Pubdate: Tue, 13 Mar 2001 Source: San Jose Mercury News (CA) Copyright: 2001 San Jose Mercury News Contact: 750 Ridder Park Drive, San Jose, CA 95190 Fax: (408) 271-3792 Website: http://www.sjmercury.com/ Forum: http://forums.bayarea.com/webx/cgi-bin/WebX Author: Kevin G. Hall IN PARAGUAY, CRIME COMES WITH THE TERRITORY CIUDAD DEL ESTE, Paraguay -- Three Cabinet ministers here resigned in protest this week amid allegations that, among other things, the finance minister smuggled a stolen BMW 528i sedan into the country for the president and created a phony paper trail to make the car appear legal. In many countries, that would be a scandal. In Paraguay -- locked in a lawless time warp -- it's almost business as usual. The landlocked South American nation remains the closest thing in the Western Hemisphere to a pirate state -- a torrid banana republic that's home to modern-day buccaneers. If you're in the market for hot cars, pirated music, counterfeit brand-name electronics, cocaine by the kilo, pliant banks happy to launder your money, imitation Mickey Mouse gear or illegal firearms, Paraguay is the place to go. ``Welcome to the Wild West,'' said Tony, an undercover agent for the Worldwide Recording Industry Association who uses an assumed name. He saw counterfeiters capture nearly half of Brazil's CD market of 95 million discs last year, the world's third-largest market for CDs, largely through pirate operations in Paraguay. On March 1, Paraguay squeaked by as a certified ``partner'' in the United States' war on drugs. The State Department decided that a few drug busts after the appointment of a new anti-drug chief were enough to take the country off the ``uncertified'' list for the first time in four years. Haven For Drug Traffickers Nevertheless, Paraguay remains a drug-runners haven, a transit point for roughly 10 tons of cocaine each year. It's on the U.S. watch list for money laundering. Evidence suggests the military sells hand grenades and other weapons to drug gangs for use against police in the region. The country manufactures millions of counterfeit CDs, sells just a few domestically, and exports almost none. Legally, that is. Transparency International, a watchdog global government-reform group, ranks Paraguay one from the bottom for official corruption, just ahead of the African nation of Cameroon. True, the country is enjoying the longest period of civilian rule in its 190-year history. But that's just 12 years, and it's been disrupted by four attempted military coups. It would be nice to say that Paraguay hasn't always been this zany and bent, but it has. It began when the country's first ruler, Gen. Jose Gaspar Rodriguez de Francia, declared himself president for life and ordered Paraguayans to wear hats so they could tip them as he passed. The second ruler, Carlos Antonio Lopez, set the standard for modern Paraguayan governments by gobbling up public lands, making himself the country's largest landowner. Gen. Alfredo Stroessner was their 20th-century counterpart. From 1954 to 1989 he offered hospitality to Nazi war criminals, sold passports to international fugitives and undermined his neighbors' economies -- mainly Brazil's and Argentina's -- by encouraging Paraguay's smuggling trade. More than 1 million Paraguayans, or about a fifth of today's population, went into exile during his rule. ``Paraguay seems like a country of fiction,'' says Alfredo Boccia Paz, a physician and human rights activist who's documenting the Stroessner era. California-sized and shaped like a swollen kidney in the center of South America, Paraguay's border cities are perfect staging areas for smuggling, drug and weapons trafficking, and any other imaginable vice bound for neighbors. There is no one to stop them. Crime gangs make millions, while average Paraguayans live with a miserable per capita income of about $1,700, among the lowest in the Americas. Stroessner effectively turned Paraguay from a hapless country given to military dictators into a gangster state without a moral compass. Under Stroessner -- now 89, feeble and in exile in Brazil -- a largely agricultural country was transformed into a major supply point for contraband into the closed economies of Brazil and Argentina during the 1960s and 1970s. That set into motion a way of life that persists, creating a corrupt business class and fortunes built on government connections. Nearly as quickly as auto sales soared in the 1960s and onward, cars were stolen from neighboring countries for unimpeded use in Paraguay. Citizens knew the Stroessner government did not mind this sort of thievery. Military Involved, Too So whom do you turn to for help? Well, not the military. Last June, some 141,000 pirated CDs turned up at a naval base in Ciudad del Este. Diplomats say privately that the military is deeply involved in arms and drug trafficking. That was evident to police last year in Rio de Janeiro, Brazil, when a gang repulsed them with hand grenades. Brazilian exporters had sold them to the Paraguayan military, which allegedly sold them back to drug gangs. The military also is suspected of perpetrating the Aug. 4, 2000, heist of $11 million, the largest in Paraguayan history, from a commercial plane bound for Argentina. Although news reports mentioned police support for the thieves and the use of at least one military jeep, President Gonzalez Macchi's government has shown scant interest in solving this remarkable crime. Gonzalez Macchi declined to be interviewed on the matter or on other corruption issues. A country low on heroes clasps an odd one to its bosom: Rutherford B. Hayes, the 19th U.S. president. As an arbitrator, Hayes sided with Paraguay in 1878 in a postwar land dispute with Argentina, expanding its territory by a fifth. Although Hayes' U.S. home has been razed, he rates a monument in Paraguay, where a prominent soccer club is named for him (and pronounced AY-yez.) Paraguayans are friendly. Residents drag chairs outside at nightfall to chat with passers-by and commiserate. ``People here are just as interested in what is going on outside in the street as they are about what is on their television screen,'' says Gerald McCulloch, a former U.S. diplomat who stayed and runs the Paraguayan-American Chamber of Commerce. Paraguayans are also laid-back. So laid-back that the 1996 national phone book finally came out in 2000. Sometimes Paraguay is a lot like gangland. Step into the Caza y Pesca hunting shop on a back street of Ciudad del Este. It's wall-to-wall handguns, from a simple .38 special for $500 to a spanking new 9mm Glock semiautomatic that fires 18 rounds. There is no Glock distributor in Paraguay, but it sells for a reasonable $1,000. Asked if he can deliver illegally to Brazil, the gun dealer offers a ready response delivered in B-movie deadpan: ``You want one or 10?'' - --- MAP posted-by: Josh Sutcliffe