Carlos Menem, former president of Argentina, and no paragon of transparent, corruption-free government, once described Yacyreta as "a monument to corruption."

Paraguay is co-owner of two of the world's largest hydrolectric dams: Yacyreta (shared with Argentina) and Itaipú (shared with Brazil). At first blush, they may appear very similar. But they are starkly different. What I find frustrating is that, in the Paraguayan public sphere, there is no distinction being made between the situation in Itaipú and the one in Yacyreta.

I have already blogged about why they are at the center of a crisis in Paraguay's foreign policy. These large construction projects, because of the systematic and organized corruption within the Paraguayan government, have been a source of misdirected hundreds of millions of dollars (probably billions) for the past 30 years.

Because of his moral stature as a priest, Fernando Lugo's election represented a chance for change in the Paraguayan government. (The subsequent revelation that he has fathered at least one child while bishop has seriously damaged his credibility and demoralized people in this country.) As of this morning, both of his appointed General Directors to the dams have been formally summoned ("interpellated") before Congress to answer regarding their administration of the dams.

I have already written my thoughts about the interpellation of Itaipú's GD Carlos Mateo Balmelli. In short, the accusations of poor administration appear factually baseless and are contradicted by both a large paper trail and expert opinion. A brief example: Mateo Balmelli was accused of irresponsibly contracting a private plane for trips from Asunción to the dam while Itaipú already owned a plane. It turns out that the Itaipú plane is unflyable and that the annual budget for the contracted plane is less than 1/10 of the annual budget for the Itaipú plane.

Yacyreta's situation is a bit worse. First of all, the dam is still incomplete, with no termination point in sight though construction began in 1983 (and planning in 1925). As a quick contrast: Itaipú planning started in 1966, construction in 1974, and completion in 1991. Its current director, Carlos Cardozo, was discovered to have used Yacyreta money to fund an international Young Leftists conference that took over military barracks two weeks ago. While it was only about $20,000 (USD), it caused a huge scandal because of the political nature of the event, causing Cardozo to return the money to Yacyreta. Given the history of using public funds from the dams to finance political parties and given the controversy of physically occupying a military compound (most of Paraguay's population is not hardcore lefty), this was troubling. Cardozo has just admitted to budgeting $1 million (USD) of Yacyreta money to fund the president's public relations and communitions secretariat. This, again, raises suspicions that Yacyreta is being used to finance the propaganda of a political party.

It seems to me that the severity of charges being levelled against Mateo Balmelli and Cardozo are quite different. What remains doubtful is whether Congress, the media, and the Paraguayan public will act accordingly.

UPDATE: Congress was not pleased with Cardozo's responses after more than 4 hours of questioning about misdirected monies (turns out that the Roman Catholic diocese of Misiones, the department where Yacyreta is located, also received money from the dam to distribute as it wished).

Paraguay's House of Deputies interpellated Carlos Mateo Balmelli, the Paraguayan General Director of ITAIPÚ Binacional. Itaipú, the world's largest hydroelectric dam which is co-owned by Paraguay and Brazil (a public company), has been at the center of controversy since before its construction (see: my dissertation when I write it for more details). These days, the controversy centers on two issues: first, the relationship between Paraguay and Brazil, where Brazil sells Paraguay's excess energy for the market price, but only pays Paraguay a fraction of that price. Second, fiscal malfeasance and corruption within Itaipú Paraguay where hundreds of millions of dollars have been misdirected into private pockets, nonexistant shadow companies providing services that don't exist, the campaign costs of the Colorado party.

Following President Fernando Lugo's inauguration in August 2008, Itaipú has been at the top of his agenda in renegotiating the relationship with Brazil and "cleaning up" corruption in a state company whose valorization is four times the GDP of Paraguay. Part of this included appointing as General Director (the equivalent of CEO/COO) a non-Colorado for the first time in the history of the dam. Carlos Mateo Balmelli, a member of the Liberal party, has been at the helm since August 2008 and has attempted to address both issues (increasing Paraguay's control of its energy vis-à-vis Brazil, trying to eliminate nepotism and corruption within the Paraguayan half of the company).

Since I'm in the middle of my research on the various conflicts, controversies, and negotiations regarding Itaipú and since Itaipú is such a lively issue in Paraguay (everyone in this country has an opinion about the dam, about Paraguay's relationship with Brazil, and about the administration of the dam-- an analysis which falls along party lines) and since it actually is a highly sensitive subject on an international scale, I'm not sure how to voice my opinions about what's going on.

Yesterday's three hour interpellation (formal interrogation) of Mateo Balmelli was called for by members of the House mainly from two parties: Patria Querida and Tekojoja. After many hours of questioning about how money has been administered since August 2008 (something which never occurred during the administration of previous director Victor Bernal, whose corruption was so flagrant that the country punished his political party by voting it out of office for the first time in six decades), the early analysis fell according to political parties: PQ thought he evaded the questions. I think they're wrong and it seems, at best, incredibly partisan-motivated and, at worst, appears to punish the actions taken under an administration that is attempting to stop mafia-like corruption.

Let me give one example of the "bad administration" of which Mateo Balmelli is accused: the House asked why, instead of using the airplane owned by Itaipú as transportation from Asunción to the dam in bi-monthly meetings, Mateo Balmelli decided to rent a plane from a private firm. The accusation is basically, "why spend money outside when there's already a plane." Mateo Balmelli's reasoning was thus: no flight book was kept for the old plane and so it was an unsafe plane (had been in two accidents whose repairs were not noted) and had been judged "No Fly" by engineers; renting a plane would be the cheapest alternative to repairing a plane thirty years old whose use had been unregistered (this is against international flight rules and a plane in this situation wouldn't be allowed to fly in the United States, for example) and to buying a new plane. And then, the coup de grâce: under the previous directorship of Itaipú, the annual expenses for the "old" plane were $2 million; under Mateo Balmelli's directorship, annual expenses for the rented plane are $150 thousand. That is to say, the cost is less than 10 per cent of previous expenses.

The money that's been saved by this is now being used for agrarian relief and water relief in drought-ridden areas. It's unclear what those $2 million were doing in the past, where it went, if it was used actually for the plane, or if it went to private pockets that nowadays are railing against the loss of misdirected funds.

You can listen to the whole thing here. My personal opinion, as mentioned before, is that the new directorship of Itaipú Paraguay has gained ground in the negotiations with Brazil and seriously challenged the internal corruption and thus is receiving massive opposition.

Last week, a homemade ("casera") bomb was found in the Palacio de Justicia--in a woman's bathroom--and after it was removed from the building, it exploded, harming no one. Apparently, the small explosive was designed to give a good scare and nothing more. The result was that much better security has been set up in the building--I actually passed through metal detectors for the first time yesterday. Since that time, people have been trying to figure out who put it there and why, with the chief explanation being: to scare people and perhaps destabilize the government.

This morning, a suspicious package was found in Saba, a clothing/fabric store near Plaza Uruguaya in the centro of Asunción. Police were called to the scene and dozens of reporters followed suit and soon there were rumors of bomb threats in other government buildings (later found to be baseless). It's been a bit difficult to get a sense of how serious the threats are, so I decided to head to Saba to see how things developed. The most exciting thing that happened was that a couple of military police took down my name and passport number after asking me who I was and as this happened, a couple of photographers took my picture and then later asked me why I had been questioned. "Because they didn't know me," I responded.

Though it's not showing up yet in online articles, it seems that the package was merely a collection of eight batteries and perhaps not even an explosive device at all. At best, it was a badly constructed improvised explosive device (IED) that wouldn't have caused any real damage (this, according to the explosives expert at the press conference after the device was removed). But, again, the concern voiced by Minister of the Interior Rafael Filizzola was about psychological effects coming from an organized attempt to raise fear in the public and destabilize the government.

One, likely unintended, consequence of today's events will probably be that Plaza Uruguaya, a site of protest by indigenous groups who occupy the public space in the city's colonial center to voice their grievances about loss of land rights, will be cleared and further occupations prohibited.

Filizzola arrives