Sunday, December 30, 2012

Brazilian perspectives on India

India’s foreign policy strategy has been unique from the outset and given the country’s peculiarities it is unlikely to adapt to outsiders’ expectations and adhere to traditional categories, continuously confounding, surprising and frustrating foreign observers – particularly those in the West.

India’s role in today’s international context abounds with paradox. At first sight, there are many reasons to be optimistic about India. However, India’s global aspirations are starkly contrasted by the enormous difficulties it faces both at home and outside of its borders.
India's rise constitutes one of the most fascinating and important stories of the past two decades, symbolising, along with China, the fundamental shift of power towards Asia. Yet while many acknowledge India’s newfound importance, the country remains one of the most misunderstood actors in the international community. The need to understand India’s perspective has never been greater, and today no global challenge – be it climate change, nuclear proliferation or poverty reduction – can be tackled successfully without India’s active contribution and engagement.

Whenever two rising powers sit next to each other, the chance for conflict greatly increases as their spheres of influence grow quickly. This unfortunate constellation now becomes increasingly visible in Asia, where a rising China and a rising India have begun to claim influence over the same regions.

Despite India’s traditional focus on multilateralism and strong support of the United Nations during the Cold War, its performance on the multilateral level today is surprisingly thought to be less effective than in the bilateral realm. India’s performance in the G20, the IMF and the World Bank is widely thought to be exemplary.  

India’s foreign policy is likely to become more pragmatic. For example, rather than in engaging in fixed partnerships, India will pursue its national interest in its growing sphere of influence, and align with whomever it deems convenient – be it other emerging countries such as Brazil in one moment, and the United States in the next.

By the middle of this decade, India’s role is set to vastly exceed its current place in global politics. 

These are some of the points made by Oliver Stuenkel, the leading Brazilian expert on India in his 38-page article on " India’s National Interests and Diplomatic Activism: Towards Global Leadership?" in the LSE publication " India: The next super power?" released in March 2012. Oliver is professor of international relations in FGV, the most influential think tank of Brazil. He writes a blog " Post Western World- How are emerging powers changing the world". He was one of the speakers in the conference I had organized in Buenos Aires in December 2011 on the theme " The New India and the New Latin America – synergies and complementarities". He presented a non-western and unconventional and fresh perspective saying that India defies the conventional norms of measuring the rise of global powers.

This Brazilian perspective on India could be food for thought for Indian policy makers. 

Sunday, December 16, 2012

La Nueva India ( The New India ) - book by Jorge Heine

La Nueva India ( the New India) is the first Latin American book on the rising of India in the twenty first century in spanish language. It was launched on 4 December at Santiago, Chile. 

There are lots of  Latin American books on the millennial culture, tradition and philosophy of ancient India. There are many thousands of ardent followers of Sai Baba, Ravi Shankar, Brahma Kumaris and Hare Krishna. Nicholas Maduro, the Venezuelan vice president and chosen successor of Chavez is a Sai Baba devotee. It is against this background that the author has drawn the attention of the Latin Americans to look at the new entrepreneurial culture as well as the market and mindset of the New India.

The author of the book Jorge Heine, a Chilean, represents the New Latin America, which has emerged in the last three decades with a new paradigm of growth and development with a promising future. Jorge chaired the academic panel in the seminar I had organized in Buenos Aires in December 2011 on the theme, " The New Latin America and the New India- synergies and complementarities".

The New Latin America is curious about the secrets of the rise of the New India. It is inspired by India's development model based on democracy despite the enormous challenges of huge population and mind-boggling diversity.  The New Latin America is keen to intensify engagement and partnership with the New India. Conscious of this historic coincidence, the author has given a Latin American perspective about India, based on his direct experience of having lived in India, interacted with the policy makers and business leaders and witnessed the transformation at the time of " India shining". He has pointed out the areas in which Latin America can learn from the experience of India. He has given facts and figures on the growing Indo-Latin American business and Indian investment in Latin America. He has related the story of how India came to the rescue of Argentina with increase in imports of soya oil when China stopped the imports from Argentina to retaliate against Argentine restrictions on imports from China.

The fact that La Nueva India is a publication of El Mercurio/ Aguilar ( a joint imprint of the oldest daily in the Spanish language and a leading publisher in Spain) adds prestige to the book, which was launched at El Mercurio's headquarters in Santiago.

The book gives a comprehensive overview of India after the economic liberalisation of 1991. It covers the economic growth, business boom, IT revolution, the achievements of Indian diaspora and the functioning of the biggest democracy amidst so much of contradictions, diversity and challenges. The title of the first chapter is " India takes the world by assault" and starts with the story of the assault of the Mumbai sky by the multistoreyed residence of Ambanis. It illustrates with the success stories of Bharti Airtel, Wipro, Aravind eye hospital, E-Choupals and Tata Nano. There is a chapter " Indovation" in which the author talks about the typically Indian innovations, Jugaad and "frugal engineering". There are chapters covering the foreign policy of India and the threats to India arising from terrorism. The last chapter is " Mumbai Consensus" talking about the harmonization of the vision of the various stake holders about the future of India. The word Consensus is etched in the memory of the Latin Americans who had suffered the consequences of the imposition of neoliberal policies of " Washington Consensus" in the ninties. But now the region has found its its own development model called as " Brasilia Consensus", which is a balanced and pragmatic mix of Inclusive Agenda and market-friendly policies. 

Jorge Heine was Chilean ambassador to India in the period 2003-7. He was not a conventional ambassador confined to the cocktail circuits of " Cheers" and " Your Excellency".  He had interacted extensively with business, academics, media and political leaders of India. He had given lectures on Latin America in Indian universities, think-tanks, chambers of commerce and management institutes. He wrote articles in Indian newspapers and magazines. Even now he is a regular contributor to The Hindu on Latin American and global affairs. No other Latin American Ambassador of the past or present has ever had such an extensive reach out in India as Jorge has accomplished. I used to call him as the Blackberry Ambassador since he was known to communicate and respond instantly making use of the Blackberry popular in those days. Coincidentally, the Blackberry company Research in Motion is the one which funds his position as CIGI Chair in Global Governance at the Balsillie Schoolof International Affairs, Canada.
Jorge has enriched the book with his diverse background and expertise. By profession, he is a political scientist. He was a cabinet minister in the Chilean government before his ambassadorial postings to South Africa and India. He is author of several books and articles. He is visiting professor in several European and American universities. He has also worked as consultant to UN and some global foundations.
This book is not just an academic exercise by Jorge Heine. He is a genuine believer in India and has been talking about India's promise in seminars and conferences held in US, Europe and Latin America and also writing about India in global newspapers and magazines. He got me to coauthor with him an article in the prestigious America's Quarterly on India-Latin America relations. 

This book is a reflection of the new trend of direct dialogue and interaction between Indians and Latin Americans. In 2008, a Brazilian journalist Patricia Campos de Mello wrote a book " La India- de miseria a potencia ( India – from misery to potency ) after her two week visit to India. Last month, Florencia Costa, another Brazilian journalist published a book " Os Indianos" ( The Indians ). She had lived in Mumbai for five years and has married a Times of India journalist Shoban Saxena, who has now moved to Sao Paulo and has started writing articles on Brazil and Latin America. 

La Nueva India is a contemporary version of the famous Octavio Paz's book " Vislumbres de la India" which had introduced the India to the Latin Americans. Octavio Paz was also ambassador to India, like Jorge Heine. Given the extensive and passionate promotion of India in Latin America with his book, articles and lectures, Jorge Heine can be described as the Latin American Ambassador of India.

Thursday, November 29, 2012

Latin American poverty rate lowest in three decades

The number of people living in poverty in Latin America and the Caribbean has dropped to its lowest level in three decades due to more jobs and higher wages, according to the study released on 27 November by the UN Economic Commission for Latin America and Caribbean.
Despite lower poverty levels overall, 167 million people in the region are still considered poor. That’s one million fewer than in 2011, and it represents about 29 percent of the region’s population. Of those, 66 million people remain stuck in extreme poverty. 

Poverty in Latin America will continues its downward trend, but at a slower rate than in recent years, thanks to projections of positive economic growth and moderate inflation for the region in 2012
the last decade has seen reduced inequality in income distribution, although this issue remains one of the region's main challenges.
The credit for this goes to the Inclusive Development policies of the governments of the region.

Wednesday, November 28, 2012

Launching of the book " Os Indianos " in Sao Paulo

The book " Os Indianos" ( The Indians ) in Portuguese was launched yesterday in Livraria Cultura, Sao Paulo. The book seem to have been well received. Florencia had to sign autographs for around 200 books at the launching event.

The author of the book is Florencia Costa, a Brasilian journalist who lived in Mumbai for the last five years. She has now married Shoban Saxena, a Times of India journalist and the two have just moved to to Sao Paulo.

The book is going to be launched in Rio next month.

This is the second book on India written by Brazilian journalists. In 2007 Patricio Campos de Melo from Estado de Sao Paulo published a book called as " A India - de miseria a potencia ( the India from misery to potency)

I hope Shoban will write a book on Brazil for the Indian audience to reciprocate what his wife has done. No Indian has written a book on Brazil. It is time...

Wednesday, October 24, 2012

Dame Doze (give me dozen) Brazilians and Pobrezinho (poor) me

When the Brazilians go for shopping in Miami and Buenos Aires, they do not ask for the price of clothes or other consumer items costing around hundred dollars a piece. They simply choose something and tell the salesperson nonchalantly, "Dame Doze" ( give me a dozen ).  " Dame Doze" has become the nickname of Brazilians.
Guess the name of the city in the world in which the maximum number of US visas  were issued in 2011. Not Mexico City, nor Monterry, Shanghai, Beijing or Chennai.
It was Sao Paulo.  398,000 visas were issued there as against 331,000 in Beijing, 305,000 in Mexico City, 292,000 in Shanghai, 270,000 in Monterry and 159,000 in Chennai.
The Paulistas (as the inhabitants of the city of Sao Paulo are called) do not go for jobs or to earn money in USA. They go there to spend money; on sightseeing and shopping. The Miami real estate agents and Florida Street shopkeepers of Buenos Aires speak more Portuguese than English and Spanish these days to attract the Brazilians loaded with money for investment and shopping. 
There were a total of 792,000 Brazilians who were issued US visa in 2011. According to a survey, Brazilian tourists are the highest per capita spenders in US. The reason for this are (a) the rapid increase in wealth thanks to the booming economy (b) the strong currency Real ( right now 2 Reals = 1 US$ . It was at one time almost 1.5 Real for a dollar) and (c) the cost of things and living in Brazil have become very high due to the exorbitant local cost of production and services. 
Sao Paulo is the most expensive city in Latin America as well as in the whole of Americas and one of the most expensive cities in the world, ranking 12th globally. It is more expensive than London (rank 25th) , New York (33rd), Paris (37th) and Rome (42nd) , according to the March 2012 cost of living survey by Mercer, a reputed human resources consultancy firm whose survey is the reference for multinational corporations. The Paulistas find it cheaper to fly to Miami or Buenos Aires for shopping than buying in Brazil itself. Sao Paulo has the largest fleet of private helicopters and jets among the cities of  the world. It is the only city in the world which has 4 Tiffany shops and 3 Bulgari outlets. Santos port near Sao Paulo has become the new Miami for cruise liners. 
Although Brazil has hundreds of beautiful beaches along its 7400 kms of the Atlantic coast, the Brazilians seek beach holidays in other Latin American beaches such as Punta del Este and Cancun. The Brazilians have overtaken the Argentines to the top spot in Punta del Este, the beach resort in Uruguay known as the summer playground of the rich and famous Latin Americans. Many Brazilians own permanent villas and apartments in Punta just to spend a couple of months in a year.
You might think that the Brazilians are beach creatures used to lying down on the sand in bikinis and shorts. Hold on.. The largest number of skiers in the ski slopes of the famous Bariloche in Argentina are Brazilians. They have direct charter flights to Bariloche from Sao Paulo, Rio and Belo Horizonte during the ski season.
I hope the Indian tourism Ministry and travel agencies focus on this under-explored Brazilian market seriously and systematically. The Brazilians have admiration for Indian spiritualism, yoga, meditation,culture and IT skills. Their interest in India have been stimulated further by the Brazilian soap opera " Camino das Indias" ( passage to India ) which drew record audience from January to September 2009. Bindi, saree, kurta  and Bollywood dancing have become fashions in Brazil since then.
While the Brazilians go abroad to spend money, foreigners are coming to earn money in Brazil attracted by the high salaries and huge business growth opportunities. Engineers and technicians from Portugal, the former colonial master, are now seeking jobs in the country of the colonised. 
Faced with shortage of professionals, the Brazilian government is sending out on scholarship over hundred thousand Brazilians for higher studies abroad. India has also made a bid for a small share of this pie. A Brazilian delegation was invited to visit Indian Universities, IITs and IIMs last year.
The Brazilian companies have leveraged the strength of their strong currency and cash surplus to acquire assets abroad. JBS, the meat processing company of Brazil has acquired US , Latin American and European firms to become the largest in the world. Vale, the mining giant has bought the Canadian nickel mining company for an astounding sum of 17 Billion US Dollars.The Brazilian industrial development bank BNDES is actively extending credits and encouragement to Brazilan companies to acquire foreign assets and become global champions. Petrobras raised 70 billion dollars in the largest- ever IPO in the world in 2010. President Lula celebrated this proud achievement saying, "It was not in Frankfurt, it wasn’t in New York, it was in our Sao Paulo exchange that we carried out the biggest capitalization in the history of capitalism".
In the past, Brazilian football players used to go to Europe to become Euro millionaires. These days some European players have come to play in Brazilian clubs to save in the strong Brazilian currency. Earlier the best Brazilian players were playing in Europe while the Brazilian clubs were stuck with only the left-overs, those waiting to go to Europe and those who had to returned from Europe on retirement. Now the number one player Neymar plays in Santos club of Brazil despite the multimillion Euro offers from many European clubs. Neymar earned 18 million dollars in the last season in salary and endorsements ranking  as the 13th best paid player in the world.
The Brazilian-Argentine football rivalry is much more intense than the India-Pakistan cricket emotions. Who is greater? Maradona or Pele? is the eternal debate over endless glasses of Caipirinhas and Malbecs. But now the Argentine shop keepers swallow their pride and sell Brazilian football jerseys to the Brazilian shoppers. Obviously they are cheaper in Argentina than in Brazil. 
The wine-drinking snobbish Argentines used to look down on the beer-guzzling Brazilians. During my golf game in Buenos Aires in 2003, the Argentine threesome in my group lamented, " we have become so poor after the 2002 crisis that we have to drink beer now ".  Now the Argentines bartenders eagerly open the most expensive wine bottles to  the Brazilian tourists.  The Argentine wine exporters are betting on Brazil as one of their largest markets. 

The prestige of Brasilian shoppers gave me an advantage during my stay in Buenos Aires in the last four years. Whenever I wanted the special attention of shopping assistants in Buenos Aires I would speak in Portuguese, making use of the Brazilian accent I had acquired during my four year stay in Sao Paulo. My café con lait ( coffee with milk ) skin color also helped in making the Argentines mistaking me for a Brazilian.
Hmmm…While my Brazilian accent and skin color fooled the sales persons, my Indian purse exposed me at the billing counter when I bought 1 or 2 pieces instead of 12. The billing clerk would  murmur " Pobrezinho " and " Pobrecito" . These are non-pejorative words and sweet way of saying "poor guy" in portuguese and spanish.

Tuesday, October 09, 2012

The message for Latin America from the reelection of Chavez

This article was published by the Indian think tank " Gateway House" on 11 October 2012


also by The Hindu newspaper on 12 October

The free, fair and peaceful Venezuelan elections on Sunday, with a clear and accepted outcome has restored the confidence of the world which had some doubts about the vulnerabilities of the Latin American democracies after the constitutional overthrow  of President Lugo of Paraguay in June this year and the unconstitutional removal of Honduran President Manuel Zelaya in 2009.  The immediate and graceful acceptance of the people's verdict by Capriles, the loser and his message of congratulations to Chavez augur well for the future of the Venezuelan democracy.  These are also good for the growing maturity of the young Latin American democracies many of which were restored from military dictatorships in the eighties. 

The reelection of Chavez for the third successive term is an undoubtable proof of the empowerment of the masses of the region. It is the poor and lower middle class who set the political and economic agenda of the region by their election of Leftist leaders. Conscious of this, even the centre- right governments of the region are strongly committed to Inclusive Growth. 

Despite the high stakes involved in the outcome of the Venezuelan elections for outside powers, there was absolutely no external interference. It was purely a Venezuelan decision for Venezuela. Yet another reassertion of the Latin Americans that they are capable and determined that they would decide their destinies themselves, based on their aspirations and perspectives.

On the negative side, there is apprehension that Chavez would use this mandate to intensify his policies of  weakening and abuse of democratic institutions and damage to the private sector business and industry.  Hopefully, he will tone down his radicalism and moderate his approach. It seems logical given his awareness of the clear message from the latest election that (a) his victory margin has come down (b) the uncertainty of his health from cancer  and ( c ) the emergence of Caprilles as a credible alternative to Chavez by securing 45% vote and his reaching out to Chavez's electorate ( unlike his predecessor candidates, who would not even pay lip service to the poor) by reassuring that he would continue the good parts of Chavez's pro-poor policies.  More importantly, Caprilles's promise to take Venezuela to the mainstream path of Latin America which is moving towards pragmatic centre with a balance of pro-poor and pro-market policies is appealing even to Chavistas who are tired of the the excessive radicalism, unnecessary confrontation and poor management of the resources and economy by Chavez.

The second negative score is the reelection of Chavez for an unprecedented third term and his continuous rule for twenty years from 1999 to 2019. This is not a good news for the region which has come out from the forgettable past regimes of Caudillos ( strong men). At present, he is the longest serving Latin American President. In all the other democracies of the region, Presidential term is limited to two or one. Even the Constituition framed by Chavez himself had limited the term to two but he got it amended later to remove the term limit.  This bad example might inspire others like President Correa of Ecuador, President Evo Morales of Bolivia and the Argentine President Cristina, who have dreams of unlimited terms and power. 

Some might fear that Chavez's victory based on his model of ideological polarization might spread further in the region giving rise to more Chavista Presidents. But his model has already reached its peak and is losing appeal steadily and irreversibly in the region. This was evident from the case of  Humala, fellow leftist leader from Peru. Chavez's support was kiss of death for Humala during the Peruvian elections in 2006. Besides asking Peruvians to vote for Humala, Chavez went further and openly attacked  Alan Garcia, the opponent of Humala, calling him as thief among other things. Humala, who was till then leading in the opinion polls, lost the elections unexpectedly since the Peruvian voters were provoked and scared by the aggressive interference of Chavez. In the 2011 elections, Humala got out from the label of Peruvian Chavez, remade himself as the Peruvian Lula, espoused pragmatism and won the 2011 elections. Similiarly when Mujica, the former guerrilla leader of Uruguay was contesting the elections in 2009, the opposition scared the voters calling him as a Uruguayan Chavez. But Mujica got over this defamation by assuring that he would be a Uruguayan Lula and got elected.  The defeat of the radical leftist candidate Obrador in the June 2012 Mexican elections is also a message to the Latin American Left that radicalism is not a ticket to power.  Even Ortega, the authentic Marxist President of Nicaragua has become business-friendly, moderate and pragmatic 

One of the long term achievements of Chavez for Venezuela is the diversification of the trade and economic partnership. Before him, Venezuela was dependent on US for over 80 percent of oil exports. Now China and India have become the second and third largest markets with 30% and 15% of the share.  Reliance has just signed a contract on 25 September for long term purchase of 300,000 – 400,000 bpd ( which is over ten percent of the total crude imports of India). Reliance has also expressed interest in exploration and production in Venezuela. ONGC is already investing in two oil fields there. This is good for the Indian strategy of diversification of oil imports and investment in these days of uncertainties caused Arab Spring and sanctions on Iran. 

Thursday, October 04, 2012

The Labor Market Story Behind Latin America’s Transformation

The unemployment rate of Latin America and Caribbean (LAC) reached a historic low of 6.5% in 2011 and "Latin America witnessed tremendous social progress during the last decade", says the October 2012 report of the World Bank entitled " The Labor Market Story Behind Latin America’s Transformation". The report has analyzed the evolution of the labour market in the last decade.

Other highlights of the report:

the robust growth that the region experienced was remarkably pro-poor, with more than 70 million Latin Americans lifted out of moderate poverty between 2003 and 2010
More than 35 million additional jobs were created while informality, one of the Latin American trademarks, fell in seven out of the nine countries where it could be measured consistently throughout the decade.
- Strong employment creation during the 2000s was coupled with a sharp decline in the inequality of labor earnings, a fact that stands in sharp contrast with both international trends and the stagnation that characterized the region in the previous decade. 
- Another set of momentous transformations in the labor field concern the changes in the patterns of cyclical labor market adjustments that occurred as LAC entered in the 2000s into an environment of low and stable inflation, finally breaking with its traditional history of home-grown macroeconomic instability. The dramatic decline of inflation in the region led to rising downward wage rigidities, which translated into lower fluctuations of earnings, especially during downturns. 
- During the last two decades Latin America has gone through a major transformation in the educational attainment (measured by years of schooling) of its labor force, a process that is still ongoing. The set of skills brought by Latin American workers to the labor market improved rapidly. In parallel to the steady increase in the supply of more educated workers, the inequality in educational attainment between the rich and the poor population has fallen.
many LAC countries experienced during the 2000s a steady decline in income inequality, which stands in sharp contrast with rising inequality in virtually everywhere else.  

- Inequality of (labor and non-labor) income fell substantially, by 5 Gini points on average for 15 LAC countries
-The services sector continued to employ an increasing number of workers: its relative share in total employment increased by 2 percentage points;
- In spite of going through the worst international crisis since the Great Depression, real wages did not fall significantly during 2007-2009. While the real wages fell on average by less than one percent in Colombia, Ecuador and Mexico,  they actually increased in Argentina, Brazil, Chile, Peru and Uruguay. 
- Even in the midst of the current slowdown, labor markets in LAC have continued to perform remarkably well. The unemployment rate for the region as a whole closed at nearly 6.5 percent in 2011, the lowest since the peak of 11 percent in 2002-2003. This is not an isolated fact, it is rather a reflection of deep changes in Latin American labor markets that took place in the 2000s and which have, in turn, been part of a broader set of fundamental transformations (including the decline in household income inequality, the consolidation of sounder macro-financial frameworks and associated restoration of counter-cyclical policy capacity, the stunning reduction in poverty and the swelling of the middle classes ) that jointly constitute what the World Bank has labeled the “new face” of LAC. 

Sunday, July 08, 2012

Launching of the book " Malgudi to Macondo- the journey of an innocent Indian through seductive Latin America

The book "Malgudi to Macondo - journey of an innocent Indian through seductive Latin America" by R. Viswanathan is being launched by The Indo-Latin American Chamber, Southern India Chamber of Commerce and Industry ( SICCI ) and Engineering Export Promotion Council, Chennai

Time 1000 to 1330 hrs followed by lunch
Venue GRT Grand Days, T. Nagar Chennai

Speakers at the event include

M.Ganapathi, Secretary Ministry of External Affairs
Siddharth Varadarajan, Editor The Hindu newspaper
Ambassadors of Brazil, Peru and Paraguay

contact Dr Ravichandran

Monday, June 25, 2012

Paraguay: Back to Latin America's bad old days?

A | A | A 
25 JUNE 2012
Gateway House
Paraguay: Back to Latin America's bad old days?
While the ouster of Paraguay’s president is a setback to the young democracy of the country, it shouldn’t be viewed as a repeat of Latin America’s history of coup d’états. The painful process of democratic maturity will continue, albeit slowly.
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The hasty impeachment of Paraguay’s President Fernando Lugo by the Congress on June 22 has brought back memories of the bad old days of Latin American history marked by coup d’états. This is the third overthrow of a democratically-elected president in the New Latin America, which had started its confident march on the path of democracy, seeking a new destiny in the twenty-first century. The previous cases were the ouster of Venezuelan President Hugo Chavez in 2002 and Honduran President Manuel Zelaya in 2009. The difference in the case of Paraguay was the absence of two critical ingredients of a classic Latin American coup: military and the Big Brother from the north, the U.S. This one was a constitutional coup staged by an overwhelming majority of the elected representatives of both houses of the Congress. The lower house voted 76-1 and the senate 36-4.
The impeachment, however, is not surprising. It was being plotted from the very first day of Lugo’s assumption of office in 2008, after his historic victory over the mighty right-wing Colorado party which had ruled the country continuously in the previous sixty-one years. What was surprising was that the Colorado oligarchs had allowed Lugo, a leftist Bishop of the Poor, a political outsider and new comer, to win in the 2008 elections. Their overconfidence and underestimation of Lugo, coupled with the division within the party leadership, did them in.
The Colorado party is not just a political party. It is the strongest institution in Paraguay with a total stranglehold over the political and economic power system. Even the civil servants and diplomats are members of the party. The Colorados were therefore determined to recover power by any means and wanted to nip in the bud the unprecedented expectations raised among the poor people of Paraguay by the leftist Lugo, who promised to reform the system. Using their majority in the Congress to block his proposals, they didn’t let Lugo implement any of his progressive policies; they paralysed his administration by internal sabotaging with their loyal bureaucrats. Lugo simply did not have the political skills or a solid political party to deal with the ruthless Colorado machinery. In addition, his own Vice President Federico Franco – sworn in as President only a day after the coup – has been conspiring with the party to topple Lugo. Franco is the leader of the liberal party, the second largest after Colorados. He seems to have made a deal with the Colorados, who have let him become president for one year, up until the next elections set for April 2013, when they expect him to cede power.
The real military coup attempt was in 1996, when the Army Chief General Lino Oviedo threatened to overthrow the civilian government. The foreign ministers of the other three Mercosur countries – Argentina, Brazil and Uruguay – flew to Asuncion immediately and told him that if he took over, they would expel Paraguay from Mercosur, which accounts for three-fourths of Paraguay's trade. The General backed down. This time, UNASUR, the union of the twelve South American countries, sent a group of foreign ministers to Asuncion but the Paraguayan Senate paid no heed and passed the impeachment resolution quickly. All the countries of the region have condemned the ouster of Lugo. Argentina and Brazil have recalled their ambassadors. Besides non-recognition of the new President, there is threat of isolation and expulsion from the regional groups. Paraguay has already been suspended from the bi-annual Mercosur summit to be held in Argentina this week. 
The chances of restoration of Lugo to the presidency do not seem to be bright. First, Lugo himself has given up, saying that he would abide by the decision of the Congress, and promptly vacated his office. Secondly, Lugo has lost his personal moral ground after the recent scandals caused by his admission of affairs with women when he was a bishop and his acceptance of fathering of children with at least two women. Thirdly, he does not have adequate political machinery to bring the masses to the streets and threaten the Congress or the new President. Lastly, the Brazilians, who have the maximum clout in Paraguayan affairs, will not go out of their way to help Lugo. He had annoyed Brazil by forcing them to pay more for the electricity they import from Paraguay and claimed it as one of his major achievements. Brazil will also keep in mind the thousands of Brazilian farmers (who dominate the soya cultivation) settled in Paraguay and whose interests were under threat from the land reform proposals of Lugo. Brazil has taken the position that they would go by Mercosur and Unasur decisions. But Unasur, which is meeting at the summit level on 27 June in Lima, will not go beyond a point to confront the elected Paraguayan Congress which has done the impeachment with an overwhelming majority. 
It seems that the new President Franco might ride out the isolation and manage to finish his term, in the same way as the vice president of Honduras did after the coup. The Colorado party is likely to come back to power next year and continue its business as usual, including the continuation of the dubious distinction of keeping Paraguay as the only country which does not have a system of personal income tax. The poor masses of Paraguay will have to wait for the next Messiah. 
While the ouster of Lugo is a setback to the young democracy of Paraguay and a disappointment to its masses, it should not be seen as repetition of history for Latin America as such. The region has irreversibly changed its paradigm and is set on the foundation of democracy. What happened in Paraguay is a damage to the super structure and a bump in the road. It is part of the painful process of the democratic maturity in some countries of the region. 
The ouster has significance for India as well: President Lugo visited New Delhi last month and met the Indian Prime Minister and the President. During my meeting with him before the visit, Lugo expressed his admiration for Indian democracy and wanted to learn from India’s example.  It is a pity that he did not get time to put into practice whatever he had learnt.
R. Viswanathan was Indian ambassador to Paraguay, Uruguay and Argentina from October 2007 to May 2012 and is now retired. His email:
This article is part of Gateway House’s Ambassadors views section, a collection of articles featuring eminent Indian diplomats.