Mon Jan 30, 2023
January 30, 2023

Open Letter from a Paraguayan to the Brazilian Working Class on Itaipu

A nation cannot become free and at the same time continue to oppress other nations”                                   (On Poland – Friedrich Engels – 1847)

No nation can be free if it oppresses other nations”      (The Question of Peace – Vladimir Lenin – 1915)


The analysis and political lessons left by the recent political crisis – not yet closed – in Paraguay, which almost cost the position of both the Paraguayan President Mario Abdo Benítez and his vice president deserves all the attention of the working class and any class-conscious activist from Latin America, but especially from Brazil. This is not an exclusively Paraguayan problem and I want to explain why.

By Juan Villamayor

The working people, the labor and social movements, and any party that claims to be left – or at least democratic – in Brazil must learn about this issue with the speediness and maximum seriousness required by the principle of proletarian internationalism.

Why do I want to address, mainly, the exploited and oppressed Brazilian people? Because, following a historical policy of oppression, exploitation, contempt, and cultural-racial discrimination [1] systematically imposed by their ruling class and by their successive governments, there is not only a lack of knowledge by the Brazilian working class and social activism in the case of the Itaipu hydroelectric power plant (from now on only Itaipu Dam) but also, what is more serious, a deep ignorance about the historical relationship between Brazil and Paraguay .

It is time for us to start discussing, as working-class sisters and brothers, about this secular relationship.

This must be the first step to free our minds and throw all myths and falsehoods spread by the Brazilian governments, the bourgeoisie, and their mainstream media into the dustbin of history.

Only in this way will it be possible to build an internationalist point of view of the unified struggle that we have to face against our common exploiters.

Only in this way will the union between both Paraguayan and Brazilian peoples be possible, to fight side-by-side the parasites that suck our resources on both sides of the border outlined by the rich to divide us, the poor.

Historical oppression and national exploitation

The first thing we must keep in mind is that Paraguay was completely destroyed a 150 years ago in the so-called Triple Alliance War [1864-1870], which in Brazil is better known as Guerra do Paraguai (Paraguay War).

The Triple Alliance against Paraguay was sealed through a secret pact between the then Empire of Brazil, ruled by Emperor Pedro II; Argentina of the liberal president Bartolomé Mitre; and Uruguay usurped by Venancio Flores, a puppet of the other countries’ rulers.

That ignominious Treaty defined in advance the annexation of Paraguayan territories and the share of any loot between the allies; the obligation to bring war to the last consequences, that is, not to accept any mediation or separate peace negotiation with the invaded country; and the imposition on Paraguay of unpayable war reparations, since, despite having been razed, it should pay the costs of a war that almost wiped it off the map.

It is estimated that only the Brazilian Empire mobilized 139,000 soldiers during the war, that is, 1.52% of its total population a century and a half ago. In fact, approximately 80% of the Allied troops on Paraguayan soil were Brazilian, composed to some extent by slaves forced to fight on foreign soil. To get an idea of ​​the magnitude of this war effort, it’s like if President Jair Bolsonaro deployed 3,169,122 soldiers on Paraguayan soil if Brazil invaded that country today, which has just under seven million inhabitants.

The result was a horrendous genocide: between 60 and 69% of Paraguay’s total population disappeared during the Great War, as we know it. It is almost impossible to find that terrible example of death, in percentage terms, in modern history. Out of the survivors, two-thirds were women, children, and the elderly.

The country lost its incipient but progressive industrial and communication advances, its agriculture, its livestock. Brazil and Argentina annexed approximately 40% of its territory – approximately 150,000 km2, equivalent to Ceará State’s area in Brazil. In a nutshell, the productive forces of Paraguay were annihilated by their supposed “civilizers.”

Since then, Paraguay has not only become one of the poorest and most unequal countries on the continent, but also an exploited and oppressed nation not only by imperialism but also by its historical agents in the Southern Cone: the Brazilian and Argentinian submissive bourgeoisies.

From being a nation that, by means of an advanced process of anti-colonial bourgeois revolution that began in 1811, nationalized almost 90% of the land and 80% of domestic and foreign trade, it turned to be the most unequal country regarding land tenure in the world after the holocaust of the Great War that ended in 1870. According to the official census, 2% of rural owners monopolize 85% of arable land, mostly dedicated to soy agribusiness and livestock. Of those landowners, many are foreigners. It is estimated, for example, that 14% of the Paraguayan territory is owned by Brazilian businessmen, intimately linked to the imperialist multinationals that control agribusiness.

Therefore, the Brazilian working people have a historical debt with their Paraguayan brothers. Not for having committed the genocide or for having ripped he small neighboring country apart, since the one who committed that crime was the Brazilian bourgeoisie, at that time a slave owner, financed in part by British banking houses and allied to the ruling classes of Buenos Aires and Montevideo. No. The Brazilian working class historical debt should be settled by knowing, debating and fighting side by side with the Paraguayan working class; fighting daily the oppression and cultural-racial discrimination that the bourgeoisie of its own country exerts in various ways on Paraguay.

In short, the following must be understood: the Brazilian bourgeoisie and its successive governments acts as a sub-metropolis or, if preferred, as a privileged semi-colony both in Paraguay and throughout the region.

Paraguay is, then, a semi-colony that is considered the “backyard” of another stronger semi-colony.

This means that the Brazilian bourgeois state, in addition to exploiting and oppressing its own working class, acts as a lieutenant – as a capanga [a hitman] – of imperialist interests in South America.

Brazil is nothing but a platform that serves the penetration of foreign products and capitals in the Southern Cone. In addition, in exchange for whipping their own people and other poorer peoples – such as Paraguay or Bolivia, to name two of the most overwhelming cases -, the Brazilian bourgeois collects some the crumbs that fall from the banquet of the imperialist nations. Isn’t it an odious role? Should the Brazilian working class accept this?

The case of Itaipu Dam

The current crisis and the case of Itaipu Dam cannot be understood without considering that historical context of permanent hostility and national oppression of Brazil over Paraguay. It can be said, without any fear of falling into exaggeration, that the plundering of Paraguayan resources through Itaipu Dam is the instrument that embodies this relationship of oppression/national exploitation nowadays.

Itaipu Dam is probably the example that best reveals the disastrous role played by the Brazilian bourgeoisie, a minority partner of imperialism, in the region. What a pathetic role of being a lackey of the imperialists but, at the same time, behaving like a beast with the poorest countries in South America.

Let’s make a brief historical review to better understand this case.

The Itaipu Dam project was born of a Brazilian military invasion in 1965

Since 1955, Brazil studied the hydroelectric potential of the area of ​​the Saltos del Guairá [Guairá Falls] – also known as Sete Quedas [Seven Falls) -, aiming at accomplishing an important industrial development, although completely controlled by the imperialist capital.

In 1962 the Brazilian government already had solid technical studies in that regard. In 1964, as we know, a reactionary coup took place and a military dictatorship was established in Brazil. Since 1954 a strong military dictatorship reigned in Paraguay, that of general Alfredo Stroessner, a macabre character, absolutely servile to the US and its regional gendarme, Brazil.

In this context, in June 1965, the Brazilian dictator Castelo Branco invaded Puerto Renato and the 20-kilometer zone that, according to Brazilian diplomacy, was “in dispute” with Paraguay since the end of the Triple Alliance War. The Stroessner dictatorship, pusillanimous, did nothing before the Brazilian army invasion into Paraguayan territory.

To legalize the Brazilian military invasion, the Act of Foz de Iguaçu was signed with US mediation on June 22, 1966. By this protocol, the two dictatorships agreed to build a future hydroelectric dam in the area and take advantage of its energy potential. In this way, the Saltos del Guairá, seized by Brazilian troops, would be considered a kind of community of goods between the two countries, once building Itaipu Dam presupposed flooding the entire area. In fact, Brazilian troops only withdrew in 1982, when that territory was flooded.

On that occasion, it is worth mentioning a gloomy story. The chancellor of the Brazilian dictatorship, General Juraci Magalhães told his Paraguayan colleague Raúl Sapena Pastor: “My dear friend, as you know, a treaty can be modified by virtue of another treaty or by the result of a war; Brazil is not willing to accept a new treaty, what remains to know is whether Paraguay is willing to promote another war” [2].

In 1966 it was already clear who would take the lion’s share of a definitive treaty.

This was the context. The Itaipu Dam was born of a Brazilian military invasion and the cession of Paraguayan territory by the Stroessner dictatorship.

The worst part is that in Article 18 of the 1973 Treaty of Itaipu this situation was not only legalized but the legal authority of the military invasion was established by the signatory States.

It would be ridiculous if we consider the enormous asymmetry between Brazil and Paraguay in all areas, that in some circumstances that clause could favor the Paraguayans. Quite the opposite. On several occasions, Brazil carried out military exercises to simulate the seizing of the hydroelectric power plant; the best known of them in 2009.

The 1973 Treaty and the power transfer from Paraguay to Brazil

The Act of Foz de Iguaçu determined that the energy produced by the future hydroelectric power would be equally shared between both countries and, if one of them could not consume all of its share, it should offer it “preferentially” to its partner, for a fair price.

The Treaty of Itaipu, signed on April 26, 1973, between the bloodthirsty and corrupt military dictatorships of General Medici and Stroessner, annulled the hollow phrases of the 1966 agreement and imposed the so-called “right of acquisition”, that is, the compulsory transfer of the energy not used by one of the countries to its counterpart, not at a fair or market price, but at a fixed and preset price.

The problem is that between 1984 – the year Itaipu Dam became operational – and 2017, Brazil used 93% of the power produced by the company and Paraguay only 7%. According to Article 13 of the 1973 Treaty, Paraguay is obliged to assign the remaining 43% of its share to Brazil, for a price set by the Itaipu Dam administration and not by the market.

In other words, Paraguay cannot sell or export its own electrical energy to third countries – such as Argentina, Uruguay or Chile, which expressed interest at some time – but is obliged to transfer it to the Brazilian Eletrobras company.

In exchange for this assignment, Brazil pays Paraguay a preset value, which is even below the cost price, which is currently 44 dollars per MWh [megawatt hour] [3]. That value underwent some adjustments in these almost five decades, but recent data indicate that the amount received by Paraguay from Brazil as compensation is 9.4 dollars per megawatt-hour, while the market price is around 120 dollars!

In other words, Paraguay yields its wealth for 7.8% of its real price. It is as if a person sold a cell phone that is worth $1,000 for $78. Who would think of doing something like that? It is not necessary to be a specialist in anything to understand the enormous injustice that is committed against the sovereign rights of Paraguay to use its own power resources.

There is a fact that is even worse: between 1984 and 2017, Paraguay received an average of US$ 2.8 per megawatt-hour sold to Brazil. We insist: US$ 2.8 for something that is worth at least US$ 120. How to name something like that with another word other than cheeky pillage? Doesn’t the Brazilian bourgeoisie act like a vulgar thief of the weakest countries?

Paraguay receives a miserable “compensation” of US$ 350 million per year due to this looting, legalized by Annex C of the 1973 Treaty. If it could freely handle and negotiate its power at market price, it could receive around US$ 2,926 million.

This looting and corruption scheme benefited, mainly, São Paulo state industrial belt, contractor companies linked to the military dictatorships of both countries, Brazilian and imperialist banks, as well as a handful of businessmen and Paraguayan authorities – many of them military or civilians linked to Stroessner – known as the “tycoons of Itaipu,” who filled their pockets as minority partners of the Brazilian looting. But this impressive story of robbery and oppression does not stop here.

Itaipu Dam’s debt is unfair and unpayable

The budget planning of the work was US$ 3.5 billion. But – in a hellish cycle of corruption, overbilling, interest, and interest on interest – Itaipu Dam’s final cost reached US$ 26.9 billion.

That cost, overbilled, became debt. A debt that, to a large extent, Paraguayans and Brazilians pay through their electricity bills and that has been paid several times.

Since Itaipu Dam’s accounts cannot be audited because the entity considered a binational company or a “supra State” that is legally not subject to either the governments or the parliaments of both countries, it is not known how much this debt actually amounts to [4]. The binational status, which could not exist, is nothing more than an artifice to legalize the 1965 military invasion and hide the enormous asymmetries between both countries.

In the case of Itaipu Dam’s debt, some studies estimate that it is around US$ 80 billion. It is also considered that 55% of the hydroelectric plant’s revenue is spent to pay this debt [5]. To get an idea, three dams such as Itaipu could be built with that stratospheric value.

It is worth insisting: something whose expenditure was planned to be US$ 3.5 billion was transformed into a debt of approximately US$ 80 billion and keeps on growing!

But in the case of Paraguay, it is worse. Because, although Brazil consumes 93% of the energy produced and Paraguay only 7%, the debt is paid half and half. It is as if a person with a shopping cart full of goods in a supermarket checkout proposed to another one buying just a chocolate bar to equally share the total cost.

Isn’t it crazy? Not for the capitalist logic.

In the case of Paraguay, the main creditor is the Brazilian state-owned company Eletrobras [6], which holds 96% of the debt [7]. But in reality, the creditors are the great imperialist banks. They were the ones that really invested in the works and then speculate on the debt. Eletrobras only acted as guarantor of the first loan, in 1975. The Paraguayan state, which according to the Brazilian press “contributes only with water,” pays US$ 2 billion per year to service the Itaipu Dam’s debt, bleeding the country’s economy.

Summing up this tragedy, if Paraguay could sell its own energy supply freely it would have an extra income of almost US$ 3 billion and, in addition, stop paying the spurious debt of US$ 2 billion per year to Brazilian and imperialist banks for the construction of the hydroelectric power plant. It is easy to conclude that around US$ 5 billion per yearequivalent to approximately 36% of the 2019 General Budget of the Nation -, could be added to Paraguay’s revenue for its own economic, social, cultural development.

Brazilian workers: if you hear the myth that the Treaty is fair because “Paraguay did not contribute to anything but the river,” repudiate that lie. First, because saying Paraguay “only contributes with water” is the same as saying that in a gold exploitation a country “only contributes with gold.” Second, because the Itaipu Dam’s debt has already been paid several times by both countries, but proportionally much more by Paraguayan taxpayers, who use very little of the energy generated by the hydroelectric power plant.

Let’s not fool ourselves. Brazilian workers, you are also being robbed by Itaipu Dam officers and your government. The energy fare Eletrobras pays to Paraguay is around US$ 9.4, amounting at most to US$ 44 per MWh, on average. But the Brazilians pay US$ 206 per megawatt-hour for household consumption [8]!

That is why we must never forget: A nation cannot become free and at the same time continue to oppress other nations.”

Therefore, both the 1973 Treaty and the debt are part of an instrument of plundering and of colonial domination of Paraguay by a handful of Brazilian bourgeois and, by means of that perverse mechanism, by imperialist companies and banks.

A working-class and internationalist way out

Given this context, it is possible to understand the latest political crisis in Paraguay. The trigger, as is known, was the revelation of a secret agreement signed in May by the Paraguayan president Marito Abdo Benítez and Jair Bolsonaro, two nefarious persons who vindicate the military dictatorships that signed the treaties in 1966 and 1973.

That agreement set a very unfavorable energy price for Paraguay in the next four years. It would mean a loss of US$ 350 million until 2022. A loss that sooner or later would be paid by consumers of that country.

The unveiled scandal led to protests of youth and sectors of the Paraguayan working class, such as the demonstrations organized by SITRANDE [ANDE workers’ union].

The wave of protests kept on growing driving the Paraguayan media to recognize that the agreement was an attempt to harm the interests of the Paraguayan citizenship in Itaipu.

All this pressure led President Marito, son of the right-hand man of ex-president Stroessner, to be the target of an impeachment process in parliament. He was saved at the last moment when Bolsonaro and the US embassy intervened to officially annul the secret agreement.

That is, the popular struggle, the pressure of various social sectors, achieved an important first victory. It pushed back not only Marito but also one of the most reactionary presidents Brazil has ever had, Jair Bolsonaro.

But we must not lose sight of the fact that it’s only a first step. A battle was won, but the war for the achievement of energy sovereignty continues. The political crisis is not closed and the working people of both countries must be alert and mobilized against their governments.

2023 will be key for the Paraguayan and Brazilian working classes because the Itaipu Treaty will be reviewed after 50 years of its signature.

Obviously, the Paraguayan people should not trust any government, business union or their country’s diplomacy, since their ruling class and their managers have always demonstrated an outrageous position of capitulation to the interests of Brazil. No hope can be placed in international organizations as well, as some sectors raise. They naively think that a complaint before the International Court of Justice in The Hague, based on the Vienna Convention, would force the Brazilian bourgeoisie and imperialist banks to retreat. This is an illusion. The institutional and peaceful path is the terrain of the enemy. It is a dead-end road for Paraguay.

The only fundamental solution is the workers’ and popular mobilization – not only in Paraguay but also of the powerful working class and the exploited people in Brazil – to achieve the annulment of the Treaty.

There can be no nationalist perspective to face this struggle. It’s a common and indivisible fight.

The Paraguayan working class must understand that their enemy is their own government and the Brazilian bourgeoisie, not the Brazilians in general. At the same time, the Brazilian working class must understand that Itaipu Dam is not a “Paraguayan” problem but a matter that directly affects them, who pay an unfair energy bill but mainly because it is a Treaty of dispossession of a brother and poorer people, historically outraged.

Brazilian workers! It is necessary to join forces with the working class and the other exploited and oppressed sectors in Paraguay!

Let us reject the disgusting national oppression that the Brazilian ruling class has always imposed on that small country and others on the continent. Brazil cannot keep its role as a US capanga in the region. A grim and shameful role!

The workers in Paraguay and Brazil have the same enemies: our bourgeoisies and submissive governments, minority partners of capital and imperialist interests!

For this reason, we can only fight together to end this whole system of exploitation and oppression, which is just semi-colonial capitalism to which we have been subjected for decades.

This is the challenge that lies ahead: the achievement of our political and economic independence, which in our historical era falls to the hands of the working class and its social allies, based on a revolutionary and socialist program. This is the only way out.


[1] In the same way that in Argentina a wide sector uses the discriminatory idiom of paraguas or gurarangos [meaning a badly educated, rude person, who does not speak Spanish because his mother tongue is Guaraní] to refer to Paraguayans, in Brazil those who come from our country are branded as muambeiros [small smugglers], falsificados [associating them to trade of cheap and low-quality goods], etc. They are xenophobic expressions, encouraged by the ruling class, through their ideological apparatus, to sow division between brother peoples.

[2] MAGALHÃES, Juraci. Minhas memórias provisórias. Rio de Janeiro: Civilização Brasileira, 1982, pp. 201-203. General Juraci Magalhães was also known by another famous phrase: “What is good for the United States is good for Brazil.”


[4] The company, truly supranational, is administered by a small council of 12 people from both countries. The main management seats, however, always corresponded to Brazilians.

[5] Among innumerable maneuvers, we can highlight the impact of the 1994 Plano Real in Brazil, which generated a loss to Itaipu Dam of around US$ 4.6 billion. On the other hand, we underline the subsidy in the price of Itaipu’s energy given to Brazilian companies between 1985 and 1990, which amounted to around US$ 4.2 billion dollars, and after a 1994 agreement between the former presidents Fernando Henrique Cardoso and Juan Carlos Wasmosy also joined the company’s liabilities.

[6] Eletrobras is 48% private-owned and is listed on the New York Stock Exchange, offering the “bi-national” Itaipu hydroelectric power plant as a guarantee and presenting it as one of its assets.

[7] IwAR1Q4JjJiUY5JjKl9cbOHuIs_1SyPoMFYIFl2nbDIzI1kU65yz0aQ3jWSuU



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