Nikolas Kozloff

Over the past few years, the international left has derived much satisfaction from the course of South American political and economic integration.  The novelty of such integration is that it has proceeded along progressive lines and has been pushed by regional leaders associated with the so-called "Pink Tide."  With so many leftist leaders in power, it is plausible to surmise that a left bloc of countries might challenge Washington's long-term hemispheric agenda.  Yet, behind all of the lofty rhetoric and idealism, serious fissures remain within South America's leftist movement, both within individual countries and within the larger regional milieu.

 

That, at least, is the impression I got from reading U.S. State Department cables recently declassified by whistle-blowing outfit WikiLeaks.  Take, for example, the Luiz Inácio "Lula" da Silva administration in Brazil, which at times encouraged a "hostile" climate against the Free Trade Area of the Americas or FTAA, a corporately-sponsored plan backed by Washington, while on other occasions encouraging "public doubt and confusion through its own often-conflicting statements" about the accord.  Behind the scenes, the Brazilian government was much more divided on the matter than commonly portrayed, torn between its South American loyalties on the one hand and the desire to gain access to the lucrative U.S. market for agricultural and industrial goods on the other. 

 

In 2003, the U.S. Embassy in Brasilia noted that "Brazil's political goals, which include a leadership role in South America along with a strong focus on development and the social agenda, sometimes clash in its pursuit of certain national economic interests."  Cautiously, Brazil conducted sensitive negotiations with Washington over the FTAA.  Lula's position was somewhat delicate: while the president needed a substantial export boost to fund his social agenda, producers were fearful about facing increased competition. 

 

Across the border in Argentina, Lula could count on political ally Néstor Kirchner, and as a result the prospects for further integration through South American trade bloc Mercosur looked bright.  On the other hand, however, Mercosur remained "more important as a political project than an economic one," and virtually all Brazilians recognized that, in the long term, Mercosur would not offer a viable long-term solution to Brazil's export needs. 

 

Itamaraty vs. Other Agencies

 

In addition to the economic contradictions, Lula faced serious political fissures within his very own cabinet over the FTAA.  In other pieces, I have noted the open U.S. disdain for Brazil's Foreign Ministry, known as Itamaraty.  A den of suspicious leftists, Itamaraty and its diplomats proved frustrating to Bush administration officials time and again.  Particularly irksome to the Brasilia embassy was Itamaraty's "rigid perspective" (read "opposition") on FTAA policy.  Specifically, the Americans fretted that Itamaraty Secretary General Samuel Pinheiro Guimarães and his ideological clique was driving anti-FTAA sentiment. 

 

In the long-term, however, such leftist sentiment within Brazilian foreign policy circles may be shunted aside by powerful interests.  Writing to the State Department, U.S. diplomats noted that "not everyone within the diplomatic corps nor within the government agrees with Itamaraty's current FTAA policy."  Specifically, Itamaraty faced opposition from the ministries of Agriculture, Development and Finance, and such divisions offered up a tempting target for Washington. Ultimately, the U.S. embassy decided that it would not seek to "exploit differences among ministers," but further WikiLeaks cables suggest that the Americans continued to gauge such fissures. 

 

Airing dirty laundry before U.S. officials, Paulo Venturelli of the Ministry of Agriculture remarked that Itamaraty negotiators were "paranoid" and had even lied to Lula about the status of FTAA deal making.  Venting yet further, Venturelli said that "top level officials" at the foreign ministry were "formulating policy based totally of 1960's North-South ideology and without real economic consideration."  In a jarring break from normal diplomatic protocol, Venturelli himself advised the Americans to take a "hard line" with his own government, and to either "tell Brazil to take the FTAA as is, or be left behind as the U.S. and the other countries proceed to form the FTAA."

 

The story was much the same during a meeting with Arno Mayer of the Finance Ministry who advised the Americans how to outflank and strengthen rival Brazilian agencies favoring the FTAA.  Mayer noted that Finance was supportive of FTAA but unfortunately Itamaraty was responsible for formulating trade policy.  Within Itamaraty, Mayer continued, officials believed that the U.S. was "out to isolate Brazil."  In an effort to "personalize" the FTAA issue, Itamaraty diplomats portrayed U.S. trade policy as "aggressive" and aimed at "encircling Brazil" by cutting deals with other Latin American countries. 

 

Tensions within Brazilian-Venezuelan Dynamic

 

In the event, Lula did not conclude an FTAA deal with the United States, and as a result the path was cleared for greater South American political integration along progressive lines.  Yet, even so, WikiLeaks documents reveal great fissures within the Mercosur bloc of nations.  Take, for example, the whole issue of Venezuela's admission to Mercosur, a development which stood to destabilize the delicate geopolitical balance.  Publicly, the Lula administration supported Venezuela's bid to join the large South American trade bloc.  President Hugo Chávez was, after all, a kindred political spirit and represented a key force driving the region's "Pink Tide" to the left. 

 

On the other hand, Lula's team and even Itamaraty did not "seem to be going out of their way to actively promote" Venezuelan membership.  Indeed, during a private meeting the Brazilian Vice-Minister of Development, Industry and Trade implied that Brazil "lacked enthusiasm" when it came to wider integration.  What is more, the Brazilian private sector was divided about Venezuela's bid.  While one group favored greater export opportunities, another "worried that Venezuela's admission to Mercosur will further complicate Brazil/Mercosur's trade negotiations with other partners." 

 

These businesspeople were concerned about Venezuela's more avowed anti-imperialist stances, particularly Chávez's opposition to the FTAA.  Moreover, they fretted that Brazil could be tainted through its association with Venezuela, and Chávez could "undermine" key efforts to establish trading links with the European Union.  In the long run, however, the Brazilian political elite seems to have calculated that it would be more worthwhile to bring Venezuela into the Mercosur fold, thereby constraining and moderating Chávez and not leaving him "to his own devices on the outside." 

 

Still, the insufferable Chávez was difficult to take as he had "frequently stolen the stage at Mercosur gatherings from Brazil's President Lula," and openly challenged Brazilian leadership by supporting Bolivian President Evo Morales's moves to grab assets belonging to state Brazilian energy company Petrobras.  Speaking to influential members of the Brazilian political elite, U.S. diplomats picked up on some skittishness.  Take, for example, one Senator Heraclito Fortes, who told the Americans that Chávez's behavior during a summit held in the Brazilian city of Manaus was "not normal."  During the proceedings, the firebrand Venezuelan leader reportedly insulted the conservative Brazilian Congress, thus leading the Chamber of Deputies to postpone a bill dealing with Venezuela's accession to Mercosur.  Expressing concern, Fortes remarked that Chávez was intent on garnering veto power within Mercosur, which would be "too much power for someone so unstable." 

 

Southern Cone Skittishness

 

The Brazilians weren't the only ones who expressed skittishness on Venezuela.  In Brasilia, U.S. diplomats met with their Argentine counterparts who said that Chávez's membership in Mercosur would be "problematic."  Traditionally, the Argentines and Brazilians had dominated Mercosur with "Paraguay and Uruguay trailing along behind."  If oil-rich Venezuela were to join Mercosur, however, this would introduce a "destabilizing element, with Caracas playing the Brazilians against the Argentines and vice versa to increase Venezuelan influence."

 

Elsewhere within the Southern Cone, regional leaders were "suspicious of his [Chávez's] motives and objectives."  Indeed, Mercosur members gave second thought to their pro-Chávez leanings once it became clear that Venezuela was intent on pushing an assertive agenda.  Take for example Chilean President Michele Bachelet, who reportedly stated her "firm dislike" of Chávez in private.  The only reason the socialist leader supported Venezuela in the first place was that she was "under great internal pressure from pro-Chávez members of her administration who want her to publicly support Chávez."

 

Montevideo Intrigue

 

Even as Brazil and Argentina grew leery about Venezuela's entry into Mercosur, other smaller countries became concerned about being eclipsed by powerful neighbors.  Take, for example, tiny Paraguay which "chafed" under the Mercosur "yoke."  According to U.S. diplomats, Brazil withheld or delayed its electricity payments to Paraguay if its smaller neighbor refused to go along with Brasilia's strategic objectives.

 

Uruguay, too, found itself in a geopolitical quandary.  A tiny nation sandwiched between Brazil and Argentina, the country formed part of Mercosur and the region's pink tide to the left but simultaneously embarked on a high stakes double game with the Bush administration.  Fearing that its political and economic interests might not be served by Mercosur, Uruguayan President Tabaré Vázquez flirted with the notion of signing a free trade agreement with Washington. 

In Montevideo, U.S. diplomats sought to parse the diplomatic tea leaves.  In early 2006, U.S. Chargé d'Affaires James Nealon wrote that Uruguay might have been prompted to seek a free trade agreement with Washington due to the country's soured relations with Argentina.  Specifically, Uruguay had grown embittered over a bilateral dispute involving a paper mill.  On the economic front meanwhile, some Uruguayans blamed Argentina for dragging their tiny nation into a terrible financial crisis following the 2002 "corralito" bank run.

 

By openly questioning the underlying validity of Mercosur, however, Vázquez risked alienating not only his leftist regional partners but also "hardened lefties" within his own Frente Amplio coalition.  The Uruguay government was "navigating a fine line" by seeking to expand its trade relations with the rest of the world while simultaneously remaining a part of Mercosur.  Vázquez himself, wrote U.S. diplomats, was more of "a pragmatist than an ideologue."  A sly fox, the president sent conflicting signals over his country's economic and political loyalties.  Speaking in Caracas, Vázquez derided free trade with the United States, but backed a faction within his own coalition to keep the option open.  By openly traveling to Venezuela and standing with Chávez, Vázquez angered the U.S.  But WikiLeaks cables also reveal a fawning and deferential Uruguayan president who sought to appease Washington.  In an attempt to "allay U.S. fears" over Vázquez's rambling press conference with Chávez, obsequious Uruguay Minister of Industry and Energy Jorge Lepra called upon Nealon for a one-to-one meeting. 

 

Never fear, Lepra declared: his boss knew "how to manage the radicals within his governing Frente Amplio coalition."   Sometimes, the minister added, Vázquez needed to "placate that crowd," but rest assured internal politics would "have little effect on his [the president's] foreign policy overtures towards the United States."  Far from being a reluctant partner, Uruguay strenuously pursued the free trade matter behind closed doors.  In a follow up meeting, a very worried Lepra expressed grave concern over the fate of the trade deal, which unfortunately for Montevideo failed to materialize in the final analysis.

 

Bank of the South Imbroglio

 

WikiLeaks reveal yet further fissures within the left coalition, even when it came to hallmark initiatives designed to challenge the U.S.  Take, for example, the much heralded Bank of the South, a new financial institution aimed at counteracting the nefarious International Monetary Fund and World Bank.  Formed in late 2007, the bank was expected to contribute to regional integration, poverty alleviation, and investment.  During a ceremony, Chávez as well as Evo Morales of Bolivia and Rafael Correa of Ecuador made "forceful comments" criticizing large financial institutions which had imposed lending conditionality and offered "bad advice" to their clients. 

 

During the ceremony, Brazil's Lula as well as Argentine president-elect Cristina Fernández de Kirchner lauded the creation of the new bank.  Privately, however, both leaders were more circumspect.  According to U.S. diplomats, "Argentine and Brazilian officials are working behind the scenes to moderate Venezuela's influence in the organization of the bank in order to avoid the overt politicization of the Bank's lending policies."  In Montevideo meanwhile, Uruguayan Finance Minister Danilo Astori said he did not believe that Bank of the South was particularly useful and moreover Uruguay only agreed to participate "so as not to be isolated."

 

The Fraught Path to South American Integration

 

In the long run, the so-called Union of South American Nations or UNASUR may replace Mercosur as the guiding mechanism for regional integration along progressive lines, which could represent a blow to Washington's hegemony.  Yet, if WikiLeaks cables are again any indication, UNASUR has had difficulty getting off the ground amidst internal fissures.  Though Venezuela and Bolivia would have surely liked to see UNASUR strike a combative stance towards the U.S., there was little agreement about how to deal with Washington.  

 

Not to worry, the Chileans related to U.S. diplomats in Asunción: Santiago had already spoken to Paraguayan officials who had "all agreed that the UNASUR declaration should not be anti-U.S."  Indeed, during an UNASUR meeting the ostensibly leftist Paraguayan President Fernando Lugo had steadfastly "held that line."  Moreover, Chilean diplomats claimed that Chávez, who had delivered a feisty anti-imperialist speech at the UNASUR summit, annoyed most other heads of state. Behind the scenes, Venezuela reportedly lobbied Paraguay to cancel an upcoming meeting between Lugo and Bush, but that effort had failed. 

 

Moreover, if WikiLeaks cables are to be believed, Paraguay is just as shifty a player as Uruguay.  Confiding in the U.S. ambassador in Asunción, Lugo remarked that he had reached out to the rightist opposition in Bolivia.  In addition, the Paraguayan leader believed that indigenous president Morales had "a complex" about race.  In a report to Washington, the Americans noted that Lugo continued to "walk a fine, pragmatic line on regional politics."

 

Counteracting the Leftist Pink Tide

 

Whatever the shortcomings and weakness of the leftist "pink tide" in South America, however, the pace of regional integration seems to have seriously alarmed U.S. diplomats.  Speaking to their superiors at the State Department, Americans officials noted that "the entry of Venezuela into Mercosur clearly altered the power balance and dynamics of the organization. Mercosur has increasingly devolved from an imperfect customs union into a more restrictive and anti-American political organization…It is clear that we need better resources and tools to counter Venezuela's political efforts…[and] politicization of MERCOSUR expansion."

 

Furthermore, if Mercosur was merely worrying, then UNASUR would seem to represent an even greater ideological challenge for Washington.  In a cable sent to Washington, U.S. ambassador in Quito Heather Hodges expressed concern that Ecuadoran President Rafael Correa might take advantage of an UNASUR ceremony to raise the issue of destabilizing U.S.-Colombian military cooperation.  "We can be sure," Hodges explained, that Correa "will emphasize the importance of deepening South American integration, and he may well put this in the context of seeking to minimize the influence of and dependence on the United States in the region."

 

Faced with such ideological pushback, U.S. diplomats soberly assessed the geopolitical milieu and looked for internal weaknesses to exploit.  Throughout the Bush years, American officials focused their attention on Venezuela, but cables suggest that small countries like Uruguay and Paraguay were particularly susceptible to U.S. pressure.  A shrewd diplomat, U.S. ambassador in Montevideo Nealon wrote his superiors that "it is…probably in our interest to lend a helping hand to government of Uruguay that is struggling to emulate a moderate Chile rather than a Bolivarian Venezuela."

 

Moving From the Venezuelan to Brazilian Threat

 

Surely the greatest nightmare for U.S. diplomats is that Venezuela, with its populist anti-imperialism, might steer the course of South American integration.  Shrewdly, however, American officials have been able to deal with Brazil, which in turn acts as a moderating force on Chávez.  True Machiavellians, U.S. diplomats have even noted that the friction between Venezuela and Brazil "provides an opportunity."  Though the WikiLeaks cables leave off in early 2010, it would not be surprising if the Obama administration continues to pursue such a divide and rule strategy to this day.

 

 With Chávez's health now fading fast and Venezuela looking like a rather spent force politically, it would seem natural that Washington will eventually turn its sights upon Brazil.  Judging from WikiLeaks cables, the U.S. doesn't have much to fear from this South American juggernaut in an ideological sense, and indeed leftist Itamaraty may be outmaneuvered by more pragmatic forces in the long run.  Nevertheless, Brazil is a rising player in the region and U.S. diplomats are keenly aware of this fact. 

 

Take, for example, American ambassador to Lima Curtis Struble, who in 2005 wrote Washington that the U.S. was in an "undeclared contest" with Brazil for political influence in Peru.  "We are winning on most issues that count," Struble added, remarking that negotiations over a U.S.-Peru free trade deal had remained positive.   However, the ambassador noted ominously, "the government of Brazil is still very much in the game" and had met with some success in pushing for UNASUR which would diminish U.S. influence.

 

If they are not doing so by now already, American diplomats are probably monitoring Brazil in an effort to preserve U.S. hegemony in the wider region.  In the not too distant future, State Department officials may believe it is imperative to sit down with their counterparts in Peru, Bolivia, or Paraguay in an effort to thwart not Caracas but Brasilia, and thus the Machiavellian game will start all over again.

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The recent election of former Bishop Fernando Lugo as President of Paraguay poses a sticky dilemma for the Vatican and underscores the hostile political environment facing incoming Pope Benedict XVI in South America. Lugo, who was known to his constituents as the "Bishop of the Poor" for his support of landless peasants, advocates so-called Liberation Theology, a school of thought which took shape in Latin America in the 1960s.

 

Recognizing the pressing need for social justice, Liberation Theology was minted by Pope John XXIII to challenge the Church to defend the oppressed and the poor. Since its emergence, Liberation Theology has consistently mixed politics and religion. Its adherents have often been active in labor unions and left-wing political parties. Followers of Liberation Theology take inspiration from fallen martyrs like Archbishop Oscar Romero of El Salvador and Dorothy Mae Stang, an American-born nun who was murdered by ranching interests in Brazil.

 

Romero, an outspoken voice for social change, was gunned down in 1980 by a right wing death squad during a Mass in the chapel of San Salvador's Divine Providence hospital. Stang, an advocate of the poor and the environment, was shot to death in the Brazilian Amazon in February 2005; her assailants were later linked to a powerful local landlord.

 

Joseph Ratzinger: Doctrinal Czar

 

During the 1980s and 1990s Benedict, then Cardinal Joseph Ratzinger, acted as John Paul II's doctrinal czar. At the time, John Paul was in the midst of a fierce battle to silence prominent Church liberals. "This conception of Christ as a political figure, a revolutionary, as the subversive of Nazareth," the Pontiff once said, "does not tally with the church's catechism."

In 1983 the Pope wagged his finger at Sandinista government minister and Nicaraguan priest, Ernesto Cardenal on a trip to Managua, warning the latter to "straighten out the situation in your church." Cardenal was one of the most prominent Liberation Theologians of the Sandinista era.

 

Originally a liberal reformer, Ratzinger changed his tune once he became an integrant in the Vatican hierarchy. As prefect of the Congregation for the Doctrine of the Faith, the Vatican's doctrinal watchdog agency, Cardinal Ratzinger warned against the temptation to view Christianity in an exclusively political light. Liberation Theology, he once said, was dangerous as it fused "the Bible's view of history with Marxist dialectics."

 

Calling Liberation Theology a "singular heresy," Ratzinger went on the offensive. He blasted the new movement as a "fundamental threat" to the church and prohibited some of its leading proponents from speaking publicly. In an effort to clean house, Ratzinger even summoned outspoken priests to Rome and censured them on grounds that they were abandoning the church's spiritual role for inappropriate socioeconomic activism.

 

As Pope, Ratzinger has not sought to hide his lack of esteem for Liberation Theology. During a recent trip to Brazil, he was pressed by reporters to comment on Oscar Romero's tragic murder in El Salvador. The Pope complained that Romero's cause had been hijacked by supporters of liberation theology. Commenting on a new book about the slain archbishop, the Pope said that Romero should not be seen simply as a political figure. Hoping to avoid any meaningful political discussion on the matter, Benedict said "He was killed during the consecration of the Eucharist. Therefore, his death is testimony of the faith."

 

How to Handle Lugo?

 

Despite his best efforts however, Benedict has not been able to impede the rise of the Bishop of the Poor in Paraguay. Lugo has had long time differences with the Vatican, which could now create some political friction between Paraguay and the Papal See. When Lugo left the priesthood to pursue politics, the Vatican refused to accept his resignation, arguing that the Bishop already made a "lifetime commitment." Defying the Pope, Lugo formed the center left Patriotic Alliance, which brought together leftist unions, indigenous people and poor farmers.

When Lugo announced his intention to run in what turned out to be his victorious presidential race, the Vatican sent him a letter declaring that the Holy See had "learned with surprise" that some political parties "have the intention of presenting him as a candidate in the coming Presidential election in Paraguay." It added: "The acceptance of that offer would be clearly against the serious responsibility of a bishop … Canon Law prohibits priests from participating in political parties or labor unions." The letter asked Lugo "in the name of Jesus Christ" to "seriously reflect on his behavior".

 

Lugo replied tartly, "The Pope can either accept my decision or punish me. But I am in politics already." Hardly amused, the Vatican suspended Lugo from his duties "a divinis," meaning that he could no longer say Mass or carry out other priestly functions such as administering the sacraments. This was enough to enable Lugo to stand in the Presidential elections, but his victory now presents the Vatican with a dilemma over whether to "reduce him to lay status." Vatican officials said it was up to the Pope to decide, and that Benedict would "take time to study the situation".

 

Brazilian Challenge

 

Though Benedict has long opposed Liberation Theology, it's unclear what he might do at this point to halt its spread. Unlike the 1980s when South America was in the midst of right-wing military rule, the region has now undergone a decided shift to the left which is confounding the Papacy.

 

In Brazil, the world's most populous Roman Catholic nation, some 80,000 "base communities," as the grass-roots building blocks of liberation theology are called, are flourishing. What's more, nearly one million "Bible circles" meet regularly to read and discuss scripture from the viewpoint of the theology of liberation.

 

Liberation Theology advocates have strong links to the labor movement which helped propel the current regime into power; this history turned President Luiz Inacio Lula da Silva into being a long time ally. The movement has been particularly strong in poorer areas of the country such as the Amazon, the hinterlands of northeast Brazil and the outskirts of large urban centers like São Paulo, which has a population of 20 million people.

 

In the latter city, the followers of liberation theology prominently display their politics. For example, during last year's May Day celebration, liberation theologists draped a wooden cross with black banners labeled "imperialism" and "privatization" and applauded when the homily criticized the government's "neoliberal" economic policies, the kind backed by Washington.

 

Chávez and Pope Benedict

 

Try as he might, Benedict has been unable to halt the re-emergence of Liberation Theology, and Paraguay and Brazil are just the tip of the iceberg. For years Venezuela has been a religious battleground, with President Chávez pursuing a combative relationship with the Catholic Church. Unlike some other Latin American countries which had a stronger liberation theology movement, the Venezuelan Church never had a leftist tendency except among diocesan priests.

 

A clash between the government and the Church was probably inevitable, and shortly after taking office Chávez started to chastise Venezuelan bishops, accusing them of complicity with the corrupt administrations that preceded his rule. The Venezuelan leader accused the Vatican's former representative in Venezuela, Cardinal Rosalio Castillo Lara, of allying himself with the country's "rancid oligarchy." Memorably, Chávez suggested that priests such as Castillo Lara ought to subject themselves to an exorcism because "the devil has snuck into their clerical robes." Incensed, the cardinal compared Chávez to Italian dictator Benito Mussolini.

 

During the April 2002 coup, prominent Catholics such as Cardinal Ignacio Velasco sided with the opposition against the president. Velasco was even accused of offering his residence as a meeting place for the coup plotters. What is more, he signed the "Carmona decree" that swept away Venezuela's democratic institutions. Senior Catholic bishops themselves attended the inauguration ceremony for Pedro Carmona, Venezuela's Dictator-For-a-Day.

 

But when Chávez was able to quickly overturn the coup and return to power, the hard line Church establishment was humiliated. Relishing his triumph Chávez launched a rhetorical broadside on the Vatican, calling on the Pope to apologize, on behalf of the Catholic Church, for the "holocaust" of the indigenous peoples of Latin America during the colonial era, and for the imposition of Christianity. The Pope, who is close to Castillo Lara, is reportedly anti-Chávez but has met with the Venezuelan leader at the Vatican.

 

Hoping to neutralize the power of the Catholic Church, Chávez frequently quotes from the Bible. Puckishly, he also tells his supporters in his public addresses that Christ was an anti-imperialist. Even as Chávez spars with the Church, Protestants have provided a key pillar of the president's political support. Over the last few years, Chávez has done his utmost to cultivate the support of Protestants, which make up 29% of the population. He even declared that he was no longer a Catholic, but a member of the Christian Evangelical Council.

 

In The Andes, Pope Faces Hostile Political Environment

 

In the Andes, the situation is not much more promising for Pope Benedict.
Ecuadoran President Rafael Correa is a Catholic Socialist and has called for a "new Catholicism" in the 21st century which would challenge globalized capitalism. The President has said that his real education came from working as a lay Salesian missionary in the mid-1980s in the largely indigenous province of Cotopaxi. During his speeches, Correa invokes the words of Leonidas Proaño, probably Ecuador's most famous liberation theologian.

Bolivia's Evo Morales has never been a fan of ecclesiastical authority and has said that Catholic bishops "historically damaged the country" by functioning as "an instrument of the oligarchs." What's more, Morales tapped Rafael Puente Calvo, an ex-Jesuit and a staunch liberation theologian, to be his Deputy Minister of the Interior.

 

In Paraguay, Brazil, Venezuela, and up and down the Andes Pope Benedict faces a very changed political climate from the 1980s. A new generation of leaders, allied to the Pope's ideological foes, has to be making life difficult for the conservative church hierarchy. If he wants the Vatican to maintain its influence in the region, Pope Benedict is going to have to be creative, diplomatic and extremely cautious in his regional initiatives.

The tiny, land locked nation of Paraguay has not been blessed with political good fortune. For decades, anti-Communist General Alfredo Stroessner, who “disappeared” and tortured thousands of dissidents, ruled over this country of some 7 million people. Stroessner was dislodged by his military subordinates in 1989 and later died in exile in Brazil at the age of 93.

However, the Colorado Party, which backed Stroessner during his 35-year dictatorship, maintained a tight lock on political power while enriching itself and the wealthy at the expense of ordinary Paraguayans. Under Colarado rule, Paraguay became renowned as a haven for fugitive Nazis, smugglers and drug traffickers.

For years, the U.S. backed repressive military rule in Paraguay in an effort to keep a lid on progressive social change. For Washington, Stroessner, a strong anti-communist, could do no wrong. A willing U.S. ally during the Cold War, Stroessner supported Lyndon Johnson’s invasion of the Dominican Republic in 1965 and even offered to help send troops to Vietnam.

Even in Paraguay’s darkest hours, while Stroessner harbored Nazi war criminals, crushed non communist peaceful opposition and persecuted the indigenous population (including forcibly assimilating the Ache population, a policy which ended in bloodshed, sexual slavery and servitude), the U.S. continued to back the General. It wasn’t until the late 1970s, with the arrival of Jimmy Carter in the White House, that the U.S. withdrew its support.

From Dictatorship to Kleptocracy

Despite the passing of Stroessner, most Paraguayans are even worse off today than under the dictatorship. Encouraged by Washington, Paraguay instituted a program of neo-liberal economic reform and privatization which thrust tens of thousands out of work. Paraguayan exiles once fled their country for political reasons. But today, it’s economic misery which has driven many Paraguayans to travel abroad. Currently some two million people live abroad in Argentina, Spain, and the United States.

The legacy of corrupt Colorado rule is evident for all to see. Currently, almost 50 percent of the country’s population lives on less than $2 a day and 38 percent of the citizenry is either unemployed or under-employed. In 2007, GDP per capita stood at roughly $4,000 while 32% of the population lived below the poverty line.

Land ownership is concentrated in the hands of a few large companies which are resorting to more and more soya farming. Amidst the concentration in land ownership, hundreds of thousands of landless farmers have been pushed to the cities by hunger.

The Power of Liberation Theology

On the other hand, today’s presidential election, which has brought Fernando Lugo to power, stands to shake up Paraguay’s politics and could even exert an impact upon the course of wider hemispheric integration. In light of the fact that Lugo has never held any elective office, his ouster of the Colorado Party is truly remarkable. When you consider that kleptocratic Colorado had managed to hold on to power for more than sixty years, Lugo’s accomplishment is even more striking.

Like his counterpart Rafael Correa in Ecuador, who once taught math to poor Indians while working with the Catholic Salesian Order, Lugo also comes from a religious background. Born into a middle-class family of political activists, his three brothers and uncle were forced into exile under the Stroessner dictatorship. In 1977 he was ordained a priest and enjoyed stints as a schoolteacher and missionary.

The following year Lugo left for Ecuador where he lived with indigenous communities and peasants. The young priest became a believer in so-called Liberation Theology, a school of thought which took shape in Latin America in the 1960s. Recognizing the pressing need for social justice, Liberation Theology challenged the Church to defend the oppressed and the poor.

Falling Afoul of Stroessner

Returning to Paraguay in the early 1980s, Lugo became a rural bishop known for both his political activism and conciliatory skills. It wasn’t long before he ran afoul of Stroessner’s military intelligence. Concerned for his own well being, he departed for Rome to study social science.

Five years later however he was back in Paraguay. This time he was chosen bishop of San Pedro, a diocese which lay in the poorest area of the country. The bishop learned Guaraní, an indigenous language spoken by peasants and urban poor who make up the majority of the Paraguayan population.

Working amongst the flock in San Pedro, Lugo began to take up the cause of landless peasants and earned a reputation as “the bishop of the poor.” Lugo’s advocacy, however, landed him in trouble with local landowners who accused him of protecting guerrilla fighters and supporting kidnappers.

The Road to the Presidency

In 2004, incensed by the social injustice that he witnessed all around him, Lugo resigned his position in the Church to pursue his political ambitions. Shortly afterwards he was the main speaker at a huge anti-Colorado demonstration in Asunción. Unionized workers, as well as leftist and indigenous organizations, began to rally behind Lugo. The ex-Bishop helped to form the Patriotic Front for Change, a grouping of some 20 Indian, farm peasant and union organizations.

Lugo is the first former Bishop to be elected president of a country (the Vatican refused to accept his resignation as Bishop, but experts believe that the church will grudgingly accept a Lugo Presidency rather than break off diplomatic relations with Paraguay) and frequently invoked the Bible while on the campaign trail. During one rally outside Asunción, he told 2,000 Indian peasants that he felt like a "Paraguayan David fighting the monstrous Goliath." The disenfranchised majority in Paraguay views Lugo as “The Bishop of the Poor.”

The former Bishop, heavyset, bespectacled and sporting a salt-and-pepper beard and priestly sandals, focused on social inequality during his campaign, questioning why “there are so many differences between the 500 families who live with a first-world standard of living while the great majority live in a poverty that borders on misery.” Lugo, who says that he has some affinity with socialism, wants to institute land reform and to re-establish Paraguay’s energy sovereignty.

As a politician and orator, Lugo would seem to differ somewhat from firebrand Hugo Chávez or Rafael Correa of Ecuador. The former Bishop stresses cooperation and dialogue rather than confrontation and a cult of personality. He reportedly has an uncanny ability to bring people together who don’t trust one another.

Lugo and Chávez

During a recent trip to Washington, Lugo assured the State Department that he was not like Hugo Chávez because he, unlike the Venezuelan leader, was a religious man. The future Paraguayan President remarked, “I am not of the left, nor of the right. I’m in the middle as a candidate sought by my people.”

The Paraguayan moreover criticized Chávez’s decision not to renew the broadcast license of Radio Caracas Television, a station which served as a hotbed of the Venezuelan opposition. In an interview, Lugo remarked that in Venezuela, there were “elements conspiring to attack the strengthening of public freedoms.” Under Chávez, Lugo added, Venezuela had pursued a political model which was “dangerous for a real democracy,” and “totally at the service of one person.”

On the campaign trail, Lugo was dogged by relentless accusations that he was receiving money from Chávez, a charge he has vehemently denied. "It’s part of a dirty campaign against me. None of this is true", he insisted.

Despite his close affinity with Paraguay’s Guaraní Indians, Lugo has likewise sought to distance himself from Bolivia’s indigenous President Evo Morales. “Individual leaders,” he has said, “can cause polarization, as I believe is happening in Bolivia. I don’t believe in creating a polarized society.” “I will not be a Paraguayan Morales,” he adds. “Paraguay will have to pursue its own political destiny.”

On the other hand, some of Lugo’s other comments may have raised eyebrows in Washington. He has praised the Venezuelan “experiment” for its positive social accomplishments, as well as “the better distribution of wealth for the benefit of the poor majority.” Furthermore, Lugo supports Chávez’s land reform program and calls the Venezuelan leader’s 21st-century socialism “interesting,” and “very stimulating.”

Lugo believes the U.S. should keep its distance from the political transformation now sweeping through South America. "I don’t think the United States has any choice but to accept these changes," he has said.

Lugo’s Paraguay: What Impact on South American Integration?

Hoping to undercut Chávez and his appeal, the U.S. has sought to cut free trade deals with individual South American countries. Unfortunately for Washington, Lugo has already stated that he has no intention of signing on to such an agreement as President. Historically, Paraguay has not played a very significant role in regional affairs. In the midst of South America’s Pink Tide and shift towards the left however, the country has taken on new geopolitical importance.

In an era of reduced U.S. influence, it’s now Brazil and Venezuela that are vying for the allegiance of smaller countries like Paraguay. Traditionally, Paraguay has formed part of Brazil’s geopolitical orbit but the relationship has recently come under strain.

Some of the friction has to do with Mercosur, a South American trade bloc. Paraguay has been a long time member of the group, while Brazil constitutues the most important economic hub. However, Paraguayans have been chafing under Brazilian influence. They charge that Brazil has bullied them by slapping crippling export restrictions upon Paraguay. As a result, Paraguay’s trade deficit has skyrocketed.

Lugo has said that he would keep Paraguay within Mercosur, but he sees the bloc as “inadequate” because it lacks a firm commitment to social and economic equity. Mercosur is unfair, he adds, because Brazil has registered greater economic growth than smaller countries.

Though the debate may sound Byzantine or obscure, it strikes at the heart of dramatic geopolitical currents shaping South America today. At stake is nothing less than the contours of future hemispheric integration and the social and economic future for millions of the region’s poor.

Venezuela’s Chávez says that Mercosur is a backward and ossified model for economic development. However, he has sought to bring Venezuela into Mercosur and hopes to subvert the bloc from within, presumably by shifting the entity’s focus from free trade to more equitable, reciprocal trade. However, Venezuela’s bid to join Mercosur has still not been ratified by Brazil, a country which has a more market-based vision of the future than the avowedly socialist Chávez.

Paraguay too has failed up until now to ratify Venezuela’s bid. Lugo has been coy about his intentions towards the issue, but he could play a key role now in helping Venezuela join the trade bloc. With a left of center government in power in Asunción, the center of political gravity within Mercosur could tilt a little towards Chávez.

The Politics of Hydro-Power

In other key respects, a Lugo presidency could shift geopolitical momentum away from Brazil and towards Venezuela. One issue which has rankled relations between tiny Paraguay and Brazil has been hydropower. To the chagrin of Brasilia, Lugo seems determined to follow in the footsteps of Hugo Chávez by pursuing a policy of resource nationalism.

Under Stroessner, Paraguay built the largest hydroelectric power plant in the world located in Itaipu. Though Itaipu, as well as the subsequently built Yacyretá Dam displaced tens of thousands of Paraguayans from their homes without any restitution, it greatly increased economic growth.

Itaipu, which is operated jointly with Brazil, is now at the center of a political firestorm in Paraguay. The dam is hugely important within the region, providing a full 20% of Brazil’s electrical power. But Lugo has declared that the contract agreed to between his country and Brazil is unfair. Currently, Paraguay is obliged to sell Brazil its surplus electricity from Itaipu at prices far below those set by the market. Lugo wants Brazil to pay more.

The Paraguayan President also wants a greater energy surplus from the dam. Currently Paraguay uses much less than half the energy from the dam while Brazil takes the rest. Paraguay would like to trade more energy so as to generate much needed income. To the dismay of President Lula in Brasilia, Lugo has said that he would like to alter the current energy accord. Such a move however would surely result in a great shortage of energy distribution to the Brazilian south and southeast.

When he talks about hydropower, Lugo strikes a nationalist chord: under his leadership, the President elect has said, Paraguay won’t “fall into submission to any other bigger country.” Lugo says that he is even prepared to take Brazil to the World Court in The Hague if necessary.

Paraguay, which historically has not had much of a political voice on the South American stage, now has a unique opportunity to tip the geopolitical scale towards Venezuela. Up until recently the international media ignored Paraguay. That could change now however with the rise of the country’s new Bishop President.