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Interview with the economic and political analyst Eric Toussaint (First part)
“The Itaipu Treaty signed in 1973 could be declared void.”
by Roberto Irrazábal
28 December 2008

The Belgian analyst Eric Toussaint argues that Paraguay could request the invalidity of the treaty on the grounds of the principles included in the Vienna Convention. He suggested to Lugo that a comprehensive auditing of the country’s debts should be carried out, just as Ecuador did.

A few days ago, the chairman of the Committee for the Abolition of Third World Debt Eric Toussaint visited the country. He was invited by President Fernando Lugo, who asked him to be his adviser on important subjects such as the Itaipu Treaty, the global economic crisis, the review of external debt and the integration processes.

The Belgian expert says that in case Paraguay does not obtain the renegotiation, it could request the nullity of the Itaipu Treaty invoking the Vienna Convention, which regulates all international treaties.

How do you see the Paraguayan claims towards Brazil regarding Itaipu?

- I have studied the 1973 Itaipu Treaty and in my opinion, it could be declared void by both parties, or by Paraguay alone if Brazil does not agree. International law allows a State to make a sovereign act of repudiation or abrogation of a treaty. In my view, this option does not mean leading to a confrontation with Brazil, but renegotiating another treaty, which would be fair and comply with international law. Paraguay does have this right, but what is important is first to seek a friendly settlement.

How can Paraguay obtain nullity?

- This treaty was signed between two dictatorships and it includes several articles which infringe the Vienna Convention, a pact that all countries must respect and that was signed in 1963 to regulate international treaties. The respect for the equality of the parties, among other aspects, is one of the arguments.

What do you suggest about Paraguay’s debts?

- We talked with President Fernando Lugo about a comprehensive audit of the debts claimed from Paraguay, the binational debts related to Itaipu and Yacyreta, the external public debt which amounts to around 2 billion dollars and the internal public debt. This is what I recommend drawing from various experiments, among which the Ecuadorian one.

How was the experiment in Ecuador?

- Ecuador organised, following a decision of the Presidency of the Republic, a national and international commission, with twelve delegates for the former and six for the latter. Four State bodies also participated: the National Audit Office, the State Prosecution Service, the Anti-Corruption Commission and the Ministry of Economy and Finance.

Did you take part in the commission?

- I was a member of this commission and for 14 months we have been analysing the contracts in order to identify the legitimate and illegitimate debts, so as to make recommendations to the government, which took the decisions.

What could happen here?

- Paraguay could use the experiment in Ecuador and adapt it to its own situation and needs, and set up a commission. In this case, I would be willing to bring my technical support.

Venezuela and Bolivia also announced they would take this measure. Is it becoming a regional tendency?

- It is a tendency. Even in Brazil fifteen days ago a parliamentary commission was set up in Congress to investigate the debt. The audit has historical roots since in the 1930s Getulio Vargas’s government in Brazil carried out an audit which revealed many breaches of the law and as a result, Brazil obtained a reduction of more than 50 per cent on its debts.

How do you see the integration process in the region?

- When we talked with President Lugo we discussed the role of Paraguay, and what I pointed out is that it would be very interesting to build a common axis between the small countries that are part of the integration process, namely Bolivia, Ecuador, Paraguay and Uruguay.

What is the objective?

- There are various initiatives of regional integration and also the plan to form a Bank of the South with 7 countries, and the voice of the small countries is not audible enough against the giants such as Brazil, Venezuela and Argentina. Paraguay needs to find a way to determine common criteria between the small countries so as to reach a balance of power within the block and have the small countries’ interests respected.

What are the threats coming from the big countries?

- The great regional powers tend to give priority to their commercial and economic interests, at the expenses of their small counterparts. This is the case with Itaipu, Yacyreta. Thus there must be mechanisms that reduce asymmetries between the countries of the block so that integration works.

How was the European experiment in this respect?

- In the European construction, the stronger countries such as England, Germany and France transferred money to Greece, Portugal, Spain and other member countries with weaker economies to reach integration by reducing those asymmetries.

What should be given priority in this process?

- It is fundamental in any integration process to have mechanisms of transfer, to have a common architecture, a Bank of the South to finance projects that encourage integration. In my opinion, these projects should aim at food sovereignty, agrarian reform, providing the region with a pharmaceutical industry that could produce high quality generic medicines, improving the rail connections between countries, and also common programmes related to education, communication, housing and environment.

And how would investments be made secure?

- I would propose the region should set up an ICSID of the South. The ICSID is the World Bank’s Court that arbitrates in disputes between transnational companies, private companies and governments. The problem is that in most cases judgments are favourable to Northern transnational companies; the ICSID is not an impartial judge, it does not take into account the Southern countries’ priorities.

How the system would be like?

- Latin American countries, when signing investment contracts with transnational companies, could include in the contracts that, in case of dispute, the complaint has to be lodged with a Latin American organ. For me, it would mean going back to something Latin America inaugurated at the beginning of last century, which is the doctrine of Carlos Calvo, an Argentinean lawyer specialized in international law who said that the jurisdiction for economic activities must be that of the region and not that of the United States or Great Britain.

Published by the paraguayan daily paper ULTIMA HORA

Translated by Stephanie Jacquemont

Roberto Irrazábal