Paraguay's Lugo sworn in, embraced by region's left

By Fiona Ortiz

ASUNCION (Reuters) - Former Bishop Fernando Lugo was sworn in on Friday as Paraguay's president in a ceremony attended by Latin America's socialist leaders, who have embraced him even as he has distanced himself from their policies.

Lugo, who once led anti-government protests and fought for rights for landless peasants, broke 61 years of rule by the Colorado Party when he was elected in April to lead this poor South American country of 5.6 million people.

In his inauguration speech in Spanish and in the Guarani Indian language, Lugo said during his five-year term he would fight the country's infamous corruption.

"Today is the end of an exclusive Paraguay, a segregationist Paraguay, a notoriously corrupt Paraguay. Today begins the history of a Paraguay whose authorities will be implacable with thieves," Lugo said.

On the eve of his inauguration, thousands of supporters at a sports stadium rally applauded Lugo when he said he would refuse his presidential salary of about $4,000 a month.

Leftist presidents Hugo Chavez of Venezuela, Rafael Correa of Ecuador and Evo Morales of Bolivia, who have increased state control of the economy in their countries, saluted Lugo as a revolutionary brother when they arrived on Thursday.

"There's a democratic revolution in South America. The elite from each country don't understand... but they won't be able to stop this revolution," said Chavez, who has used his charisma and the country's oil wealth to lead Latin America's new generation of leftist leaders.

While Lugo has said he will govern for the poor, he has differentiated himself from Chavez and his allies, sending a more pro-business message and saying he will reduce rather than increase state control of the economy.

CONSERVATIVES STAY AWAY

Brazilian President Luiz Inacio Lula da Silva and Argentine President Cristina Fernandez came to Asuncion for the swearing in and were met by a front-page editorial in ABC Color newspaper, calling on them to pay higher prices for electricity produced in Paraguay from dams their countries financed.

Lugo's top priorities are renegotiating hydro-power treaties with Paraguay's huge, wealthy neighbors Brazil and Argentina and finding solutions for thousands of landless peasants.

The region's more conservative and pro-Washington leaders, from Colombia, Mexico and Peru, sent emissaries to the inauguration.

Lugo is an extremely rare case of a Roman Catholic bishop becoming leader of his country after the Vatican reluctantly agreed to his request to return to lay status.

Although he won with only 40 percent of the vote in a three-way race, he faces high expectations from Paraguayans fed up with the corrupt and inefficient Colorado Party.

Corruption is so intense that Lugo said he struggled to find a head for the customs agency, where bureaucrats routinely take bribes to allow contraband imports. He said one person he approached for the job had received a death threat.