Transition and reform in a predatory state: the case of Paraguay

Abstract

This paper examines the problems of public and institutional reforms within the context of a so-called predatory state. The predatory state is one that acts in the interest of an elite rather than pursue a coherent strategy for economic development. The argument is that, even after the process of political transition is begun, important reforms are blocked by a lingering institutional overhang that continues to serve the predatory elite. We examine the experience of Paraguay that disposed of its dictator in 1989 and began a democratic transition. The failure to implement needed reforms is shown to have blocked a revival of economic growth and development.Paraguay, reform, corruption, predatory state, privatization,

Anatomy of State Capture: Introduction

“…The shadow state derives its power and resources from the constitutional state, a relationship that is, ultimately, politically unsustainable -especially if the predatory capabilities of the shadow state are allowed to expand in an unmanageable way (Khan, 2000;Grzymala-Busse, 2008;Richards, 2008;Di John, 2010;Gray & Whitfield, 2014). In the case of State Capture in South Africa, the constitutional state has been hollowed out as the energy and objectives of governance were redirected to serve or defend the shadow state.…”

Democracy and Social Welfare in Uruguay and Paraguay

“…The richest families significantly improved their share, while all other groups lost income; the families immediately below them in rank only slightly, the "poorest" 70 percent of households, especially the bottom bracket, more severely. While in Uruguay a limited progressive redistri- Uruguay: 1980: Mesa-Lago 1990: Ferreira-Coimbra and Forteza 2004a: Trylesinski 2007. 2008 bution did take place, no similar development occurred in Paraguay.…”

“…In "predatory states" political access is restricted, so that power is used to limit economic competition and generate rents that benefit small minorities. When confronted with a contraction of rent based assets, the "predatory state" must find alternative resources or face a challenge to its rule (Richards, 2008). Thus, in order to receive what had become a vital financial support by the IMF, Duarte had to commit himself to restructuring the pension system, but he avoided hurting the most powerful party constituencies and softened the social costs imposed by the reform.…”

A coup foretold: Fernando Lugo and the lost promise of agrarian reform in Paraguay

“…Setting many complexities aside, not least the fact that “[t]he state itself is a socially and politically contested terrain, and as such is a highly heterogeneous institution comprised of various actors” (Borras, , p. 75), the essence of the Paraguayan state under Stroessner, and during the 19 years of transition to democracy, is accurately captured in Peter Evans' (, p. 562) conceptualization of the “predatory state”, wherein the state acts in the interest of an elite rather than pursuing a coherent strategy for economic development:

Some states may extract such large amounts of otherwise investable surplus and provide so little in the way of “collective goods” in return that they do indeed impede economic transformation. It seems reasonable to call these states “predatory” … Those who control the state apparatus seem to plunder without any more regard for the welfare of the citizenry than a predator has for the welfare of its prey.

Following this description, several scholars have argued that Paraguay should be seen as a predatory (“oligarchic”, “patrimonial” or “privatized”) state, whereby connected individuals treat public agencies as private property (Fogel, ; Levy, ; Nickson & Lambert, ; Richards, ). For example, Levy (, p. 41) writes, “Paraguay is the epitome of state corruption and confusion between state and Colorado Party interests where the patrimonial state blurs distinctions between public and private property … and acts as a vital source of patronage for the Colorado Party, which behaves as if it ‘owns’ the state.” This dynamic is perhaps nowhere more evident than in the extraction of surplus from the corrupt sale of tierra fiscal (state land) – a practice initiated during the Stroessner dictatorship and continued under successive Colorado governments.…”

“…Following this description, several scholars have argued that Paraguay should be seen as a predatory ("oligarchic", "patrimonial" or "privatized") state, whereby connected individuals treat public agencies as private property (Fogel, 2009;Levy, 2013;Nickson & Lambert, 2002;Richards, 2008). For example, Levy (2013, p. 41) In the 1960s, the Stroessner regime, faced with stagnating agricultural growth and a growing concern over the spreading land conflict between latifundistas and minifundistas, embarked on an ambitious internal colonization programme, distributing state-owned land, much of it in the sparsely populated interior and border areas.…”