PARAGUAY:Paraguay's main opposition presidential candidate wants a new pricing deal on the Itaipú dam, writes Tom Hennigan
ONE OF the engineering wonders of the modern world, the Itaipú dam, was to have been the great motor that would drive Paraguay towards a more prosperous future.
But more than two decades after it started operations, Paraguay is still one of South America's poorest nations and the dam is the source of bitter recriminations with the country's partner in the project, Brazil, and a key issue in the current presidential election campaign.
Spanning the Paraná river that marks the border between the two countries, Itaipú is the world's largest hydroelectric plant, at least until China's Three Gorges dam becomes fully operational.
The dispute between its two owners centres on Paraguay's claim that Brazil is not paying a fair price for Paraguay's surplus power, which it is obliged to sell to its giant neighbour at a fixed price.
Brazil rejects the accusation, saying Paraguay is trying to alter commitments made that ensured construction of the dam in the first place.
The dispute goes back to the 1973 treaty under which the dam operates. According to this, each country gets 50 per cent of all power generated, but if one country does not use all of its share, it must offer it to the other at a price fixed in 1973, and since subject to several small revisions.
Paraguay could never hope to use its entire share, and sells 90 per cent of it to Brazil, which has a voracious appetite for power to fuel its booming economy. For this Paraguay receives about $300 million (€197.4 million) a year, though Paraguayans point out that the energy Brazil receives is the equivalent to more than 224,000 barrels of oil a day which, at current prices, would cost it more than $7 billion (€4.6 billion) a year.
The Paraguayan government has tentatively tried to cajole the Brazilians into renegotiating the 1973 deal, but has been happy to receive the $300 million, which is not subject to congressional oversight and largely disappears into the black hole that is official corruption in Paraguay.
Leaders from the country's long-time ruling party, the Colorados, have made huge personal fortunes over the years from contract work on the dam's construction, or from sitting on the board of the bi-national company that runs it for the two governments.
The main opposition alliance has made the government's mismanagement of the dam and the failure to get a better price for the country's electricity a key part of its campaign to end the Colorados' 62-year grip on power.
Fernando Lugo, a former Catholic bishop and main opposition candidate, says the Colorados have failed to protect one of Paraguay's few natural resources - water - from foreign exploitation, and that he will make renegotiating the 1973 treaty a priority if he wins on April 20th.
"No country sells off its natural resources at cost price," says Lugo. "I believe it will be difficult to renegotiate the Itaipú treaty, but it is possible that we can come to an agreement with Brazil about the price of the electricity which today is sold at cost price and we just want a market price for it."
But Brazilians dismiss the Paraguayans' arguments, pointing out that it was obliged to buy Paraguay's surplus power in the 1980s when it did not need it and guaranteed the massive loans raised to finance construction.
"What was the advantage to Brazil? That there would be this huge hydroelectric plant and the electricity would be very cheap. If you embark on such an undertaking you have to get your benefits in the end," says José Gelázio da Rocha, who was the Brazilian head of engineering at the dam during initial construction.
"Now you have Paraguayans saying the price must be made in relation to electricity generated by oil, which is something unacceptable. It is not comparing like with like."
Ministers in the government of Brazil's president Lula da Silva have been briefing the Brazilian press against the candidacy of Lugo, with one unnamed minister describing him as a "left-wing populist", a move that could backfire in a country that is historically suspicious of Brazilian interference in its internal affairs.
In an effort to block Lugo's victory in April, Brazil is suspected by many in Paraguay of discreetly supporting the campaign of the second opposition candidate, Lino Oviedo. A controversial former general, he is reportedly being bankrolled by Brazilian businessmen, among them supporters of President Lula.
Oviedo first rose to prominence as the protege of Andrés Rodríguez, the drug-trafficking Colorado general who in 1989 overthrew the country's long-ruling Colorado dictator, Alfredo Stroessner.
He took part in the electoral fraud that eased Rodríguez's chosen successor into power only to stage a coup against him in 1996. That attempt failed and three years later he had to flee the country amid accusations he was involved in the assassination of the country's vice-president.
He was granted exile in Brazil before returning home in 2004, where he remained in prison until September of last year. He recently declared that should he win, Brazil would have an ambassador in Paraguay's presidential palace. While the remark might have pleased his Brazilian backers, Lugo's campaign jumped on it to claim that on the key issue of Itaipú, Oviedo could not be trusted to defend Paraguay's interests.