Itaipu talks raise Paraguay political crisis risks

Significance

The ambassador to Brazil and two top energy officials also resigned following the revelation of a secret agreement with Brazil that would reduce Paraguayan benefits from utilisation of energy from the binational Itaipu hydroelectric plant in the period up to the expiry of the Itaipu Treaty in 2023. The resignations followed widespread protests at the agreement, including opposition calls for the impeachment of President Mario Abdo Benitez, forcing him to postpone an official visit to Turkey.

Impacts

• Paraguay will aspire in future to use all of its half share, either for domestic consumption or for re-export to third countries.
• Suspicions are mounting that the agreement on Itaipu purchases was a dry run for a ‘sell-out’ to Brazil when the treaty is renegotiated.
• Only one year into his five-year term, Abdo Benitez’s position looks increasingly weak.