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Paraguay (country), inland republic in South America, bounded on the northwest and north by Bolivia, on the east by Brazil, and on the south and southwest by Argentina. The total area of Paraguay is 406,752 sq km (157,048 sq mi). Asunción is the country�s capital and largest city.

The Paraguay River divides the country into sharply contrasting regions, namely, in the west, the Gran Chaco, or Paraguay Occidental, and in the east, Paraguay proper, or Paraguay Oriental. The Gran Chaco is part of an alluvial plain that extends from Paraguay into Bolivia on the west, Argentina on the south, and Brazil on the east. Grassy plains, swamps, and scrub forests cover the area.

Paraguay proper consists mainly of the southern extension of the Paraná plateau. This elevation, from 300 to 600 m (1,000 to 2,000 ft) high, forms a watershed that gives rise to numerous tributaries of the Paraguay and Paraná rivers. On its western edge the plateau falls off sharply to a region of fertile grassy foothills toward the Paraguay River; in the east it descends gradually toward the Paraná River. The main rivers are the Paraná, the Paraguay, and the Pilcomayo. Lake Ypoá is the only large inland body of water. Among Paraguay�s many spectacular waterfalls is Guaíra Falls.

The climate of Paraguay is subtropical. At Asunción average temperatures range from about 17�C (about 63�F) in July to about 27�C (about 80�F) in January. In the Chaco and other points to the north temperatures often reach 38�C (100�F). Annual rainfall averages some 1,120 mm (44 in) in the Asunción area, some 815 mm (32 in) in the Gran Chaco, and some 1,525 mm (60 in) in the eastern forest regions. The Chaco has heavy rainfall in the summer and almost no rain in the winter.

The primary resources of Paraguay are its fertile soil and its forests. It has few mineral resources; limestone, copper, clay, and petroleum are the most important. Paraguay�s rivers, well suited for hydroelectric projects, are another important resource.

The plants and animals of Paraguay are substantially the same as neighboring South American countries. Paraguay proper, where rainfall is heavy, is covered by dense evergreen forests interspersed with a wide variety of tropical grasses, ferns, palms, and exotic flowers. In the Gran Chaco, vegetation is comparatively sparse but includes the red quebracho tree, a rich source of tannin extract. The plains are covered by coarse tropical reeds, grasses, and stunted trees.

The animals of Paraguay include armadillos, capybaras (a type of large rodent), tapirs, jaguars, anteaters, wild boar, deer, alligators, and various species of snake. Among the local birds are toucans, ibis, herons, parrots, black ducks, partridges, American ostriches, rheas, and parakeets. Many of these birds exhibit strikingly beautiful plumage.

Paraguay has perhaps the most racially homogenous population in South America. About 95 percent of the people are mestizos (people of mixed Spanish and Native American ancestry). Minority groups include individuals of pure Spanish ancestry, living mainly in Asunción; unassimilated Guaraní people of the eastern forest region; and small colonies of immigrants from Japan, Italy, Portugal, Canada, and other countries. The Mennonites, a German-speaking religious sect, form a notable immigrant group. Some 45 percent of the population lives in rural areas.

At the 1992 census, the population of Paraguay was 4,120,000. An estimate for 2001 was 5,734,139, giving the country an overall density of only 14 persons per sq km (37 per sq mi), one of the lowest in South America. Population is densest in the western Oriental and most sparse in the Chaco.

Paraguay is divided into 17 departments, plus the capital district of Asunción. Fourteen of the departments are in Paraguay proper: Alto Paraná, Amambay, Caaguazú, Caazapá, Canendiyú, Central, Concepción, Cordillera, Guairá, Itapúa, Misiones, Ñeembucú, Paraguarí, and San Pedro. Three of the departments are in the Gran Chaco: Alto Paraguay, Boquerón, and Presidente Hayes. The departments are divided into districts, which are subdivided into municipalities and rural districts.

The chief cities of Paraguay include Asunción (1996 urban agglomeration; 1.1 million), the capital and a commercial city and port; Ciudad del Este (133,893), a town near the Itaipu Dam on the Paraguayan-Brazilian border; Encarnación (58,261), a railroad and agricultural center; Concepción (35,276), a river port; Coronel Oviedo (38,316); and Caaguazú (38,220).

Paraguay is a bilingual country; its official languages are Spanish and Guaraní, which is commonly spoken by about 90 percent of the people. Guaraní is used in most folk poems and songs and in books and periodicals. see Tupí-Guaranian.

Roman Catholicism, the official religion, is the faith of about 90 percent of all Paraguayans. Freedom of worship is extended to other faiths. A number of small Protestant groups exist, of which the Mennonite group is the largest.

Elementary education in Paraguay is free and nominally compulsory for children from 6 to 12 years of age. While the number of schools is inadequate, 97 percent of the adult population is literate. In 1997, 905,800 pupils were enrolled in primary schools and 327,800 students attended secondary, vocational, and teacher-training schools. About 42,300 students attended institutions of higher education, which included the National University of Asunción (1890) and the Catholic University of Our Lady of Asunción (1960).

Paraguayan culture is a blend chiefly of Guaranian and Spanish elements, supplemented by more recent Argentine, German, and Italian influences. The culture of Paraguay has remained isolated and therefore has retained many features introduced in the 16th and 17th centuries by the Spanish conquerors, artisans, and Jesuit missionaries. The Ateneo Paraguayo, a leading cultural center, sponsors art exhibits, lectures, and concerts, and Guaraní culture is promoted by the Academy of Guaraní Language and Culture, the Indian Association of Paraguay, and the Guaraní Theater.

Among the notable libraries are the National Archives and American Library of the National Museum of Fine Arts, which also houses paintings and historical objects, and the library of the Paraguayan Scientific Society; all are in Asunción. Other important museums in Asunción include the Andres Barbero Ethnographical Museum and the Museum of Military History.

Historical and legal writings occupy the leading place in Paraguayan literature; even poetry seldom loses touch with social realities. Among the foremost 20th-century Paraguayan writers are Juan Natalicio Gonzalez and Manuel Ortiz Guerrero. See Latin American Literature.

From remote times, the Guaraní have used primitive wind and percussion instruments, mostly wooden flutes, whistles, rattles, and bells. Guitars and harps, introduced by early Spanish settlers, are basic instruments of contemporary Paraguayan music. One of the oldest forms of Paraguayan popular music is the polka, and ballads and songs preserve much of the country�s history and tradition. The Guarania, a song with a flowing lyric melody introduced in the early 20th century, is the first distinctive variation of the Hispanic colonial tradition. See Latin American Music.

Much Paraguayan art uses themes of native folklore and of religion, frequently expressed in church decoration. The earliest well-defined Paraguayan art dates from colonial times when Jesuit and Franciscan missions established art schools. Examples of early art, now extant, in both baroque Spanish and Native American styles, include pediments adorned with figures of saints, pulpits, seats carved in stone, and magnificent wood-carved altarpieces.

Among the greatest names in modern Paraguayan art are the painters Pablo Alborno and Juan Samudio. The most renowned Paraguayan craft is the production of the very delicate ñandutí lace. See Latin America Painting and Latin American Sculpture.

Agriculture is prominent in the Paraguayan economy, contributing 29 percent of the gross domestic product (GDP). In 1999 the GDP was $7.7 billion, or $1,440 per capita.

The principal industry of Paraguay is farming. In 2000 the yields of leading agricultural products, in metric tons, were cassava (3.5 million), seed cotton (202,283), sugarcane (2.9 million), corn (0.9 million), wheat (250,000), root crops such as sweet potatoes (3.6 million), and fruits such as bananas and oranges (527,780). Livestock breeding is a major agricultural occupation; Paraguay has 9.9 million cattle, 400,000 horses, 2.7 million pigs, and 412,500 sheep.

Forestry is very important to the economy of Paraguay. In 1999, 8.1 million cu m (286 million cu ft) of timber were cut. Other forest products include tannin and petitgrain oil, which is a perfume base. Fishing is negligible, the catch being 28,000 metric tons in 1997.

Mining is unimportant in Paraguay. Although deposits of petroleum, iron, manganese, salt, and other minerals are reported, they are not exploited commercially. Limestone, extracted in significant amounts, was used in producing about 250,000 metric tons of cement annually in the early 1990s.

Manufacturing is confined largely to agricultural and forestry products and to basic consumer goods. Among the important products are packed meat and other foodstuffs, textiles, wood products, and chemicals.

Almost all of Paraguay�s electricity is produced in hydroelectric facilities. Output in 1999 was 52 billion kilowatt-hours. The great Itaipu hydroelectric project on the Paraná became fully operational in 1991. The joint Paraguayan and Argentine Yacyretá Dam project was completed in 1994.

The basic unit of national currency is the guaraní (3,119 guaranís equal U.S.$1; 1999 average). The Central Bank of Paraguay (1952) issues currency and controls exchange.

In 1999 Paraguay�s imports cost $3 billion, and its exports earned $929 million. Major imports were petroleum, machinery, transportation equipment, metal and metal products, and foodstuffs; leading exports were cotton, soybeans, timber, oilseeds, and meat. The chief purchasers of Paraguay�s exports are Brazil, The Netherlands, Argentina, the United States, Uruguay, and Chile; leading sources of imports are Brazil, Argentina, the United States, Japan, South Korea, and Hong Kong. Paraguay is a member of two trade associations, the Latin American Integration Association (LAIA) and the Southern Cone Common Market (known by its Spanish acronym MERCOSUR). The LAIA, created in 1980 to replace the Latin American Free Trade Association (LAFTA), works to integrate the economies of member countries, which include most South American countries as well as Mexico. MERCOSUR, a free trade association created in 1995, lowers tariffs between Paraguay, Argentina, Uruguay, and Brazil.

More than 2,900 km (1,800 mi) of internal waterways�chiefly the Alto Paraná and Paraguay rivers�have provided the main means of transportation, with most of the boats owned by Argentine interests. In 1998 Paraguay had 29,500 km (18,330 mi) of roads. Paraguay is served by a section of the Pan-American Highway, and the Trans-Chaco Highway links Asunción with Bolivia. Paraguay has about 440 km (about 275 mi) of operated railroad track. Asunción is served by an international airport completed in 1980.

Paraguay has 55 telephone lines for every 1,000 people; the majority of the telephone connections are in Asunción. The country has 182 radio receivers and 101 televisions per 1,000 residents.

The government has virtually unlimited regulatory authority over trade union activity. Trade unionists in the late 1980s represented only 2 percent of the labor force. Many workers belong to some 113 affiliates of the Confederación Paraguaya de Trabajadores (Confederation of Paraguayan Workers).

Paraguay is governed under a 1992 constitution that gives much power to the president but limits each holder of the office to one term.

The head of state and chief executive official of Paraguay is a president, who is elected to a single five-year term by a simple majority vote of the electorate. A vice president is elected concurrently under the same conditions. The president is assisted by a council of ministers and is advised by a council of state.

Paraguay�s bicameral national legislature is made up of a 45-member senate and an 80-member chamber of deputies. The political party receiving the most votes in legislative elections receives two-thirds of the seats in each chamber, and the remaining third is divided proportionally among the other contending parties. Legislators serve terms of up to five years.

The leading political organization in Paraguay is the Asociación Nacional Republicana, known as the Colorado Party. Other groups include the Christian Democratic Party, the Liberal Radical Party, the Authentic Liberal Radical Party, and the Liberal Party.

The highest tribunal in Paraguay is the Supreme Court, made up of five judges chosen by the country�s president. Other judicial bodies include courts of appeal, courts of first instance, magistrates� courts, and justices of the peace.

The armed forces have long dominated political institutions in Paraguay. In 1999 the country�s military included an army of 14,900 people, a navy of 3,600, and an air force of 1,700. Military service by males is compulsory for 18 to 24 months.

The aborigines of Paraguay were Native Americans of various tribes collectively known as Guaraní because of their common language. They were numerous when the country was visited, probably about 1525, by the Portuguese explorer Alejo García. During the next few years Italian navigator Sebastian Cabot, then in the service of Spain, partly explored the rivers of the country.

On August 15, 1537, Spanish adventurers seeking gold established a fort on the Paraguay River, calling it Nuestra Señora de la Asunción (Our Lady of the Assumption), because that day was the feast day honoring the Assumption of the Virgin Mary. Colonial Paraguay and the territory of present-day Argentina were ruled jointly until 1620, when they became separate dependencies of the Viceroyalty of Peru.

Beginning about 1609, the Jesuits, working under great hardship, established many missions called reducciones, which were settlements of Native American converts, whom the missionaries educated. The communal life on these settlements was similar to the original life of the Native Americans. Granted almost complete freedom from civil and ecclesiastical local authorities, the Jesuits, through the missions, became the strongest power in the colony. In 1750 King Ferdinand VI of Spain, by the Treaty of Madrid, ceded Paraguayan territory including seven reducciones to Portugal, and the Jesuits incited a Guaraní revolt against the transfer. In 1767 the missionaries were expelled from Spanish America, including Paraguay; soon thereafter, the missions were deserted.

In 1776 Spain created the Viceroyalty of the Río de la Plata, which comprised present-day Argentina, Paraguay, Uruguay, and Bolivia. Paraguay became an unimportant border dependency of Buenos Aires, the capital of the Viceroyalty, and sank gradually into relative insignificance until the early 19th century.

Paraguay proclaimed its independence on May 14, 1811. Three years later José Gaspar Rodríguez de Francia made himself dictator and ruled absolutely until his death in 1840. Fearing that Paraguay might fall prey to stronger Argentina, Francia dictated a policy of national isolation. In the administrative reorganization following the dictator�s death, his nephew Carlos Antonio López became the leading political figure. In 1844 López became president and dictator. He reversed the isolationist policy, encouraged commerce, instituted many reforms, and began building a railroad. Under his rule the population of Paraguay rose to more than 1 million.

At his death in 1862 López was succeeded by his son, Francisco Solano López. In 1865, looking to build an empire, he led the nation into a war against an alliance of Argentina, Brazil, and Uruguay. The war devastated Paraguay, and when the death of López in 1870 ended the conflict, more than half of the population had been killed, the economy had been destroyed, and agricultural activity was at a standstill. Territorial losses exceeded 142,500 sq km (55,000 sq mi). The country was occupied by a Brazilian army until 1876, and the peace treaties imposed heavy indemnities on the country. In 1878 President Rutherford B. Hayes of the United States was arbiter in the settlement of boundaries between Argentina and Paraguay.

Paraguayan history after the war was largely an effort to reconstruct the country. Immigration was encouraged, and Paraguay established subsidized agricultural colonies. The unsettling effects of the war, however, were apparent for many decades, particularly from 1870 to 1912, when no president was able to serve out a full term. Subsequently, periods of political stability alternated with periods of ferment and revolt. The administration (1912-1916) of Eduardo Schaerer was relatively enlightened. The country remained neutral and prosperous during World War I (1914-1918), and the administrations of Manuel Gondra (1920-1921), Eusebio Ayala (1921-1923), and Eligio Ayala (1923-1928) were on the whole periods of peace and progress. The border with Bolivia in the Chaco Boreal, which had never been formally drawn, was the scene of numerous incidents between 1929 and 1932. In the latter year a full-scale war broke out when the area was invaded by Bolivia. An armistice was declared in 1935. In the final settlement, made by an arbitration commission in 1938, Paraguay was given about three-fourths of the disputed area. See also Chaco War.

After the war, the government was reorganized to permit widespread economic and social reforms. By a new constitution adopted in 1940, the state was given the power to regulate economic activities and the government was highly centralized. Paraguay declared war on Germany and Japan on February 7, 1945. The country subsequently became a charter member of the United Nations.

In 1940 General Higinio Morínigo had made himself president and ruled as a dictator for the next eight years. A coup d�état deposed him in 1948. In September 1949, Federico Chávez, an army-backed leader of a faction of the dominant Colorado Party, was elected president without opposition. He imposed a dictatorship much like that of Morínigo. In March 1951 the Chávez regime devalued the currency in an attempt to check inflation and the loss of gold reserves. The economic crisis was aggravated in 1952, when Argentina, itself the victim of depressed economic conditions, abrogated a barter agreement with Paraguay. During the year legislation granted various benefits to workers. In general elections held on February 15, 1953, President Chávez was reelected, again without opposition. He imposed wage and price controls in June 1953 to check inflation. On May 5, 1954, his government was overthrown by an army-police junta.

The electorate on July 11 endorsed General Alfredo Stroessner, commander in chief of the army and head of the Colorado Party. He was the only candidate. Attempts by leftist forces to seize power were put down in 1956 and 1957. A plebiscite in 1958 confirmed President Stroessner for another five-year term.

In elections for a new congress in 1960, all 60 seats were won by the president�s supporters in the Colorado Party. Diplomatic relations with Cuba were severed in December. Paraguay was among the states that favored collective action by the Organization of American States against the Cuban regime, but such measures were not approved by the two-thirds majority required. In 1963 Stroessner was reelected president, running against the first opposition candidate in a Paraguayan presidential election in 30 years. He enjoyed some popularity in the mid-1960s, partly because of continued economic progress, but many Paraguayans had also fled into exile from his dictatorship. Stroessner continued in power in 1968 after having had the constitution altered the previous year to permit his reelection. He was again reelected in 1973, 1978, and 1983.

A significant step was taken by the Stroessner regime in the late 1960s with the establishment of close economic relations with neighboring countries. In May 1968 the La Plata Basin Pact was signed by the foreign ministers of Argentina, Bolivia, Brazil, Paraguay, and Uruguay. This agreement, calling for joint development of the La Plata River Basin, was expected to stimulate the economy of the entire region and would be of special importance to Paraguay, the least-developed nation in the area.

In the 1970s and early 1980s Paraguay was relatively calm. Itaipu, the largest hydroelectric dam in the world, was built on the Paraná River in a joint venture with Brazil. Inflation was controlled, but declining markets for Paraguayan exports led to rising unemployment and a worsening of the nation�s trade position. The mid-1980s brought limited political liberalization, including, in 1987, the lifting of the state of siege in Asunción. Reelected to his eighth term in 1988, Stroessner was ousted in a military coup in February 1989.

General Andrés Rodríguez, the leader of the coup that had removed Stroessner from office, won election to the presidency as head of the Colorado Party following Stroessner. In office, he inaugurated a program of privatizing state-owned enterprises, but the economy remained relatively stagnant, and his party lost some support. The Colorado nominee in the May 1993 presidential elections, Juan Carlos Wasmosy, won the office with only a plurality of the votes cast. Under Wasmosy, Paraguay joined Argentina, Brazil, and Uruguay in creating the Southern Cone Common Market (Spanish acronym MERCOSUR) in 1995. This trade association promised to lower tariffs and increase trade, sparking concerns that lower tariffs and economic integration would harm small Paraguayan businesses.

In April 1996 a confrontation between Wasmosy and General Lino Cesar Oviedo, commander of Paraguay�s army, brought the country to the brink of a coup. Wasmosy accused Oviedo of interfering in the political process and of opposing government policies, and he ordered Oviedo to step down from his position. Oviedo rejected the order and threatened to kill Wasmosy. After a tense standoff, Oviedo agreed to resign, but only under the condition that he be named defense minister. Fearing another coup attempt, Wasmosy agreed, but when many citizens protested, he reversed his decision. Oviedo then announced his intention to run for the presidency in 1998.

Oviedo won a presidential primary election in 1997 and emerged as the presidential candidate of the Colorado Party. However, Wasmosy, who was constitutionally barred from seeking reelection, ordered Oviedo arrested and jailed for his role in the coup attempt. In April 1998, two weeks before the election, a military tribunal sentenced Oviedo to ten years in prison. The Colorado Party then nominated Raúl Cubas Grau, Oviedo�s vice-presidential running mate, to replace Oviedo as the party�s presidential nominee. Cubas won the election in May 1998 and pardoned Oviedo soon after taking office. Oviedo�s pardon outraged many people, and the Supreme Court ordered him back to prison in December 1998. Cubas ignored the court order and allowed Oviedo to remain free.