Prospects Facing Fernando Lugo and Lula Over Electricity

This Friday, Fernando Lugo, the "leftist" president-elect of Paraguay, will take office, marking the first time in over 55 years that neither the military nor the Colorado party has been in the presidency. I commented before on the issues he might be facing upon the beginning of the administration, but I think the Economist reiterates a lot of the points already made pretty well. The one thing I would add is that, at least right now, I don't see much trouble erupting over the Itaipu issue. Certainly, Brazil and Lula are interested in maintaining their low rates with Paraguay in their joint-deal for electricity from the dam. However, Lula's nothing if not the consummate polite diplomat. Through his 5 and a half years as president, he has consistently negotiated with any and every country that might help Brazil, all while respecting the countries he negotiates with.

This was certainly the case when Bolivia nationalized its oil. When that happened, the outcry from O Globo and the middle class was extreme; they demanded Lula cut off all aid to Bolivia and even declared that that oil was rightfully Brazil's, and that Bolivia had no right to nationalize it (nevermind the inconsistency that Brazil's own oil company and petroleum-producer, Petrobras, is nationalized). However, Lula paid attention to Morales's promise not to automatically cut countries off as long as the countries that Bolivia supplied renegotiated their deals so that Bolivia was getting fairer prices for its oil. Lula agreed, and Brazil's doing just fine.

The point of this Bolivia tangent is to say that, given how Lula dealt with Bolivia when they nationalized their oil, I don't see any reason to believe that there will be a major falling out between Paraguay and Brazil/Lugo and Lula over the Itaipu electricity issue. Lula's proven that he's open to renegotiating deals that are fair to both countries, and it seems that Lugo is also going about the issue with in a very friendly, "conciliatory" way. Of course, things could change, but it looks right now that Lugo will have much greater difficulties in dealing with internal opposition and land issues within Paraguay than electricity deals with Brazil.