Paraguay's Rise: Santiago Peña's Promise and Pitfalls

Paraguay is no longer a secret bet: Santiago Peña attracts and scares in equal measure

Paraguay has enjoyed years of steady growth, and on August 15, 2023, it placed a textbook economist at the helm: Santiago Peña. The enthusiasm among those seeking refuge outside Spain is real; so are the shadows of corruption, geopolitical dependence, and oil that remains underground.

The fundamentals that inspire hope

The country is no longer the class laggard: a young population, abundant hydroelectric power for industrialization, fertile land, and water in the eastern region, where 98% of the population lives. Added to this is an uncomfortable comparative advantage: until now, it has escaped the socialism and drug-trafficking violence plaguing several neighbors. The result is an economy rising steadily for years, with a low profile that is beginning to break.

With Peña, equipped with economic training and orthodox discourse, markets sense something more than continuity. The shift is generational: alongside Lacalle Pou in Uruguay, the region welcomes leaders who sound like manuals, not rallies. So far, the headline is good.

The new geopolitical game: Taiwan, the Chaco, and balancing Brazil

Paraguay is one of the few countries maintaining diplomatic ties with Taiwan instead of China. This already brings development aid, scholarships, and advantages for beef exports. Now, according to reports, Taiwan wants to cooperate with Petropar to explore oil in the Chaco. Estimates suggest around 4 billion barrels and potential production of 200,000 to 300,000 barrels per day for decades. Today, Paraguay produces exactly the same amount of oil as Spain: zero.

Alignment with the United States and Israel is read as a natural counterweight to pressure from Brazil and Argentina, two uncomfortable giants. But the decision to move the embassy to Jerusalem, mentioned in the analysis, sets off alarms for those wary of bloc geopolitics. The balance is not free: either you are a partner of someone, or a hostage of everyone.

The shadows nobody applauds

The Colorado Party is not exactly a school of virtues. Former president Horacio Cartes has been under suspicion of alleged links to drug trafficking, and the electoral process that brought Peña to power was not free of fraud allegations. In late September 2023, a report leaked by La Política Online and picked up by RT revealed alleged US interference plans in the country. Nothing new regarding recent history, but it gives arguments to skeptics.

Among the concerns, the Mercosur factor also appears: with Lula back in Brazil and Argentine uncertainty, regional governance becomes complicated. Those who see Peña as a puppet of globalism also recall the promise to approach Israel and the lack of concrete measures beyond rhetoric.

European paradise or mirage?

For the average Spaniard with some capital, Asunción offers decent private hospitals and low crime rates in affluent areas, with Córdoba or Buenos Aires just a couple of hours away. Tropical climate and pests are the price to pay, and it is not small: in summer, the refuge shifts to southern Brazil or Argentina.

Projects like Paraíso Verde exist, designed for Europeans fleeing collapse, though with a Germanic logic that clashes with the Mediterranean style. The promise of a "new Switzerland" in the Chaco must be taken with caution, but the country's recent history invites not dismissing it entirely.

Between the manual and reality

Santiago Peña has room to maneuver: a growing economy, favorable demographics, and an establishment smiling at him. He also has baggage: Colorado Party politics, external pressure, and the temptation to sell smoke. The bet makes sense, but anyone thinking Paraguay will become the definitive refuge for Spaniards should wait to see the accounts, not the speeches. One thing is certain: the region is no longer the same.