Paraguay's Colorado Party likely to win back presidency

ASUNCION Thu Apr 18, 2013 3:48pm EDT

1 of 2. Paraguay's presidential candidate Horacio Cartes (C) of Colorado Party waves the national flag of Paraguay during a visit to Caacupe, 54 km north of Asuncion, in this April 16, 2013 handout photo by the Colorado Party. Cartes is campaigning for the general elections that will be held on April 21.

Credit: Reuters/Colorado Party/Handout

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ASUNCION (Reuters) - Paraguayans will likely vote to put the Colorado Party back into the presidency on Sunday, restoring the center-right party to power after leftist President Fernando Lugo broke its 60-year reign in 2008.

Wealthy businessman Horacio Cartes, 56, is the Colorado Party's candidate and leads most polls ahead of the election. A political newcomer who admits he did not start voting until four years ago, he is trying to put a new face on a party with a long history of corruption.

His main rival is Efrain Alegre, a 50-year-old lawyer and career politician in the ruling Liberal Party, which took over the presidency after Lugo was impeached in a lightning-quick trial that prompted diplomatic sanctions against the country. Lugo, who described himself as a socialist, had been backed by a coalition of leftist parties and the center-right Liberal party.

Lugo, a former Roman Catholic bishop, was impeached in June when Congress found him guilty of mishandling armed clashes over a land eviction that killed 17 police and peasant farmers.

Both Cartes and Alegre vow to carry out agrarian reform and lure private capital to Paraguay, where nearly 40 percent of its 6.6 million people are poor. The South American nation relies on soy and beef exports and is a hotbed of contraband trade.

While the two candidates are similar ideologically, they have very different styles. Cartes is brash and outspoken and has had to defend himself against accusations from rivals that link him to money laundering and drug running.

Alegre is a more somber figure. But his reputation as an honest administrator has been undermined by an investigation into whether he misappropriated state funds while serving as Lugo's public works minister.

As a congressman, Alegre led investigations into several Colorado Party corruption cases and he promises to fight against the country's "mafias." Cartes says his party is committed to cleaning up its ways after losing the presidency five years ago.

"The party learned that this model is finished ... The people are fed up," he said in a recent interview.

If the center-right Colorados win on Sunday, Paraguay will buck the trend in South America where leftists have made steady gains in recent years. Only Colombia and Chile are now led by conservatives.

The leftist bloc is especially strong within the Mercosur trade group, whose members include Brazil, Argentina, Uruguay and Venezuela. Mercosur suspended Paraguay after Lugo's impeachment and brought in socialist Venezuela, even though its inclusion was never approved by the Paraguayan Congress.

Neither Cartes nor Alegre is prepared to make a fuss, however. Both support Paraguay's full return to Mercosur.

"I don't think ideology will be an obstacle to advance in the process of integration," Alegre told Reuters. "Business opportunities are what interest us in international relations."

Cartes has said nearly 30 percent of Paraguayan workers depend on trade ties with fellow Mercosur nations. "We can't keep fighting amongst ourselves."

BLOATED STATE

There is no second round of balloting in Paraguay so the candidate who gets the most votes wins. Voters will also elect members of Congress and local authorities this weekend.

Although the left is out of the running for the presidency, leftist coalitions are expected to pick up seats in Congress. This means whoever wins the presidency will have to negotiate with the opposition to get laws passed.

Paraguay's economy has been on a roller coaster ride, depending largely on crop weather. Growth is seen hitting 13 percent this year after a severe drought caused a contraction in 2012.

In January, the Liberal government took an unprecedented step to tap global debt markets, selling $500 million in 10-year bonds that were nearly 12 times oversubscribed.

Both candidates promise to modernize the bloated state bureaucracy, which employs about 10 percent of all workers.

They hope to attract up to $2.7 billion in private capital over the next five years to refurbish the country's airports and build new highways. The Liberals think a similar amount of money would be needed to improve the performance of state-owned firms.

Some private investments are already on track in Paraguay, including a roughly $4 billion aluminum project by Rio Tinto Alcan and soy-crushing plants by major multinationals.

"Paraguay is more attractive for investment today," said Daniel Correa, an economist at Investor consulting group. "But we need to add value to production to reduce dependence on the farm sector and help resolve employment problems."

(Writing by Hilary Burke; Editing by Kieran Murray and Cynthia Osterman)

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