MercoPress. South Atlantic News Agency

Paraguay downplays derogatory references from Brazilian politicians

Presidential hopeful Serra said Brazil was doing “philanthropy” with its poor neighbours

Paraguayan officials downplayed statements by Brazil’s main opposition presidential candidate Jose Serra who said that Brazil is doing “philanthropy with Paraguay and Bolivia”.

Foreign Affairs minister Hector Lacognata said he had received comments and seen some cuttings with the alleged statements from Serra in Sao Paulo during a meeting with business people, but for the Paraguayan government “they are what they are, campaign speeches”.

“In electoral campaigns candidates try those speeches and reactions which most votes and public opinion attract, and obviously that is the path Mr Serra has chosen”, underlined the head of Paraguayan diplomacy.

Brazil opposition main presidential candidate said that Brazil “is doing philanthropy with Paraguay and Bolivia” in reference to the benefits extended to Paraguay regarding the shared Itaipu hydroelectric dam and the problems faced by Brazilian companies in Bolivia with the nationalization process.

However Lacognata said that the administration of President Fernando Lugo “is closely following the timetable agreed with President Lula da Silva referred to Itaipú”.

The benefits agreed with Brazil regarding Itaipú, which was one of the main points of President Lugo’s campaign promises (‘recovering our energy sovereignty’) will be reviewed Friday when the brief visit of President Lula da Silva next Friday.

The main ceremony of the bilateral summit will take place 60 kilometres from the capital Asunción where the two presidents will put the founding stone for the works on a 500 KW power grid linking the world’s largest operational hydroelectric dam with Asunción. This should help end blackouts and brownouts in Paraguay’s capital but there are still some questions about the financing of the 300 million US dollars investment needed for such an undertaking.

This is part of a bilateral agreement reached by both leaders 25 July 2009 in Asunción, by which Brazil agreed to extend Paraguay greater benefits from the shared Itaipú.

However some of the points are still pending Congressional agreement in Brazil which is in the midst of a presidential campaign and makes it difficult to establish a date.

Among the pending benefits are trebling the payment Paraguay receives for the surplus power absorbed by Brazil, from 120 to 360 million USD.

Theoretically power is distributed 50/50 but since Paraguay has more than enough with 5% of Itaipú under contract conditions dating back to the seventies, the rest can only be sold to partner Brazil, at rates of four decades ago.

Precisely the agreement also contemplates that Paraguay can gradually have access with the extra power to the Brazilian energy spot market, hopefully collecting better prices.

However Sao Paulo, the main beneficiary of the cheap energy and its strong manufacturing lobby has campaigned strongly against those terms of the agreement, which Lula da Silva promised to Paraguay, but has no certainty in achieving the necessary votes in Congress.

Brazilian industry and the energy sector have also complained bitterly that President Lula da Silva has been too lenient with Bolivia’s Evo Morales and his policy of taking over energy and other “strategic” industries, many of them belonging to Brazilians.

Therefore no wonder that the former governor of Sao Paulo and former mayor of the Sao Paulo megapolis and now presidential hopeful Jose Serra brought up the issue precisely before the business community of Brazil’s power house.

President Lula da Silva has argued that Brazil as the rich brother has “to give a hand” to its poor neighbours, not only out of compassion but also strategically.