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Brazilian Elections Don’t Bode Well for Itaipu’s Paraguay Deal

Presidents Lula and Lugo The chances for Paraguay of a better deal from Brazil regarding the Itaipu hydroelectric dam surplus power and its price are seen as "difficult" particularly because Brazil is approaching an electoral year, according to Asuncion press reports from journalists who accompanied President Fernando Lugo in his visit to BrasÀ­lia.

"Brazil continues to apply, religiously, its delay method in the Itaipu issue. This was evident last Friday, May 8, in Brazilian capital Brasí­lia when the Itamaraty diplomacy rolled out its ability to ensure conversations become more and more complicated and don't lead anywhere," reports Paraguayan daily ABC Color.

Brazil and Paraguay share the world's largest operational dam, but under contract all the surplus power must be sold to Brazil at a pre-established price (dating back to the seventies). Paraguay is longing for a new deal, as promised by President Lugo in his electoral platform, but Brazil insists Paraguay must pay its share of the construction.

According to Paraguayan sources, Brazil pays for the surplus power an average of US$ 3 US per MW/hour, when the international price is closer to US$ 70. Brazil argues Paraguay still has a pending debt of US$ 14 billion from the construction of Itaipu and the treaty can't be reviewed until 2023.

As usual, "Brazilian diplomats in all bilateral meetings insist they want to help with Paraguay's development" and for this they are offering to build two new international bridges linking both countries.

One of them over the Paraná River, which would be the second link and according to the Paraguayan press would connect a very fertile agriculture area, on both sides exploited mainly by Brazilian farmers. The second over the Paraguay River would help develop eco-tourism, which is of major interest for Brazil and its world famous wetlands, Pantanal.

"Obviously for these investments Brazil is offering generous credits but with the condition that Brazilian companies build the bridges."

The Paraguayan press adds a new obstacle-ingredient, general elections which are scheduled for October 2010 and include, President, two thirds of the Senate and the whole Lower House.

This is a good motive to insist in leaving negotiations for the incoming administration.

Mercopress

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