	Political Conditions

Paraguay is a landlocked country in South America bordered by Argentina, Bolivia, and Brazil, with a population of close to 7 million. In April 2013, Horacio Cartes of the Colorado Party was elected president with nearly 46% of the vote. Leftist parties have opposed his public-private partnership (PPP) legislation, which they have alleged is a covert effort to privatize government-run utilities and infrastructure. Some observers note that factionalism in Cartes's own Colorado Party—between traditionalists who wish to defend the party's long-standing patronage practices and those who have sided with the more technocratic approach adopted by President Cartes, called Cartistas —has served to undermine some of the president's initiatives. This act sparked severe rioting in Asunción and the burning of parts of the parliament building. The U.S. Embassy declared that the situation should be handled not in a secret vote but transparently. Eventually, President Cartes announced that he would not seek reelection. In late May 2017, Finance Minister Santiago Peña and the governor of the Itapúa department (the term for a state in Paraguay) announced their intention to run for the ticket of the Colorado Party when primaries are held in December 2017 ahead of the 2018 general elections. In addition, the country is experiencing division outside the realm of formal politics, as rural and urban disparities are revealing strains and occasionally sparking protest and a generation born after the years of the Stroessner dictatorship is beginning to become politically active. U.S.-Paraguayan Relations

Paraguay traditionally has had friendly relations with the United States, and the United States has supported the consolidation of Paraguay's democracy and its continued modernization and economic reforms. The development program focused on democracy and governance aid to assist Paraguay in combating favoritism, corruption, impunity, and limited management capacity and fostered sustainable agricultural practices. In the Trump Administration's congressional budget request for FY2018, however, the development assistance component was zeroed out. The request for Paraguay declined to $400,000 to assist in the professionalization of the Paraguayan military, including in the area of human rights, and to help strengthen the military's ability to protect Paraguay's borders from transnational threats. In addition, Paraguay hosts a large Peace Corps program. In 2016, Paraguay became the 11 th partner of U.S. Southern Command's Human Rights Initiative. Paraguay grows and exports more marijuana than any other country in Latin America except Mexico, and it is a significant transshipment point for Andean cocaine. In late April 2017, in Paraguay's Ciudad del Este (the country's third-largest city), 60 armed men blasted their way into a Spanish security firm and stole $40 million dollars from a vault, which resulted in President Cartes calling on Paraguay's military to respond after federal police were clearly outgunned. Outlook

Although the Cartes Administration has encountered fervent opposition at times—such as during recent, atypical political violence in response to the effort to push through presidential reelection—it generally has promoted policies to encourage foreign investment and promote greater economic stability while countering corruption and seeking to increase transparency. According to the International Monetary Fund, the Paraguayan economy is projected to grow by 4.3% in 2017; if so, it would be a standout in South America.
Paraguay is a South American country wedged between Bolivia, Argentina, and Brazil. It is about the size of California but has a population of less than 7 million. The country is known for its rather homogenous culture—a mix of Latin and Guarani influences, with 90% of the population speaking Guarani, a pre-Columbian language, in addition to Spanish. The Paraguayan economy is one of the most agriculturally dependent in the hemisphere and is largely shaped by the country's production of cattle, soybeans, and other crops. In 2016, Paraguay grew by 4.1%; it is projected to sustain about 4.3% growth in 2017.
Since his election in 2013, President Horacio Cartes of the long-dominant Colorado Party (also known as the Asociación Nacional Republicana [ANC]), has moved the country toward a more open economy, deepening private investment and increasing public-private partnerships to promote growth. Despite steady growth, Paraguay has a high degree of inequality and, although poverty levels have declined, rural poverty is severe and widespread.
Following Paraguay's 35-year military dictatorship in the 20th century (1954-1989), many citizens remain cautious about the nation's democracy and fearful of a return of patronage and corruption. In March 2016, a legislative initiative to allow a referendum to reelect President Cartes (reelection is forbidden by the 1992 constitution) sparked large protests. Paraguayans rioted, and the parliament building in the capital city of Asunción was partially burned. In response to the effort to change the Paraguayan Constitution to allow for presidential reelection, which included a secret vote in Paraguay's Senate, the U.S. Embassy in Asunción declared that constitutional revisions should be done transparently and called on all parties to work together to resolve issues sparking the disturbances. In April 2017, President Cartes announced that he would not run in the 2018 elections, and subsequently the initiative to enable reelection was withdrawn.
U.S.-Paraguayan relations have been close for decades. The U.S. government has provided development assistance to Paraguay, and the two governments have collaborated on security, counternarcotics, and efforts to promote and strengthen democracy. In July 2017, Paraguay hosted the annual multination special operations competition held in the region, known as Fuerzas Comando. At the time, Admiral Tidd, commander of the U.S. Southern Command, held meetings with President Cartes and Paraguay's military leadership focused on U.S.- Paraguayan bilateral relations in security cooperation, humanitarian aid, fighting transnational crime, and counterterrorism. In addition, the Peace Corps has had a significant presence in Paraguay, with more than 200 volunteers in recent years. In FY2017, the program in Paraguay is estimated at nearly $5 million and is proposed to remain at the same level in FY2018.
The Trump Administration's FY2018 foreign aid request for Paraguay would reduce U.S. assistance to $400,000, a 95% cut compared to FY2016, concentrating on military training and eliminating traditional development programs. Congress may wish to consider if the long-term U.S. focus on strengthening democracy and promoting development in Paraguay remains relevant.