THE constant, high-pitched whine of the space-invaders in the cafes and bars of Asuncion’s Calle Palma, the Rubik cubes stacked awkwardly for sale on its pavements and all the latest electronic wizardry smuggled from Panama, are a clear sign of the times. Even Paraguay, surely one of the most mysterious and isolated countries of the Americas, has been dragged into the international business circuits that peddle the wares of the US and Japanese leisure industries.

Yet these visible tokens of modernity are uncomfortably juxtaposed with the straggling collection of cattle foraging for sparse riverside grasses a few blocks away from the Presidential Palace — and the horse-drawn delivery wagons which have to outmanoeuvre the Mercedes in downtown Asuncion.

By the early seventies Paraguay had exchanged its role as Argentina’s stagnant back-garden to become a part of Brazil’s economic ‘miracle’. The extension of Brazil’s agribusiness boom into Paraguay and the two countries’ joint construction of the largest hydroelectric project in the world gave Paraguay’s economy the highest rate of growth in Latin America.

Since dam construction began in 1973-4, the flow of investment dollars has financed an unprecedented boom in luxury goods for Paraguay’s rich minority. The bulk of these are smuggled from Brazil and Argentina — an arrangement which has the government’s tacit approval as a means of dispensing favours to the powerful and loyal, in much the same way that feudal barons used to parcel out the fiefdoms.

All these untaxed imports are crippling the development of local manufacturing industry, which employs only 18 per cent of the workforce and generates just 17 per cent of Gross Domestic Product. At the same time, opening up the agricultural frontier has produced many peasant casualties. Evicted from their land, they have migrated to Asuncion to swell the ‘informal sector’ where the hours are long, the work scarcely productive and the wages disgraceful.

Far from enhancing their security and well-being, the government’s ‘land reform’ has functioned to supply the agricultural frontier with a cheap labour force — to prepare the terrain for international, regional and, to a lesser extent, local agribusiness. But then how could it be otherwise with economic policy that favours smuggling, speculation and all manner of financial wheeling and dealing and where real wages have fallen by 12 per cent since 1970?

There are two big issues in the country at the moment. The first is the long-term question of what Paraguay should do with the huge amounts of electricity from its hydroelectric projects. The second is whether President Stroessner will perpetuate the dictatorship which he has presided over since 1954. There are deep divisions over whether to sell the electricity or use it to industrialise the country. And there is mounting speculation that Stroessner won’t stand in the presidential elections next year.

Anthony Hill