boom that is now being implemented in Bolivia, ought to be taken as an example by its Paraguayan counterparts.[18]

President Cartes, upon his return from Chile in March, 2014, was very optimistic about prospects with its ties to Chile.  He made assurances that President Bachelet is eager and open to expand the Pacific Alliance with countries that at times are closer to the Atlantic.  Although Peru and Chile are two successful countries in South America, we must bear in mind that both countries have scarce resources and soil limitations that negatively affect the agricultural and livestock production, therefore Paraguayan agricultural products can fulfill the demands that these two countries continue to have.

The enthusiasm of President Horacio Cartes is in harmony with the strategic interests of Paraguay in the XXI century; however his nation’s infrastructure needs serious improvements in order to be integrated into the regional grid of rail tracks and modern road infrastructure systems.  Unfortunately, Paraguay has no reliable infrastructure to reach the Andean Countries of Peru, Ecuador, Colombia, Chile and Bolivia; nations which have a combined GDP of US$ 947 billion as of 2012.  Given the current poor road connections between Paraguay and its neighbors and its largely irrelevant diplomacy,  the positive ambitions of President Cartes are doomed to remain on paper for as long as there is no well-coordinated effort to increase the presence of Paraguayan products in Asia-Pacific markets as well as improve Paraguay’s image abroad by reinvigorating its relations with regional countries and the ASEAN group of nations. [19]

The logical option is for Paraguay to avoid the interconnection routes passing through Argentina and focus towards establishing a high standard routes system connected to Bolivia, running through the Paraguayan Chaco. [20]

It is possible that the Foreign Ministry and its staff will continue to be dormant while XXI century regional challenges and sustainable development of Paraguay will continue to persist.  Moreover, Paraguay’s impressive economic growth requires Asuncion to be a more agile player in the international markets, as President Cartes stated: “[he] would like to see the completion of public works and tangible results of [our government] be visible in a more efficient manner”.  President Cartes has admitted that he continues to be uncomfortable with the speed on how the government offices operate and administer public money. [21] It is time to engage a well-trained young generation of Paraguayans from Alto Parana to Ñeembucú and from Itapúa to Alto Paraguay in order to make Asuncion’s foreign policy more pragmatic, globally interactive and visionary.

References:

http://www.abc.com.py/edicion-impresa/politica/cartes-viaja-manana-a-la-paz-para-reunirse-con-evo-646479.html

http://ecodiario.eleconomista.es/politica/noticias/5374159/12/13/Horacio-Cartes-llega-a-Bolivia-en-su-primera-visita-oficial.html#.Kku8e1fLqErrfRI

http://www.abc.com.py/edicion-impresa/politica/paraguay-no-busca-salir-al-pacifico-1218556.html

http://www.abc.com.py/edicion-impresa/economia/paraguay-deberia-aprovechar-ventajas-del-puerto-franco-en-antofagasta-211229.html

http://sur1810.com/nota/7340/bolivia_y_paraguay_restableceran_embajadores_tras_visita_de_cartes/

http://www.rediex.gov.py/publicaciones-de-comercio-exterior-exp2

http://www.rediex.gov.py/publicaciones-de-comercio-exterior-exp2

https://docs.google.com/file/d/0B27xUCV6nxI8cTVqdHdwejNkcDQ/edit?usp=sharing

http://www.ultimahora.com/argentina-pone-mas-trabas-las-importaciones-n229748.html

http://historico.elpais.com.uy/120323/ultmo-632299/ultimomomento/paraguay-prepara-acciones-judiciales-contra-trabas-argentinas/

http://www.abc.com.py/edicion-impresa/politica/argentina-no-cumple-convenios-que-protegen-el-transito-internacional-1225647.html

http://www.americaeconomia.com/economia-mercados/comercio/argentina-impone-20-trabas-comerciales-paraguay-que-violan-los-tratados-d

http://www.abc.com.py/edicion-impresa/suplementos/empresas-y-negocios/argentina-cuando-los-numeros-no-cierran-625104.html

http://www.lanacion.com.ar/1499332-en-la-argentina-y-paraguay-ya-hablan-de-una-guerra-fria

http://www.abc.com.py/edicion-impresa/politica/bolivia-es-el-paso-natural-de-nuestro-pais-para-llegar-al-puerto-de-iquique-1226880.html

Notes:

[A] In 2013 Paraguay exported agricultural comodities to Colombia, Ecuador and Panama with the value of 40 USD Million, 16 USD Million and 3 USD Million respectively. 

[B] In 2013, Bolivia imports agricultural products from Paraguay with a value of 54.7 USD million; while Paraguay imported only 5 USD million worth of commodities from Bolivia.  La Paz imports from Paraguay large quantities of crops, pharmaceuticals and grain.