Monday Falls (Saltos del Monday) are located in eastern Paraguay, close to the majestic Iguazú Falls and the Saltos del Guairá, a region of spectacular natural beauty. (Guairá Falls were drowned to build Itaipú dam.)

As part of a plan to build tourism and protect Paraguay's natural beauty, the Paraguayan government has undertaken an investment of $6.5 million USD to construct a look-out on Monday Falls, to develop the proper road work that can hold the kind of traffic they'd like to see, etc. Government planners took Iguazú Falls as their inspiration--a major tourist attraction not just for Argentina and Brazil, but for the entire world. The hope was to bring in millions of revenue to the government which could then be re-invested in social development.

Instead, the government will get $220 USD a month.

For the next twenty years, Acqua Paraná Tour, SA will pay the municipality of Presidente Franco a paltry $220 a month for the right to run the national park, to charge admission, to sell food and souvenirs. Within Paraguay, this smacks of an illicit deal where government funds were used to build massive infrastructure and then the financial benefits were problematically transferred to private hands. The local mayor is claiming this is a great deal for the municipality.

The political side of electricity.

Following the passage of the Joint Declaration's Itaipú energy provisions, Paraguay's government has embarked on a more aggressive strategy for Itaipú Binational hydroelectric dam. Paraguay owns 50% of the electricity produced by the world's largest dam (in 2010, Itaipú produced 87,970 GWh), but most of this is consumed within Brazil because Paraguay lacks the demand for its energy. Since 2008, the new government in Paraguay has sought to use its hydroelectric resources in a targeted way, to fund social and economic development. One part of this strategy includes increasing consumption and demand within Paraguay by attracting foreign investment.

Rio Tinto Alcan, the aluminum giant, is in talks with the Paraguayan government to open a smelting plant in Paraguay, but among the chief sticking points is just how much Paraguay's public utility company, ANDE, will charge Rio Tinto Alcan for electricity. Figuring out this number isn't just difficult because of various technical and financial factors that have to be considered. It's difficult because there are political hopes and promises and expectations that are attached to Itaipú energy for Paraguay. And these aren't minor hurdles, but significant competing priorities that drive the actions of decision-makers within Paraguay. The dam is an arena for major political battles within Paraguay--promises to change the way Itaipú dam's energy and financial resources were spent within the country was a key campaign pledge in the new government. And because of historical tensions between Paraguay and Brazil, the dam gets interpreted through a patriotic frame of reference.

And so, while the base cost of electricity from Itaipú is about $43.80/MWh, one of Paraguay's most influential engineers/members of Fernando Lugo's leftist government insists that $60/MWh is the minimum that should be charged. This contradicts CRU Strategies' (a UK consulting firm focused on mining, metals, and fertilizer) recommendation that the price be set somewhere between smelting industry standard: $35-$38/MWh. For a sense of perspective, recently in the U.S., a representative from Rio Tinto Alcan complained that the amount they were paying for electricity in Kentucky--$43.50/MWh--was 65% greater than the average cost for aluminum smelting worldwide--$26/MWh. And, to further complicate matters, it seems that smelting electricity costs in China run between $49 to $55/MWh.

The likely resolution will fall somewhere between the extremes ($26 and $60/MWh), but the process will be troubled by the intangibility of these numbers. What I mean is this: in Paraguay, electricity price seems to have nothing to do with the product delivered. There are regular black-outs (some caused by apparent error within the Paraguayan half of Itaipú itself), people often have illegal electricity connections, and the degree of financial mismanagement within the electricity sector (often described as "corruption") means that there's no trust that a price reflects value. Price instead reflects social power. You pay a set price not because that's what something is worth, but because that's what someone more powerful than you has said you should pay for it.

And so, one of the hidden factors in the price of electricity that Rio Tinto Alcan and the Paraguayan government are debating is that of trust. How much do Paraguayans trust that their government is demanding a fair price for the nation's natural resources? If the answer is "not much," then that means that no matter what the final number, it'll be perceived as "not enough." And this is the pressure that's being placed on Paraguay's negotiators.

I'll be presenting at the Annual Meeting of the American Anthropological Association, in Montreal, as part of a panel entitled "Managers Of Things, Or What Do Managers Imagine Themselves To Be Managing?" on Friday, November 18, from 8-9:45am.

Managing Expectations: Spectacles of Corruption, Rituals of Patronage

Because of its symbolic and economic weight within Paraguay, Itaipú hydroelectric dam--the world's largest--has come to embody what its planners hoped: the physical manifestation of an all powerful state. With the recent presidential election of leftist former Bishop Fernando Lugo, a new group of technocrats and politicians appointed to the helm did not merely manage the energy potential of the dam, but through it distilled the "promise" of the Paraguayan nation--promise in the sense of commitment and of hope for the future. As the engine of the Paraguayan state apparatus, the dam stood at the nexus of an intricate patronage system that grew concomitantly with the energy production. How and what favors were asked and answered by technocrats appointed to manage electricity production--a public secret--unmasks more than just the balancing act performed by high level employees as they juggled partisan obligations, political aspirations, and social pressure to portray generosity as a hallmark of power. Rather, this gets to the heart of how the fractured and tentative "state" is constituted in Paraguay--protecting privilege through the management of resources and relationships. Campaign promises to end patronage and administer the dam's wealth to bring development clashed with entrenched models of state-to-nation obligations and the personal ambitions of a new class of political elites. This paper explores how the top managers at the dam straddled informal expectations of patronage with formal responsibilities of energy production in the midst of a push towards "transparency" thwarted and abetted by mediatic "corruption" scandals. Based on eighteen months of fieldwork among Paraguay's political elite, this paper analyzes rituals of approach and request, how Itaipú managers configured multiple vectors of obligation, and how a hydroelectric dam embodied fantasies of prosperity. Itaipú's managers explicitly described this process as a way not just to remake the dam, but as a way to remake the Paraguayan state itself.