Paraguay lawmakers back down on impeachment threat after hydropower deal annulled

ASUNCION/BRASILIA (Reuters) - Paraguayan lawmakers backed down on their threat to impeach President Mario Abdo on Thursday after Brazil and Paraguay canceled an energy deal that sparked controversy and threatened to destabilize his government.

Abdo apologized for the handling of the scandal over the signing of an energy pact with Brazil, which opposition lawmakers said went against the country’s sovereignty.

“Whoever has to be accountable for his misconduct will be accountable,” Abdo said in a message to the nation, adding that he thanked lawmakers for choosing to proceed in a way “that does not break the democratic process.”

Some lawmakers said they would push to impeach Abdo and Vice President Hugo Velazquez on Wednesday following a scandal that prompted the resignations of the foreign minister and three other officials.

The furor was sparked by an energy deal - made public last week - that was related to the giant Itaipu hydroelectric plant that straddles the two countries. Officials and lawmakers said the pact would be harmful for Paraguay and cost the state around $200 million.

Paraguay is highly reliant on revenue from Itaipu, which ranks as the world’s largest hydroelectric plant.

“I apologize if I was wrong,” Abdo said in front of about 5,000 supporters who gathered outside the government palace in the center of Asuncion, the capital.

The scandal was the first major crisis to hit Abdo, who maintains a close relationship with far-right Brazilian President Jair Bolsonaro. Brazil’s foreign minister said on Thursday that attempts to impeach the Paraguayan leader risked the “rupture of democratic order.”

Bolsonaro said on Thursday that he supported Abdo, who emerged as one of his first allies in the region.

“The problem with Paraguay is that you can carry out the impeachment in 72 hours,” Bolsonaro told reporters on Thursday morning. “We do not want to damage Paraguay.”

Paraguay and Brazil are preparing to negotiate Itaipu’s future, whose founding treaty is set to expire in 2023.

Reporting by Lisandra Paraguassu and Daniela Desantis in Asuncion; writing by Marcelo Rochabrun and Cassandra Garrison; editing by Alistair Bell, Susan Thomas and Dan Grebler