1938: Paraguay

Paraguay returned to a normal constitutional régime on Oct. 10, when Dr. Felix Paiva, who had been provisional president since August 1937, was elected president. A week later the Congress, elected Sept. 25, held the first business session since the beginning of the Chaco war. The Cabinet resigned Oct. 12, to give the President a free hand in reorganizing the government. A serious political crisis threatened when the Liberals, led by Jerónimo Zubizarreta, refused to enter a coalition cabinet or to cooperate with the Paiva government. Disquieting political reports around the end of October were associated with the problem of occupying the young army officers who would be out of work when the Paraguayan forces were withdrawn from their advanced positions in the Chaco. Danger of a serious military uprising was considerably lessened, however, by the ultimate reconciliation of the Liberals to the Paiva government, for without the backing of any important political party, any such move would probably prove abortive. Early in November the new Cabinet was announced. Political peace in the reconstruction period following the close of the Chaco war seems particularly desirable.

The settlement of the Chaco controversy, finally consummated by the arbitral award made Oct. 10 fixing the boundaries between Paraguay and Bolivia, was hailed by Secretary Hull as an 'outstanding triumph for the spirit of peace and the principles of order based on law over the doctrine of force and aggression.' There is no doubt that it has strengthened inter-American solidarity. A treaty of peace and friendship was signed July 21 by Bolivia and Paraguay and was ratified Aug. 10, in Paraguay by a plebiscite and in Bolivia by a Constituent Assembly. It was the result of three years' efforts on the part of the Chaco Peace Conference, made up of the representatives of the two parties to the dispute and of six neutral nations, the United States, the ABC powers (Argentina, Brazil and Chile), Peru and Uruguay. It was thus literally 'a triumph for New World diplomacy.' Much of the credit for the settlement is attributed to Spruille Braden, United States delegate to the Peace Conference.

The treaty specifically delineates one part of the frontier and leaves the remainder for arbitration. The frontier delineated recognizes Bolivia's title to a triangle of land granted to Bolivia by Brazil in the Treaty of Petropolis but not recognized by Paraguay on the ground that the waterfront on the upper Paraguay River involved in it belonged to Paraguay. The treaty and the subsequent arbitral award grant Paraguay more than three-quarters of the entire Chaco, and add 69,000 sq. mi., to its territory. Bolivia, on the other hand, gets access to the Atlantic Ocean by the guarantee of free transit through Paraguayan territory for Bolivian exports and imports and by the use of a free port at Puerto Casado, where Bolivia may set up customs agencies and construct warehouses. Puerto Casado is Paraguay's second port and is the center of an important timber and cattle district. It is too remote from Bolivia's economically significant area to be of much more than psychological value to that country, however. Bolivia also retains possession of its oil fields, which lie well to the west of the proposed frontier; so, likewise, does the international road from Villa Montes to Santa Cruz de la Sierra. Furthermore, it gets security against military attack from the east since the boundary runs through sheer desert. Nevertheless, the settlement was received apathetically by Bolivia, which feels that its interests were sacrificed.

The negotiations were strained till the very end, and early in June looked deadlocked. Their threatened breakdown, and persistent rumors of active rearming for an early renewal of the Chaco war, which had already cost 100,000 lives in its three years of fighting, caused extreme pessimism among the mediators. Since the armistice of June 12, 1935, both countries had violated pledges not to increase their armed forces in the Chaco and had been receiving arms and munitions from abroad; Bolivia from the United States and Europe, Paraguay from Italy. On June 27 Paraguay announced its withdrawal from the World Court, an action intended to eliminate the possibility of arbitration by the Court.

Diplomatic relations with Bolivia were formally resumed on Nov. 26, the new Paraguayan minister to Bolivia being a Liberal and former Foreign Minister, Dr. Justo Pastor Benitez; the Bolivian minister to Paraguay is Dr. Fabian Vaca Chavez, Foreign Minister during the Chaco war. A new treaty of commerce and navigation will be negotiated, as provided in the peace treaty.