Paraguay faces censure for Fernando Lugo's removal

Police officers stand in front of wall spray painted with a message that reads in Spanish: "Franco, coupmonger," referring to newly named president Federico Franco Graffiti condemning President Lugo's removal has spread in Paraguay's capital

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"We're at the beginning of a period of great uncertainty," says Eduardo Arce, a Paraguayan journalist.

In less than 48 hours last week, Mr Arce and his fellow Paraguayans witnessed a swift impeachment process that removed President Fernando Lugo and installed vice-president Federico Franco as interim leader until elections due in April.

Congress voted almost unanimously to remove Mr Lugo over his handling of clashes between farmers and police that left at least 17 people dead.

Although the impeachment adhered to the country's constitution, the move has threatened to isolate the South American nation from its neighbours.

The left-leaning presidents of Argentina, Bolivia and Venezuela called Mr Lugo's removal "a coup".

Paraguayan resident: 'I think this was a coup'

Many countries, including right-leaning Chile and Colombia, also recalled their ambassadors for consultations.

This Friday, the diplomatic and economic weight of two regional groupings could be brought to bear on Paraguay.

The Union of South American nations, Unasur, has scheduled an extraordinary meeting to discuss the crisis.

This coincides with the routine meeting of presidents of the South American trading bloc, Mercosur, in the Argentine city of Mendoza, at which developments in Paraguay will be a priority.

Possible economic sanctions on the new government are high on the agenda, and even an expulsion from the bloc will be debated.

Mercosur, which comprises fellow founders Argentina, Brazil, Uruguay, as well as several associate members, has already suspended Paraguay "because of a rupture in the democratic order".

Landlocked

"Paraguay's economy strongly depends on the trade links with its neighbours," says economist Fernando Masi, who believes sanctions could hit hard.

Paraguay's  ousted president Fernando Lugo on 27 June Mr Lugo has called for sanctions against the government, not the Paraguayan people

Last year, more than half of Paraguay's exports, worth some $2.8bn (£1.8bn), went to Brazil, Argentina and Uruguay.

Almost double this amount was imported by Paraguay from the three countries, according to official data.

"As a member of Mercosur, Paraguay can export to other nations in the bloc without paying custom duties, but if expelled, it would have to pay the standard 14% tariff for non-members," says Mr Masi.

The competitiveness of Paraguayan goods in the region would be affected, with potentially damaging effects on its businesses, he says.

In the last two years, Paraguay has had one of the fastest-growing economies in the region, based mainly on commodity exports, and in particular soy bean and beef.

"Paraguay is very vulnerable to any type of sanctions as it does not have sea access, leaving it highly dependent on its neighbours for exporting and importing," says political analyst Milda Rivarola.

'No coup'

The political events of the past week have left many in the capital, Asuncion, shocked and some furious.

Newly appointed Paraguayan President Federico Franco (centre) and newly appointed Defence Minister Maria Liz Garcia (left) preside over the swearing-in of Colonel Juan Jose Casaccia Furiasse (right  as the new commander of Presidential Escort Regiment, at Asuncion 28 June, 2012. Mr Franco (centre) insists there has been no rupture of the democratic order

"What happened goes against the rules of democracy. I did not like Lugo but they should have allowed him to end the term he won in free elections," said Asuncion resident Maria Teresa.

"This is definitely a coup. If it was the people who voted him into office, it should be the people that vote him out," said Shirley, who also lives in the capital.

Mr Lugo accepted the impeachment, stressing to his supporters that he did not want any bloodshed.

There have been some small demonstrations in the capital against his dismissal.

Farmers' organisations, a key part of Mr Lugo's political base, have also announced further actions.

The newly appointed government has defended the way he was removed.

In his first meeting with the foreign media, Mr Franco stressed that there had been "no coup or breakdown in the democratic order. We respect our country's constitution".

Allies alienated

The Paraguayan constitution establishes an impeachment procedure in the event that an elected leader is accused of criminal actions.

And there is support for the new government.

map

"I think that this is a good thing, because he (Mr Lugo) was not doing a good job," said Asuncion local Severiana.

Francisco Capli, who heads market-research firm First Analysis, also rejects accusations that there was a coup.

Paraguay, he says, remains marked by having a military ruler, Gen Alfredo Stroessner, in power for almost 36 years until 1988.

"When democracy returned, a new constitution was drafted with the aim of giving strong powers to parliament, seeking to avoid the concentration of power in one figure," said Mr Capli.

Since assuming office in 2008, as Paraguay's first elected left-wing president, Mr Lugo had lost most allies in Congress.

It also emerged that the former Roman Catholic bishop had fathered at least two children, which enraged many in a highly religious society.

Many of his own supporters also criticised him for his perceived lack of policies to aid landless farmers.

"If we had a parliamentary system Mr Lugo's government would have fallen long ago," Mr Capli said.

Mr Lugo is the first elected Paraguayan leader to be impeached.

The full consequences of this for Paraguay remain to be seen.

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