Paraguay's exports, however, at first a need, proved eventually to be a trap. The country's neighbors, most notably Brazil and Argentina (the latter still in the process of becoming a country), were already satellites of Great Britain, the new metropolis. Motivated by a "free-market" ideology and the interests of the elites supporting it, Paraguay's neighbors needed free access to its natural resources for export (to Great Britain first) and to its internal rivers to transport them.
Paraguay, for its part, needed access to the La Plata river to carry its own exports abroad. This need forced Carlos Antonio Lopez to end the isolation of the country's purely defensive military, and sign onto an alliance with the government of Corrientes and other Argentine provinces against the governor of Buenos Aires, Juan Manuel de Rosas. Rosas had been defeated in the Caseros battle in 1852. Following this, however, the victory of Buenos Aires forces commanded by Bartolome Mitre over the Governor of Entre Rios, Jose Justo de Urquiza, who headed a confederation of provinces, made Paraguay dependent on powerful export interests at the port. Another development of the period was the bombing from Paraguayan border fortifications of the American battleship "Walter Witch," which had been sent in 1854 "to protect American interests." Later, an entire American military fleet of twenty battleships was sent upstream the Parana river to punish Paraguay for the bombing. Fortunately, the confrontation was averted by international arbitration: the Americans had to withdraw their demands and, instead, content themselves with a commercial treaty.
The death of Carlos Antonio Lopez in 1862, and his succession by Francisco Solano as the new President, served as the starting point for a campaign of ideological demonizing of the Paraguayan regime in Buenos Aires newspapers. The descendants of land owners who had been executed forty years before by Dr. Francia portrayed the Paraguayan regime as a "barbarian dictatorship."
Inside Paraguay, too, conditions were not the same. The accumulated wealth of the State was increasingly associated with the Lopez family. Private traders and producers kept operating under the State's licenses, but now class interests were sharpened and envy and disgust were spreading among them.
British conspiracies proliferated all over the South Cone, and local elites engaged in extra-continental commerce sought eagerly to involve themselves in them. In the same year, 1862, Argentina finally unified itself as a country, under the rule of the agro-exporting port interests.
The British conspiracies had the effect of disposing Bartolome Mitre, the first President of the unified Argentina, against Paraguay. That in turn led the new Paraguayan President Francisco Solano Lopez to enter into an alliance with the government of the Partido Blanco (the White Party) of Uruguay, which at the time represented the interests of minor traders in the capital city, Montevideo. The alliance would guarantee Paraguay access to the La Plata river to carry its own exports abroad, without having to make concessions regarding its sovereignty (understood as politically established economic independence and self-determination in a centralized State).
Paraguay's alliance with Uruguay, however, infuriated the British Empire, which had never taken Uruguay seriously as a country. This set the stage for the Partido Colorado (the Colored Party), which represented the interests of big land owners and exporters in Uruguay, to organize an invasion into their own country from both Brazil and Argentina, with the support of both those countries and the British. The invasion ended with a bloodbath in Montevideo in 1864.
At this point, the wall shutting off Paraguayan exports was completed. And, because the country had become dependent on exports for further growth, it loomed as a stranglehold on the country's economy. This left the Paraguayan government with just two choices. The first was to make huge concessions in sovereignty: it could accept the return of large private holdings at the expense of its own population. These "privatizations," as they are called today, would bring with them the return of injustice and humiliating forms of employment bondage typical of the way common people have been treated by the powerful throughout history. That option was proudly turned down by Paraguay's President, Francisco Solano Lopez, and, soon, also, by the country's entire population. They knew well, and following events proved, that private land owners returning to Paraguay would show no mercy to their own people.
The second choice for the Paraguayan government was to fight, and this it undertook to do. President Francisco Solano Lopez, a career military officer, launched an offensive to rescue the Uruguayan White Party's government. The offensive suffered from serious miscalculations, however. Troops were trapped in the region's swamps, and uprisings in the provinces of Corrientes and Entre Rios, on which Francisco Solano was counting for logistical support, failed to materialize. The upshot was that all the Argentine provinces, which had previously fought one another for decades, were now finally unified as single country under the boot of the "free trade" interests of Buenos Aires. The failed offensive undertaken by Paraguay served as an excuse and offered propitious conditions, for a merciless war of aggression against the country. Known as the "Triple Alliance War," it was signed into being in secret by Brazil, Argentina and the Colorados's Uruguay, with financial support and blessings from Great Britain.
The Triple Alliance War brought with it genocide of truly epic proportions. It lasted five years (1865-1870), instead of the few months expected, in the course of which the foundry was dynamited and all other achievements of the independent Paraguayan economy were destroyed. All was done in the name of "progress," though celebrated in its course by well-known drunken parties.
Fully two-thirds of the Paraguayan people were massacred. The population at the beginning of the war was estimated at about one million; by the war's end less than 300,000 were left, and the disproportion between the numbers of men and women was so extreme that polygamy had to be legalized for a while in order to repopulate the country.
The three countries victorious in the war divided its territory and, despite being themselves the aggressors, imposed reparations on Paraguay. To pay the reparations, the new government, now led by big land owners back in the country and traitors of the Lopez period, contracted in London the first foreign loan the country had ever drawn, by which the plantations would be re-established and their production offered as a guarantee. All of the assets ended up in the hands of London bankers, since the government failed to fulfill the service of its reparations to Brazil, Argentina and Uruguay.
With this, Paraguay was plunged into total ruin. Its long period of political stability, in which there had been three governments in 50 years, gave way to "democracy"--22 Presidents in the following 31 years. Testimony reveals that the bones of fallen defenders could still be seen over battlefields 50 years later.
In 1935, Paraguay's fortunes seemed to take an upturn, when it won the so-called Chaco War against Bolivia, which had been staged on one side by the interests of American oil companies, and on the other by the British. But the hopes of the Paraguayan people to restore the country's mid-19th-century well-being were frustrated: the land they had won from the war against Bolivia only served to expand the possessions of private land owners.
As it happened, the Triple Alliance War was also quite unpopular with the populations of the aggressor countries, especially in the northern provinces of Argentina. Domingo Faustino Sarmiento was the Argentine intellectual of the "civilization and barbarity" doctrine. (It was told about him later that he was a living contradiction: he wanted to be "the man of the port" in the provinces and "the man of the provinces" in the port.) He identified "civilization" with "free trade" and "barbarity" with the supposed "authoritarian regimes." As Argentine Minister of Education, Sarmiento was a prolific founder of schools and libraries. At the same time, however, he referred to the Paraguayan people as a "herd of wolves."
Having become the second President of the unified Argentina, Sarmiento finished up the Triple Alliance War together with the Empire of Brazil, which put into it money it had and he didn't have.
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