Paraguay (pâr'əgwā, –gwī, Span. pärägwī') , officially Republic of Paraguay, republic (2005 est. pop. 6,348,000), 157,047 sq mi (406,752 sq km), S central South America. Paraguay is enclosed by Bolivia on the north and west, Brazil on the east, and Argentina on the south and west; Bolivia and Paraguay are the two landlocked nations of the continent. The capital and by far the largest city is Asunción.

Land and People

The eastern part of the country, between the Paraguay and Paraná rivers, where most of the population lives, is a lowland, rising in the east and north to a plateau region. The region was once heavily forested, but forest land has been steadily depleted. The Paraná, south of the Iguaçu River (with its magnificent falls), separates Paraguay from Argentina. The Paraguay River also forms part of the border with Argentina, from its confluence with the Paraná north to the Pilcomayo River. The section west of the Paraguay River is a dry plain, part of the Chaco (see Gran Chaco). Cattle are raised and quebracho is found in the woodlands of the Chaco Boreal. Administratively, the country is divided into 19 departments. All the important cities are in the east. Besides Asunción, they are Villarrica, Concepción, and Encarnación.
The population is largely mestizo, of mixed Spanish and Guaraní descent. Spanish is the official language, but Guaraní, spoken by most of the population, is also considered a national language. The Jesuit missions (the reductions, active from the late 16th to the 18th cent.) were instrumental in the blending of Spanish and Guaraní cultures. Later immigrants—German, Italian, and French, and most recently Brazilian and Japanese—added new elements to the distinctive civilization of Paraguay. The country's arts and handicrafts reflect the various strains. A notable musical contribution is the guaranía, a form developed from native melodies by José Asunción Flores during the Chaco War. Nanduti (spider web) lace is the most famous Paraguayan handicraft. The isolated indigenous groups that live in the Chaco and elsewhere have little part in the national life. Roman Catholicism is the established religion; most of the small number of Protestants are Mennonites. There are two universities, National (1890) and Catholic (1960), both in Asunción.

Economy

More than half of Paraguay's workers are engaged in agriculture and forestry; less than 15% work in industry and mining. The principal crops are soybeans, cotton, sugarcane, corn, wheat, tobacco, cassava, and fruits; cattle raising is also important. Orange groves furnish petitgrain, used in perfumes and flavorings. In addition to quebracho, hardwoods and cedars are commercially exploited. Meatpacking, sugar processing, cement production, textile and wood-products manufacturing, brewing, and the production of other consumer goods are the main industries. The country also has a large underground economy based on smuggling, money laundering, and trafficking Bolivian cocaine.
Paraguay has minimal road and rail systems, and river transportation is the primary means of moving goods. Hydrovía, a proposed waterway to straighten and deepen the Paraná, was approved by Paraguay, Bolivia, Argentina, Brazil, and Uruguay in 1994. The Itaipú Dam on the Paraná River, completed in 1991, is one of the world's largest, and the electricity it generates is economically vital to Paraguay. The Yacyretá hydroelectric project, also on the Paraná, was inaugurated in 1998.
The leading exports are soybeans, electricity, meat, feed, cotton, and oils. The leading imports are vehicles, consumer goods, tobacco, petroleum products, and electrical machinery. Paraguay's main trading partners are the fellow members of Mercosur, the United States, and European Union countries. Customs duties furnish an important part of the country's revenues, but are significantly undercollected due to smuggling.

Government

Paraguay is governed under the 1992 constitution. The president, popularly elected, serves a five-year term and cannot be reelected. The legislature has two houses, a 45-member senate and an 80-member chamber of deputies. The two main parties, both conservative, are the Colorado party, which has governed since 1948, and the Authentic Radical Liberal party. Other groups include the National Encounter party, the Febreista Revolutionary party, the Christian Democratic party, and the outlawed Communist party.

History

Early History
European influence in Paraguay began with the early explorations of the Río de la Plata. Juan Díaz de Solís was the first to come (1516), and Sebastian Cabot followed him (1527) to the Paraguay River, which was thought to offer access to Peru. One of the main reasons for the voyages (c.1535) of Juan de Ayolas and Domingo Martínez de Irala was to seek a way across the continent. A colony grew up, as Asunción became the nucleus of the La Plata region. Irala dominated the colony until his death (1556 or 1557) and clashed with Álvar Núñez Cabeza de Vaca.
At the end of the 16th cent. Hernando Arias de Saavedra, called Hernandarias, became governor of Río de la Plata prov., of which Paraguay was a part; it was through his efforts that the administrations of present Argentina and Paraguay were separated (1617). The Jesuit missions were founded in the days of Hernandarias (most of them in the trans-Paraná area, now in Argentina). Real independence from Spain was asserted when in 1721 José de Antequera led the comuneros of Asunción in a successful revolt and governed independently for some 10 years. In 1776 the region was made part of the viceroyalty of the Río de la Plata.